[2013] FWCFB 431 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decisions
SENIOR DEPUTY PRESIDENT ACTON |
|
Appeal against decisions [[2012] FWA 6468 and [2012 FWA 9191] of Commissioner Cribb in matter number U2011/1147 - application for unfair dismissal remedy - compensation - decisions quashed - matter determined by Full Bench.
Introduction
[1] On 1 August 2012 Commissioner Cribb handed down a decision (first decision) in respect of an unfair dismissal remedy application made to Fair Work Australia (FWA) by Ms Gloria Bowden against Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge (Ottrey). 1 Ms Bowden was summarily dismissed from her employment by Ottrey on 27 May 2011. On 1 January 2013 FWA was renamed the Fair Work Commission (FWC).
[2] The Commissioner found Ms Bowden’s application had been made within the requisite legislative period, Ms Bowden was protected from unfair dismissal, the Small Business Fair Dismissal Code was not relevant to the application before her, the application did not concern redundancy and Ms Bowden had been dismissed by Ottrey. 2
[3] In respect of whether Ms Bowden’s dismissal was harsh, unjust or unreasonable the Commissioner concluded in her first decision as follows:
“[65] In all of the circumstances of this matter and, having taken account of each of the factors in s.387 of the Act, I determine, on fine balance, that Ms Bowden’s summary dismissal was harsh. Ms Bowden was summarily dismissed rather than dismissed with notice. As she was still being rostered to work, albeit, with difficulty, in a separate area to Ms Crocker, there would not appear to be any justification for dismissal without notice or pay in lieu of notice. Ms Bowden’s dismissal was also harsh as she had had no previous allegations/complaints made about her conduct and the allegations related to one occurrence (the Facebook exchanges/sending of the Workplace Politics document). As well, Ms Crocker participated equally in the Facebook exchanges and there does not appear to have been any disciplinary action taken regarding her “Fuck you all” Facebook post.
[66] It therefore follows that, pursuant to s.385 of the Act, Ms Bowden has been unfairly dismissed.” 3
[4] The Commissioner then turned to consider the issue of remedy. After setting out s.390 of the Fair Work Act 2009 Cth) (FW Act) concerning when the FWC may order a remedy for unfair dismissal, she said:
“[68] … I am satisfied that Ms Bowden was protected from unfair dismissal at the time of his dismissal (s.390(1)(a)) and that he has been unfairly dismissed (s.390(1)(b)). Further, Ms Bowden has made an application under s.394 of the Act (s.390(2)).
[69] Section 390(3) states that Fair Work Australia must not order the payment of compensation unless two conditions have been met.
[70] The first condition is that Fair Work Australia is satisfied that reinstatement is inappropriate (s.390(3)(a)). Ms Bowden is seeking reinstatement which is opposed by the respondent. In all of the circumstances of this matter, I am satisfied that reinstating Ms Bowden is inappropriate. It is my view that it would be a difficult situation if Ms Bowden was returned to the workplace.
Compensation
[71] Section 390(3)(b) requires that Fair Work Australia consider it appropriate in all of the circumstances of the case to order compensation. Taking into account all of the circumstances of this matter, an order for payment of compensation is considered appropriate.
[72] The requirements regarding an order for compensation are contained in section 392 of the Act. Section 392(2) sets out the criteria for deciding the amount of compensation in all of the circumstances of the case…
[73] I will deal with each of the criteria in turn.
s.392(2)(a) - viability of employer’s enterprise
[74] There was no material before me that any order made would affect the viability of the respondent. Therefore, I am satisfied that the order I intend to make will not impact in this regard.
s.392(2)(b) - length of applicant’s service
[75] Ms Bowden commenced employment with Ottrey Homes on a casual basis in April 2007. She became a permanent part time employee on 5 February 2008. Ms Bowden’s length of service was four years and three months.
s.392(2)(c) - remuneration would have been likely to receive
[76] There does not appear to have been submissions by either the applicant or the respondent about s.392(2)(c).
[77] Having considered all of the material before me, I find that it is likely that, in the absence of dismissal, Ms Bowden would have continued with Ottrey Homes for a period of at least six months.
[78] During the hearing the parties agreed to ascertain Ms Bowden’s hourly rate at the time of dismissal. Also missing is the number of hours per fortnight that Ms Bowden worked. Both parties are requested to reach a common view about these two matters.
s.392(2)(d) - efforts to mitigate the loss
[79] It was Ms Bowden’s evidence that she continued on with the second job that she had at the time of her dismissal. In addition, she has started a small business.
[80] On the basis of the material before me, I am satisfied that Ms Bowden has made efforts to mitigate the loss of her employment with Ottrey Homes.
s.392(2)(e) and (f) - the amount earned between dismissal and the making of the order and between the order and receipt of compensation
[81] Ms Bowden provided evidence of her earnings from her business for November 2011 ($342). She also provided the payslips from her other employer which showed that, from 23 May 2011 to 27 November 2011, Ms Bowden earned $3152.81. Ms Bowden’s Centrelink payments were also provided. However, such payments are not taken account of in calculating the amount earned.
[82] Given the elapse of time since the hearing, the applicant’s representative is requested to provide the Tribunal and the respondent with updated earnings from Ms Bowden’s ‘other’ job and from her business.
s.392(2)(g) - any other matters
[83] There were no other relevant matters sought by either party to be considered by the Tribunal.
s.392(3) - misconduct
[84] As Ms Bowden was dismissed for serious misconduct, a deduction of 20% will be made.
Contingencies
[85] In the final calculation of compensation, I propose to make a small adjustment of 10% on the basis that a substantial portion of the projected period of continued employment has passed.
Shock or distress
[86] No part of the provisional compensation amount relates to any shock or distress suffered by Ms Bowden (s.392(4)).
[87] The information sought from the parties (the hourly rate and number of hours per week and the amount of earnings from the ‘other’ job and business) is to be forwarded to the Tribunal and each other by 24 August 2012.
[88] Once this information is received, the Tribunal will be able to finalise the amount of compensation on the basis set out, with respect to deductions for misconduct and contingencies, in paragraphs 84 and 85 above.” 4 [Footnotes omitted]
[5] On 26 October 2012, the Commissioner issued a further decision (second decision) in regard to remedy. 5 That second decision was as follows:
“[1] This decision concerns determination of the amount of compensation to be ordered by the Tribunal. It follows the decision issued on 1 August 2012 in which the Tribunal found that Ms Bowden had been unfairly dismissed. In that decision, the Tribunal was unable to finally determine the amount of compensation as there was insufficient material before the Tribunal at that time.
[2] Accordingly, the parties were requested to reach a common view on Ms Bowden’s hourly rate of pay and the number of hours per fortnight she worked.
[3] By letter of 15 August 2012, the Tribunal was advised by the respondent’s representative that the parties had agreed that:
[4] Further, the applicant’s representative was requested to provide the Tribunal and the respondent with Ms Bowden’s updated earnings from her ‘other’ job and from her business.
[5] This information was provided on 5 September 2012 for the period 27 November 2011 - 1 August 2012 and was:
Total $13,969.99
[6] The information is relevant to the requirements of sections 392(2)(c), (e) and (f) and section 392(3) of the Fair Work Act 2009 (the Act):
Likely remuneration (s.392(2)(c)):
Amount earned (s.392(2)(e) and (f):
$12,266.00
Total $17,464.80
[7] The amount earned by Ms Bowden whilst mitigating her loss is greater than the remuneration she would have been likely to receive if she had continued in employment for six months. Therefore, on this basis, there is no need to continue the calculations nor is there a necessity to make an order for the payment of compensation by the respondent to Ms Bowden.
[8] Accordingly, no order for payment of compensation is made.” 6 [Footnotes omitted]
[6] Ms Bowden has appealed the Commissioner’s decisions in respect of remedy. This decision deals with that appeal.
Grounds of appeal
[7] The essence of Ms Bowden’s grounds of appeal is that the Commissioner erred in respect of the circumstances she took into account in determining a compensation remedy. In respect of compensation, Ms Bowden submitted she should have been awarded $10,771.52 compensation based on six months employment at Ottrey but for her dismissal, a 20% discount for misconduct, a 10% increase for contingencies and a reduction of $342 for her other earnings.
[8] Ottrey opposed the granting of permission to appeal, submitting the Commissioner carefully considered the criteria in s.392(2) of the FW Act concerning compensation against the facts of the case. Further, they submitted the decision not to order compensation is not manifestly unjust or counter intuitive. Ottrey said the weight to be afforded to Ms Bowden’s non-Ottrey earnings in determining an amount of compensation was discretionary and even if the appeal bench would have afforded it less weight than the Commissioner that is not sufficient to establish appealable error. Alternatively, Ottrey submitted that any amount of compensation ordered by the FWC should take into account Ms Bowden’s increased earnings subsequent to the termination of her employment, a 20% discount for her misconduct and a 10% discount for contingencies, or five weeks’ remuneration discounted by 20% for misconduct and 10% for contingencies.
Consideration of the grounds of appeal
[9] Sections 390, 391, 392 and 393 of the FW Act contain provisions concerning remedies for unfair dismissal. Section 390 of the FW Act sets out when the FWC may order a remedy for unfair dismissal and is as follows:
“(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) The FWC may make the order only if the person has made an application under section 394.
(3) The FWC must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.”
[10] Section 391 of the FW Act deals with reinstatement as follows:
“Reinstatement
(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person by:
(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or
(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.
(1A) If:
(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and
(b) that position, or an equivalent position, is a position with an associated entity of the employer;
the order under subsection (1) may be an order to the associated entity to:
(c) appoint the person to the position in which the person was employed immediately before the dismissal; or
(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.
Order to maintain continuity
(2) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following:
(a) the continuity of the person’s employment;
(b) the period of the person’s continuous service with the employer, or (if subsection (1A) applies) the associated entity.
Order to restore lost pay
(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.
(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:
(a) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for reinstatement; and
(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.”
[11] In respect of compensation, s.392 of the FW Act provides that:
“Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”
[12] Section 393 of the FW Act provides for monetary orders to be paid in instalments as follows:
“To avoid doubt, an order by the FWC under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.”
[13] In effect, s.390 of the FW Act provides that the FWC may order a person’s reinstatement if:
● the FWC is satisfied the person was protected from unfair dismissal at the time of being dismissed;
● the person was unfairly dismissed; and
● the person made an unfair dismissal remedy application under s.394 of the FW Act.
[14] Section 390 of the FW Act also provides that the FWC may order the payment of compensation to a person, if:
● the FWC is satisfied the person was protected from unfair dismissal at the time of being dismissed;
● the person was unfairly dismissed;
● the person made an unfair dismissal remedy application under s.394 of the FW Act;
● the FWC is satisfied that reinstatement of the person is inappropriate; and
● the FWC considers an order for the payment of compensation is appropriate in all the circumstances of the case.
[15] It is apparent that a FWC decision to order a person’s reinstatement is a discretionary decision, 7 exercisable if the FWC is satisfied the person was relevantly protected, the person was unfairly dismissed and the person has made a s.394 application.
[16] It is further apparent that a FWC decision to order the payment of compensation to a person is also a discretionary decision, but is only exercisable if, amongst other things, the FWC is satisfied reinstatement of the person is inappropriate and the FWC considers a compensation order is appropriate in all the circumstances of the case.
[17] Section 391 of the FW Act concerns the type of reinstatement and associated orders the FWC may make, when the associated orders may be made and sets out the matters the FWC must take into account in determining an amount for an associated order to restore lost remuneration.
[18] Section 392 of the FW Act concerns the amount of compensation the FWC may order and sets out the circumstances the FWC must and must not take into account in determining the amount, requires the reduction of the amount on account of certain misconduct and establishes a compensation cap.
[19] Section 393 of the FW Act clarifies that the FWC has a discretion to order the payment of the amount in specified instalments.
[20] The forerunners to ss.390, 391, 392 and 393 of the FW Act were s.654 of the Workplace Relations Act 1996 (Cth) (WR Act) and, prior to the Work Choices amendments 8 to the WR Act, s.170CH.
[21] Section 170CH of the WR Act, prior to the Work Choices amendments, was as follows:
“(1) Subject to this section, the Commission may, on completion of the arbitration, make an order that provides for a remedy of a kind referred to in subsection (3), (4) or (6) if it has determined that the termination was harsh, unjust or unreasonable.
(2) The Commission must not make an order under subsection (1) unless the Commission is satisfied, having regard to all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s undertaking, establishment or service; and
(b) the length of the employee’s service with the employer; and
(c) the remuneration that the employee would have received, or would have been likely to receive, if the employee’s employment had not been terminated; and
(d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and
(e) any other matter that the Commission considers relevant;
that the remedy ordered is appropriate.
(3) If the Commission considers it appropriate, the Commission may make an order requiring the employer to reinstate the employee by:
(a) reappointing the employee to the position in which the employee was employed immediately before the termination.
(b) appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination.
(4) If the Commission makes an order under subsection (3) and considers it appropriate to do so, the Commission may also make:
(a) any order that the Commission thinks appropriate to maintain the continuity of the employee’s employment; and
(b) subject to subsection (5)—any order that the Commission thinks appropriate to cause the employer to pay to the employee an amount in respect of the remuneration lost, or likely to have been lost, by the employee because of the termination.
(5) If, as a result of an application under section 170CP, a court has awarded an amount of damages for a failure to give notice of a termination as required by section 170CM, any amount ordered to be paid by the Commission under paragraph (4)(b) in respect of the termination is to be reduced accordingly.
(6) If the Commission thinks that the reinstatement of the employee is inappropriate, the Commission may, if the Commission considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay the employee an amount ordered by the Commission in lieu of reinstatement.
(7) Subject to subsection (8), in determining an amount for the purposes of an order under subsection (6), the Commission must have regard to all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s undertaking, establishment or service; and
(b) the length of the employee’s service with the employer; and
(c) the remuneration that the employee would have received, or would have been likely to receive, if the employee’s employment had not been terminated; and
(d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and
(e) any other matter that the Commission considers relevant.
(8) In fixing an amount under subsection (6) for an employee who was employed under award conditions immediately before the termination, the Commission must not fix an amount that exceeds the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the employee; or
(ii) to which the employee was entitled;
(whichever is higher) for any period of employment with the employer during the period of 6 months immediately before the termination (other than any period of leave without full pay); and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.
(9) In fixing an amount under subsection (6) for an employee who was not employed under award conditions immediately before the termination, the Commission must not fix an amount that exceeds:
(a) the total of the amounts determined under subsection (8) if the employee were an employee covered by the subsection; or
(b) the amount of $32,000, as indexed from time to time in accordance with a formula prescribed by the regulations;
whichever is the lower amount.
(10) For the avoidance of doubt, an order by the Commission under paragraph (4)(b) or under subsection (6) may permit the employer concerned to pay the amount required in instalments specified in the order.”
[22] Section 654 of the WR Act was as follows:
“(1) Subject to this section, the Commission may, on completion of the arbitration, make an order that provides for a remedy of a kind referred to in subsection (3), (4) or (7) if it has determined that the termination was harsh, unjust or unreasonable.
(2) The Commission must not make an order under subsection (1) unless the Commission is satisfied, having regard to all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s undertaking, establishment or service; and
(b) the length of the employee’s service with the employer; and
(c) the remuneration that the employee would have received, or would have been likely to receive, if the employee’s employment had not been terminated; and
(d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and
(e) any other matter that the Commission considers relevant;
that the remedy ordered is appropriate.
(3) If the Commission considers it appropriate, the Commission may make an order requiring the employer to reinstate the employee by:
(a) reappointing the employee to the position in which the employee was employed immediately before the termination.
(b) appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination.
(4) If the Commission makes an order under subsection (3) and considers it appropriate to do so, the Commission may also make:
(a) any order that the Commission thinks appropriate to maintain the continuity of the employee’s employment; and
(b) subject to subsections (5) and (6)—any order that the Commission thinks appropriate to cause the employer to pay to the employee an amount in respect of the remuneration lost, or likely to have been lost, by the employee because of the termination.
(5) In determining an amount for the purposes of an order under paragraph (4)(b), the Commission must have regard to:
(a) the amount of any income earned by the employee from employment or other work during the period between the termination and the making of the order for reinstatement; and
(b) the amount of any income reasonably likely to be so earned by the employee during the period between the making of the order for reinstatement and the actual reinstatement.
(6) If, as a result of an application under section 663, a court has awarded an amount of damages for a failure to give notice of a termination as required by section 661, any amount ordered to be paid by the Commission under paragraph (4)(b) in respect of the termination is to be reduced accordingly.
(7) If the Commission thinks that the reinstatement of the employee is inappropriate, the Commission may, if the Commission considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay the employee an amount ordered by the Commission in lieu of reinstatement.
(8) Subject to subsections (9), (10), (11) and (12), in determining an amount for the purposes of an order under subsection (7), the Commission must have regard to all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s undertaking, establishment or service; and
(b) the length of the employee’s service with the employer; and
(c) the remuneration that the employee would have received, or would have been likely to receive, if the employee’s employment had not been terminated; and
(d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and
(e) any misconduct of the employee that contributed to the employer’s decision to terminate the employee’s employment; and
(f) any other matter that the Commission considers relevant.
(9) An amount ordered by the Commission under subsection (4) or (7) to be paid to an employee may not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the employee by the manner of terminating the employee's employment.
(10) If the Commission is satisfied that misconduct of the employee contributed to the employer’s decision to terminate the employee’s employment, the Commission must reduce the amount it would otherwise fix under subsection (7) by an appropriate amount on account of the misconduct.
(11) In fixing an amount under subsection (7) for an employee who was employed under award-derived conditions (see subsection 642(6)) immediately before the termination, the Commission must not fix an amount that exceeds the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the employee; or
(ii) to which the employee was entitled;
(whichever is higher) for any period of employment with the employer during the period of 6 months immediately before the termination (other than any period of leave without full pay); and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.
(12) In fixing an amount under subsection (7) for an employee who was not employed under award-derived conditions (see subsection 642(6)) immediately before the termination, the Commission must not fix an amount that exceeds:
(a) the total of the amounts determined under subsection (11) if the employee were an employee covered by the subsection; or
(b) the amount of $32,000, as indexed from time to time in accordance with a formula prescribed by the regulations;
whichever is the lower amount.
(13) For the avoidance of doubt, an order by the Commission under paragraph (4)(b) or under subsection (7) may permit the employer concerned to pay the amount required in instalments specified in the order.”
[23] Section 392(2) of the FW Act is similar to s.170CH(7) of the WR Act, prior to the Work Choices amendments, and s.654(8) of the WR Act. However, s.170CH(7) and s.654(8) did not contain terms similar to ss.392(2)(e) and (f). Nonetheless, under the WR Act post dismissal remuneration of the dismissed employee was usually had regard to by the Australian Industrial Relations Commission (AIRC) in determining an amount of compensation.
[24] As much is apparent from the decision in Ellawala v Australian Postal Corporation. 9 In Ellawala a Full Bench of the AIRC said in respect of s.170CH(7) of the WR Act, prior to the Work Choices amendments:
“[31] The principles applicable to determining an amount to be ordered in lieu of reinstatement are dealt with in Sprigg. In that case the Full Bench endorsed the following approach:
Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).
Step 2: Deduct monies earned since termination.
Step 3: Discount the remaining amount for contingencies.
Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.
[32] Any amount provisionally arrived at by application of these steps is subject to whether offsetting weight is given to other circumstances, including those that need now to be taken into account under paragraphs 170CH(7)(a), (b) and (c) [sic]. The legislative cap on the amount able to be ordered is then applied pursuant to ss.170CH(8) and (9).
[33] The first step in this process - the assessment of remuneration lost - is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult, but it must be done. As the Full Bench observed in Sprigg:
‘... we acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step by virtue of the requirement of s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.’
[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the ‘anticipated period of employment’. This amount is then reduced by deducting monies earned since termination. Only monies earned during the period from termination until the end of the ‘anticipated period of employment’ are deducted. An example may assist to illustrate the approach to be taken.
[35] In a particular case the Commission estimates that if the applicant had not been terminated then he or she would have remained in employment for a further 12 months. The applicant has earned $3,000 a month for the 18 months since termination, that is $54,000. Only the money earned in the first twelve months after termination - that is $36,000 - is deducted from the Commission's estimate of the applicant's lost remuneration. Monies earned after the end of the ‘anticipated period of employment’, 12 months after termination in this example, are not deducted. This is because the calculation is intended to put the applicant in the financial position he or she would have been in but for the termination of their employment.
[36] The next step is to discount the remaining amount for ‘contingencies’. This step is a means of taking into account the possibility that the occurrence of contingencies to which the applicant was subject might have brought about some change in earning capacity or earnings…
[43] We note that in Slifka North J only applied the deduction for contingencies to prospective loss, that is loss occasioned after the date of the hearing. This approach has also been adopted in a number of first instance arbitrations by members of the Commission. As a matter of logic this approach has some appeal. A discount for contingencies is a means of taking account of the various probabilities that might otherwise affect earning capacity. At the time of hearing any such impact on an applicant's earning capacity between the date of termination and the hearing will be known. It will not be a matter of assessing prospective probabilities but of making a finding on the basis of whether the applicant's earning capacity has in fact been affected during the relevant period. But this matter was not raised before us and we were not directed to any evidence upon which we could make a finding as to whether Ms Ellawala's earning capacity was adversely effected by some event which took place in the period between her termination and the hearing of the matter at first instance…
[45] In relation to the fourth step set out in Sprigg we note that the usual practice is to settle a gross amount and leave taxation for determination.” 10 [Endnotes omitted]
[25] Sprigg is a reference to Sprigg v Paul’s Licensed Festival Supermarket 11 and Slifka to Slifka v JW Sanders Pty Limited.12
[26] In applying the above principles in the factual circumstances of Ellawala, the Full Bench said:
“[68] We now turn to apply the principles applicable to the determination of the amount to be ordered in lieu of reinstatement which we have set out earlier in our decision.
[69] In relation to the first step - the assessment of remuneration lost - we are of the view that Ms Ellawala's employment would only have continued for a further six months. We have reached that conclusion having regard to the fact that Ms Ellawala has now been the subject of two internal inquiries about her handling of EMS documentation. The procedure for such transactions is not complicated, yet Ms Ellawala has made a number of mistakes in relation to its implementation, despite being previously counselled to take more care in her work. Given the limited financial information before us we are not able to quantify the amount equivalent to six months remuneration at this stage. That can be done in the process of settling the order arising from our decision.
[70] As to the second step, we would deduct the amount earned by the appellant between 30 January and 29 July 1998. We note that we are satisfied that the appellant made a sufficient effort to mitigate her losses.
[71] As the third step, we have decided to deduct 15 per cent for contingencies. We have already taken into account the uncertainty surrounding Ms Ellawala's ongoing employment, as a result of her past performance, in our assessment of lost remuneration. The circumstances here are distinguishable from those in Le Good. In that case the Commission deducted one third for contingencies reflecting the greater than usual uncertainty associated with the fact that the applicant's employer was in the process of restructuring its business.
[72] As the fourth step, we have considered the impact of taxation but we elect to settle a gross amount and leave taxation for determination.
[73] Because the provisional amount resulting from the first four steps is under the legislative cap, no adjustment is required for that reason.
[74] We can summarise the considerations we are required to have regard to, on the basis of the following findings:
(i) There is no firm basis on which it can be concluded that an order for the amount determined to be paid in lieu of reinstatement would affect the viability of the respondent [s.170CH(7)(a)];
(ii) The length of the appellant's service with the respondent is a circumstance which weighs in favour of there being compensation. Certainly no diminution of any amount that might otherwise be determined is warranted because of that circumstance [s.170CH(7)(b)];
(iii) The remuneration lost because of the termination is assessed at six months remuneration [s.170CH(7)(c)];
(iv) The efforts at mitigation by the appellant have resulted in income that has been taken into account in assessing the amount to be paid in lieu of reinstatement. The applicant's effort is sufficient to exclude any further deduction [s.170CH(7)(d)];
(v) The provisional amount determined to this point should be reduced by 15 percent for contingencies.
(vi) We see no reason to add to, or to detract from, the amount based on total remuneration lost for any other matter.
[75] We have taken into account all of the circumstances of this case. There are no other factors or circumstances that we consider should, or must be taken into consideration. For that reason, among others, we are also satisfied that a fair go all round is achieved in the arbitral consideration of the application. Accordingly we determine that the order made by Commissioner Foggo should be varied by substituting for the order set out in Print S0711 compensation be paid, an order determined in accordance with the process and findings we have set out above.
[76] The amount we intend to award is six months remuneration less:
[27] In Smith and Others v Moore Paragon Australia Ltd, 14 a Full Bench of the AIRC said in respect of what they called the guidelines in Sprigg and Ellawala:
“[32] It seems to us that the amounts arrived at by the application of the guidelines in Sprigg in the present matter are on their face manifestly inadequate for employees with the length of service of the Appellants, the circumstances of their dismissal and their poor prospects for future employment. This causes us to sound a warning in relation to the application of Sprigg. The guidelines laid down in Sprigg and refined in Ellawala v Australian Postal Commission are clearly designed to serve the proper and desirable purpose of fostering uniformity and consistency in decision-making by individual members of the Commission when assessing compensation pursuant to s.170CH(6). However, those guidelines are not a substitute for the words of the Act. By virtue of s.170CH(2), any remedy ordered by the Commission must be a remedy that the Commission considers ‘appropriate’ having regard to all the circumstances of the case including the matters set out in s.170CH(2). Section 170CH(6) confers a general discretion ‘if the Commission considers it appropriate in all the circumstances of the case’ to ‘make an order requiring the employer to pay the employee an amount ordered by Commission in lieu of reinstatement’ subject to the Commission having regard ‘to all the circumstances of the case including’ the matters listed in s.170CH(7) - the same list of matters set out in s.170CH(2) - and subject also to the ‘cap’ provided for in s.170CH(8) and (9). If an application of the guidelines in Sprigg yields an amount which appears either clearly excessive or clearly inadequate, then the member should reassess any assumptions or intermediate conclusions made or reached in applying the guidelines so as to ensure that the level of compensation is in an amount that the member considers appropriate having regard ‘to all the circumstances of the case’ including the matters listed in s.170CH(7) and subject to the ‘cap’ provided for in s.170CH(8) and (9). In this context it should be borne in mind that the result yielded by an application of the Sprigg guidelines may vary greatly depending upon particular findings in relation to the various steps including, in particular, step one, which necessarily involves assessments as to future events that will often be problematic.” 15 [Footnotes omitted]
[28] The application of s.392(2) of the FW Act was considered by a Full Bench of FWA in Tabro Meat Pty Ltd v Heffernan. 16 Later we follow the approach in Tabro Meat in respect of s.392(2).
[29] Against this analysis, we are satisfied the Commissioner’s decisions in respect of remedy are affected by appealable error.
[30] In her first decision, the Commissioner properly finds that Ms Bowden was protected from unfair dismissal at the time of being dismissed, was unfairly dismissed and made an application under s.394 of the FW Act. She also finds that the reinstatement of Ms Bowden is inappropriate and that taking into account all the circumstances of the matter an order for the payment of compensation is appropriate.
[31] The Commissioner then turns to s.392 of the FW Act. Section 392(2) of the FW Act, as we have earlier set out, provides that in determining an amount for the purposes of an order for the payment of compensation, the FWC must “take into account” all the circumstances of the case including the matters in ss.392(2)(a) to (g).
[32] In Construction, Forestry, Mining and Energy Union v Hamberger and Another, 17 Katzmann J points out that “[t]o take a matter into account means to evaluate it and give it due weight”18 and that “mere advertence will not be enough.”19
[33] However, the Commissioner makes only some findings on the matters in ss.392(2)(a) to (g) of the FW Act. For example, she finds that Ms Bowden’s length of service with Ottrey was four years and three months but does not make any finding about the impact that should have on her determination of an amount for the purposes of an order for the payment of compensation. Further, in determining an amount for the purposes of an order for the amount of compensation, it is apparent the Commissioner only takes into account her findings in regard to ss.392(c), (e) and (f) of the FW Act. She gives no reasons as to why she does not take into account the other matters. The Commissioner says in her second decision:
“[7] The amount earned by Ms Bowden whilst mitigating her loss is greater than the remuneration she would have been likely to receive if she had continued in employment for six months. Therefore, on this basis, there is no need to continue the calculations nor is there a necessity to make an order for the payment of compensation by the respondent to Ms Bowden.
[8] Accordingly, no order for payment of compensation is made.” 20 [Footnote omitted]
[34] In determining an amount for the purposes of an order for the payment of compensation to Ms Bowden by Ottrey, therefore, the Commissioner did not take into account all the circumstances of the case as required by s.392(2).
[35] Given the nature of this appealable error, we consider it is in the public interest that we grant permission to appeal against the Commissioner’s decisions in respect of remedy. We do so. We will deal with the issue of remedy in respect of Ms Bowden’s s.394 application. We start by setting out some relevant facts beyond those apparent from the parts of the Commissioner’s decisions to which we have referred or beyond those not otherwise already apparent.
Relevant facts
[36] Prior to her dismissal, Ms Bowden was employed by both Ottrey and Yooralla. After her dismissal she continued to be employed by Yooralla but on increased hours and also started to work in a small business she established. Her remuneration or income over relevant periods from Ottrey, Yooralla and the small business has been as follows:
Date |
Source |
Amount $ gross |
1 July 2010 to 22 May 2011 |
Yooralla |
7,219.22 21 |
Pre 27 May 2011 |
Ottrey |
485.75 per week 22 |
28 May 2011 to 30 June 2011 |
Yooralla |
1,900.00 23 |
1 July 2011 to 26 November 2011 |
Yooralla |
5,441.25 24 |
1 July 2011 to 30 June 2012 |
Yooralla |
18,399.00 25 |
Pre 27 November 2011 |
Small business |
80.00 26 |
1 July 2011 to 30 June 2012 |
Small business |
1,700.00 27 |
1 July 2012 to 28 August 2012 |
Small business |
280.00 28 |
[37] We now turn to consider the matters in s.390 of the FW Act.
Remedy
[38] There is no contest that Ms Bowden made an application under s.394 of the FW Act. There was no appeal against the Commissioner’s decision that Ms Bowden was protected from unfair dismissal 29 and unfairly dismissed.30 We accept the Commissioner’s decision in that regard.
[39] We have a discretion to order Ms Bowden’s reinstatement but we will not do so. For the reasons given by the Commissioner, 31 and because Ms Bowden no longer seeks reinstatement and it is opposed by Ottrey, we are satisfied the reinstatement of Ms Bowden is inappropriate.
[40] As to whether an order for the payment of compensation by Ottrey to Ms Bowden is appropriate in all the circumstances of the case, we note that the phrase “all the circumstances of the case” in s.390(3)(b) of the FW Act is also contained in s.392(2). However, in s.392(2) the phrase is followed by a reference to the matters in ss.392(2)(a) to (g) and s.392(2)(g) concerns “any other matter that the FWC considers relevant.” In this case, we think the matters in ss.392(2)(a) to (g) embrace all the circumstances of the case relevant to our consideration of whether a compensation order is appropriate. In Henderson v Department of Defence 32 it was recognised that the same matters may serve different purposes in s.170CH of the WR Act, as it was prior to the Work Choices amendments. A Full Bench of the AIRC said:
“[20] It is correct that, if the Commission decides to order an amount in lieu of reinstatement, regard would have to be had to the same matters for the purpose of determining the amount to be ordered. But that involves having regard to these matters for a different purpose. In s.170CH(2) the purpose of the inquiry is to ascertain which remedy or remedies, if any, are appropriate. In s.170CH(7) the purpose of the inquiry is to ascertain the amount to be awarded in lieu of reinstatement. If it were otherwise s.170CH(7) would be redundant.” 33
[41] We turn then to the matters for the purpose of considering whether an order for the payment of compensation by Ottrey to Ms Bowden is appropriate in all the circumstances of the case.
[42] There is no sound basis to conclude an order for the payment of compensation would affect the viability of Ottrey’s enterprise. The effect of such an order on Ottrey’s viability does not militate against such an order. Ms Bowden’s length of service with Ottrey was some four years. This is a period supporting such an order. The remuneration Ms Bowden received, or would have been likely to receive, if she had not been dismissed and her mitigation efforts at Yooralla and in her small business support an order for the payment of compensation. We concur with the Commissioner that Ms Bowden would have worked for Ottrey for at least another six months but for her dismissal. The amount of remuneration earned by her from employment or other work and the income reasonably likely to be so earned by her are not such as to militate against such an order. The matter of contingencies does not militate against such an order in this case, particularly given the period she would have worked for Ottrey but for her dismissal has long passed. However, the misconduct of Ms Bowden that contributed to Ottrey’s decision to dismiss her, as set out in the Commissioner’s first decision, does go against an order for the payment of compensation. There are no other matters that we consider are relevant to the circumstances of the case for the purpose of considering whether a compensation order is appropriate.
[43] In our view, the matters supporting an order for the payment of compensation outweigh that going against such an order, leading us to consider that an order for the payment of compensation by Ottrey to Ms Bowden is appropriate in all the circumstances of the case.
[44] We turn then to the determination of an amount of compensation having regard to the matters in s.392 of the FW Act and instalments having regard to s.393 of the FW Act.
Compensation amount and instalments
(i) Remuneration that would have been received (s.392(2)(c))
[45] The Commissioner decided that if Ms Bowden had not been dismissed she would have continued to work for Ottrey for at least six months. There was no challenge to that conclusion and we concur with it. Over that six month period the remuneration she would have received, or would have been likely to receive, from Ottrey is $12,629.50 gross, being 25 hours of work per week x $19.43 gross per hour x 26 weeks = $12,629.50 gross. While other matters, such as superannuation, form part of remuneration, 34 we have not included them in our calculations because the evidence about such other forms of remuneration in respect of Ms Bowden was provided in respect of only some of her employment.
(ii) Remuneration earned (s.392(2)(e)) and Income reasonably likely to be earned (s.392(2)(f))
[46] With respect to the amount of any remuneration earned by Ms Bowden from employment or other work during the period between her dismissal and the making of an order for compensation and any income reasonably likely to be so earned by her during the period between the making of an order for compensation and the actual compensation, given the facts in this case we consider we can deal with these circumstances together. During the first of these periods Ms Bowden earned remuneration from her employment at Yooralla and from work in her small business. We think it is reasonable to assume she will have continued post 30 June 2012 and will continue in the immediate future to earn from employment at Yooralla. We also think it is reasonable to assume she will have continued post 28 August 2012 and will continue in the immediate future to earn from her work in her small business. We issued directions to the parties for submissions which should have, but did not, reduce our need to so assume.
[47] From the information we have about Ms Bowden’s remuneration and in the absence of submissions to the contrary, we think it is reasonable to assume that the amount of any remuneration earned by Ms Bowden from employment or other work during the period between her dismissal by Ottrey and the making of the order for compensation and the amount of any income reasonably likely to be so earned by her during the period between the making of the order for compensation and the actual compensation is some $35,000 gross.
[48] Of this amount of $35,000 gross, over the six month period from the date of her dismissal to 26 November 2011, being the period we have concluded Ms Bowen would have continued to work for Ottrey if she had not been dismissed, she earned around $7,341.25 gross from Yooralla and $80 gross from her small business. Given her pre-dismissal employment history at Yooralla, we think it is reasonable to assume that Ms Bowden would have earned around $4,100 of the $7,341.25 gross from Yooralla in the six months following her dismissal even if she had not been dismissed by Ottrey.
[49] As a result, from the $12,629.50 gross in six months that Ms Bowden would have received or would have been likely to have received, from Ottrey if she had not been dismissed, we deduct:
● $3,241.25 gross, being the difference between the amount she earned from Yooralla over the six months following her dismissal and that we think it is reasonable to assume she would have earned from Yooralla in that six months if she had not been dismissed; 35 and
● $80 gross, being the amount she earned from her work in her small business in the six months following her dismissal.
[50] This results in an amount of $9,308.25 gross.
[51] We are not satisfied the remainder of the $35,000 gross earned and reasonably likely to be earned by Ms Bowden in the period between her dismissal and the actual compensation warrants us further reducing or, indeed, increasing the amount of $9,308.25 gross that we have arrived at. The remainder concerns earnings over a considerable period and as an average weekly amount over that period is less than the average weekly amount she was earning immediately prior to her dismissal. It was not suggested we should increase any amount of compensation otherwise arrived at because of Ms Bowden’s earnings over that considerable period.
(iii) Other matters (s.392(2)(g))
[52] There has been some variation in cases as to when “contingencies” should be considered in determining an amount of compensation. For example in Sprigg and Ellawala “contingencies” were considered after both the remuneration the dismissed person would have received, or would have been likely to receive, if they had not been dismissed and the monies earned by them since termination had been considered. However, in Lockwood Security Products Pty Limited v Sulocki and Others 36 a Full Bench of the AIRC, in consideration of the particular facts in the case, applied a contingency discount directly to the amount they estimated the dismissed person would have earned but for their dismissal, before making any other deductions.37
[53] In this case, we are not persuaded we should make any deduction for contingencies from the amount derived from the circumstance in s.392(2)(c) or from the amount of $9,308.25 gross we have further derived. We accept that “any discount for contingencies depends upon the circumstances of each particular case.” 38 No sound basis for making a deduction for contingencies has been made to us in this case.
[54] In her first decision, the Commissioner said that in the final calculation of compensation she proposed to make “a small adjustment of 10%” for contingencies “on the basis that a substantial portion of the projected period of continued employment has passed.” In fact, all of the projected period of continued employment has passed.
[55] We have considered the impact of taxation but we elect to settle a gross amount and leave taxation for determination. There are no other matters that we consider are relevant in determining an amount of compensation instead of reinstatement, apart from those in ss.392(2)(a), (b) and (d), 392(3) and 392(5) with which we now deal.
(iv) Viability (s.392(2)(a))
[56] There is no sound basis to conclude that an order of compensation for $9,308.25 gross payable by Ottrey to Ms Bowden would affect the viability of Ottrey’s enterprise. It is not a matter which in this case warrants adjustment to the amount.
(v) Length of service (s.392(2)(b))
[57] Ms Bowden’s length of service with Ottrey was some four years. This length of service, while supporting an order for the payment of compensation, in our view is not such as to warrant us either reducing or increasing the amount of $9,308.25 gross in this case.
(vi) Mitigation efforts (s.392(2)(d))
[58] As well as the earnings of the dismissed person, s.392 of the FW Act requires the FWC to take into account the efforts of the dismissed person (if any) to mitigate the loss suffered by them because of their dismissal. It is evident that Ms Bowden has made reasonable efforts to mitigate her loss by increasing her hours at Yooralla and starting a small business. However, we are not persuaded we should reduce or increase the amount of $9,308.25 gross because of her efforts to mitigate her loss.
(vii) Misconduct (s.392(3))
[59] We do, however, make a further deduction from the amount of $9,308.25 gross in compensation that we would otherwise order having regard to the misconduct of Ms Bowden that contributed to Ottrey’s decision to dismiss her. Like the Commissioner, we are satisfied misconduct by Ms Bowden contributed to Ottrey’s decision to dismiss her. We think the nature of the misconduct, as set out in the Commissioner’s first decision, 39 was such that we should reduce the amount we would otherwise order by around 20%, resulting in an amount of $7,500 gross. A deduction of 20% for misconduct was contained in the submissions of Ms Bowden and Ottrey.
(viii) Compensation cap (s.392(5))
[60] Since the amount of compensation of $7,500 gross is less than the compensation cap in s.392(5) of the FW Act, we make no further reduction for that reason.
(ix) Instalments (s.393)
[61] There was no submission that any amount of compensation should be subject to payment by instalments. We are not satisfied that in this case payment by instalments is warranted.
Conclusion
[62] In light of the above, we consider we should make an order that Ottrey pay $7,500 gross less taxation as required by law as compensation to Ms Bowden in lieu of reinstatement within 14 days of the date of this decision. It accords a fair go all round to both Ottrey and Ms Bowden.
[63] We therefore quash the Commissioner’s decisions in respect of remedy. We will order that Ottrey pay $7,500 gross less taxation as required by law as compensation to Ms Bowden in lieu of reinstatement within 14 days of the date of this decision. An order 40 to that effect is being issued at the same time as this decision.
SENIOR DEPUTY PRESIDENT
1 Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge, [2012] FWA 6468.
2 Ibid at [43]-[45].
3 Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge, [2012] FWA 6468.
4 Ibid.
5 Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge, [2012] FWA 9191.
6 Ibid.
7 Ellawala v Australian Postal Corporation, Print S5109 at [24].
8 Workplace Relations Amendment (Work Choices) Act 2005 (Cth).
9 Print S5109. See also, Sprigg v Paul’s Licensed Festival Supermarket, Print R0235 at paragraphs 35-43; and Lockwood Security Products Pty Limited v Sulocki and Others, PR908053 at [55]-[59].
10 Ellawala v Australian Postal Corporation, Print S5109.
11 Print R0235.
12 (1995) 67 IR 316.
13 Ellawala v Australian Postal Corporation, Print S5109.
15 Smith and Others v Moore Paragon Australia Ltd, PR942856.
17 (2011) 195 FCR 74.
18 Ibid at [103]. See also Nestle Australia Ltd v Commissioner of Taxation, (1987) 16 FCR 167 at 184 and Elias v Commissioner of Taxation, (2002) 123 FCR 499 at [62].
19 Ibid. See also Zhang v Canterbury City Council, (2001) 51 NSWLR 589 at [64].
20 Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge, [2012] FWA 9191.
21 Exhibit A4 in U2011/1147.
22 Correspondence to Fair Work Australia from Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge dated 15 August 2012.
23 Estimate from Exhibit A4 in U2011/1147.
24 Exhibit A4 in U2011/1147.
25 PAYG payment summaries for Gloria Bowden.
26 Estimate from service fees less expenses of Glorybee Odd Jobs.
27 Ibid.
28 Ibid.
29 Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge, [2012] FWA 6468 at [44].
30 Ibid at [66].
31 Ibid at paragraph [70].
32 Print S8591.
33 Ibid.
34 Rofin Australia Pty Ltd v Newton, Print P6855 at page 4; and Deane v Paper Australia Pty Ltd, PR929820 at [16]-[20]. Contrast s.332 of the Fair Work Act 2009 (Cth).
35 SPC Ardmona Operations Limited v Organ and Esam, PR965476 at [35].
37 Ibid at [56].
38 Enhance Systems Pty Ltd v Cox, PR910779 at [38].
39 Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge, [2012] FWA 6468.
40 Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge, PR533477.
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