Garry French v Lufra Investments Pty Ltd t/a Best Western Lufra Hotel

[2009] FWA 1623

[2009] FWA 1623

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Garry French
v
Lufra Investments Pty Ltd t/a Best Western Lufra Hotel
(U2009/10416)

COMMISSIONER DEEGAN CANBERRA, 9 DECEMBER 2009

Termination of employment - remedy.

[1] This decision concerns an application for relief under s.394(1)(a) of the Fair Work Act 2009 (the Act) made by Mr Garry French.

[2] On 26 October 2009, I decided [PR989784] that the termination of Mr French’s employment with Lufra Investments Pty Ltd t/a Best Western Lufra Hotel was harsh, unjust or unreasonable. In the decision, I deferred consideration of remedy, to enable the parties to file further evidence and make submissions.

[3] On 24 November 2009, a hearing by telephone was conducted with Mr J Eddington, Hobart Community Legal Service representing the applicant and the respondent’s managing director, Mr J Shepley, of counsel.

Legislation

[4] Those sections of the Act relevant to this decision are set out below::

390 When FWA may order remedy for unfair dismissal

(1)  Subject to subsection (3), FWA may order a person's reinstatement, or the payment of compensation to a person, if:

(a)  FWA 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)  FWA may make the order only if the person has made an application under section 394.

(3)  FWA must not order the payment of compensation to the person unless:

(a)  FWA is satisfied that reinstatement of the person is inappropriate; and

(b)  FWA considers an order for payment of compensation is appropriate in all the circumstances of the case.

392 Remedy—compensation

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), FWA 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 FWA considers relevant.

Misconduct reduces amount

(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA 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 FWA 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 FWA 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.

Note: subsection 392(5) indexed to $54,150 from 1 July 2009

(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.

Consideration

[5] Given the circumstances of the termination as set out in my decision 1 it is my view that the employment relationship between the parties has broken down. In the circumstances and given that the applicant is not seeking reinstatement (having obtained alternative employment soon after the termination took effect) I do not consider reinstatement is appropriate. I do consider that an award of compensation is appropriate in all the circumstances of the case.

[6] I will deal with each of the matters set out in s.392(2) in turn.

[7] The respondent has provided evidence that the respondent’s business suffered a loss in the three month period up until end September 2009. The business has relatively high turnover and the evidence relates only to a very narrow period in the off-season. I do, however, take into account that the business has not run at a profit in recent years in determining an appropriate amount of compensation.

[8] The applicant had been employed at the workplace for a period of nine and one half years. His period of service with the respondent was just over five years. His entire period of service at the workplace should be taken into account as his former service was recognised for his entitlements.

[9] The respondent has provided evidence to the effect that the applicant was being paid $16 per hour for a 38 hour week at the time of his termination. Additionally he was accruing annual leave entitlements equivalent to 4 weeks per year and a 9% superannuation entitlement. It is likely that the applicant, had he not been dismissed, would have continued to have received remuneration at the same or better rate for at least the next two years.

[10] The applicant took prompt action to mitigate his loss and was fortunate in finding alternative employment, albeit on a casual basis, on 28 July 2009.

[11] There is material to indicate that the applicant’s earnings from his new employment was $8149.44 from commencement until 27 October 2009 and were anticipated to be a further $2600.00 for the month of November.

[12] It is likely that the applicant will have earned a further $2600.00 (for the month of December) by the time the compensation ordered is paid.

[13] There are a number of other matters that I consider relevant to the matter of compensation:

(a) the applicant was not paid his entitlement to notice as the respondent characterised his conduct leading to the termination as “serious misconduct” (two weeks “ex gratia” was paid while the notice entitlement was 5 weeks)

(b) payment of the applicant’s long service leave entitlement and annual leave entitlement was not made until the day prior to the remedy hearing (more than 4 months after the termination took effect)

(c) the applicant’s new employment is casual and less secure and reliable than his employment with the respondent

(d) while the applicant’s take home pay in his new employment is slightly more than he received in his employment with the respondent, but includes a casual loading to compensate for lack of leave entitlements.

[14] On the basis of all the matters put to me and the factors set out above it is my view that the applicant should receive an amount of compensation equivalent to 10 weeks pay in lieu of reinstatement to his former position.

[15] There is no necessity to reduce the amount for any misconduct on the part of the applicant 2, no part of the compensation relates to any shock or distress suffered by the applicant3 and the amount clearly does not exceed the applicable compensation cap.4

[16] An order giving effect to this decision will be published separately.

COMMISSIONER

Appearances:

Mr James Eddington, Hobart Community Legal Service for the applicant

Mr John Shepley of counsel, for the respondent

Hearing details:

Canberra (by telephone)

24 November 2009

 1   PR 989784.

 2   Fair Work Act 2009, s.392(3).

 3   Fair Work Act 2009, s.392(4).

 4   Fair Work Act 2009, s.392(5).

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