Fair Work Commission|2013-11-26|Before: Lawler VP

Appeal by B, C and D [2013] FWC 9293 (26 November 2013)

Australian Postal Corporation T/A Australia Post

[1] On 28 August 2013 a Full Bench delivered a decision upholding an appeal by three employees of Australia Post against a decision at first instance dismissing their unfair dismissal applications ([2013] FWCFB 6191, Lawler VP and Cribb C, Hamberger SDP dissenting). The majority granted permission to appeal, allowed the appeal and quashed the decision at first instance. The majority found that the dismissal of each of B, C and D were harsh, unjust and unreasonable and that each was unfairly dismissed.

[2] The majority allowed the appeals, quashed the decision and orders of the Commissioner at first instance, and remitted the "matter of remedy" to me "for determination in accordance with these reasons" ([2013] FWCFB 6191 at [120]).

[3] These are my reasons for decision on remedy and should be read in conjunction with the reasons of the majority.

[4] The majority addressed the issue of remedy in the following terms:

"[114] The grant of a remedy is governed by s.390 of the FW Act.

"390 When FWC may order remedy for unfair dismissal

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

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

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

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

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

Note: Division 5 deals with procedural matters such as applications for remedies.

[115] There is no dispute that the Appellants were protected from unfair dismissal at the time of being dismissed. The only issue in relation to whether the Appellants had been unfairly dismissed was whether their dismissal was harsh, unjust or unreasonable. Each of the Appellants made an application under s.394.

[116] Having concluded that each of the dismissals were harsh, we are also satisfied that each of the Appellants was unfairly dismissed such that the requirement in s.390(1)(b) is satisfied. We are satisfied that, in the circumstances we have set out, a remedy is appropriate.

[117] The language of s.390 demonstrates that the legislature intended reinstatement to be the primary remedy where FWC was satisfied that the discretion to order a remedy was exercised. The plain words of s.390(3) prohibit FWC from ordering compensation unless FWC is affirmatively satisfied that "reinstatement of the person is inappropriate".

[118] Given the time that has elapsed since the decision of the Commissioner, and the scope for changed circumstances that may bear upon the issue of whether reinstatement is appropriate, we have decided not to determine remedy ourselves but instead remit the issue of remedy to Vice President Lawler for determination. In making that remitter, we make the following observations:

(a) On the present state of evidence we are not satisfied that reinstatement is inappropriate for each of the Appellants. Indeed, we are affirmatively satisfied that reinstatement with continuity of employment is appropriate. There is nothing about the conduct of Appellants that could reasonably be taken to have undermined fundamental trust and confidence in the employment relationship. It is unlikely that any of the Appellants would engage again in conduct of the sort in issue in this case. The factors that weighed in favour of the dismissal being harsh also weigh in favour of reinstatement being appropriate.

(b) There must be a significant discount in any order for back pay to reflect the fact of the Appellants' misconduct, quite apart from any other discounts that may be appropriate to reflect a "fair go all round", particularly in light of the delay in the resolution of these matters. Obviously income earned in the intervening period must be brought to account."

[5] Australia Post contended, in effect, that the whole issue of remedy was still at large and argued that reinstatement was not appropriate on the facts in existence at the time of the termination. That contention is inconsistent with the reasons of the majority. I am obliged to determine remedy "in accordance with" the majority's reasons ([2013] FWCFB 6191 at para [120]). The majority was affirmatively satisfied that reinstatement was appropriate on the evidence before the Full Bench but recognised that the long lapse of time since the hearing at first instance, and the absence of any evidence as to events since that time, rendered it possible that events in the intervening period may have rendered reinstatement inappropriate.

[6] Australia Post relied on evidence from Ms Guthrie, the company secretary of the trustee for the beneficial superannuation scheme operated by Australia Post of which each of the three employees was a member. That scheme is now closed. Ms Guthrie gave evidence of difficulties and complexities associated with reinstating the three employees to that superannuation scheme. However, the 'bottom line' of her evidence was that it was possible to restore each of the employees to membership of the scheme provided Australia Post cooperated (as it would be obliged to do if required by a relevant order of the Commission). I am not satisfied that the complexities associated with restoring each of the appellants to the superannuation scheme is a factor that renders reinstatement inappropriate, either alone or in combination with other factors.

[7] I have now heard evidence in relation to the intervening events and I am not satisfied that anything has occurred in relation to any of the appellants that has rendered their reinstatement inappropriate. On the contrary, the evidence of the circumstances of each of the three appellants lends weight to the conclusion of the Full Bench that reinstatement is appropriate. Each of the appellants is suffering a continuing financial disadvantage as a result of the termination. Each continues to seek reinstatement.

[8] I am not persuaded that the existence of a recruitment freeze and the present staffing situation at the Dandenong Letter Centre ("DLC") should prevent reinstatement of the employees.

[9] I am not persuaded that the additional emails discovered in relation to one of the appellants after the decision to terminate changes the analysis in relation to that appellant.

[10] Australia Post argued that it has lost trust and confidence in the appellants such that they should not be reinstated and placed reliance on a statement from Mr Doyle, the head of the DLC, in which he expressed his loss of trust and confidence in the appellants.

[11] In Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186 at 191-192, the Full Court of the Industrial Relations Court said:

"...we accept that the question whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is impracticable, provided that such loss of trust and confidence is soundly and rationally based.

At the same time it must be recognised that, where an employer, or a senior officer of an employer, accuses an employee of wrongdoing justifying the summary termination of the employee's employment, the accuser will often be reluctant to shift from the view that such wrongdoing has occurred, irrespective of the Court's finding on that question in the resolution of an application under Division 3 of Part VIA of the Act.

If the Court were to adopt a general attitude that such a reluctance destroyed the relationship of trust and confidence between employer and employee, and so made reinstatement impracticable, an employee who was terminated after an accusation of wrongdoing but later succeeded in an application under the Division would be denied access to the primary remedy provided by the legislation. Compensation, which is subject to a statutory limit, would be the only available remedy. Consequently, it is important that the Court carefully scrutinise any claim by an employer that reinstatement is impracticable because of loss of confidence in the employee.

[12] In oral evidence, Mr Doyle agreed that it was extremely unlikely that any of the appellants would ever again breach the policies against sending etc pornographic emails using Australia Post's IT systems. I find accordingly. The majority found that "there is nothing about the conduct of the Appellants that could reasonably be taken to have undermined fundamental trust and confidence in the employment relationship" ([2013] FWCFB 6191 at para [118](a)). Mr Doyle's concession in oral evidence is consistent with that finding.

[13] A grant of the remedy of reinstatement is governed by s.391:

(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.

(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:

(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.

(2) If FWA makes an order under subsection (1) and considers it appropriate to do so, FWA may also make any order that FWA considers appropriate to maintain the following:

(b) the period of the person's continuous service with the employer, or (if subsection (1A) applies) the associated entity.

(3) If FWA makes an order under subsection (1) and considers it appropriate to do so, FWA may also make any order that FWA 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), FWA 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."

[14] In all the circumstances I am satisfied that it is appropriate that there be an order pursuant to s.391(1)(a) requiring Australia Post to reinstate each of the employees by reappointing the person to the position in which the person was employed immediately before the dismissal. This does not require Australia Post to restore each to the precise role that they performed at the time of their dismissal. The order I will make will not require Australia Post to restore each to a position within the DLC at the classification that they held at the time of their dismissal.

[15] In all the circumstances, I also consider it appropriate to make an order pursuant to s.391(2) to maintain the continuity of the employment of each of the appellants and their period of continuous service for all purposes other than in respect of the accrual of annual leave and long service leave in the period between termination and reinstatement (albeit that the order will have the effect of restoring any partial long service leave accrual that was not paid out at the time of termination).

[16] I consider it appropriate to make an order for the restoration of some lost pay that causes Australia Post to pay to the person an amount for the remuneration lost, or likely to have been lost, by each of the appellants because of their dismissal. However, consistent with the reasons of the majority, I did not consider it appropriate that the order be for the full amount of remuneration lost by each of the appellants. In particular, there must be a substantial discount for misconduct of each, and a further discount to reflect the matters identified by the majority in para [118](b) of their reasons.

[17] I am required to consider the matters specified in s.391(4) and do so:

(a) the amount of any remuneration earned by each of the appellants from employment or other work during the period between the dismissal and the making of the order for reinstatement is as set out in the statements of each of the appellants (and I assume that they have continued earning at the same rate between the remedy hearing 22 October 2013 and the making of order for reinstatement).

(b) the amount of any remuneration reasonably likely to be so earned by each of the appellants during the period between the making of the order for reinstatement and the actual reinstatement is likely to be de minimis and in the order of one weeks' income at the rate specified in each of the appellants' statements.

[18] I do not accept the submission of Australia Post that there should be no order for back pay. The cases relied upon Australia Post in that submission are cases that turn on their own facts and do not lay down any principle that demands that outcome in this case.

[19] It is tolerably clear that the majority considered that an order for back pay would be appropriate subject to a substantial discount in relation to the misconduct of the appellants and in recognition that it would be unfair to Australia Post to visit the consequences of the delay in the final resolution of this matter upon Australia Post alone in circumstances where it had not had the benefit of the employee's labour during the period of delay ([2013] FWCFB 6191 at para [118](b)).

[20] The assessment of the appropriate quantum of back pay in this case is not greatly assisted by an application of the principles in Sprigg v Paul's Licensed Festival Supermarket (1988) 88 IR 21, a case focussed on assessing compensation when reinstatement is not ordered and the Commission is concerned to assess future likelihoods, whereas here I am concerned only with pay in respect of a period in the past (together with the likely short period between orders and the orders being given effect). The decision in Sprigg is not to be applied in a mechanical fashion (see Smith v Moore Paragon Australia Ltd (PR942856 at para [32]). In any event, but for the dismissal, each of the appellants would more likely than not have continued in employment with Australia Post for many years. The amounts I have determined include a discount for contingencies and are amounts that I consider appropriate in all the circumstances.

[21] I accept the evidence in the witness statements filed by the appellants on the question of remedy. Those statements were tendered without objection and the appellants were not cross-examined on their contents. Those statements show that the dismissal had material adverse consequences on each of the appellants and their families. Each made reasonable efforts to mitigate his loss. Those statements support the following calculation of the notional loss of each of the appellants as a result of their dismissal (noting that no allowance has been made for wage increases over the period since 2011 such that the implied loss figures is a little understated):

Earnings if no dismissal (2.964 years between 14 December 2010 and 26 November 2013)

Calculated Loss for period 14 Dec 2010 to 26 Nov 2013

[22] I consider that a discount of 75% on the calculated loss is appropriate to reflect both the misconduct and the inappropriateness, in the peculiar circumstances of this case, of holding Australia Post liable for the whole of the very long period that the course of the unfair dismissal applications have taken thus far. The quantification of an appropriate discount referable to each of those components is necessarily impressionistic and does not admit of precise quantification. It seems to me that the figures I have arrived at strike an appropriate balance given the findings and reasons of the majority of the Full Bench.

[23] It will be evidence that the employees are each out of pocket to the tune of many tens of thousands of dollars. In those circumstances and in all the circumstances of the case I did not consider it appropriate to impose a further disadvantage on the appellants in the form of a reduction in classification levels as sought by Australia Post.

[24] Orders to give effect to these reasons have issued in conjunction with these reasons.

Mr. D. Victory of Maurice Blackburn Lawyers on behalf of the Appellants

Mr. M. McKenney of Counsel and Mr. B. Avallone of Minter Ellison Lawyers on behalf of the Respondent

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Appeal by B, C and D [2013] FWC 9293 (26 November 2013)

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Judgment (69 paragraphs)

Appeal by B, C and D [2013] FWC 9293 (26 November 2013)

Legislation Cited (1)

Cases Cited (2)