s.394 - Unfair dismissal

Application for an unfair dismissal remedy - dismissal found to be unfair - order for compensation appropriate.

[1] On 25 April 2025, Mrs Leesa Zaicos made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (FW Act) for an order granting a remedy, alleging that she had been unfairly dismissed from her employment with Tamworth Dementia Respite Service Inc (TDRS). TDRS is a social service providing support for participants aged 65 years and over with dementia and their carers.

[2] Mrs Zaicos was employed by TDRS from 22 March 2021 until her dismissal on 23 April 2025. At the time of the dismissal, Mrs Zaicos was the Executive Manager of TDRS.

• [3] The application was initially allocated to Deputy President Boyce and was dismissed following the Deputy President's finding that the dismissal was a genuine redundancy within the meaning of s.389 of the FW Act.[1] In this regard, the Deputy President determined that TDRS no longer required Mrs Zaicos' job to be performed by anyone due to changes in the operational requirements of the enterprise having regard to its financial position and the decisions that had to be made at the relevant time, that there was no requirement for TDRS to engage in consultations about redundancy and that there was no basis upon which he could find that it would have been reasonable in all the circumstances to redeploy Mrs Zaicos.

• [4] The decision to dismiss the application was quashed by a Full Bench on appeal.[2] The Full Bench found that Mrs Zaicos was covered by the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award), the SCHADS Award applied to Mrs Zaicos' employment, that TDRS did not comply with clause 8.1 of the SCHADS Award and that the Deputy President was wrong to find that there was no requirement for TDRS to engage in consultation about redundancy. In this regard, clause 8.1 of the SCHADS Award requires an employer to give notice to and engage in discussions with affected employees if it has made a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees.

[5] The Full Bench rejected the objection made to Mrs Zaicos' unfair dismissal application that her dismissal was a case of genuine redundancy. The matter has been remitted to me to determine whether the dismissal was harsh, unjust or unreasonable.

[6] I conducted a determinative conference in relation to the matter on 10 December 2025. Mrs Zaicos represented herself at the conference and gave evidence. Mr Andrew Bardnen Director of Rodgers Reidy, a Registered Liquidator and a Registered Trustee in Bankruptcy represented TDRS and gave evidence. No personnel from TDRS attended the determinative conference or provided evidence.

[7] In summary, I have determined that Mrs Zaicos' dismissal was harsh, unjust and unreasonable for reasons which include that Mrs Zaicos was blameless in relation to the circumstances of her dismissal and was dismissed while unwell and receiving workers compensation. Further, there was no sound operational reason for Mrs Zaicos' dismissal, TDRS did not consult Mrs Zaicos in relation to the dismissal and TDRS could have considered offering Mrs Zaicos a reduction in hours as an alternative to dismissal. I have decided that an order for payment of compensation is appropriate.

[8] Mrs Zaicos has over 25 years' experience in aged care, is a qualified nurse and has a Bachelor of Health Science (Leisure and Health) degree. Mrs Zaicos' work in aged care includes working in the areas of mental health, hoarding and squalor, fall prevention, dementia, and assisting people to stay in their homes. Mrs Zaicos commenced part time employment with TDRS in March 2021. TDRS has been in operation, with a manager, since 1987. TDRS is an incorporated association based in Tamworth, New South Wales and provides centre-based programs in Tamworth and surrounding areas for participants with dementia.

[9] TDRS is governed by a voluntary committee of management and receives the majority of its income pursuant to a Commonwealth Standard Grant Agreement between the Commonwealth represented by the Department of Health and Aged Care and TDRS (Grant Agreement).

[10] The Grant Agreement provided that it commenced on 1 July 2018, that TDRS was funded to provide 'Social Support - Group' and that the Grant Activity Objective was:

To assist frail, older people to participate in community life and feel socially included through structured, group-based activities that develop, maintain or support independent living and social interaction.

[11] On 4 June 2024, TDRS changed to a 'Centre Based Respite' facility. The new Grant Activity Objective was:

To support and maintain care relationships between carers and clients, through providing good quality respite care for frail, older people so that regular carers can take a break.

[12] During her employment, Mrs Zaicos secured increases in funding which effectively doubled TDRS' operational budget and led to an expansion of services. Mrs Zaicos then developed an outreach service model designed to provide dementia support to surrounding areas. Mrs Zaicos successfully obtained funding for a pilot program and implemented the service in the town of Quirindi. Following the success of this pilot, she secured ongoing funding to ensure the outreach program's permanent operation for one day per week. As Mrs Zaicos secured more funding, her hours of work increased to four days per week.

[13] In the role of Executive Manager, Mrs Zaicos was responsible for staffing, program management, dealing with external providers, applying for grants, growing TDRS to meet the demands of the local areas, and bringing the facility up to required standard. In this regard, Mrs Zaicos was responsible for ensuring TDRS remained compliant when moving from the Commonwealth Home Support Program (CHSP) funding to the Support at Home Program model and the new Aged Care Act 2025 which was implemented from 1 July 2025.

• [14] At the time Mrs Zaicos commenced employment, TDRS had a manager and four staff members and serviced 20 clients and carers. By 2025, there were either eight or nine staff members and around 12 volunteers providing services to approximately 90 high‑needs dementia clients and their carers.[3] TDRS received annual funding of around $130,000 at the time that Mrs Zaicos commenced employment, which increased to $320,000 then almost $500,000 when the service at Quirindi was established.

[15] The staff working for TDRS in Tamworth comprised a cook, main group leader, and assistant room leaders who rotated through various roles including assisting participants to engage in activities and with toileting and personal care. All of these staff members were required to have a Certificate 3 qualification in individual, aged or disability care. Mrs Zaicos and the main group leader would organise and plan different activities each month which included meeting with participants to discuss what they wanted to do.

[16] During the period from 2020 to 2023, the external accountant engaged by TDRS stopped paying superannuation and GST and complying with other requirements of the Australian Tax Office (ATO), resulting in TDRS incurring a debt of approximately $250,000 to the ATO. Mrs Zaicos became aware of this because staff complained to her about unpaid superannuation. Mrs Zaicos advised the committee of this matter and they refused to act. The accountant assured Mrs Zaicos that there was no issue with the superannuation. Other staff started complaining about superannuation so Mrs Zaicos encouraged them to make formal complaints resulting in some staff members complaining directly to the ATO. Mrs Zaicos then instructed a solicitor which led to the cessation of the accountant's services. Mrs Zaicos was subsequently given access to TDRS' business portal with the ATO which resulted in Mrs Zaicos becoming aware of the extent of TDRS' non-compliance with its obligations including the failure to pay GST. Prior to this time, Mrs Zaicos did not have access to TDRS' Xero accounting software or the ATO portal.

[17] Relevantly, the engagement of the external accountant predated Mrs Zaicos' employment with TDRS. The accountant nominated his personal address as the mailing address for correspondence from the ATO to TDRS. As such, all correspondence from the ATO was sent to the accountant's address so Mrs Zaicos had no way of knowing about TDRS' ATO compliance issues prior to receiving complaints about superannuation from staff.

[18] Mrs Zaicos' financial duties were limited to receiving invoices on behalf of TDRS and sending them to the accountant for payment. Mrs Zaicos had access to TDRS' bank account and was a co-signatory, together with the accountant. Mrs Zaicos co-approved payment of invoices and the fortnightly payroll. Mrs Zaicos said that the authorisation of payroll involved approving a lump sum through internet banking and that she did not have access to the individual payroll records for employees including superannuation.

[19] TDRS was prohibited from using its Commonwealth funding for any purpose other than the delivery of client services. Because of TDRS' large debt to the ATO, it was essentially operating insolvently. Mrs Zaicos said that a new accountant was appointed but he became hostile and she believed that he was trying to protect the previous accountant. The new accountant was repeatedly asked to report the actions of the previous accountant, but he refused, stating that the previous accountant would only 'get a slap on the wrist' and it was not worth affecting their professional relationship by reporting him.

[20] Mrs Zaicos explained that there was no governance at TDRS, the policies were out of date, and that the committee members had been in their roles for many years, were elderly, and had multiple health issues. The committee met every two months, but Mrs Zaicos did not receive much guidance from them.

[21] When the financial issues were identified in 2024, the committee increased Mrs Zaicos' duties to five days per week. Mrs Zaicos eventually suffered a psychological injury as a result of the stress caused by managing these financial issues and was certified as unfit for work for a period of one month from 4 April 2025.

[22] Mr Andrew Bardnen is a Director of Rodgers Reidy, a Registered Liquidator and a Registered Trustee in Bankruptcy. On 8 April 2025, the TDRS committee appointed Mr Bardnen as its Voluntary Administrator pursuant to s.436A of the Corporations Act 2001 (CA Act).

[23] Mr Bardnen explained that the objective of the voluntary administration regime, as set out in s.435A of the CA Act, is to provide for the business, property and affairs of an insolvent association to be administered in a way that:

(a) maximises the chances of the association, or as much as possible of its business, continuing in existence; or

(b) if it is not possible for the association or its business to continue in existence, results in a better return for the association's creditors and members than would result from an immediate winding up of the association.

[24] Following his appointment as Administrator, Mr Bardnen undertook a review of the operations of TDRS and took immediate steps, including:

• Taking control of TDRS' business and assets;
• Conducting a strategic review of TDRS, including its financial position and cashflow; and
• Continuing to trade TDRS' business.

[25] Mr Bardnen undertook these steps for the purposes of his consideration as to whether or not TDRS' operations should continue to operate on a revised basis or alternatively, cease operations with all employees being immediately terminated.

[26] TDRS' financial records, in particular, its profit and loss statement for the period from 1 July 2024 to 8 April 2025, revealed that its main expense was employees' gross wages plus superannuation totaling $271,567.15, (which was approximately 77% of its total expenses) with Mrs Zaicos' pay being approximately 42.5% of total employees' salaries. Mr Bardnen said that Mrs Zaicos' hourly rate was at a level where TDRS could not commercially offer reduced hours or redeployment to Mrs Zaicos.

[27] Mr Bardnen decided on behalf of TDRS that it was not in the position to maintain Mrs Zaicos' employment or offer her redeployment. TDRS terminated Mrs Zaicos' employment while she was absent from work on workers compensation on 23 April 2025. Mr Bardnen said that this was part of a genuine restructure of TDRS.

[28] The letter of termination provided the following in relation to Mrs Zaicos' termination entitlements:

Pursuant to the Corporations Act 2001, employee entitlement claims under an external administration are paid in priority to ordinary unsecured creditors. However, they are not paid on termination and will be paid in due course, if sufficient funds are available. Accordingly, if I declare a dividend to the Association's employees in respect to their outstanding priority employee claims, any amounts due to you will be paid at that time following an adjudication of all priority claims.

[29] Mr Bardnen said that any redeployment for Mrs Zaicos was inappropriate due to the Voluntary Administration process and as at the time of terminating Mrs Zaicos, the future of TDRS remained uncertain, and would depend upon the vote of TDRS' creditors in the meeting of creditors, which was held on 26 May 2025.

[30] Mr Bardnen said that during the Administration period, no new employee was employed by TDRS in Mrs Zaicos' role. Two existing part-time employees shared the tasks and duties previously performed by Mrs Zaicos, resulting in a nominal increase in their salaries and hours worked.

[31] Mr Bardnen explained that at the time he was appointed, TDRS had paid the outstanding superannuation and that most of the remaining debt which TDRS incurred was in respect of GST. Although the Commonwealth funding made it clear that it was inclusive of GST and GST should be remitted, the previous accountant had assumed that the monies were GST exempt and incorrectly recorded this on the Business Activity Statement.

[32] A meeting of creditors was held on 26 May 2025 which Mrs Zaicos attended. The minutes of the meeting recorded that five proof of debt forms had been received from creditors comprising:

• $3,360.94 from a current employee;
• $1,110.74 from a current employee;
• $1,780.62 from a current employee;
• $15,452.32 from Mrs Zaicos (in respect of her outstanding annual leave and payment in lieu of notice); and
• $248,164.90 from the ATO

[33] The meeting resolved that TDRS enter into a Deed of Company Arrangement. The effect of this arrangement was that:

• Employees of TDRS, including Mrs Zaicos, would receive their full entitlements;
• The estimated return to the ATO was 4.55 to 9.54 cents in the dollar; and
• Any remaining debt owing to the ATO would be extinguished at the conclusion of the three year period that the Deed of Company Arrangement would operate.

[34] The Deed of Company Arrangement was executed on 11 June 2025. On this date, Mr Bardnen became the Deed Administrator and control of TDRS reverted back to its committee of management.

[35] On 15 August 2025, Mr Bardnen declared a first and final dividend in favour of priority (employee) creditors of TDRS pursuant to ss.556(1)(e), 556(1)(f), 556(1)(g) and 556(1)(h) of the CA Act. This resulted in Mrs Zaicos receiving three weeks pay in lieu of notice and outstanding annual leave and leave loading.

When can the Commission order a remedy for unfair dismissal?

[36] Section 390 of the FW Act provides that the Commission may order a remedy if:

(a) the Commission is satisfied that the person was protected from unfair dismissal at the time of being dismissed; and

[37] Both limbs must be satisfied. I am therefore required to consider whether Mrs Zaicos was protected from unfair dismissal at the time of being dismissed and, if I am satisfied that Mrs Zaicos was so protected, whether Mrs Zaicos has been unfairly dismissed.

[38] Section 385 of the FW Act provides that a person has been unfairly dismissed if the Commission is satisfied that:

(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.

[39] There was no dispute, and I find that Mrs Zaicos has been dismissed within the meaning of s.385 of the FW Act.

[40] Under s.396 of the FW Act, the Commission is obliged to decide the following matters before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.

[41] Section 382 of the FW Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:

(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

(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.

[42] There is no dispute about these matters and I am satisfied that:

• the application was made within the period required in s.394(2);
• at the time of dismissal, Mrs Zaicos was a person protected from unfair dismissal because:
  • Mrs Zaicos was an employee who completed a period of employment with TDRS of at least the minimum employment period; and
  • The SCHADS Award covered Mrs Zaicos.

[43] In relation to whether the the dismissal was consistent with the Small Business Fair Dismissal Code, I find that the Small Business Fair Dismissal Code does not apply because it deals only with dismissal on the grounds of an employee's conduct or capacity to do their job. Mrs Zaicos was not dismissed for either of these reasons.

• [44] In relation to whether Mrs Zaicos' dismissal was a case of genuine redundancy, I adopt the findings of the Full Bench and find that Mrs Zaicos' dismissal was not a case of genuine redundancy.[4]

[45] Having considered each of the initial matters, I am required to consider the merits of the application.

Was the dismissal harsh, unjust or unreasonable?

[46] Section 387 of the FW Act provides that, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission 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.

• [47] I am required to consider each of these criteria, to the extent they are relevant to the factual circumstances before me.[5]

[48] In relation to s.387(a), (c) and (e), the dismissal was not related to Mrs Zaicos's capacity, conduct or unsatisfactory performance. I find that these matters are neutral considerations.

[49] Section 387(b) deals with whether the employee was notified of the valid reason for the dismissal related to the person's capacity or conduct. This matter is not relevant given that the dismissal was not related to Mrs Zaicos' capacity or conduct.

[50] Section 387(d) deals with any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to the dismissal. I find that there were no discussions relating to the dismissal.

[51] Section 387(f) deals with the degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal. The parties did not make any submissions about this matter.

[52] Section 387(g) deals with 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. The parties did not make any submissions about this matter.

[53] Section 387(h) deals with any other matters that the Commission considers relevant. I consider these matters below.

Mrs Zaicos was blameless in relation to the circumstances of her dismissal

[54] The evidence establishes that Mrs Zaicos was dismissed after she identified mismanagement of TDRS' financial affairs by its accountant. This set in train a series of events which led to the appointment of an Administrator who decided to terminate Mrs Zaicos' employment when she was absent from work while unwell and receiving workers compensation.

[55] Based on the evidence before me, I find that Mrs Zaicos was entirely blameless in relation to the circumstances of her dismissal and that the consequences of the dismissal were extremely harsh in that both Mrs Zaicos' health and her financial situation were adversely affected. Mrs Zaicos gave uncontested evidence that the financial situation of TDRS caused her to develop a psychological injury on 4 April 2025 which she continued to suffer from for almost eight months because of TDRS' poor treatment of her. Although there was no medical evidence before me, it is reasonable for me to infer that Mrs Zaicos' health issues arose from the termination of her employment and the events preceding this because she received workers compensation payments from TDRS' insurer during the period from April to November 2025.

[56] I also find that the circumstances which led to Mrs Zaicos' dismissal were entirely the responsibility of the committee, including its failure to have proper oversight of the previous accountant's work and refusal to act on the complaints of employees in relation to unpaid superannuation. During the determinative conference, Mr Bardnen attempted to attribute responsibility for TDRS' lack of oversight of its financial affairs to Mrs Zaicos which was entirely without foundation, given the poor governance of the committee, lack of policies and procedures applying at TDRS and that Mrs Zaicos was not provided with access to TDRS' accounting software until the unpaid superannuation was discovered.

Failure of Mr Bardnen to comply with TDRS'consultation obligations under the SCHADS Award

[57] There was no attempt by Mr Bardnen to comply with TDRS' legal obligations to consult with Mrs Zaicos about the decision to terminate her employment, which is a serious matter given the potential penalties that TDRS is now exposed to arising from this conduct. Further, although the evidence establishes that Mrs Zaicos has expertise in providing programs to people with dementia and that Mrs Zaicos single handedly doubled TDRS' revenue and expanded its services, there was no attempt by Mr Bardnen to discuss with Mrs Zaicos options to maintain quality service delivery in accordance with the terms of the Grant Agreement.

[58] There was debate between Mr Bardnen and Mrs Zaicos during the determinative conference about whether it was a condition of the Grant Agreement that TDRS employ a qualified operations manager. Mrs Zaicos contended that her position was a requirement of the Grant Agreement, the CHSP Program Manual and other documents. Mr Bardnen produced an email from the Department of Social Services dated 24 June 2025 which advised, 'to the best of my knowledge, there are no specific required qualifications for CHSP managers' in response to an email from TDRS of the same date which asked, 'Can you please advise if there is a specific compliance requirement under the Department of Health's funding arrangement that stipulates that the Association must be operated by a qualified operations manager'.

[59] Ultimately, the documents relied on by Mr Bardnen and Mrs Zaicos do not assist in resolving this issue. The most persuasive evidence is derived from TDRS' conduct in employing a degree qualified professional with 25 years experience to run its services, and in increasing Mrs Zaicos' hours when the services expanded. In my view, this establishes that a person with Mrs Zaicos' expertise and experience was necessary to deliver the quality services required by the Grant Agreement.

There was no sound operational reason for Mrs Zaicos' dismissal

[60] I find, based on the evidence before me, that Mr Bardnen's decision to terminate Mrs Zaicos' employment was based solely on her rate of pay and did not involve any assessment of the qualifications, responsibilities and duties required to run a Centre Based Respite facility. It is likely that during Mrs Zaicos' four year employment history, she would have taken leave, necessitating some of her duties being delegated to more junior staff members on a temporary basis. This is what occurred after Mrs Zaicos was dismissed. It is therefore not surprising that Mr Bardnen, who has no qualifications in the delivery of services to aged participants, would reach an uninformed view during the two month period that he managed TDRS, that Mrs Zaicos' role could be undertaken by two lower graded employees carrying out additional duties. Taking into account the duties Mrs Zaicos performed for TDRS, Mrs Zaicos' qualifications and 25 years of experience in the aged care sector, I do not accept that her role could be carried out by the employees who Mr Bardnen assigned duties to on an ongoing basis. There is no evidence before me that Mrs Zaicos' role has continued to be carried out in this way after control of TDRS reverted back to its committee of management on 10 June 2025. I am therefore not satisfied that there was a sound operational reason for Mrs Zaicos' dismissal.

[61] The rationale provided by Mr Bardnen for Mrs Zaicos's dismissal was not convincing. The termination may have been a logical consequence of TDRS' dire financial circumstances if the funds usually used to pay Mrs Zaicos' salary could have been diverted to pay the outstanding debt to the ATO, however this did not and could not occur.

[62] The funding for Mrs Zaicos' salary was provided through the Grant Agreement. There is no dispute between the parties that TDRS was prohibited from using these funds to pay tax debts from previous years. As such, it cannot be suggested that the funds used for Mrs Zaicos' salary could be diverted to pay the ATO debt. Further, the amounts owed to employees were relatively small and the amount owed to the ATO will be extinguished at the conclusion of the Deed of Company Arrangement.

[63] When Mr Bardnen was questioned during the determinative conference about the rationale for Mrs Zaicos' dismissal, he referred to the following matters:

• Mr Bardnen spoke to the Commonwealth at the time of his appointment in April 2025 and was advised that there was no guarantee that funding would be renewed for the financial year commencing 1 July 2025;
• If TDRS stopped providing services, funding would immediately cease so there was a need to continue providing services;
• The Commonwealth had raised an issue about whether all of the participants were eligible to claim funding so funding might be reduced due to issues about eligibility, however TDRS was trying to find eligible participants to address this;
• The outreach program at Quirindi had ceased due to issues about participant eligibility;
• Changes to NDIS funding (I believe that Mr Bardnen was referring to Aged Care funding);
• TDRS had been spending more than it could afford to which created the tax debt.

[64] In relation to the first issue, Mrs Zaicos gave evidence that staff (including herself) were employed pursuant to employment contracts which provided that ongoing employment beyond 30 June each year was contingent upon funding being renewed. As such, this was not a reason to terminate Mrs Zaicos' employment two months before this date. In my view, Mr Bardnen should have advised Mrs Zaicos that there was a possibility that her employment contract would not be renewed beyond 30 June 2025, if funding was not renewed or significantly reduced, as part of the required consultation process. There was no financial justification for terminating Mrs Zaicos' employment prior to 30 June 2025 as TDRS continued to receive funding through the Grant Agreement during this period, which included funding for Mrs Zaicos' salary. As events transpired, it was not necessary for TDRS to use funding from the Grant Agreement to pay Mrs Zaicos' salary during the period from April to 30 June 2025 because Mrs Zaicos was receiving workers compensation at the time of her dismissal, which was paid by the insurance company and not by TDRS.

[65] In relation to the suggestion that funding may be reduced because participants might not be eligible, there was no evidence before me which established that participants were in fact not eligible to attend TDRS' programs or that funding has been reduced because of this. It is possible that changes to the funding model may have resulted in changes to eligibility. In this regard, Mrs Zaicos expressed concern that participants would fall through the gap as they are transferred from CHSP funding to the Support at Home Program without her expertise to guide this transition.

[66] In relation to TDRS spending more than it was entitled to, this appears likely given that TDRS was utilising a portion of its funding that should have been paid to the ATO in relation to GST. However, there is no suggestion that this portion was equivalent or even close to the amount paid to Mrs Zaicos in respect of her salary. I repeat my earlier observations that Mrs Zaicos was receiving workers compensation at the time of her dismissal. There is no evidence about how TDRS used the funding which would have been otherwise allocated for Mrs Zaicos' salary while Mrs Zaicos was receiving workers compensation.

[67] Mr Bardnen was not able to provide evidence about the quantum of funding provided to TDRS for the financial year commencing from 1 July 2025 as management of TDRS had reverted back to the committee by that time. In the circumstances there is no evidence to support a finding that the funding provided to TDRS from 1 July 2025 was either not renewed or reduced and that TDRS could not afford to pay Mrs Zaicos' salary or a large portion of that salary.

Did TDRS have other options available apart from termination?

[68] The history of Mrs Zaicos' employment with TDRS shows that she was willing to increase her hours of work when funding increased and that she was also willing to increase her work to a full-time role to assist in managing the crisis caused by the previous accountant's financial mismanagement. In my view, this shows that Mrs Zaicos was aware that her hours of work were directly connected to the quantum of funding received. Mrs Zaicos had previously worked for TDRS for less than four days per week, before its funding was increased. In these circumstances, if Mr Bardnen was genuinely concerned that TDRS' funding would be reduced, he should have explored whether Mrs Zaicos was willing to reduce her hours of work in anticipation of this possibility, as an alternative to dismissal.

Is the Commission satisfied that the dismissal of Mrs Zaicos was harsh, unjust or unreasonable?

[69] I have made findings in relation to each matter specified in s.387 as relevant.

[70] I must consider and give due weight to each matter as a fundamental element in determining whether the termination was harsh, unjust or unreasonable.[6]

[71] Having considered each of the matters specified in s.387 of the FW Act, I am satisfied that the dismissal of Mrs Zaicos was harsh, unjust and unreasonable because:

1. Mrs Zaicos was blameless in relation to the circumstances of her dismissal;
2. Mrs Zaicos was dismissed when she was absent from work while unwell and receiving workers compensation;
3. The consequences of the dismissal were extremely harsh in that both Mrs Zaicos' health and her financial situation were adversely affected;
4. Mr Bardnen failed to comply with TDRS' consultation obligations under the SCHADS Award;
5. There was no sound operational reason for Mrs Zaicos' dismissal; and
6. If Mr Bardnen genuinely believed that TDRS' funding might be reduced from 1 July 2025, he could have explored whether Mrs Zaicos was willing to reduce her hours of work in anticipation of this possibility, as an alternative to dismissal.

[72] I am therefore satisfied that Mrs Zaicos was unfairly dismissed within the meaning of s.385 of the FW Act.

[73] Being satisfied that Mrs Zaicos made an application for an order granting a remedy under s.394, was a person protected from unfair dismissal, and was unfairly dismissed within the meaning of s.385 of the FW Act, I may, subject to the FW Act, order Mrs Zaicos' reinstatement, or the payment of compensation to Mrs Zaicos.

[74] Under s.390(3) of the FW Act, I must not order the payment of compensation to Mrs Zaicos unless:

(a) I am satisfied that reinstatement of Mrs Zaicos is inappropriate; and

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

Is reinstatement of Mrs Zaicos inappropriate?

[75] Mrs Zaicos has not sought reinstatement and TDRS has not made any submissions in relation to this matter. On this basis I consider that reinstatement is inappropriate.

Is an order for payment of compensation appropriate in all the circumstances of the case?

[76] Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, '[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one...'[7]

• [77] 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.[8]

[78] Mrs Zaicos submitted that payment of compensation is appropriate. TDRS submitted that payment of compensation is not appropriate in circumstances where Mrs Zaicos was employed pursuant to a contract of employment which ended on 30 June 2025 and Mrs Zaicos suffered no financial loss during the period from the date of dismissal to 30 June 2025.

[79] TDRS submitted that based upon the unsigned employment contract of Mrs Zaicos and an email from Mrs Zaicos to the Administrator's office dated 23 June 2025, Mrs Zaicos' employment contract was due to expire on 30 June 2025. TDRS submitted that Mrs Zaicos continued to receive wages through workers compensation from 24 April 2025 to at least 12 November 2025. TDRS submitted that taking into account that Mrs Zaicos' outstanding entitlements were paid in full under the Deed of Company Arrangement, including three weeks pay in lieu of notice and accrued annual leave entitlements, together with the continued payment of workers compensation, Mrs Zaicos has received 28 weeks of payments and accordingly, does not appear to have suffered financial loss.

[80] The only employment contract in evidence before me was an unsigned contract which did not appear to have an end date. As noted above, Mrs Zaicos gave evidence that she was employed pursuant to an employment contract which provided that ongoing employment beyond 30 June each year was contingent upon funding being renewed. I accept Mrs Zaicos' evidence in this regard. I find that as Mrs Zaicos was employed for a four year period and her employment was renewed on an annual basis, she had a reasonable expectation that if funding was renewed, her employment would continue for a further twelve months. There is no evidence to suggest that funding was not renewed for the financial year commencing 1 July 2025. As Mrs Zaicos is earning less income than she would if she was still employed by TDRS, I find that she has suffered financial loss as a result of the dismissal and that an order for payment of compensation is appropriate.

Compensation - what must be taken into account in determining an amount?

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

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

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

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

(e) the amount of any remuneration earned by Mrs Zaicos 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 Mrs Zaicos 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.

[82] I consider all the circumstances of the case below.

Effect of the order on the viability of TDRS' enterprise

[83] TDRS submitted that as part of the Deed of Company Arrangement, it was agreed and accepted by TDRS' creditors including Mrs Zaicos that TDRS would provide contributions to the Deed Fund in the sum of $48,000 by way of monthly instalments of $1,500.00 for a period of 32 months to allow an estimated dividend around 4.55 cents to 9.54 cents in the dollar to unsecured creditors of TDRS.

[84] TDRS submitted that any financial remedies available to Mrs Zaicos will have a significant impact on the Deed of Company Arrangement and may result in it being terminated with TDRS being placed into liquidation. TDRS submitted that if it is put into liquidation, it will cease trading and all employees will be terminated.

[85] The submissions by TDRS about the impact of compensation being awarded to Mrs Zaicos were vague and not supported by any evidence. TDRS did not provide any evidence about its current funding arrangements or its current financial situation. The only information I have before me about TDRS' financial position is the profit and loss statement for the period immediately prior to Mrs Zaicos' dismissal and the debts covered by the Deed of Company Arrangement.

[86] As I have no evidence before me which establishes that a payment of compensation will affect the viability of TDRS, I do not propose to reduce the amount of compensation ordered on this basis. However, I have taken into account the fact that TDRS is subject to a Deed of Company Arrangement and have decided that any compensation awarded to Mrs Zaicos will be payable by instalments so that TDRS has a longer period to raise the necessary funds than would be ordinarily be required.

[87] Mrs Zaicos' length of service was approximately four years and one month. I consider that Mrs Zaicos' length of service does not support reducing or increasing the amount of compensation ordered.

Remuneration that Mrs Zaicos would have received, or would have been likely to receive, if Mrs Zaicos had not been dismissed

[88] As stated by a majority of the Full Court of the Federal Court:

[i]n determining the remuneration that the applicant would have received, or would have been likely to receive... the Commission must 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.[9]

[89] TDRS submitted that if the creditors meeting on 26 May 2025 had not accepted the Deed of Company Arrangement, TDRS would have been placed into liquidation resulting in the dismissal of all employes in about late June 2025. However, this did not occur and TDRS continues to provide services. Further, there is no suggestion by TDRS that its funding was not renewed on 1 July 2025 so it is reasonable for me to infer that TDRS has received funding from the period from 1 July 2025 to 30 June 2026. Based upon the previous practice of TDRS of renewing Mrs Zaicos' contract in such circumstances, I find that Mrs Zaicos' employment would have continued until at least 30 June 2026 if she had not been dismissed, which is a further period of 62 weeks.

[90] Immediately before the financial issues were identified, Mrs Zaicos was working four days per week. At the time that the financial issues were discovered, the committee increased Mrs Zaicos' work to five days per week to manage these issues. Given that Mr Barnden was managing the financial affairs of TDRS from April 2025, I believe that Mrs Zaicos' would have reverted to her previous pattern of working four days per week if she had remained employed. A payslip produced to the Commission by Mrs Zaicos shows that at the time of her dismissal, her gross weekly pay for working five days per week was $2400.84. If Mrs Zaicos was working four days per week, this amount would be reduced to $1920.67. In addition, Mrs Zaicos was receiving a fortnightly laundry and first aid allowance of $20.49 and was accruing annual leave each week. The weekly annual leave and leave loading accrual if Mrs Zaicos was working four days per week is $173.59.

[91] Taking all of these matters into account, I find that the remuneration that Mrs Zaicos would have received, if she had not been dismissed is $130,479.62, which is calculated by adding Mrs Zaicos' weekly pay ($1920.67), laundry and first aid allowance ($10.25) and annual leave and leave loading ($173.59) and multiplying this by 62, being the additional number of weeks that I estimate that Mrs Zaicos would have been employed if she was not dismissed.

[92] I note that Mrs Zaicos said that she received $180 per week 'study payment' from TDRS in relation to her higher education debt and that her current employer is paying $40 per week in relation to this expense. Mrs Zaicos' payslips from both TDRS and her current employer indicate that these payments may be part of a salary sacrifice arrangement rather than being in addition to her gross weekly pay. I accept that such arrangements may have resulted in Mrs Zaicos receiving a greater after-tax benefit when she was employed by TDRS, however I do not believe that it is appropriate to increase the amount of compensation to take account of this. This is because of the difficulty in calculating such an amount given that the Commission has not been provided with precise information about taxation which would apply if salary sacrifice arrangements were not in place and also because TDRS is a not-for-profit service which derives most of its funding from the Commonwealth. This funding is for service delivery, a large portion of which is employee costs, however the quantum of funding is unlikely to have been determined with reference to the after-tax amounts received by employees.

Efforts of Mrs Zaicos to mitigate the loss suffered because of the dismissal

[93] Mrs Zaicos must provide evidence that she has taken reasonable steps to minimise the impact of the dismissal.[10] What is reasonable depends on the circumstances of the case.[11]

[94] Mrs Zaicos was unfit for work from 4 April 2025 and in receipt of workers compensation payments from about 24 April 2025 to about 24 November 2025. Mrs Zaicos explained that after being certified as having some capacity to work, she worked closely with a return-to-work coordinator who assisted her in overcoming the challenges she faced because of her treatment by TDRS. Mrs Zaicos said that due to the injury she suffered in the workplace, she is unable to return to a similar role so she recently accepted an opportunity at a position graded lower than her role at TDRS. Mrs Zaicos commenced employment in this position on 24 November 2025 and receives weekly pay of $1.554.40 for that employment.

[95] In relation to this matter, TDRS reiterated its submissions that Mrs Zaicos has not suffered any financial loss as a consequence of the dismissal. I do not accept these submissions for the reasons already stated.

[96] I find that Mrs Zaicos obtained suitable employment as soon as she was fit to do so. I am therefore satisfied that Mrs Zaicos took reasonable steps to mitigate her loss.

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

[97] Mrs Zaicos was in receipt of workers compensation payments for approximately 11 months from April 2025, however neither party provided precise information about the quantum of gross payments received. Both Mrs Zaicos and TDRS provided calculations of financial loss on an 'after tax' basis. As TDRS will be required to deduct tax from any compensation ordered by the Commission, the calculations which follow are prepared as gross figures.

[98] Mrs Zaicos provided bank statements for the period from 1 April to 15 December 2025 which showed that for most of the period from 28 April 2025 to 16 July 2025 she received a weekly net amount of workers compensation payments in the sum of $1,436.15, then from 17 July 2025, she received a weekly net amount of workers compensation payments in the sum of $1,238.28, which is approximately 85 per cent of $1,436.15. TDRS provided an email dated 18 November 2025 from Ms Sabina Lauakl, Senior Case Manager, Gallagher Bassett Services Pty Ltd to the Administrator stating that Mrs Zaicos was receiving gross weekly workers compensation payments of $1,952.00 which would reduce to $1,221.00 after 12 December 2025. Ms Lauakl's email did not refer to Mrs Zaicos' payments reducing from 17 July 2025.

[99] I have prepared calculations of the gross workers compensation payments made to Mrs Zaicos based on the gross figure of $1,952.00. Eighty-five per cent of this amount is $1,659.20. During the 12-week period from 24 April 2025 to approximately 16 July 2025, Mrs Zaicos received a gross weekly amount of $1,952.00 in workers compensation payments which was reduced to $1,659.20 during the 19-week period from 17 July to 24 November 2025. I calculate the total amount of workers compensation payments received by Mrs Zaicos to be $54,948.80 comprising of 12 weeks pay at $1,952.00 per week plus 19 weeks pay at $1,659.20 per week. These calculations are approximate figures only, based upon the material before the Commission which is imprecise.

[100] On 15 August 2025, Mrs Zaicos received three weeks pay in lieu of notice in respect of her termination by TDRS which was a total gross amount of $7,202.52.

[101] From approximately 24 November 2025, Mrs Zaicos received weekly gross pay in new employment of $1,554.40 per week. The amount of remuneration earned by Mrs Zaicos from employment or other work during the period between the dismissal and the making of the order for compensation is $88,576.12 comprising of:

1. workers compensation payments in the sum of $54,948.80;
2. three weeks pay in lieu of notice in the sum of $7,202.52; and
3. the amount that Mrs Zaicos is likely to have received in her new employment during the 17 week period from 24 November 2025 to the date of this decision being $26,424.80. This is calculated by multiplying Mrs Zaicos' weekly pay in the new employment of $1,554.40 by 17.

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

[102] I find that the amount of income reasonably likely to be so earned by Mrs Zaicos during the period between the making of the order for compensation and the actual compensation is a gross amount of $1,554.40 per week from the employment that Mrs Zaicos commenced on 24 November 2025.

[103] The parties have not made submissions in relation to any other relevant matters.

Is the amount of compensation to be reduced on account of misconduct?

[104] If I am satisfied that misconduct of Mrs Zaicos contributed to the employer's decision to dismiss_,_ I am obliged by s.392(3) of the FW Act to reduce the amount I would otherwise order by an appropriate amount on account of the misconduct.

[105] I am satisfied that misconduct of Mrs Zaicos did not contribute to TDRS' decision to dismiss. Therefore, the amount of the order for compensation is not to be reduced on account of misconduct.

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

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

[107] The amount worked out under s.392(6) is the total of the following amounts:

(i) received by Mrs Zaicos; or

(ii) to which Mrs Zaicos was entitled;

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

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

[108] Based on evidence provided by the parties, I find that the total amount of the remuneration received by Mrs Zaicos during the 26 weeks immediately before the dismissal was $62,421.84.

• [109] This is less than half the high-income threshold which applied immediately before the dismissal.[12] The amount of compensation ordered by the Commission must therefore not exceed $62,421.84.

Compensation - how is the amount to be calculated?

• [110] As noted by the Full Bench, '[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).[13] This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages[14]'.[15]

[111] 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.

• [112] I have estimated the remuneration Mrs Zaicos would have received, or would have been likely to have received, if TDRS had not terminated the employment to be $130,479.62 on the basis of my finding that Mrs Zaicos would likely have remained in employment until 30 June 2026 working four days per week. This estimate of how long Mrs Zaicos would have remained in employment is the 'anticipated period of employment'.[16]

• [113] Only monies earned since termination for the anticipated period of employment are to be deducted.[17] I have calculated this amount to be $110,340.82 comprising of:

1. workers compensation payments in the sum of $54,948.80;
2. three weeks pay in lieu of notice in the sum of $7,202.52; and
3. the amount that Mrs Zaicos is likely to receive in her new employment during the 31 week period from 24 November 2025 to 30 June 2026 being $48,186.40. This is calculated by multiplying Mrs Zaicos' weekly pay in the new employment of $1,554.40 by 31.

[114] I therefore deduct the sum of $110,337.72 from $130,479.62 which leaves a gross amount of $20,141.90.

• [115] I now need to consider the impact of contingencies on the amounts likely to be earned by Mrs Zaicos for the remainder of the anticipated period of employment.[18] There is no evidence before me which establishes the occurrence of contingencies which might have brought about some change in earning capacity or earnings by Mrs Zaicos during the anticipated period of employment. I therefore do not consider it appropriate to deduct any amount for contingencies.

[116] I have considered the impact of taxation but have elected to settle a gross amount of $20,141.90 plus superannuation and leave taxation for determination.

• [117] 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'.[19] These circumstances include my findings that Mrs Zaicos' employment would have continued until at least 30 June 2026 if she had not been dismissed and that Mrs Zaicos took reasonable steps to mitigate her loss.

[118] I am satisfied that the amount of compensation that I have determined above takes into account all the circumstances of the case as required by s.392(2) of the FW Act and that the amount does not include a component compensating for shock, distress or humiliation.

[119] I have found that Mrs Zaicos's dismissal was harsh, unjust and unreasonable for reasons which include that there was no sound operational reason for Mrs Zaicos' dismissal and that TDRS failed to consult Mrs Zaicos in relation to the dismissal and to consider alternatives to dismissal such as reduced hours. In addition, the consequences of the dismissal were particularly harsh as Mrs Zaicos was dismissed when she was absent from work while receiving workers compensation.

[120] I have determined that an order for compensation is appropriate and that TDRS should pay compensation to Mrs Zaicos in the sum of $20,141.90 gross plus superannuation less taxation as required by law in lieu of reinstatement by way of the following instalments:

1. The sum of $7,000.00 gross plus superannuation less taxation as required by law by 13 April 2026;
2. The sum of $7,000.00 gross plus superannuation less taxation as required by law by 4 May 2026; and
3. The sum of $6,141.90 gross plus superannuation less taxation as required by law by 1 June 2026.

[121] An order giving effect to this decision is published with this decision.

Mr A. Barnden, Deed Administrator of Rodgers Reidy for the Respondent

[1] PR790335

[2] [2025] FWCFB 231

[5] Sayer v Melsteel Pty Ltd [2011] FWAFB 7498, [14]; Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [69]

[6] ALH Group Pty Ltd t/a The Royal Exchange Hotel v Mulhall (2002) 117 IR 357, [51]. See also Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [92]; Edwards v Justice Giudice [1999] FCA 1836, [6]-[7]

[7] Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter [2014] FWCFB 7198, [9]

[8] Vennix v Mayfield Childcare Ltd [2020] FWCFB 550, [20]; Jeffrey v IBM Australia Ltd [2015] FWCFB 4171, [5]-[7]

[9] He v Lewin [2004] FCAFC 161, [58]

[10] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002), [34] citing Lockwood Security Products Pty Ltd v Sulocki and Ors PR908053 (AIRCFB, Giudice J, Lacy SDP, Blair C, 23 August 2001), [45]

[11] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002), [34] citing Payzu Ltd v Saunders [1919] 2 KB 581

[12] The high income threshold which applied immediately before the dismissal was $175,000

[13] [1998] AIRC 989; (1998) 88 IR 21

[14] [2013] FWCFB 431

[15] Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206, [16]

[16] Ellawala v Australian Postal Corporation Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000), [34]

[18] Enhance Systems Pty Ltd v Cox PR910779 (AIRCFB, Williams SDP, Acton SDP, Gay C, 31 October 2001), [39]

[19] Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206, [17]

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