These passages from a recent unfair dismissal decision of the Fair Work Commission contain very useful observations about the legal principles involved in calculating compensation for unfair dismissal and in particular that a failure by a dismissed employee to seek alternative employment will reduce his or her compensation for unfair dismissal. Furthermore the Commission does not have the power to order an employer which has been held to have unfairly dismissed an employee to provide a reference or statement of service.
- “ “Based on my factual findings and my assessment of the mandatory considerations in s 387, I conclude that the dismissal of Ms Panchal was unjust and unreasonable, and therefore unfair.
- In her submissions, Ms Panchal stated that the remedies she sought were compensation, a statement of service, payment of entitlements that she says are owed to her by Bulla, and six months compensation. The Commission has no power to order Bulla to give Ms Panchal a statement of service, or to deal with claims relating to outstanding entitlements. I note that reinstatement would not in my view be appropriate in this case, and that in her submissions Ms Panchal did not seek it. The only available remedy is compensation. In assessing compensation, the Commission must take into account all the circumstances of the case, including the matters set out in s 392(2). There is no evidence that an order for compensation would affect Bulla’s viability (s 392(2)(a)). Ms Panchal had a number of years of service with Bulla (s 392(2)(b)). If she had not been dismissed, I consider that Ms Panchal would have remained employed for at least another six months and earned another six months’ salary (s 392(2)(c)). Ms Panchal’s gross pay per week was $1211.54. Had she not been dismissed she would have earned a gross amount of $31,500.04 over that 6-month period.
- However, Ms Panchal said that she had not applied for any jobs since her dismissal. The Act requires the Commission to consider the efforts of a successful applicant to mitigate the loss they have suffered because of their unfair dismissal (s 392(2)(d). This entails an inquiry into what efforts the applicant has made to find another job. In this case, Ms Panchal did not make any such efforts whatsoever. Compensation that is ordered under the Act is for loss of income that has been caused by an unfair dismissal. If no effort is made to seek new employment, at some point the absence of income becomes attributable to the failure of the individual to apply for new jobs. The Act also states clearly that compensation must not include any component referable to shock, distress, humiliation or other analogous hurt (s 392(4)). In this case, Ms Panchal said that she was too scared to seek work because her husband had been threatened by the maintenance manager to leave the company alone. But this reason for not seeking work does not make sense. Looking for a new job has nothing to do with Bulla. There was no reason for her to be scared about applying for new jobs. Any such fear was an irrational one. Ms Panchal also said that she did not make attempts to find work because she thought that Bulla would give her a bad reference. But this is no excuse for making no effort to find work. Employers do not routinely require a reference, and it is well-known that many employers have a general policy of not providing references to former employees.
- Ms Panchal’s failure to take reasonable steps to mitigate her loss by looking for work requires a very substantial reduction in the compensation that might otherwise be ordered. Indeed, I have considered whether it is appropriate in the circumstances for any compensation at all to be ordered. I have concluded that it is. It is probably unlikely that Ms Panchal would have obtained a new job right away. In this early period, the loss of income was caused by the dismissal. But it is likely that at some point, had she made reasonable efforts, Ms Panchal would have found a new job. The absence of income from that point was caused by Ms Panchal’s inaction. It is appropriate to endeavour to estimate when that point was, difficult though this may be. I draw on the Commission’s industry experience and note that jobs in the agricultural sector are not in short supply, and that unemployment generally is low. I estimate that there is a reasonable likelihood that Ms Panchal could have obtained another job on a similar income within two months (eight weeks) from her dismissal. Bulla said that Ms Panchal received payment in lieu of notice. Based on her permanent employment since 28 June 2021, Ms Panchal had less than 3 years of service (her prior casual service would not count), which would have seen her paid 2 weeks’ in lieu of notice. This should be deducted from the eight weeks referred to above. In my view, the compensation to be awarded to Ms Panchal should be confined to the six week period where her loss of income was more clearly causatively connected to the unfair dismissal, rather than to Ms Panchal’s failure to seek a new job. Six weeks’ gross pay is $7269.24. To this should be added 11.5% superannuation of $835.96. Standing back from the detail of the compensation analysis and considering the matter on an overall basis, I consider this to be a fair and reasonable amount of compensation in the circumstances. I do not consider that it would be appropriate to award more. I will order that these amounts be paid to Ms Panchal within 28 days of this decision. An order is issued separately in PR780001. “
Panchal v Bulla Mushrooms (Aust) Pty Ltd [2024] FWC 2784 delivered 7 October 2024 per Colman DP