Samantha Jane Bond v Lake Illawarra Pre-School and Kindergarten

[2019] FWC 1252

[2019] FWC 1252

FAIR WORK COMMISSION

DECISION

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

Samantha Jane Bond
v
Lake Illawarra Pre-School and Kindergarten
(U2018/9682)

COMMISSIONER RIORDAN WOLLONGONG, 27 MARCH 2019

Application for an unfair dismissal remedy.

[1] Ms Samantha Bond (the Applicant) has lodged an application claiming that she was unfairly dismissed by Lake Illawarra Pre-School and Kindergarten (the Respondent).

[2] The Respondent advised at the Conciliation/Direction Hearing that the Pre-School was to be sold in 2019 due to personal reasons.

[3] The Respondent failed to adhere to the Directions of the Commission and did not attend at the Hearing on 8 February 2019. Despite numerous attempts, the Commission has been unable to contact the Respondent since the Hearing date.

[4] Whilst the Applicant was represented by Hennikers Solicitors throughout the Direction process, the Applicant’s submissions were inadequate. The Applicant’s representative advised the Applicant on the morning of the Hearing that he was unavailable to attend the Hearing. As a result the Commission, as presently constituted, did not proceed with the Hearing and advised the Applicant that questions will be sent to both parties in an attempt to ascertain the relevant and necessary facts of the matter.

[5] The parties were directed to file their response to those questions by 26 February 2019.The Applicant submitted her response on 18 February 2019. The Respondent has failed to respond to the Commission’s questions.

[6] I have decided to determine the matter on the information which has been filed by the parties throughout the process.

Background

[7] It is uncontested that the Respondent is a small employer in the Illawarra Region of NSW with only 3-4 employees.

[8] The Applicant commenced her employment with the Respondent on 23 April 2014. The Applicant was employed as a “Childcare Worker Untrained / Certificate III in Children’s Services. The Applicant was notified of her termination on 18 September 2018.

[9] The Applicant went on maternity leave on 14 November 2017. The Applicant contacted the Respondent in September 2018 in relation to her pending return to work. In response, the Respondent sent the Applicant the following text message:

“Tuesday, 18 September 2018 4:31pm

Just letting you know it’s the tone that I know your taking with me in regards to your return date unless you have completed your diploma as requested, we paid for your to have an extension and you were still unable to complete it to my knowledge…meaning you no longer fit the job description…I’ve also had legal advice and have my agency ready to go if you try to return. Our service already has a cert3 and you were employed with the understanding you would achieve your diploma.”

[10] The Applicant submitted that she was only employed as a Certificate III employee. Whilst the Applicant was studying to obtain her Diploma qualification, the Respondent advised her that she would not pay her the higher grade even if she obtained her qualification because the Respondent already had a Diploma accredited employee.

[11] After numerous requests by the Commission, the Respondent finally submitted its “F3 employer response”, on 13 December 2018. This is the only correspondence that the Commission has received from the Respondent. In this response, the Respondent claims that the Applicant was not dismissed but that her position has been made redundant. The Respondent claims that due to the low occupancy level of the centre, the Respondent could not afford to pay 2 employees. Further, because of the requirements to employ a Diploma qualified staff member, the Applicant did not have the necessary qualifications to satisfy the essential requirements of the role.

[12] The Applicant submitted that she was not consulted about her redundancy and that the only time that she had been advised by the Respondent that she did not hold the necessary qualifications for the ongoing role was by text message on 18 September 2018.

[13] The Respondent has raised a jurisdictional issue in its F3 response that the Applicant was not dismissed but that her termination was a case of genuine redundancy.

[14] It is necessary for the Commission to deal with this jurisdictional issue at first instance.

Jurisdiction

[15] The relevant provisions of the Fair Work Act, 2009 (the Act) are:

“381 Object of this Part

(1) The object of this Part is:

(a) to establish a framework for dealing with unfair dismissal that balances:

(i) the needs of business (including small business); and

(ii) the needs of employees; and

(b) to establish procedures for dealing with unfair dismissal that:

(i) are quick, flexible and informal; and

(ii) address the needs of employers and employees; and

(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a "fair go all round" is accorded to both the employer and employee concerned.

Note: The expression "fair go all round" was used by Sheldon J in in re Loty and Holloway v Australian Workers' Union [1971] AR (NSW) 95.

382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.

386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person's employment with his or her employer has been terminated on the employer's initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person's employment, to avoid the employer's obligations under this Part.

387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

388 The Small Business Fair Dismissal Code

(1)  The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2)  A person's dismissal was consistent with the Small Business Fair Dismissal Code if:

(a)  immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person's employer was a small business employer; and

(b)  the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.

389 Meaning of genuine redundancy

(1) A person's dismissal was a case of genuine redundancy if:

(a) the person's employer no longer required the person's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person's dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer's enterprise; or

(b) the enterprise of an associated entity of the employer.”

(my emphasis)

Modern Award

[16] The Respondent claimed that the Applicant was covered by a NSW State Award. This is incorrect. The Applicant’s employment was covered by the Children’s Services Award, 2010 1.

[17] Clause 8 of this Award deals with the issue of consultation and states:

“8. Consultation about major workplace change

8.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:

(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and

(b) discuss with affected employees and their representatives (if any):

(i) the introduction of the changes; and

(ii) their likely effect on employees; and

(iii) measures to avoid or reduce the adverse effects of the changes on employees; and

(c) commence discussions as soon as practicable after a definite decision has been made.

8.2 For the purposes of the discussion under clause 8.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:

(a) their nature; and

(b) their expected effect on employees; and

(c) any other matters likely to affect employees.

8.3 Clause 8.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.

8.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 8.1(b).

8.5 In clause 8:

significant effects, on employees, includes any of the following:

(a) termination of employment; or

(b) major changes in the composition, operation or size of the employer’s workforce or in the skills required; or

(c) loss of, or reduction in, job or promotion opportunities; or

(d) loss of, or reduction in, job tenure; or

(e) alteration of hours of work; or

(f) the need for employees to be retrained or transferred to other work or locations; or

(g) job restructuring.

8.6 Where this award makes provision for alteration of any of the matters defined at clause 8.5, such alteration is taken not to have significant effect.”

[18] The Explanatory Memorandum to the Act, states the following comment in relation to section 389(1):

“1550.            Paragraph 389(1)(b) provides that it will not be case of genuine redundancy if an employer does not comply with any relevant obligation in a modern award or enterprise agreement to consult about the redundancy.  This does not impose an absolute obligation on an employer to consult about the redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.”

(my emphasis)

Consideration

[19] I have taken into account all of the submissions and documentation that has been provided by the parties.

[20] A Full Bench of Fair Work Australia, in UES (Int'l) Pty Ltd v Leevan Harvey 2 held that:

“[48] UES, however, failed to consult with Mr Harvey as required by the “consultation regarding major workplace change” clause in the modern award that applied to his employment. In the circumstances the failure to so consult was unreasonable. We regard such a failure to consult as also a matter relevant to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable. Further, it is a matter telling for a conclusion that Mr Harvey’s dismissal was harsh, unjust or unreasonable.

Conclusion regarding harsh, unjust or unreasonable

[49] Taking into account the matters referred to above, we are satisfied Mr Harvey’s dismissal by UES was harsh, unjust or unreasonable. A failure to consult does not necessarily mean a dismissal was harsh, unjust or unreasonable. However, in this case we consider the failure to consult was unreasonable and is sufficient to lead us to conclude Mr Harvey’s dismissal was harsh, unjust or unreasonable, notwithstanding the valid reasons for his dismissal and the due weight we have given to those valid reasons.” 3

[21] Whilst it may be argued that the Respondent has satisfied the first limb of section 388(1)(a) of the Act by no longer requiring the services of the Applicant, the Respondent’s failure to consult with the Applicant about the changes that it had introduced into the workplace means that it has not complied with the consultation requirements of the Modern Award.

[22] As a result of the lack of consultation, I find that the Applicant’s termination was not a genuine redundancy.

[23] I now turn to the issues contained in section 387 of the Act.

[24] When considering whether a termination of an employee was harsh, unjust or unreasonable, the oft-quoted joint judgement of McHugh and Gummow JJ in Byrne v Australian Airlines (Byrne) is of significance:

“It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.

… In Lane v Arrowcrest Group Pty Ltd, von Doussa J considered the example of the dismissal of an accountant who held a position of trust where it was discovered after the dismissal that the accountant had been systematically embezzling money from the employer. His Honour said it would be astonishing if the employer could not resist an allegation that the dismissal was harsh, unjust or unreasonable, within the meaning of the relevant award, by pointing to those facts discovered after the dismissal, so long as they concerned circumstances in existence when the decision was made. His Honour concluded:

“Whether the decision can be so justified will depend on all the circumstances. A circumstance, likely to favour the decision to dismiss, would be that fraud or dishonesty of the employee had caused or contributed to the employer's state of ignorance. A circumstance likely to weigh against the decision would be that the employer had failed to make reasonable inquiries which would have brought existing facts to its knowledge before the dismissal occurred.”” 4 [footnotes omitted]

Section 387(a) valid reason

[25] The meaning of the phrase “valid reasons” has been universally drawn from the judgement of Northrop J in Selvachandran v Peterson Plastics Pty Ltd:

“In broad terms, the right is limited to cases where the employer is able to satisfy the Court of a valid reason or valid reasons for terminating the employment connected with the employee’s capacity or performance or based on the operational requirements of the employer. …

Section 170DE(1) refers to “a valid reason, or valid reasons”, but the Act does not give a meaning to those phrases or the adjective “valid”. A reference to dictionaries shows that the word “valid” has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is: “2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.” In the Macquarie Dictionary the relevant meaning is “sound, just, or well founded; a valid reason”.

In its context in s 170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, commonsense way to ensure that” the employer and employee are each treated fairly…”⁵

[26] The changing financial position of the Respondent is a relevant consideration in assessing the validity of any decision to terminate an employee. The Respondent claims that the business has suffered a reduction in its client base. A business such as a preschool is heavily reliant on the number of children that it has in its care. The Respondent’s claim that it could not justify or afford to have the Respondent, as a Certificate III employee, to resume work following her maternity leave due to the decrease in the number of children who now attend the preschool and her lack of a diploma qualification provides a valid reason for the Applicant’s termination. I have taken this into account.

Section 387(b) notified of reason

[27] I have taken into account that the Applicant was advised of her termination by text. Whilst I agree with the decision of DP Sams in Cachia v Scobel Pty Ltd 6 that no employee should be advised of their dismissal by a text message, the text message from the Respondent does not advise the Applicant of the full reason for her termination. It mentions the qualification issue but provides no mention of the reduction of children at the preschool.

Section 387(c) opportunity to respond

[28] I have taken into account that the Applicant was not given an opportunity to respond to the decision of the Respondent.

Section 387(d) support person

[29] The Applicant was not terminated at a meeting but by text message.

Section 387(e) unsatisfactory performance

[30] There is no evidence that the Applicant’s performance was unsatisfactory.

Section 387(f) size of employer

[31] The Respondent is a small business and does not employee a HR resource.

Section 387(g) HR expertise

[32] The Respondents behaviour in this matter has been less than ideal. The Respondent did not provide the Applicant with the appropriate correspondence in relation to her termination nor has it followed any of the procedures as stipulated by the Act in order to ensure the Applicant is provided with procedural fairness and a “fair go”. Further, the Respondent has not complied with any of the Directions of the Commission. The Respondent’s behaviour highlights that it has little or no HR expertise. I have taken this into account.

Section 387(h) any other matter

[33] I have taken into account that the Respondent is a small business. As such, the Applicant’s termination must be undertaken in accordance with the Small Business Fair Dismissal Code (the Code).

“Section 388

Small Business Fair Dismissal Code

(1)  The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2)  A person's dismissal was consistent with the Small Business Fair Dismissal Code if:

(a)  immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person's employer was a small business employer; and

(b)  the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.”

[34] The Small Business Fair Dismissal Code states that;

“Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

[35] I am satisfied that the Respondent did not comply with the Code. The Respondent did not provide the Applicant either verbally or in writing of the need to have completed her Diploma in order to return to work. The Applicant was not given an opportunity to respond to any of the Respondent’s assertions.

[36] The Applicant had been on paternity leave prior to her termination. The relevant provisions of the Act pertaining to the Applicant’s situation include:

“70 Entitlement to unpaid parental leave

An employee is entitled to 12 months of unpaid parental leave if:

(a) the leave is associated with:

(i) the birth of a child of the employee or the employee's spouse or de facto partner; or

(ii) the placement of a child with the employee for adoption; and

(b) the employee has or will have a responsibility for the care of the child.

Note: Entitlement is also affected by:

(a) Section 67 (which deals with length of the employee's service); and

(b) for pregnancy and birth—subsection 77A(3) (which applies if the pregnancy ends other than by the child being born alive, or if the child dies after birth); and

(c) for adoption—section 68 (which deals with the age etc. of the adopted child).

83 Consultation with employee on unpaid parental leave

(1) If:

(a) an employee is on unpaid parental leave; and

(b) the employee's employer makes a decision that will have a significant effect on the status, pay or location of the employee's pre-parental leave position;

the employer must take all reasonable steps to give the employee information about, and an opportunity to discuss, the effect of the decision on that position.

(2) The employee's pre-parental leave position is:

(a) unless paragraph (b) applies, the position the employee held before starting the unpaid parental leave; or

(b) if, before starting the unpaid parental leave, the employee:

(i) was transferred to a safe job because of her pregnancy; or

(ii) reduced her working hours due to her pregnancy;

the position the employee held immediately before that transfer or reduction.

84 Return to work guarantee

On ending unpaid parental leave, an employee is entitled to return to:

(a) the employee’s pre-parental leave position; or

(b) if that position no longer exists—an available position for which the employee is qualified and suited nearest in status and pay to the pre-parental leave position.

84A Replacement employees

Before an employer engages an employee to perform the work of another employee who is going to take, or is taking, unpaid parental leave, the employer must notify the replacement employee:

(a) that the engagement to perform that work is temporary; and

(b) of the rights:

(i)  the employer; and

(ii)  the employee taking unpaid parental leave;

have under subsections 77A(2) and (3) (which provide a right to cancel the leave if the pregnancy ends other than by the birth of a living child or if the child dies after birth); and

(c) of the rights the employee taking unpaid parental leave has under:

(i)  subsections 77A(4) to (6) (which provide a right to end the leave early if the pregnancy ends other than by the birth of a living child or if the child dies after birth); and

(ii)  section 84 (which deals with the return to work guarantee); and

(d) of the effect of section 78 (which provides the employer with a right to require the employee taking unpaid parental leave to return to work if the employee ceases to have any responsibility for the care of the child).

[37] The Respondent has not complied with the provisions of the Act in relation to parental leave. It is evident that the respondent did not have the obligatory discussion with the Respondent about the changing role in accordance with section 83 of the Act. I have taken this into account.

Conclusion

[38] The Respondent had obligations under the Act, the Code and the Modern Award to consult with the Applicant about the change in circumstances of the Respondent and the resultant termination of the Applicant’s employment. This consultation did not occur.

[39] Despite having found previously that the Respondent had a valid reason to terminate the Applicant’s employment based on the fact that the Applicant did not have the necessary qualifications to return to work due to the shrinking size of the Respondent, I find that the Applicant was not provided with any procedural fairness in relation to her termination.

[40] The Applicant was terminated by text message, without warning, on 18 September 2018 after enquiring about her return to work. This action by the Respondent clearly shows that no consultation about the Respondent’s restructuring of the business ever occurred. This lack of procedural fairness, together with the Applicant’s lack of opportunity to respond to her termination, denied the Applicant her statutory rights to consultation. I find that this action by the Respondent renders the Applicant’s termination as harsh and unfair.

Remedy

[41] The relevant provisions of the Act in relation to a remedy for an unfair dismissal are:

“Section 390

When the FWC may order remedy for unfair dismissal

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

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

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

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

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

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.

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

(3) 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

(4) 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

(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.”

[42] The Applicant does not seek reinstatement but financial compensation. I find that an order for the payment of compensation is appropriate based on the circumstances of this case.

Section 392(a) – effect of order on viability of enterprise

[43] The Respondent has not provided the Commission with any evidence in relation to its financial viability. I am aware that the Respondent has lost a number of clients and is to be sold due to divorce proceedings but that the preschool is still operational. I am confident that the order that I make will not affect the financial viability of the Respondent. I have taken this into account.

Section 392(b) – length of service

[44] I have taken into account that the Applicant has worked for the Respondent for a period of nearly 4.5years. I have taken this into account.

Section 392(c) – remuneration Applicant would have likely received if not dismissed

[45] I have taken into account that the Applicant was returning from parental leave. There had been no performance or disciplinary issues prior to taking leave which leads me to the conclusion that he employment would have been on-going employment. The only issue which may have threatened her on-going is in relation to her lack of qualifications. I have taken this into account.

Section 392(d) – efforts of person to mitigate loss

[46] The Applicant has been unable to find new employment since her termination. I have taken this into account.

Section 392(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

[47] The Applicant has not earned any income since her termination. I have taken this into account.

Section 392(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

[48] The Applicant will not earn any income during this period due to her current employment status. I have taken this into account.

Section 392(g) – any other matter

[49] The commonly used formula to calculate the appropriate amount of compensation emanates from a Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket⁷ (the Sprigg Formula), which states:

“1. Estimate the remuneration the employee would have received if they had not been dismissed. Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment i.e. the anticipated period of employment.

2. Deduct any remuneration earned by the employee since their dismissal until the end of the anticipated period of employment.

3. Deduct an amount for contingencies…

4. Consider the impact of taxation and adjust the figure accordingly.

5. Assess the figure against the compensation cap. If the amount is more than the compensation cap it should be reduced to the compensation cap.”

[50] Based on the Sprigg formula, the Applicant would receive a total of 5 weeks’ pay. Two weeks’ pay would be compensation for the time that the Respondent should have taken to discuss the Respondent’s need for an employee with a diploma qualification with the Applicant. The Applicant should have been given time to consider her position and provide a written response to this issue. The Respondent should then have considered the Applicant’s response and made a final decision. The additional three weeks would have been the notice period required to be paid to the Applicant in accordance with section 117 of the Act.

[51] In Hanson Construction Materials v Pericich 8, a recent Full Bench of the FWC held;

“[39]… Sprigg is a useful servant, but is not to be applied in a rigid determinative manner. In deciding the amount of a compensation order the Act directs that the Commission ‘must take into account all of the circumstances of the case’ including the particular matters set out at s.392(2)(a)to(g).” 9

[52] I note that the Applicant has been unable to secure alternate employment. I note that the Illawarra Region suffers from a higher unemployment rate than the national average. After taking into account all of the issues identified in this decision, I order an additional 4 weeks’ pay on top of the 5 weeks resulting from the Sprigg formula.

[53] The amount ordered does not contain any component for the Applicant’s shock, distress or humiliation.

Conclusion

[54] Having taken into account all of the material that has been provided by the parties, all of the issues pertaining to section 392 of the Act and the lack of procedural fairness that has been provided to the Applicant, I have decided to make an order for 9 weeks compensation plus the payment of the Applicant’s normal superannuation entitlement on this amount.

[55] I so Order.

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 1   MA000120

 2   [2012] FWAFB 5241

 3   Ibid at [48]-[49]

 4 (1995) 185 CLR 410, 465-7.

5 (1995) 62 IR 371, 372-3.

 6   [2018] FWC 2648

7 (1998) 88 IR 21

 8   [2018] FWCFB 5960

 9   Ibid at [39]