Henry Armour v Mader Contracting Pty Ltd
[2023] FWC 2844
•29 OCTOBER 2023
| [2023] FWC 2844 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Henry Armour
v
Mader Contracting Pty Ltd
(U2022/5218)
| COMMISSIONER SCHNEIDER | PERTH, 29 OCTOBER 2023 |
Application for an unfair dismissal remedy
On 2 May 2023, the Fair Work Commission (the Commission) issued a Decision [[2023] FWC 1034][1] finding that Mr Henry Armour (the Applicant) had been unfairly dismissed by his employer Mader Contracting Pty Ltd (the Respondent) pursuant to section 394 of the Fair Work Act 2009 (Cth) (the Act).
Subsequently, the parties were directed to file submissions in relation to remedy.
The Applicant filed submissions and evidence on 9 June 2023. The Respondent filed submissions and evidence on 21 June 2023.
A hearing in relation to the remedy was held by the Commission, on 28 June 2023.
Remedy
In the circumstances, where I have found that the Applicant was protected by unfair dismissal at the time of being dismissed and that he was unfairly dismissed from his employment by the Respondent, I now turn to addressing the element of remedy, as prescribed under section 390 of the Act.
Accordingly, I am satisfied that the Applicant:
· made an application for an order granting a remedy under section 394;
· was a person protected from unfair dismissal; and
· was unfairly dismissed within the meaning of section 385 of the Act,
Subject to the prescribed requirements under section 390 of the Act, I will consider ordering the Applicant’s reinstatement or the payment of compensation to the Applicant if satisfied that such an order is appropriate in all the circumstances of the matter.
Legislation
Under section 390(3) of the Act, I must not order the payment of compensation to the Applicant unless:
(a) I am satisfied that reinstatement of the Applicant is inappropriate; and
(b) I consider an order for payment of compensation is appropriate in all the circumstances of the case.
Further, section 392 of the Act provides:
“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), 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
(2) 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
(3) 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
(c) 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.”
In relation to reinstatement, section 391 of the Act provides that:
“391 Remedy—reinstatement etc.
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.”
Reinstatement – Appropriateness
Submissions
The Applicant submits that reinstatement is not appropriate in the given circumstances as he is now undertaking other employment, as of 11 May 2022.
The Respondent submits that, due to the nature of the conduct engaged in by the Applicant, it had lost all trust and confidence in the Applicant and thus, reinstatement is not appropriate.
The Respondent, in support of its position against reinstatement, noted that the Applicant is now employed with another organistion, and has been for 12 months since his departure from the company.
Findings
Having regard to the above submissions provided by both parties, I am satisfied that the Applicant has been employed with another employer for greater than 12 months.
I note that there was a significant amount of contested evidence provided by the parties regarding the conduct of the Applicant and what occurred in the events leading to the dismissal.
Having considered this, I am satisfied that there exists mutual contention and shared understanding that both parties agree reinstatement is not an appropriate remedy in the circumstances.
Having regard to the matters referred to above, I consider that reinstatement is inappropriate.
I will now consider whether a payment for compensation is appropriate in all the circumstances.
Compensation – Appropriateness
Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate.
As noted by the Full Bench in Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter:[2]
“[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one…”[3]
Where an applicant has suffered financial loss as a result of the dismissal, this may be a relevant consideration in the exercise of this discretion.[4]
Submissions
The Applicant submits that he was unemployed between 20 April 2022 (the day following his termination) until 11 May 2023 (the day on which the Applicant found new employment).
The Applicant stated that, as a result of the decision of the Respondent to terminate his employment, he and his family suffered financial hardship.
The Applicant states that he had to sell personal property, to the value of $7500, to assist in supporting his family during this period.
The Applicant’s partner was pregnant at the time of the Applicant’s employment being terminated with the Respondent.
The Respondent submits that payment of compensation may be appropriate in this circumstance, however, if any compensation is awarded the amount should be limited as the Commission had found there was a valid reason for the Applicant to be terminated.
Findings
Due to the Respondent’s decision to unjustly terminate the Applicant’s employment, I find that an order for compensation is appropriate.
However, I note the Respondent’s submission that any compensation should be limited in the circumstances due to the Applicant’s misconduct, this will be addressed later in the decision.
Compensation – Considerations
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 currently before the Commission below.
Effect of the order on the viability of the Respondent’s enterprise
The Respondent’s representative confirmed, at the hearing on 28 June 2023, and I am satisfied, that an order for compensation would not have an effect on the viability of the employer’s enterprise.
Length of the Applicant’s service
The Applicant’s length of service with the Respondent was 2 years and 8 months.
The Applicant did not make any submissions in relation to the length of service being a factor to increase the amount of compensation ordered.
The Respondent submits that the Applicant’s length of service was not an extended period of time.
The Respondent submits that the Applicant’s length of service in this case should not weigh in favour of increasing the amount of compensation ordered.
I consider that the Applicant’s length of service does not support reducing or increasing the amount of compensation ordered.
Remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed
As stated by a majority of the Full Court of the Federal Court in He v Lewin;
“[i]n 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.”[5]
The Applicant submits that he would have worked a further three weeks, 149.5 hours of work, at $72.00 per hour amounting to a total of $10,782.
The Applicant also submits that his new position is a lower paid position, in which he receives $11.05 less per hour.
The Applicant submits that, for a period of 1094.5 hours (the balance of 6 months), his dismissal resulted in him being $12094.25 worse off.
The Applicant also sought $7500 compensation for personal items that he sold following his dismissal.
The Respondent submits there was a valid reason for the Applicant’s termination, and this should be reflected in the amount compensation, as the Applicant’s employment would have likely not continued.
The Respondent notes that the dismissal was deemed unfair as the Respondent failed to provide the Applicant with procedural fairness.
Accordingly, the Respondent submits that the Applicant should only receive compensation for a maximum period of one or two weeks.
The Respondent asserts this duration is reflective of the length of time in which the Respondent could have conducted a procedurally fair process.
The Respondent submits that the Applicant generally worked an 8/6 roster (FIFO) and was paid an hourly rate of $72.00.
The Respondent submits that, on such a roster, the Applicant would earn $7164 gross.
I accept the position of the Respondent that, if had they followed a procedurally fair process, it would be reasonable to conclude that the Applicant’s employment would have ceased in a period of no more than two weeks.
I therefore accept the submission of the Respondent that the Applicant would have received further remuneration of $7,164 from the Respondent in that fortnight.
Having found that there was a valid reason for the Applicant’s dismissal, I do not believe that the $12,094.25 difference in payment between the Applicant’s new position and his position with the Respondent should be a factor.
Based on the submissions received by the Applicant, the Applicant sold personal items to the value of $7,500 following his dismissal. I accept that the Applicant may have sold these items to assist with the financial hardship immediately following the termination of his employment. The Applicant was paid for these items. I do not accept that the Respondent is responsible for a further reimbursement of these items to the Applicant.
Efforts of the Applicant to mitigate the loss suffered by the Applicant because of the dismissal
The Applicant must provide evidence that they have taken reasonable steps to minimise the impact of the dismissal.[6] What is reasonable depends on the circumstances of the case.[7]
The Applicant submitted that he had taken reasonable steps to minimise the impact of the dismissal by obtaining new employment after three weeks of being unemployed.
The Respondent did not dispute this claim.
I am satisfied that in the circumstances of this case, the Applicant took reasonable steps to mitigate their loss by obtaining employment three weeks after the termination of his employment with the Respondent.
Amount of remuneration earned by the Applicant from employment or other work during the period between the dismissal and the making of the order for compensation
As I have found that had the Respondent followed a procedurally fair process and terminated the Applicant in a period of no more than two weeks after the termination date, this is not a relevant factor for consideration.
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
Neither party made submissions in relation to this point. Having found that the Applicant’s employment would have been terminated no more than two weeks after when the Applicant’s employment did end, I have decided that this factor is neutral in these circumstances.
Other relevant matters
Neither party have raised any matters for my consideration that I feel are relevant to this decision, which I have not otherwise already considered in this decision.
Compensation – Calculation
As noted by the Full Bench in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries:
“[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).[8] This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages[9].”[10]
The approach in Sprigg is as follows:
· 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. Workers’ compensation payments are deducted but not social security payments. The failure of an applicant to mitigate his or her loss may lead to a reduction in the amount of compensation ordered.
· 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 total amount of remuneration the Applicant would have received or would have been likely to receive, had the Respondent not terminated the employment, to be $7,164.00.
I have determined that this figure is appropriate based on my finding that it was likely that the Applicant would have remained employed for a further two weeks with the Respondent.
This estimate of how long the Applicant would have remained in employment is the “anticipated period of employment”.[11]
Step 2
I have found that as the Applicant’s employment would have ended within two weeks, had the Respondent followed a procedurally fair process.
Only monies earned since termination for the anticipated period of employment are to be deducted.[12]
I therefore deduct the sum of $0 from $7,164.00.
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.[13]
Having found that the Applicant’s employment would have been terminated within two weeks, had the Respondent followed a procedurally fair process, I do not consider there needs to be a further deduction for any other contingencies in this matter.
Step 4
I have considered the impact of taxation but have elected to settle a gross amount of $7,164.00 and leave taxation for determination.
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”[14], notably:
· Confirmation from the Respondent that any potential compensation will not negatively impact the viability of the enterprise.
· Having found that, if the Respondent followed a procedurally fair process, the Applicant’s employment would have ended within a period of no more than two weeks.
· Having considered the Applicant’s steps to mitigate his loss and find alternative employment.
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 section 392(2) of the Act.
Compensation – Reductions
If I am satisfied that misconduct of the Applicant contributed to the employer’s decision to dismiss, I am obliged by section 392(3) of the Act to reduce the amount I would otherwise order, by an appropriate amount, on account of the misconduct.
I am satisfied that the misconduct of the Applicant contributed to the employer’s decision to dismiss.
The Respondent submits that an appropriate amount by which to reduce the compensation ordered, on account of misconduct, would be 50% because:
· The Applicant improperly handled and removed property from the work site;
· The misconduct of the Applicant gave rise to a valid reason for dismissal; and
· The Applicant ignored a lawful directive of the Respondent and returned to site when directed not to do so.
The Respondent submits that, consistent with Mr John Lanzafame v Artisan People Pty Ltd and Mrs Nada Hinic v Safety Assembly Moulding Pty Ltd,[15] a 50% deduction in compensation should be applied.
Having considered the above submissions, I am satisfied that the appropriate amount by which to reduce the amount of the order for compensation, on account of misconduct, is 50%.
Applying this reduction to the amount determined, at step 4 above, the gross amount of compensation to be ordered, subject to the compensation cap discussed below, is $3,582.
Compensation – Cap
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:
(a) 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 in accordance with the regulations.
The Applicant was not on leave without pay or without full pay during the 26 weeks immediately before the dismissal.
Based on the Applicant’s 8/6 roster, his earnings in the 26 weeks prior to his dismissal were approximately $93,132 ($7,164 x 13 fortnights).
The high-income threshold immediately before the dismissal was $158,500. Half of that amount is $79,250.
The amount of compensation ordered by the Commission must therefore not exceed $79,250.
I confirm that, consistent with section 394(2) of the Act, the below amount does not include payment for shock, distress, or humiliation caused by the Applicant’s dismissal.
Conclusion
In light of the above, I will make an order that the Respondent pay $3,582.00 (gross), less taxation as required by law, to the Applicant, in lieu of reinstatement, within 14 days of the date of this decision.
The Order is issued concurrently.[16]
COMMISSIONER
[1] [PR761549].
[2] 2014] FWCFB 7198.
[3] Ibid, [9].
[4] [2020] FWCFB 550, [20]; [2015] FWCFB 4171, [5]-[7].
[5] [2004] FCAFC 161, [58].
[6]vPR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), [34]; citing PR908053 (AIRCFB, Giudice J, Lacy SDP, Blair C, 23 August 2001), [45].
[7] PR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), [34]; citing [1919] 2 KB 581; see also, [2015] FWCFC 2267, [23]; citing, PR915963, [34].
[8] (1998) 88 IR 21.
[9] [2013] FWCFB 431.
[10] [2016] FWCFB 7206, [16].
[11] Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000), [34].
[12] Ibid.
[13] PR910779 (AIRCFB, Williams SDP, Acton SDP, Gay C, 31 October 2001), [39].
[14] [2016] FWCFB 7206, [17].
[15] [2023] FWC 1006.
[16] [PR767727].
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