Fair Work Commission|2025-08-06

Irena Kennedy v Warwick Fabrics (Australia) Pty Ltd [2025] FWC 1961 (6 August 2025)

s.394 - Unfair dismissal

[1] On 26 March 2025, the Fair Work Commission (the Commission) issued a Decision[1] finding that Irena Kennedy (the Applicant) had been unfairly dismissed by her employer Warwick Fabrics (Australia) Pty Ltd (the Respondent) pursuant to section 394 of the Fair Work Act 2009 (Cth) (the Act).

[2] Subsequently, the parties were directed to file submissions in relation to remedy. The Applicant filed submissions and evidence on 7 April 2025 and 7 May 2025. The Respondent filed submissions and evidence on 16 April 2025 and 9 May 2025. A Hearing in relation to remedy was held by the Commission on 2 May 2025.

[3] I have found that the Applicant was protected by unfair dismissal at the time of being dismissed and that she was unfairly dismissed from her employment by the Respondent.

[4] I now turn to addressing the element of remedy, as prescribed under section 390 of the Act.

[5] Accordingly, I am satisfied that the Applicant:

made an application for an order granting a remedy under section 394 of the Act;

was a person protected from unfair dismissal; and

was unfairly dismissed within the meaning of section 385 of the Act.

[6] Subject to the prescribed requirements under section 390 of the Act, I will consider ordering the Applicant's reinstatement or the payment of compensation to the Applicant if satisfied that such an order is appropriate in all the circumstances of the matter.

[7] Under section 390(3) of the Act, I must not order the payment of compensation to the Applicant unless:

(a) I am satisfied that reinstatement of the Applicant is inappropriate; and

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

[8] Section 392 of the Act provides:

(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.

(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.

(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.

(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.

(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:

(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."

[9] In relation to reinstatement, section 391 of the Act provides that:

(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 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:

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

(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."

[10] Both parties submit that reinstatement is not appropriate in the circumstances of this matter. I note that the Applicant has moved a considerable distance (approximately 3 hours) from her previous work location with the Respondent which further reduces the practical possibility of reinstatement. As a result, I have determined that reinstatement is not the appropriate remedy.

[11] Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate.

[12] As noted by the Full Bench in Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter:[2]

"[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one..."[3]

[13] Where an applicant has suffered financial loss, as a result of the dismissal, this may be a relevant consideration in the exercise of this discretion.[4]

[14] The Applicant submits that compensation is an appropriate remedy in the circumstances. The Applicant submits that the losses suffered due to the conduct of the Respondent exceeded the 26-week compensation cap. The Applicant submits that the maximum compensation is the appropriate remedy in the circumstances.

[15] The Respondent submits that any compensation awarded to the Applicant should be on the lower range of the compensation that can be awarded by the Commission.

[16] Accordingly, due to the harsh and unreasonable manner in which the Applicant's employment was terminated, and the impact this decision had on the Applicant, I consider that an order for payment of the compensation is appropriate in the circumstances of the matter.

[17] Section 392(2) of the Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to the Applicant in lieu of reinstatement including:

(a) the effect of the order on the viability of the Respondent's enterprise;

(c) the remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed;

(d) the efforts of the Applicant (if any) to mitigate the loss suffered by the Applicant because of the dismissal;

(e) the amount of any remuneration earned by the Applicant 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 the Applicant 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.

[18] I consider all the circumstances of the case currently before the Commission below.

Effect of the order on the viability of the Respondent's enterprise

[19] The Respondent did not make any submission that an order for compensation would have an impact on the viability of the Respondent's enterprise. As a result, I consider this to be a neutral factor.

[20] The Applicant was employed for just under 6 years at the time of her dismissal and submits that it was her intention to remain employed with the Respondent until she had reached retirement age.

[21] I am satisfied that the Applicant's length of service is not insignificant and will be considered accordingly.

Remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed

[22] As stated by a majority of the Full Court of the Federal Court in He v Lewin;[5]

"[i]n determining the remuneration that the employee would have received or would have been likely to receive... it is necessary for the Commission to address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination." [6]

[23] The Applicant, in her submissions, highlighted a number of factors which she believes supports the submission that her employment would have continued for at least the maximum period of 26 weeks, including:

The Applicant's employment having already been close to six years with the Respondent.

The issues faced in securing new employment, this was also a further reason as to why she would not have been seeking to leave the Respondent.

Being 54 years of age, she planned to work with the Respondent until she retired.

[24] The Applicant's weekly earnings at the time of her dismissal with the Respondent were $1,885.45 per week.

[25] The Respondent submits that the maximum compensation payable to the Applicant is $49,021.70, plus superannuation.

[26] In relation to the anticipated period of employment, I make the following findings:

The Applicant has put forward a sound and logical argument as to why her employment would have continued for an extended period of time.

The Applicant had been working with the Respondent for nearly six years at the time of her dismissal.

However, I note the comments of the Respondent that the Applicant had moved over three hours away from the Respondent prior to the termination of her employment, therefore it would seem unlikely that the Applicant would have been realistically returned to employment with the Respondent for an extended period of years.

[27] I therefore find that the Applicant's employment would have continued for a maximum of another 18 weeks.

Efforts of the Applicant to mitigate the loss suffered by the Applicant because of the dismissal

[28] The Applicant must provide evidence that they have taken reasonable steps to minimise the impact of the dismissal.[7] What is reasonable depends on the circumstances of the case.[8]

[29] The Applicant also submits that the Commission should consider the below steps when considering what is reasonable in these circumstances:

She attempted to find work in a vast geographical area from Busselton, Bunbury, and Collie in the Southwest of Western Australia.

She applied for jobs in the Southern suburbs of the Perth metropolitan area.

Her mental health impacted the ability to look for work.

She looked for work in a variety of industries not just in sales (e.g. hospitality, retail, and office administration).

Her age and workers compensation claim impacting her ability to find work.

[30] The Respondent disputes that the Applicant took reasonable steps to minimise the impact of her dismissal.

[31] The Respondent submits that the Applicant did not take adequate steps to mitigate her loss following the termination of her employment, noting:

The 14 jobs listed by the Applicant that she sourced via Workforce Australia do not have applied dates listed, therefore it is hard to ascertain when these jobs were in fact applied for.

The Applicant did not provide details for jobs applied to for the period from the end of July 2024 up until early April 2025. The Respondent notes that the Applicant started to receive JobSeeker benefits in March 2025.

The Applicant has provided no evidence to support her submission that her mental health condition impacted her ability to look for work. The Applicant has also not provided any evidence to support her submission that her workers compensation claim has impacted her job search efforts.

[32] Having considered the above factors, I am not satisfied that the Applicant has taken all reasonable steps to mitigate her loss. The submissions from the Applicant cover a very small period in time (from April 2025) and do not adequately explain her efforts to mitigate her loss following the termination of her employment in July 2024. A 25% reduction will be made on this basis.

Amount of remuneration earned by the Applicant from employment or other work during the period between the dismissal and the making of the order for compensation

[33] The Applicant submitted that she is not currently working and is in receipt of Jobseeker payments only. The Applicant has not earned an income during this period, so I find this to be $0.

Amount of income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation

[34] I have calculated the Applicant's earnings during this period to be $0.

[35] The parties did not bring to my attention any other relevant matters that I believe required consideration.

[36] As noted by the Full Bench in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries:

"[t]he well-established approach to the assessment of compensation under s.392 of the FW Act... is to apply the "Sprigg formula" derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul's Licensed Festival Supermarket (Sprigg).[9] This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages[10]."[11]

[37] 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.

[38] I have estimated the remuneration the Applicant would have received, or would have been likely to have received, if the Respondent had not terminated the employment to be $33,938.10 on the basis of my finding that the Applicant would likely have remained in employment for a further period of 18 weeks.

[39] This estimate of how long the Applicant would have remained in employment is the "anticipated period of employment".[12]

[40] I have found that the amount of remuneration, earned by the Applicant, from the date of dismissal was $0, and that the amount of income reasonably likely to be earned by the Applicant, between the making of the order for compensation and the payment of compensation, is $0.

[41] The Applicant did not earn any remuneration from the period of 29 July 2024 until 9 May 2025; this is a period of around 10 months.

[42] The Applicant was not paid any form of notice from the Respondent following the termination of her employment. Therefore, this is not something that needs to be considered.

[43] Only monies earned since termination for the anticipated period of employment are to be deducted.[13]

[45] I now need to consider the impact of contingencies on the amounts likely to be earned by the Applicant for the remainder of the anticipated period of employment.[14]

[46] I do not consider any further deductions for any additional contingencies is required.

[47] Briefly, the below shows the calculation at this time:

Remuneration for the anticipated period: $33,938.10

Deduction of 25% for the failures in mitigating loss: $33,938.10 - $8,484.53 = $25,453.57

[48] I have considered the impact of taxation but have elected to settle a gross amount of $25,453.57, plus superannuation, and leave taxation for determination.

[49] As I highlighted in the decision, I consider that the Applicant had a part to play in the termination of her employment. The Applicant was given a clear direction by the Respondent to provide a copy of the medical report she discussed at the show cause meeting on 15 July 2024.

[50] Therefore, on the account of this conduct from the Applicant I have decided that a further deduction of 15%, or $5,090.72, is warranted.

[51] Section 392(5) of the Act provides that the amount of compensation ordered by the Commission must not exceed the lesser of:

(a) the amount worked out under section 392(6) of the Act; and

(b) half the amount of the high-income threshold immediately before the dismissal.

[52] The amount worked out under section 392(6) of the Act is the total of the following amounts:

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the Applicant 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 Applicant for the period of leave in accordance with the regulations.

[53] The high-income threshold immediately before the dismissal was $175,000.

[54] Half of the high-income threshold, as above, is $87,500.

[55] From the submissions and evidence of the Applicant, which I have previously accepted above, the Applicant's annual remuneration was $1885.45 x 52 = $98,043.40.

[56] Accordingly, the amount of compensation ordered by the Commission in this matter must not exceed $49,021.70.

[57] The amount provided for as a result of the calculation in accordance with Sprigg is lower than the compensation cap that is provided for under the Act.

[58] As a result, the compensation to the Applicant will be $20,362.85.

[59] Having applied the formula in Sprigg, I am nevertheless required to ensure that "the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case",[15] including my findings that:

The payment will not adversely impact the viability of the Respondent's operations.

The Applicant's length of service with the Respondent being a factor in favour of the amount ordered.

My finding that the Applicant did not make sufficient efforts to mitigate her loss following the termination of her employment and a reduction of 25%.

The contributory conduct of the Applicant, in failing to follow the direction of Mr Maffey on 15 July 2025, which results in a further deduction of 15%.

[60] Accordingly, considering all the circumstances, I have determined that the appropriate compensation $20,362.85.

[61] I have considered the impact of taxation but have elected to settle on the amount of $20,362.85 (gross) and leave taxation for determination.

[62] I am satisfied that the amount of compensation I have determined above takes into account all the circumstances of the case as required by section 392(2) of the Act.

[63] I confirm that, consistent with section 394(2) of the Act, the amount to be ordered does not include payment for shock, distress, or humiliation caused by the Applicant's dismissal.

[64] Accordingly, I will order that the Respondent pay $20,362.85 (gross) plus superannuation, less taxation as required by law, to the Applicant, in lieu of reinstatement, within 14 days of the date of this decision.

[65] The Order is issued concurrently.[16]

[7] PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002), [34]; citing PR908053 (AIRCFB, Giudice J, Lacy SDP, Blair C, 23 August 2001), [45].

[8] PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002), [34]; citing [1919] 2 KB 581.

[12] Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000), [34].

[14] PR910779 (AIRCFB, Williams SDP, Acton SDP, Gay C, 31 October 2001), [39].

Printed by authority of the Commonwealth Government Printer

Irena Kennedy v Warwick Fabrics

At a glance

Court

Decision date

Source

Judgment (160 paragraphs)

Irena Kennedy v Warwick Fabrics (Australia) Pty Ltd [2025] FWC 1961 (6 August 2025)

Parties

Legislation Cited (1)

Cases Cited (1)