Kyoung Sub Cha v The Coffee Traders Group Pty Ltd (In Liquidation)
[2025] FWC 158
•16 JANUARY 2025
| [2025] FWC 158 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Kyoung Sub Cha
v
The Coffee Traders Group Pty Ltd (In Liquidation)
(U2024/4164)
| COMMISSIONER P RYAN | SYDNEY, 16 JANUARY 2025 |
Application for an unfair dismissal remedy – dismissal harsh, unjust and unreasonable – compensation ordered.
Introduction
On 8 January 2023, I determined that The Coffee Traders Group Pty Ltd (In Liquidation) (Coffee Traders) unfairly dismissed Mr Kyoung Sub Cha from his employment.[1] I also decided that an order for the payment of compensation be made in Mr Cha’s favour, but there was insufficient material before me to determine the amount of compensation.
Following a case management hearing on 14 November 2024, I directed the parties to file further evidence and submissions addressing the amount of compensation.
The materials provided by the parties were scant. Mr Cha provided a 2-page submission most of which focused on the factual matters leading up to his dismissal. Coffee Traders submitted a Statutory Report to creditors. However, at the case management hearing on 14 November 2024, a representative for the Liquidator stated that Coffee Traders did not oppose the making of an order for compensation and that if made, Mr Cha will rank as a priority unsecured creditor.
I conducted a hearing on the issue of remedy on 12 December 2024. Mr Cha represented himself, assisted by a Korean interpreter. There was no appearance by, or on behalf of, Coffee Traders.
For the reasons that follow, I order Coffee Traders pay Mr Cha compensation of $3,076.92 gross less taxation.
What must be taken into account in determining compensation?
A compensation remedy is designed to compensate a person found to have been unfairly dismissed from employment for losses reasonably attributable to the unfair dismissal. A compensation order is not designed to be a form of punitive measure to punish an employer.[2]
In determining an amount to be paid as compensation the Fair Work Act 2009 (FW Act)[3] requires all the circumstances of the case to be taken into account, including:
(a)the effect of the order on the viability of Coffee Traders’ enterprise;
(b)the length of Mr Cha’s service;
(c)the remuneration that Mr Cha would have received, or would have been likely to receive, if he had not been dismissed;
(d)the efforts of Mr Cha (if any) to mitigate the loss suffered by him because of the dismissal;
(e)the amount of any remuneration earned by Mr Cha 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 Mr Cha 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 now turn to a consideration of all the circumstances of this case.
s.392(2)(a) – Will an order for compensation effect the viability of Coffee Traders enterprise?
Coffee Traders did not oppose the making of an order for compensation and made no submissions as to the effect of any order on its viability. Although Coffee Traders is in liquidation and that an order of any amount will be a financial burden, this must be weighed against the protection of Mr Cha from unfair dismissal. Having regard to all of the circumstances, I do not consider that this factor warrants a reduction in the amount of compensation.
s.392(2)(b) – What was the length of Mr Cha’s service?
Coffee Traders employed Mr Cha for 1 year and 9 months. I consider this length of service does not support reducing or increasing the amount of compensation ordered.
s.392(2)(c) – What is the remuneration that Mr Cha would have received, or would have been likely to receive, if he had not been dismissed?
It is necessary for the Commission to estimate how long Mr Cha would have remained employed by Coffee Traders and the remuneration that he would have likely received.[4] This is called the “anticipated period of employment”.[5] Mr Cha was paid an annual salary of $80,000.00 plus superannuation. This equates to an amount of $1,538.46 per week.
Mr Cha sought compensation in the amount of 32 weeks’ pay plus superannuation.
In the Merits Decision, I found that Mr Cha was unfairly dismissed because he was deprived of the opportunity to consult about measures that might have mitigated the adverse impact of Coffee Traders’ decision to make his position redundant.[6]
Accordingly, I consider Mr Cha’s employment would not have continued beyond the time it would have taken for Coffee Traders to have complied with its consultation obligations in the Restaurant Industry Award 2020. In my view this would not have exceeded a period of two weeks.
Based on a weekly amount of $1,538.46, the remuneration that would have been received in this period equates to $3,076.92 gross.
s.392(2)(d) – What efforts (or steps) did Mr Cha take to mitigate the loss suffered by him because of the dismissal?
I accept that Mr Cha made reasonable efforts to mitigate his loss by attempting to find alternative employment. Accordingly, no reduction is made on this account.
s.392(2)(e) - What was the amount of remuneration earned by Mr Cha from employment or other work during the period between the dismissal and the making of the order for compensation?
There is no evidence that Mr Cha earned any other income in the two weeks that followed his dismissal. Accordingly, no adjustment of the compensation amount is required on this basis.
s.392(2)(f) - Is there any amount of income reasonably likely to be earned by Mr Cha during the period between the making of the order for compensation and the actual compensation
As the anticipated period of employment has already passed this matter is not relevant.
Are there any other relevant matters?
Other relevant matters include whether to discount any amount for contingencies. The discount for contingencies should only be applied in respect to an “anticipated period of employment” that is not actually known, that is a period that is prospective to the date of the decision. As the anticipated period of employment has already passed, no discount for contingencies will be applied.
There were no other relevant matters.
How is the compensation amount calculated?
The well-established approach to the calculation of compensation is to apply the “Sprigg formula”.
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 estimate the remuneration Mr Cha would have likely received if Coffee Traders had not terminated his employment is $3,076.92.
Step 2
There are no monies earned since termination that are to be deducted. I have also determined that there be no reduction in respect to mitigation.
Step 3
As the anticipated period of employment has passed, I do not make any deduction for contingencies.
Step 4
I have considered the impact of taxation but have elected to settle on a gross amount of $3,076.92 and leave taxation for determination.
I am satisfied that the compensation amount is appropriate having regard to all the circumstances of this case and that it does not include a component for shock, humiliation or distress.[7]
s.392(3) - Is the compensation amount to be reduced on account of misconduct?
I am satisfied that Mr Cha did not commit any misconduct and no reduction on account of misconduct has been made.
Does the compensation cap apply?
Section 392(5) of the FW Act provides that the compensation amount ordered by the Commission must not exceed the lesser of:
(a)the amount Mr Cha received or was entitled to during the 26 weeks immediately before his dismissal ($40,000.00); and
(b)$83,750.00, being half the amount of the high income threshold ($167,500.00).
The amount of $3,076.92 is less than half the amount of the high-income threshold. It is also less than the total amount of remuneration to which Mr Cha was entitled during the 26 weeks immediately before his dismissal. It follows that there is no basis to reduce the amount of $3,076.92.
Conclusion
I will make an order that Coffee Traders pay $3,076.92 gross less taxation as required by law to Mr Cha in lieu of reinstatement within 21 days of the date of this decision.
COMMISSIONER
Appearances:
K Cha, Applicant.
No appearance for the Respondent.
Hearing details:
2024.
Sydney (via Microsoft Teams video-link):
12 September.
[1] Kyoung Sub Cha v The Coffee Traders Group Pty Ltd[2024] FWC 3099 (Merits Decision).
[2] Kable v Bozelle, Michael Keith[2015] FWCFB 3512 at [17].
[3] See s.392 of the Fair Work Act 2009.
[4] He v Lewin [2004] FCAFC 161 at [58].
[5] Ellawala v Australian Postal Corporation Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000) at [34].
[6] Mertis Decision at [72].
[7] See s.392(4) of the FW Act.
Printed by authority of the Commonwealth Government Printer
<PR783378>
0
0
0