Fair Work Act 2009

s.394 - Unfair dismissal

Xin Jin Shan Chinese Language and Culture School Inc

[1] On 7 December 2020 I determined that the dismissal of Mr Jian Ping Liu (Applicant) by the Xin Jin Shan Chinese Language and Culture School Inc (Respondent) on redundancy grounds was not a case of genuine redundancy within the meaning of s.389 of the Fair Work Act 2009 (Act) and was harsh, and therefore unfair.[1] I also issued directions to enable the parties to make further submissions as to the remedy (if any) that should be ordered taking into account my conclusion. This decision deals with the question of remedy.

[2] Section 390 of the Act sets out the circumstances in which an order for reinstatement or compensation may be made:

"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.

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

[3] That the Applicant was protected from unfair dismissal when he was dismissed and that he was unfairly dismissed was determined in my earlier decision.[2] Section 390(1) of the Act is therefore satisfied. It is uncontroversial that the Applicant has made an application under s.394. Section 390(2) is also satisfied. The Applicant does not seek reinstatement.[3] In the circumstances and given my earlier conclusion as to the reason for dismissal (a redundancy albeit not a case of genuine redundancy within the meaning of s.389) for the purposes of s.390(3)(a) I am satisfied that an order for reinstatement of the Applicant is inappropriate. I turn then to consider whether an order for payment of compensation is appropriate in all the circumstances of the case, and if so, what that amount should be.

[4] Taking into account my earlier finding that the dismissal was unfair, the reasons for that conclusion and since an order for reinstatement is inappropriate, I consider that an order for payment of compensation is appropriate in all the circumstances. There is no material before me which would suggest a contrary conclusion. The Respondent does not contend that an order for compensation is not appropriate. Its submissions were directed to the appropriate amount of compensation that should be fixed. Section 390(3)(b) is therefore satisfied

[5] The Applicant seeks an order of compensation. The submissions made by the Applicant in support of an order for compensation are largely misconceived. The Applicant seeks an order in the sum of $67,747.28 comprising 26 weeks wages for loss of income, seven weeks wages as severance or redundancy pay, three weeks wages in lieu of notice, 52 weeks of Jobkeeper payments and an amount for interest.

[6] The Applicant makes this claim without reference to the statutory considerations (or the cap on compensation) relevant to the assessment of compensation as a remedy under the Act. This is despite the directions for further submissions directing his attention to relevant provisions of the Act and despite their reproduction in an attachment to the directions. Even making allowance for the fact the Applicant is not represented, the approach adopted by him is not helpful and the matters to which he points as justifying the amount sought are largely irrelevant. If nothing else, it ought to have been evident to the Applicant that the claimed compensation amount is well in excess of the compensation cap. The Commission does not have power to make an order for compensation at large. The power is discretionary, and the fixing of a compensation amount is guided by the matters in s.392 of the Act which must be taken into account. The amount ultimately to be ordered is determined by taking into account the mandated statutory considerations and then if the assessment yields a result beyond the permitted threshold, the amount is subjected to a cap on compensation.

[7] The Respondent contends, taking into account the finding I have earlier made, that the appropriate level of compensation is in the range of one to two week's further remuneration, or $180 - $320.[4]

[8] Section 392 of the Act sets out the circumstances that must be taken into account in determining an amount of compensation, the effect of any findings of misconduct on that compensation amount and the upper limit of compensation that may be ordered as follows:

(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] The method for calculating compensation under s.392 of the Act was consider by a Full Bench of the Commission in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge.[5] In that decision the Full Bench set out a suggested order in which the criteria and other factors might be applied, taking into account authorities under corresponding provisions of the Workplace Relations Act 1996 in Sprigg v Paul's Licensed Festival Supermarket[6] and Ellawala v Australian Postal Corporation_._[7] I have adopted the methodology in Bowden in determining the amount of a payment of compensation observing that Bowden and the formulation in Sprigg serve as a guide rather than postulating any decision rule.

Remuneration that the Applicant would have received: s.392(2)(c)

[10] A consideration of this circumstance requires an assessment to be made about the likely period of employment that would have ensued had the Applicant not been unfairly dismissed. An assessment of the likely period of employment is not to be conducted in a vacuum but rather against the backdrop of the circumstances of the dismissal and the reasons for concluding that the dismissal was unfair. The dismissal of the Applicant was effected on redundancy grounds, albeit that the failure to consult as required by the applicable modern award meant the redundancy dismissal was not a case of genuine redundancy within the meaning of s.389 of the Act. It is to be remembered that there was a change in the Respondent's operational requirements, consequent on the requirement imposed by Monash City Council that the Respondent cease operating a building located at 13 Windsor Avenue, Mount Waverley, Victoria as an office and revert the use to that which was permitted - a car park.[8] Because of this change, the Respondent decided that it no longer required the Applicant's job to be performed by anyone. Instead, each department would be responsible for undertaking its own photocopying rather than having the Applicant undertake the work.[9] Where there was a requirement for larger scale copying, that work would be (and had been) sent to an external provider.[10] Taken together, these circumstances resulted in the job of the Applicant becoming redundant and dismissal followed.

[11] The point here is that the Respondent took steps that were responsive to the impact of the requirement imposed by Monash City Council on the Respondent's business. Thus, as at the date of the Applicant's dismissal the Respondent no longer required the Applicant's job to be performed by anyone because of changes to the operational requirements of the Respondent's enterprise. That which the Respondent had failed to do, and that which led me, in part, to conclude the Applicant's dismissal was unfair, was to consult as required by the Clerks - Private Sector Award 2010 (Award).

[12] The Applicant made no submission about this consideration. He does not say how long he might have remained employed had he not been unfairly dismissed or why such a period should result in the circumstances of this case. For the Respondent it may be inferred from its submissions that it contends that the likely period of employment that would have ensued had the Applicant not been unfairly dismissed would be a short period - perhaps between one and two weeks. This period would be productive of consultation but would unlikely have led to any further employment of the Applicant in any other position.[11] This proposition was not challenged by the Applicant in his reply submission, due largely in my view to his continued wrong focus, as disclosed in his reply submissions, on an excessive compensation claim, a perception of wrong doing (rightly or wrongly) on the part of the Respondent and the desire for punitive action in the form of a large compensation figure to act both as punishment for wrong doing (not limited to the dismissal) and as a deterrent. Such considerations might be relevant for fixing a civil penalty by a court for contraventions of the Act or an industrial instrument, but they have no place in assessing compensation. An order for compensation is made in lieu of reinstatement and is directed to placing the former employee, so far as money can, in the position the person would have been in but for the unfair dismissal (taking into account the statutory considerations and the compensation cap).

[13] Ultimately, I accept that the consultation that would and should have occurred but for the dismissal would not likely have resulted in the Applicant continuing in employment in another role. Employment would thus have come to an end following consultation because the job occupied by the Applicant was redundant. In my assessment taking these matters into account, the Applicant would likely have continued in employment for a further six weeks during which consultation, which did not occur in accordance with the Award, should have occurred. Thereafter the Applicant would have been given notice and worked out his notice period. I consider that in the normal course of events, a further week for consultation would be sufficient, however in this case, the Applicant only worked one day per week. Thus once the Respondent had complied with its obligations to commit matters to writing as required by the Award, time should be allowed for the Appellant to respond and to make suggestions about possible mitigation steps and for the Respondent to consider the response and communicate with the Applicant. Given his working days, I therefore consider two weeks further employment to allow for proper consultation to be appropriate. Once consultation had concluded, dismissal would have been effected by the Respondent giving the Applicant notice of dismissal on redundancy grounds. Given his period of employment and age, the Applicant would have been given four weeks' notice pursuant to s.117 of the Act. After working out the notice period the employment would have ended. Thus, a total likely period of employment of six weeks. Therefore, the remuneration that the Applicant would have received if he had not been dismissed is six weeks' pay plus 9.5% superannuation contributions.

Remuneration earned by the Applicant: s.392(2)(e)

[14] The Applicant appears not to have obtained any alternative employment or other work since his dismissal. He therefore will not have earned any remuneration from employment or other work between the date of his dismissal and the making of the order for compensation. In the circumstances I do not propose any deduction on account of remuneration earned.

[15] Given my assessment about the likely remuneration that the Applicant would have received if he had not been dismissed, and the consequence of that conclusion on the assessment of compensation, I do not propose to make any deduction on account of this consideration. In any event on the material before me, the earning of any income by the Applicant between the date of any compensation order and the payment of same to the Applicant is unlikely

[16] Putting to one side the Applicant's various submissions earlier noted justifying the compensation amount claims, no party suggested other relevant matters for the assessment of compensation. Given the amount of compensation assessed, a deduction for exigencies is not appropriate.

[17] The Respondent does not contend that its financial position is such that an order of compensation might impact its viability. In the circumstances I do not consider that the order I propose be made will adversely affect the viability of the Respondent's business.

[18] At the time of his dismissal the Applicant had completed just short of four years of service with the Respondent. This is not an insignificant period of employment however it is not a material factor weighing in favour of the order in an amount beyond that which I propose to make nor does it suggest the amount I propose to order is excessive.

[19] I accept that the Applicant has not, since his dismissal, made any attempt to find new employment.[12] There is also nothing in his written submissions on remedy which suggests that he had taken any steps to find alternative employment or work. The Respondent contends that the absence of any mitigation efforts is a compelling factor militating against the award of any further financial compensation for the loss of capacity to earn income.[13] I accept that the absence of mitigation efforts is a factor that must be taken into account in assessing compensation but I do not propose any deduction on account of any failure to mitigate. This is because in making an assessment of the compensation amount, the duration of the anticipated period of employment is short and is confined to the period the Respondent would have been required to consult together with the notice period the Respondent, acting lawfully, would have given the Applicant that his employment was to end.

[20] No deduction is warranted given the reason for dismissal was redundancy and not misconduct.

[21] At the time of his dismissal the Applicant worked one day per week for eight hours. He was paid at a rate of $20 per hour according to payslips produced by the Respondent. This rate appears to be below that for which the Award made provision at the relevant time. In my assessment, having regard to the Applicant's duties, he was entitled to be classified as a Level 1 employee under the Award and given his years of service, the appropriate classification was Level 1 - Year 3. The relevant applicable hourly rate for this classification under the Award at the time of his dismissal was $22.43 per hour. For eight hours (or one week in the Applicant's case) the appropriate amount is $179.44. For six weeks, the amount is $1,076.64. The total compensation amount is therefore $1,076.64 plus superannuation.

[22] The compensation amount is below the statutory cap.

[23] No suggestion was made that the compensation amount should be paid by instalment and I do not propose to so order.

[24] I consider the application of the Sprigg formula does not, in this case, yield an amount that is clearly excessive or clearly inadequate. Accordingly, there is no basis for me to reassess the assumptions made in reaching the compensation amount of $1,076.64 plus 9.5% superannuation.

[25] For the reasons I have given, it is appropriate that I order compensation in the sum of $1,076.64 plus 9.5% superannuation. The order I make will require payment by the Respondent of the compensation amount within 14 days of the date of the order. The order is published contemporaneously with this decision in PR726559.

[1] Jian Ping Liu v Xin Jin Shan Chinese Language and Culture School Inc [2020] FWC 6327

[3] Applicant's outline of submissions at [5]

[4] Respondent's submissions as to remedy at [5]

[5] [2013] FWCFB 431

[6] (1998) 88 IR 21

[8] Jian Ping Liu v Xin Jin Shan Chinese Language and Culture School Inc [2020] FWC 6327 at [29]

[11] Respondent's submissions as to remedy at [5]

[13] Respondent's submissions as to remedy at [6]

Printed by authority of the Commonwealth Government Printer