Stephen Pitceathly v Diona Pty Limited
[2011] FWA 1793
•30 MARCH 2011
[2011] FWA 1793 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Stephen Pitceathly
v
Diona Pty Limited
(U2010/11250)
COMMISSIONER RYAN | MELBOURNE, 30 MARCH 2011 |
Application for relief in relation to unfair dismissal - dismissal found to be harsh, unjust or unreasonable - compensation to be awarded.
[1] This decision concerns an application for relief under s.394(1)(a) of the Fair Work Act 2009 (the Act) made by Mr Stephen Pitceathly.
[2] On 24 January 2011 I decided 1 that the termination of Mr Pitceathly’s employment with Diona Pty Limited (Diona) was harsh, unjust or unreasonable and that compensation in lieu of reinstatement was appropriate. However, I deferred consideration of the amount of compensation to be ordered until I received further evidence from the parties in this regard.
[3] I issued directions on 15 February 2011 requiring the applicant to file and serve his material by 23 February 2011 and the respondent to file and serve its material by 2 March 2011.
[4] A hearing was subsequently conducted on 4 March 2011 in Brisbane with the employer appearing via video link from Sydney.
[5] I now issue my decision in relation to the amount of compensation to be awarded to the applicant.
Legislation
[6] Those sections of the Act relevant to this decision are set out below:
“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.”
[7] Section 392(2) requires me to take into account all of the circumstances of the case including the factors that are listed in paras (a) to (g). I shall now discuss the identified considerations under the various provisions.
The effect of the order on the viability of the employer’s enterprise - 392(2)(a)
[8] The respondent conducts a substantial business and there is no indication that any order for compensation contemplated by the Act would impact upon the viability of the business.
[9] No reduction to the amount of compensation determined under s.392(2)(c) will be made under this provision.
The length of the person’s service with the employer - 392(2)(b)
[10] The applicant was employed by the respondent for just over two years. This is a relatively short period and subject to the consideration of the other circumstances relating to the employment, must be taken into account. I have taken into account the circumstance that Mr Pitceathly had taken up employment with Diona recently after he left the Royal Australian Air Force and moved to Brisbane. Mr Pitceathly submitted to FWA that he expected to remain in employment with Diona for a number of years.
[11] No reduction to the amount of compensation determined under s.392(2)(c) will be made under this provision.
The remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed - 392(2)(c)
[12] If Mr Pitceathly had not been dismissed I consider he would have remained in his employment with Diona for at least 1 more year. However taking into account the evidence in this matter it is clear that Mr Pitceathly would not have continued to receive the same remuneration package that he was receiving prior to his dismissal. As the evidence makes clear, Diona was surprised to find out that Mr Campbell had made an agreement on behalf of Diona to pay Mr Pitceathly a loaded wage or salary which was significantly higher than the base rate for the position. In the Financial Year ending 30 June 2010 Mr Pitceathly earnt a gross amount of $133,283.00 from his employment with Diona. This amount was comprised of $124,683.00 as wages or salary and $8,600.00 as allowances. In addition Mr Pitceathly would have earned an amount of superannuation payments. Diona contended that Mr Pitceathly would not have retained the same position or the same total wage even if he had not been dismissed. Diona contended that Mr Pitceathly would have continued to be employed under the relevant modern award and that he would have been moved to site work and that his wage would have been around $1245.86 per week or $64,784.72 per annum. In addition Mr Pitceathly would have received at least the minimum statutory superannuation entitlement of $5,830.62.
[13] If Mr Pitceathly had not been dismissed on 30 July 2010 I consider that he would have retained the loaded wage or salary of $124,683.00 for no longer than 8 weeks and for which he would have earnt $19182.00. Thereafter Mr Pitceathly would have received a wage for a 38 hour week in accordance with the hours of work provisions of the award and with any penalty rates and overtime being paid for additional hours worked. The base rate of pay would have been $1245.86 per week. For the remaining 44 weeks of the year Mr Pitceathly would have earnt $54817.84. If I assess superannuation at the lowest rate Mr Pitceathly would have received a superannuation entitlement of $5830.62.
[14] Thus the minimum amount of remuneration that Mr Pitceathly would have received had he not been dismissed is $79830.46. This is the amount of compensation that should be paid to Mr Pitceathly.
The efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal - 392(2)(d)
[15] Mr Pitceathly has sought to mitigate the losses suffered by him because of the dismissal. Mr Pitceathly gained employment approximately 12 weeks after the date of the dismissal. Diona made the submission that any compensation should be limited to the period between the date of dismissal and the date Mr Pitceathly obtained employment. Diona also contended that Mr Pitceathly failed to mitigate his loss from being unfairly dismissed because He sought work “in an industry and in a position unfamiliar to the Applicant and where the Applicant lacked the requisite experience and skill to perform those new roles.” This contention was based solely on the nature of the jobs which Mr Pitceathly identified in his written submission to FWA.
[16] I note that while Mr Pitceathly attached a number of job applications to his written submissions and he noted that “The numbers are not a true reflection as a lot of applications gave no verification they were received.” Therefore the submissions of Diona are made without knowing the full range of jobs which Mr Pitceathly applied for.
[17] I also not that the submissions of Diona are not supported by any material which establishes that Mr Pitceathly ‘lacked the requisite experience and skill to perform those new roles”.
[18] In Biviano v Suji Kim Collection 2a Full Bench of the AIRC, Ross VP, O'Callaghan SDP, and Foggo C considered the extent to which an applicant seeking a remedy for unfair dismissal was required to mitigate the losses suffered:
[35] The question of what steps were reasonable in the mitigation of loss is a question of fact to be determined having regard to the particular circumstances. The common law principles regarding mitigation may be of some assistance in applying paragraph 170CH(2)(d).
[36] At common law a plaintiff is expected to take reasonable steps to minimise the effect of a breach of contract. As Lord Haldane said in British Westinghouse Electric and Manufacturing Co. v Underground Electric Railways Co. of London:
"The fundamental basis is thus compensation for pecuniary loss flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps."
[37] While it is frequently said that there is a "duty" to mitigate it is a little misleading to speak in terms of a duty. If the "duty" is not discharged there is no corresponding right of the respondent that mitigation takes place. In this sense the respondent is not possessed of any true right. Rather, the principle of mitigation operates pro tanto as a conditional bar to the recovery of damages. As Donaldson MR said in Sotiros Shipping Inc. v Sameiet Solholt (The Solholt):
"A plaintiff is under no duty to mitigate his loss, despite the habitual use by lawyers of the phrase `duty to mitigate'. He is completely free to act as he judges to be in his best interests. On the other hand ... a defendant is only liable for such part of the plaintiff's loss as is properly to be regarded as caused by the defendant's breach of duty."
[19] In the present matter I am satisified that Mr Pitceathly took reasonable steps to mitigate the loss suffered by him as a result of the dismissal. Mr Pitceathly was under no duty to seek and find employment as a logistics manager. Mr Pitceathly had to take all reasonable steps to mitigate his loss and in applying for numerous positions and in being successful in getting a paid employment Mr Pitceathly did what was necessary. Diona contends that Mr Pitceathly should have concentrated his search for employment in the logistics industry and in the position of logistics coordinator and that if he had done so he would have obtained employment earlier. Diona acknowledges that Mr Pitceathly has found employment at a rate of pay lower than he earnt with Diona. The conclusion to be drawn from the material before me is that Mr Pitceathly was prepared to apply for and accept employment in a position with a lower rate than he had been receiving. Rather than being a ground for criticism of Mr Pitceathly it does in my considered view mean that Mr Pitceathly was prepared to take all reasonable steps to mitigate his loss.
[20] No reduction to the amount of compensation determined under s.392(2)(c) will be made under this provision.
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 - 392(2)(e)
and
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 - 392(2)(f)
[21] Mr Pitceathly is currently earning $2328.00 per fortnight and has been doing so since 20 October 2010. The total amount of income that would be taken into account under s.392(2)(e) and (f) is calculated at $2328.00 per fortnight for the period from 20 October 2010 to the date of payment under the order to be issued with this decision namely 20 April 2011. The amount calculated under s.392(2)(e) and (f) is $30,264.00.
[22] The amount of compensation determined under s.392(2)(c) will be reduced by an amount of $30,264.00.
Any other matter that FWA considers relevant - 392(2)(g)
[23] There are two relevant matters which I have given consideration to.
[24] Firstly, Diona has contended that “the maximum compensation the Applicant could receive is 12 weeks as after that time he entered into employment elsewhere and was not in a position to be reinstated and had chosen a new career.”
[25] This contention completely misunderstands the purpose of compensation as a remedy for an unfair dismissal. The purpose of compensation is to compensate the employee for the unfair dismissal. The very structure of s.392 indicates that where a person who has been unfairly dismissed takes all reasonable steps to mitigate their loss by seeking and obtaining new employment then the amount earnt by them after the dismissal is only one of the factors that has to be taken into account in assessing the amount of compensation. Parliament has clearly stated the limits that are placed on the Tribunal in making an order for compensation. Shock and distress cannot be considered in the compensation amount and there is an absolute upper limit placed on the amount of compensation that can be ordered. However Parliament has not said that a person who has been unfairly dismissed cannot receive compensation for losses suffered after the person has, consistent with a general obligation to take all reasonable steps to mitigate the loss suffered, gained new employment. In the present matter Diona concedes that Mr Pitceathly gained new employment 12 weeks after his dismissal and that it was at a lower wage than he had previously earnt. Clearly Mr Pitceathly suffered continuing loss from his unfair dismissal even after he gained new employment. This continuing loss can, within the limits set by the several provisions of s.392, be part of the compensation determined under s.392.
[26] Secondly, in this matter I have neither discounted nor increased the amount of compensation for contingencies. Any variation in the amount of compensation to take into account contingencies is a matter to be considered on a case by case basis. (Ellawalla v Australian Postal Commission 3 and Hall v Tarlinton4.) There is nothing before me which suggests that the amount of compensation should be adjusted up or down to take account of contingencies.
Misconduct reduces the amount - 392(3)
[27] Diona has contended that the amount of compensation should be reduced because of the conduct of Mr Pitceathly in relation to the ordering of the degreaser. Diona relied upon paragraph 92 of my decision in this matter [2011] FWA 478. Diona also sought to rely upon the decision in Bilson v Mission Australia[2010] FWA 6297.
[28] I make two comments in relation to these submissions. Firstly, paragraph 92 of my decision in [2011] FWA 478 did not find that Mr Pitceathly had engaged in misconduct. Secondly, “misconduct for the purposes of s.392(3) would mean wrongful or unlawful conduct, motivated by premeditated or intentional purpose or by obstinate indifference to the consequences of one’s acts but which is not so seriously in breach of the standards of fairness and justice that the employer should not be bound to continue the employment.” 5. The conduct of Mr Pitceathly in relation to the ordering of the degreaser could not be described as misconduct according to this test.
[29] There is therefore no misconduct that could reduce the amount of compensation calculated under s.392(2)(c).
Shock, distress etc disregarded - 392(4)
[30] I am mindful of the requirements of s.392(4) and I have not included in the compensation figure calculated under s.392(2)(c) a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to Mr Pitceathly by the manner of his dismissal.
Compensation Cap - 392(5)
[31] The amount of compensation that I would order is the amount calculated under s392(2)(c) less the amount calculated under s.392(2)(e) and (f). This amount is $79,830.46 less $30,264.00 which equals $49,566.46.
[32] The compensation cap is, for the purposes of this matter, the total amount of remuneration received by Mr Pitceathly for any period of employment with the employer during the 26 weeks immediately before the dismissal. Diona has asserted that Mr Pitceathly’s average wage for the 26 weeks preceding his dismissal was $1,245.86 or a total of $32,392.36. This figure seems to be totally inconsistent with Mr Pitceathly’s submission that in the year ending 30 June 2010 he was paid $124,683.00 in wages. It would appear from the submissions of Diona that the amount of $1245.86 represents the weekly wage for a 38 hour week whereas the actual rate paid to Mr Pitceathly included the payments, as agreed to by Mr Campbell, for additional hours and for being on-call.
[33] It would appear that Mr Pitceathly earnt significantly more than $32, 392.36 in the 26 weeks immediately prior to his dismissal with a possible upper limit being about $62,000.00. For the purposes of this matter I will determine a figure at the lower end of the range and for the purposes of s.392(5) I consider that Mr Pitceathly earnt $35,000.00 in the 26 weeks immediately prior to his dismissal.
[34] As the amount of compensation to be paid to Mr Pitceathly is greater than the compensation cap determined under s.392(5) the amount of compensation to be ordered in this matter is to be reduced to the amount of the compensation cap.
[35] Diona is ordered to pay to Mr Pitceathly an amount of compensation as remedy for unfair dismissal in the amount of $35,000.00.
[36] The compensation payment, less any required deduction of taxation, is to be made within 21 days of this decision.
[37] An order to the above effect has been issued in conjunction with this decision.
COMMISSIONER
Appearances:
S. Pitceathly for the applicant
D. O’Connor for the respondent
Hearing details:
2011
Brisbane
Sydney
March 4
1 [2011] FWA 478
2 Appeal by Biviano against decision and order of Commissioner Whelan [PR912480 and PR912482] re: Suji Kim Collection, 28 March 2002 [PR915963]
3 Print S5109 at PN42 - PN44
4 (1978) 19 ALR 501 at 506
5 Bilson v Mission Australia[2010] FWA 6297 at PN 43
Printed by authority of the Commonwealth Government Printer
<Price code A, PR507800>
0
2
0