Determination of compensation in unfair dismissal cases

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Determination of compensation in unfair dismissal cases

A recent case highlights the criteria Fair Work Commissioners will consider in determining a financial remedy for employees who have been found to have been unfairly dismissed in situations where reinstatement to their former position is considered impractical.

On 30 March 2021, Deputy President William Clancy determined that an employee had been unfairly dismissed. That decision was linked to a direction by her employer that, during a harassment and bullying complaint that she had lodged, she could only confide in her support person or lawyers acting as her support person(s), but not both. That direction, which the Deputy President determined was not reasonable in the circumstances, contributed to the company’s decision to terminate her.

Accepting her submission that reinstatement was impractical, the Deputy President, therefore, had to determine the suitable financial compensation she should receive, consistent with the principles detailed in s 392 of the Fair Work Act 2009. This can be briefly summarised as:

  • The effect the order would have on the employer’s business;

  • The length of the employee’s service;

  • The remuneration the employee would have received, but for the termination;

  • Any efforts the employee made to mitigate their loss after termination;

  • Amounts earned by the employee following termination.

The maximum compensation payable is capped at 26 weeks’ pay.

In this case, the applicant claimed the maximum amount equated to $74,512.50.

While rejecting the employer’s claim that the employment relationship would have only lasted a further one month following her termination on 3 September 2020, he also did not accept the employee’s claim that she would have remained for at least a further five (5) years. On the basis of deteriorating relationships between the employee, key managers, and some clients, he believed that a more reasonable duration would have been six months.

He assessed this amount, including allowances she received for a vehicle and telephone, to total   $68,100. The employee claimed that she struggled to find work due to her mental state and was only able to secure occasional contract work several days a week for a short period following her dismissal, amounting to approximately $5,915.

The Deputy President did not accept her submission that she had fully sought to mitigate her loss.  Whilst acknowledging her mental situation, combined with the traditional slow down over Christmas and the impact of the pandemic, he assessed a 25% reduction in the amount of compensation payable to her. Deducting the post-earnings, the revised amount left a total of $46,638.75.

He ordered the remaining balance plus applicable superannuation to be paid to her within 21 days of the decision.

A G v Health Generation Pty Ltd (U2020/12801)

For a copy of the original decision, please refer to:

2021fwc1751.pdf

For questions about bullying and harassment claims, terminations, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 0417 622 178, 1300 WAL LAW or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

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