Margaret McKinnon v Goldtide Pty Ltd

[2015] FWC 4485

[2015] FWC 4485

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Margaret McKinnon
v
Goldtide Pty Ltd
(U2014/11863)

SENIOR DEPUTY PRESIDENT HARRISON SYDNEY, 17 JULY 2015

Application for relief from unfair dismissal – dismissal found to be unfair in [2015] FWC 3565 – order of compensation.

[1] Ms McKinnon (the applicant) was dismissed from her employment with Goldtide Pty Ltd (the respondent) and subsequently lodged an application for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act). On 28 May 2015, I issued a decision in which I found Ms McKinnon was unfairly dismissed. 1 I determined reinstatement would not be an appropriate remedy. I was unable to make any rulings on whether compensation would be appropriate and, if so, the quantum, because I did not have enough information to apply each of the considerations referred to in ss.390 and 392 of the Act. I had urged the parties to consider reaching an agreement to finally resolve this application. However, no agreement was reached.

[2] I issued directions to the parties to file submissions regarding compensation. Section 392 of the Act was annexed to those directions for the benefit of the parties, both having being unrepresented. The parties have since consented to the quantum of compensation being determined “on the papers” and I have given careful consideration to the written submissions both of them have filed in arriving at this decision.

[3] I turn first to s.390(3) of the Act. Relevantly, that provides that I must not order a payment of compensation to the applicant unless I consider such an order “is appropriate in all the circumstances of the case”. I have decided that an order for compensation is appropriate in this matter. I turn to the issue about what the quantum should be. In this respect, I must apply the considerations in s.392 of the Act. That section 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), 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 FWC considers relevant.”

Misconduct reduces amount 
(3) If FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, 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 
(4) The amount ordered by 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 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 

(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.”

[4] A methodology for determining an amount of compensation was discussed in Sprigg v Paul’s Licensed Festival Supermarket 2 and further developed in Ellawalla v Australia Postal Corporation.3I have taken the comments made in these decisions into account in reaching a conclusion about the amount of compensation to be ordered.

[5] I turn to each of the relevant considerations in s.392.

s.392(2)(a): effect on the viability of the employer’s enterprise

[6] Although Dr Altman, the principal of Goldtide, submitted that any compensation ordered would need to be covered by him personally, he did not contend that an order would affect the viability of his practice. He submitted he may be required to take out a loan to pay an amount of compensation.

s.392(2)(b): the length of the applicant’s service with the employer

[7] The applicant was employed by the respondent for seven years.

s.392(2)(c): the remuneration that the applicant would have received, or would have been likely to receive, if she had not been dismissed

[8] Had the applicant not been dismissed, she would have continued to be paid at least $35.50 per hour. I say “at least” on the basis of evidence in the arbitration that established Ms McKinnon’s hourly rate was increased by Dr Altman each year. However, I have made my calculations on the basis of the hourly rate at the time the applicant was dismissed. Therefore, the weekly rate that would have been paid is $568.00. The applicant had worked two days each week, eight hours a day.

[9] Assessing how long the applicant would likely have remained in employment is a difficult task, but one I must undertake. In this respect, I have considered both parties’ submissions and the findings I made in my earlier decision.

[10] The applicant says she intended to work with Dr Altman until her retirement. 4 Though she had always been employed on a casual basis, she had anticipated moving to a full-time role when her job-share colleague retired. The applicant was of the view that her colleague’s retirement was imminent.

[11] For the reasons I gave in my earlier decision, I doubt Dr Altman would have increased the applicant’s hours, or that he would have had her work on a full-time basis. Dr Altman relied on my finding that the applicant’s conduct was sufficiently unacceptable to justify his decision that he did not want her to work for him any longer and that, although the process of doing so might have been deficient, there was a valid reason for terminating her employment. He submitted there was no basis on which to accept she would have remained employed for a lengthy period. He said there would have been no prospect of her converting to a full-time role. He did not indicate how long she would have remained in employment, although I take it from his submissions that he contends she would not have remained in employment for more than about four weeks. I should indicate that there is no sufficient basis established for me to accept his submission that she may have been summarily dismissed.

[12] I have decided that it is likely the applicant would have remained in employment for a period of 20 weeks. I doubt the poor relationship she and Dr Altman had, details of which I discussed in my earlier decision, would have lasted longer than that.

[13] Had the applicant remained in employment for a further 20 weeks, she would have been paid $11,360.00.

[14] Dr Altman submitted that, prior to her dismissal, the applicant had indicated an intention to be absent from work on seven working days during the period 19 August 2014 to 14 September 2014. A day’s pay was $284.00. I have also taken into account that there was one public holiday in the relevant period that fell on a Monday, for which the applicant would not have been paid.

s.392(2)(d): the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[15] The reasonableness of the efforts made to mitigate loss depends on the particular circumstances of the case. 5 The applicant submitted that she made numerous unsuccessful applications for work. She provided documentation to indicate she applied for five jobs between 26 November 2014 and 11 December 2014. She had also undertaken “irregular casual work” for another employer since March 2013 and, following her dismissal, has sought to “work as often as work is available” for this employer.

[16] Dr Altman submits Ms McKinnon’s efforts to mitigate her loss were minimal and that the paucity of the evidence regarding those efforts warrants a deduction to the amount of compensation awarded.

[17] On balance, I find Ms McKinnon has made reasonable efforts to mitigate the loss she has suffered because of her dismissal.

s.392(2)(e) and (f): amount of remuneration earned since dismissal and income likely to be earned during the period between the making of the order and the actual compensation

[18] The applicant provided pay slips for the period between 12 August 2014 and 12 February 2015. She has been working on a casual basis and receives $25.00 per hour. She has earned an average of $500.00 per week since her termination. However, I have taken into account that when she was working for Dr Altman, she had worked on a casual basis on days other than Mondays and Tuesdays. She says that the shortfall between what she would have earned had she remained employed for two days per week with Dr Altman and worked on a casual basis on other days of the week was $442.00.

[19] Dr Altman submitted that, given the remuneration earned and Ms McKinnon’s increased capacity to work at this alternate employer since her termination, the amount of compensation awarded should be reduced accordingly.

[20] I have considered the termination payments received by the applicant upon the termination of her employment under the next subsection.

s.392(2)(g): any other relevant matter

[21] The letter of termination records that an “ex gratia termination payment” of three months’ pay (less $200.00 which had been paid in advance) based on the applicant’s “standard weekly hours” would be made, amounting to $7,384.00. 6 The letter does not refer at all to long service leave. After the termination, the applicant made a complaint about her termination payments. Dr Altman took advice from his employer association and then described the termination payments he had made as consisting of a pro-rata long service leave component of 6.0253 weeks ($3,422.37), a payment in lieu of five weeks’ notice ($2,840.00) and an ex gratia payment of 1.974 weeks ($1,121.63). Revisiting the manner in which termination payments are described in this way is to be discouraged. It also gives rise to some complexity in deciding what amount I might deduct from any compensation ordered. I have proceeded on the basis that Dr Altman has paid long service leave entitlements. It is not appropriate I take those statutory entitlements into account in assessing compensation. It is only the payments in lieu of notice I have taken into account when considering whether I should reduce compensation. I am also aware of the fact that, as the applicant was a casual, it is not likely she was legally entitled to payment in lieu of notice. I indicated in my earlier decision that the terms of employment were not written and at no time did the applicant receive pay slips.

[22] There are no contingencies raised by the parties I consider appropriate to take into account.

s.392(3): misconduct reduces amount

[23] I am not satisfied the conduct of the applicant which gave rise to the decision to dismiss her can be categorised as misconduct. Her conduct after her dismissal is not relevant to this subsection. There is no warrant for any reduction in the amount I decide to order on account of this consideration.

s.392(4): shock, distress etc. disregarded

[24] The amount of compensation I have decided to order does not include a component for shock, distress or humiliation, or other analogous hurt, caused to the applicant by the manner of her dismissal.

ss.392(5) and 392(6): the amount must not exceed the compensation cap

[25] The amount I have decided to order does not exceed the compensation cap as assessed under ss.392(5) and 392(6).

Conclusion

[26] I have taken into account all of the circumstances of the case and all of the matters I must consider pursuant to ss.392(2), 392(3) and 392(5). I am satisfied that it is appropriate to order that the respondent pay the applicant compensation in the amount of $4,800.00, less applicable tax. This amount is to be paid within 21 days of the date of this decision. I will issue a separate order to this effect.

SENIOR DEPUTY PRESIDENT

Final written submissions:

Applicant’s final submissions: 12 June 2015

Respondent’s final submissions: 23 June 2015

 1   [2015] FWC 3565.

 2 (1998) 88 IR 21.

 3   Print S5109.

 4   A1 paras. 27 and 28.

 5   Biviano v Suji Kim Collection PR915963 at [35].

 6   Applicant’s final submissions attachment 3.

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