Eden McGinty v Hair & Co Pty Ltd
[2023] FWC 1387
•15 JUNE 2023
| [2023] FWC 1387 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Eden McGinty
v
Hair & Co Pty Ltd
(U2023/1149)
| DEPUTY PRESIDENT BOYCE | SYDNEY, 15 JUNE 2023 |
Application for an unfair dismissal remedy — Applicant’s dismissal found to be harsh, unjust, and unreasonable (see Eden McGinty v Hair & Co Pty Ltd [2023] FWC 1257) - reinstatement inappropriate – award of compensation appropriate remedy - determination of compensation amount to be awarded.
Introduction
In my decision in Eden McGinty v Hair & Co Pty Ltd[2023] FWC 1257 (29 May 2023), I found that the Applicant (Ms Eden McGinty) was unfairly dismissed by the Respondent (Hair & Co Pty Ltd), and that compensation is an appropriate remedy. This decision concerns the calculation of the amount of compensation to be awarded to the Applicant.
Directions were issued on 29 May 2023 for each party to file and serve (by 9 June 2023) any witness statements, other documents and written submissions in respect of the amount of compensation to be awarded to the Applicant by reference to ss. 392(1) to 392(6) of the Fair Work Act 2009 (Act). The Applicant complied with these Directions, and filed information setting out her rate of pay on 9 June 2023. When the Respondent filed no further materials, and made no contact with my Chambers as to its non-compliance with Directions, I nonetheless provided the Respondent with a further opportunity to comply with the Directions. The Respondent did not avail itself of this further opportunity to comply with Directions, and made no contact with my Chambers proffering any explanation for its non-compliance.
Is an order for payment of compensation appropriate in all the circumstances of the case?
Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, “[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one…”.[1]
Given that I have found that the Applicant was unfairly dismissed, and having specific regard to the reason for her dismissal, I consider that an order for the payment of compensation by the Respondent is appropriate.
Compensation – what must be taken into account in determining an amount?
Section 392(2) of the Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to the Applicant in lieu of reinstatement including:
(a) the effect of the order on the viability of the Respondent’s enterprise;
(b) the length of the Applicant’s service;
(c) the remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed;
(d) the efforts of the Applicant (if any) to mitigate the loss suffered by the Applicant because of the dismissal;
(e) the amount of any remuneration earned by the Applicant from employment or other work during the period between the dismissal and the making of the order for compensation;
(f) the amount of any income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the Commission considers relevant.
I consider all the circumstances of the case below.
Effect of the order on the viability of the Respondent’s enterprise (s.392(2)(a))
There was no evidence before me of the effect on the viability of the Respondents’ business of an award of compensation. I consequently find that an order for compensation is unlikely to have an effect on the viability of the Respondent or its business.
Length of the Applicant’s service (s.392(2)(b))
The Applicant, at the time of her dismissal, was employed by the Respondent for a period of around 1 year and 4 months. I consider that the Applicant’s length of service is a neutral consideration in terms of any amount of compensation to be awarded.
Remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed (s.392(2)(c))
As stated by a majority of the Full Court of the Federal Court, “in determining the remuneration that the Applicant would have received, or would have been likely to receive… the Commission must address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination.”[2]
The Applicant was undertaking an apprenticeship/traineeship on a fulltime basis with the Respondent. I accept that the Applicant had no immediate intention to leave the Respondent’s employ. In the circumstances, I am willing to conclude that the Applicant’s employment would have continued on for at least 6 months with the Respondent on a weekly rate of pay of $564.54.
Six months (or 26 weeks) post the Applicant’s dismissal, at a weekly rate of pay of $564.54 per week, comes to a gross figure of $14,678.04 (i.e. 26 × $564.54).
As stated above, I am satisfied that but for her dismissal, the Applicant would have likely remained in the Respondent’s employment for a further 6 months. Had she done so, I find that she would have received $14,678.04 (plus 10.5 percent superannuation on that amount) for that 6 month period.
Efforts of the Applicant to mitigate the loss suffered by the Applicant because of the dismissal (s.392(2)(d))
What is reasonable (in terms of the steps that an Applicant has taken to minimise his or her loss) depends upon the circumstances of the case.[3] I am satisfied that the Applicant has made reasonable efforts to mitigate her loss in the wake of her dismissal, and that no discount to the amount of $14,678.04 ought be applied.
Income earned by the Applicant following her dismissal (s.392(2)(e))
The Applicant did not receive payment in lieu of notice on termination, and has earned no other income since her termination. Consequently, I apply no discount by reference to s.392(e) of the Act to the proposed amount of compensation.
Amount of income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation (s.392(2)(f))
I am satisfied that the Applicant is unlikely to earn income between the making of an order for compensation and the payment of that compensation. Consequently, I make no deduction in respect of likely earnings in that period.
Any other relevant matter (s.392(2)(g))
No other relevant matters were raised by the Applicant or the Respondent going to an order for compensation, nor am I aware of any.
Misconduct (s.392(3))
In determining the amount by which it is appropriate to reduce an order for compensation on account of misconduct, the Commission must consider, amongst other things, whether the Applicant engaged in misconduct and, if so, whether that misconduct contributed to the Respondent’s decision to dismiss the person. A Full Bench of this Commission has observed that, “[t]he section seems to require such consideration even if the FWC has found there was no valid reason for the person’s dismissal.”[4] However, the Full Bench goes on to say that, “if there was no valid reason for the dismissal we think that may be relevant to the FWC’s decision as to the ‘appropriate’ amount by which to reduce the amount of compensation the FWC would otherwise order.”[5]
I have found that the Applicant’s dismissal was not for a valid reason. I am satisfied, on the evidence before me, that the Applicant did not engage in any misconduct during her employment with the Respondent, and therefore make no deduction on the amount of $14,678.04.
Instalments (s.393)
The Respondent did not apply to pay any award of compensation by instalments. No order will be made to that effect.
Shock, Distress (s.392(4))
I note that the amount of compensation calculated does not include a component for shock, humiliation or distress.
Compensation – how is the amount to be calculated?
As noted by the Full Bench, “[t]he well-established approach to the assessment of compensation under s.392 of the FW Act… is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg).[6] This approach was articulated in the context of the Act in Bowden v Ottrey Homes Cobram and District Retirement Villages.”[7]
The approach in Sprigg is as follows:
Step 1: Estimate the remuneration the Applicant would have received, or have been likely to have received, if the Respondent 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.
Step 1
I have estimated the remuneration the Applicant would have received, or would have been likely to have received, if the Respondent had not terminated her employment to be $14,678.04 on the basis of my finding that it is likely the Applicant would have remained in employment for a further period of six months. This estimate of how long the Applicant would have remained in employment is the “anticipated period of employment”.[8]
Step 2
I have found that the Applicant has not earned any amount of remuneration since the date of her dismissal, and that she is unlikely to earn any remuneration between the making of the order for compensation and the payment of compensation.
Only monies earned since termination for the anticipated period of employment are to be deducted. Consequently, no deductions are to be made for earnings. I have also found that the Applicant has taken reasonable steps to mitigate her losses and consequently no deduction in this regard is to be made to the amount of $14,678.04.
Step 3
I now need to consider the impact of contingencies on the amounts likely to be earned by the Applicant for the remainder of the anticipated period of employment.[9]
I do not consider it appropriate to make any deduction for contingencies.
Step 4
I have considered the impact of taxation but have elected to settle upon a gross amount of $14,678 which is to be subject to normal taxation.
Compensation and all the circumstances of the case
Having applied the formula in Sprigg, I am nevertheless required to ensure that “the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.”[10]
I am satisfied that the amount of compensation that I have determined above takes into account all the circumstances of the case as required by s.392(2) of the Act.
Compensation – how does the compensation cap apply?
Section 392(5) of the Act provides that the amount of compensation ordered by the Commission must not exceed the lesser of:
a. the amount worked out under section 392(6); and
b. half the amount of the high income threshold immediately before the dismissal.
The amount worked out under section 392(6) is the total of the following amounts:
(a)the total amount of the remuneration:
(i)received by the Applicant; or
(ii)to which the Applicant 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 Applicant 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 Applicant for the period of leave is in accordance with the regulations.
The gross amount of $14,678.04 is less than the compensation cap. No further adjustment of the amount is necessary.
Conclusion
I am satisfied that the amount of compensation that I have determined to be awarded to the Applicant (and paid by the Respondent) takes into account all the circumstances of the case as required by s.392(2) of the Act, and that the figure of $14,678.04 (plus 10.5 percent superannuation on that amount), in all the circumstances of this case, does not yield an amount that is clearly excessive or clearly inadequate.
I am equally satisfied that my finding as to the Applicant’s dismissal being unfair, and the amount of compensation to be awarded to the Applicant, ensures that a fair go all round has been afforded to both the Applicant and the Respondent in this case.[11]
I will make an order that the Respondent pay the Applicant (in lieu of reinstatement) $14,678.04 (less applicable taxation as required by law), plus 10.5 percent superannuation on that amount, within 14 days of the date of this decision. Orders to this effect will be issued contemporaneously with this decision.
It is unfortunate that the Respondent has failed to properly engage with these proceedings. I note that the Respondent has equally not engaged with the underpayment of wages matters raised by the Applicant and her Mother. It is therefore my intention to refer these underpayment matters for investigation to the Fair Work Ombudsman.
DEPUTY PRESIDENT
Appearances:
Ms Mary McGinty (Applicant’s Mother), appeared for the Applicant.
Mr Jalal El Hallak, Director, appeared for the Respondent.
[1] Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter [2014] FWCFB 7198, at [9].
[2] He v Lewin [2004] FCAFC 161, at [58].
[3] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), at [34] citing Payzu Ltd v Saunders [1919] 2 KB 581.
[4] Read v Gordon Square Child Care Centre Inc [2013] FWCFB 762, at [83].
[5] Ibid.
[6] (1998) 88 IR 21.
[7] [2013] FWCFB 431; Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206, at [16].
[8] Ellawala v Australian Postal Corporation Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000), at [34].
[9] Enhance Systems Pty Ltd v Cox PR910779 (AIRCFB, Williams SDP, Acton SDP, Gay C, 31 October 2001), at [39].
[10] Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206, at [17].
[11] Section 381(2) of the Fair Work Act 2009.
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