Unfair dismissal; when will reinstatement be ordered

Where an employee wins a case of unfair dismissal, that is to say that where the Fair Work Commission  upholds a claim for an unfair dismissal remedy, the primary remedy under the Fair Work Act is an order for the reinstatement of the employee, together with an order of compensation for the economic loss suffered (generally the lost wages less some nominal discounts) together with an order for continuity of service.

Nevertheless such orders are very rare. This is because by the time the case is heard, generally after months of legal skirmishing, the relationship between the applicant and his or her former employer is generally so damaged that the Commission is reluctant to legislate the employee back into the employer’s workforce. The concept used is “trust and confidence” and here it is on display in the following extract from a recent Fair Work Commission case.

“The issue of when reinstatement is inappropriate and the related question of the need for trust and confidence between the parties was considered at length by the Full Bench of the Commission in Nguyen and Le v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter. 62 In its decision, the Full Bench held that:

  • ‘trust and confidence’ in this context is that which is essential to make an employment relationship workable, which is “not to be confused with an implied term in a contract of employment of mutual trust and confidence, the existence of which was recently eschewed by the High Court in Commonwealth Bank of Australia v Barker”; and
  • While “trust and confidence is a necessary ingredient in any employment relationship, it would be wrong to assume that it is the sole criterion or even a necessary one to determine whether or not reinstatement is appropriate”. 63(references omitted)

[78] The Full Bench summarised the relevant principles to be followed in assessments of trust and confidence as follows:

“[27] The following propositions concerning the impact of a loss of trust and confidence on the question of whether reinstatement is appropriate may be distilled from the decided cases:

  • Whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is appropriate but while it will often be an important consideration it is not the sole criterion or even a necessary one in determining whether or not to order reinstatement.
  • Each case must be decided on its own facts, including the nature of the employment concerned. There may be a limited number of circumstances in which any ripple on the surface of the employment relationship will destroy its viability but in most cases the employment relationship is capable of withstanding some friction and doubts.
  • An allegation that there has been a loss of trust and confidence must be soundly and rationally based and it is important to carefully scrutinise a claim that reinstatement is inappropriate because of a loss of confidence in the employee. The onus of establishing a loss of trust and confidence rests on the party making the assertion.
  • The reluctance of an employer to shift from a view, despite a tribunal’s assessment that the employee was not guilty of serious wrongdoing or misconduct, does not provide a sound basis to conclude that the relationship of trust and confidence is irreparably damaged or destroyed.
  • The fact that it may be difficult or embarrassing for an employer to be required to re-employ an employee whom the employer believed to have been guilty of serious wrongdoing or misconduct are not necessarily indicative of a loss of trust and confidence so as to make restoring the employment relationship inappropriate.

[28] Ultimately, the question is whether there can be a sufficient level of trust and confidence restored to make the relationship viable and productive. In making this assessment, it is appropriate to consider the rationality of any attitude taken by a party.” 64 (references omitted)”

KB v The Agency Pty. Ltd. (2018) FWC 6937 delivered 23 November 2018 per Wilson C