s.394 - Application for unfair dismissal remedy

Dismissal found to be unfair - quantum of remedy determined

• [1] On 5 October 2024, Mr Michael Friday (the Applicant) applied to the Fair Work Commission (FWC) under s.394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy, alleging that he had been unfairly dismissed from his employment with Leaning Tree Steiner School Inc. (the Respondent). On 21 February 2025 I handed down my decision in that matter. The case citation is [2025] FWC 537 and in the decision, I found that Mr Friday had been unfairly dismissed. However, I determined that reinstatement was inappropriate and so proposed to award compensation.

• [2] As there was insufficient material provided at the substantive hearing, I directed the parties to make written submissions on the issue of compensation. As part of the submissions process the Respondent sought and was granted an order for production. While the Applicant claimed to have complied with this order to the extent of his ability, the Respondent was not satisfied with the material produced. As such, the Respondent submitted that the matter should proceed to a hearing. I granted this request and the issue of remedy was heard on 8 April 2025.

• [3] The first step in calculating the compensation to be paid to the Applicant is to determine the compensation cap for the Applicant. The method for calculating the amount to be compared to half of the high-income threshold is set out in s.392(6) of the Act as follows:

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;"

• [4] The Applicant submitted that the figure should be $80,583.28. The Respondent submitted that the figure should be $72,272.00 based on the Applicant's gross annual salary of $144,544.00. While the Applicant did not provide a basis for his amount, I have assumed that it is the gross salary plus superannuation. While I will deal with superannuation as part of the order, for the purposes of calculating the cap I will only deal with the Applicant's gross salary and as such I determine that the total amount of remuneration is $72,272.00. As this amount is less than half of the high-income threshold - being an amount of $87,500.00 - the compensation cap is $72,272.00.

• [5] In assessing compensation, the Commission is required, by s 392(2) of the Act, to take into account all of the circumstances of the case, including the specific matters identified in paragraphs (a)-(g) as follows:

(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.

I will address each of those matters in the process of deriving an amount of compensation using the formula from Sprigg v Paul's Licensed Festival Supermarket [1998] AIRC 989; (1998) 88 IR 21 (Sprigg).

Remuneration earned if the dismissal had not occurred - s.392(2)(c)

• [6] In accordance with the Sprigg formula and s.392(2)(c), I am first required to make an assessment of the remuneration the Applicant would have received, or have been likely to have received, if the employee had not been dismissed. In respect of this assessment, the usual practice is to decide how long the employee would have remained in their employment. As has been observed in many prior decisions of the FWC, this step is often difficult and requires the member to engage in what is essentially speculation. However, the task must nonetheless be undertaken.

• [7] The Applicant submitted that the summary nature of his dismissal deprived him of an opportunity to remedy the deficient aspects of his performance. As such, he proposed that the FWC ought to consider what would have been the scenario if he had been allowed to address the identified deficiencies. The Applicant submitted that there was no reason to suggest that he would not have assiduously addressed the task of remedying his performance deficiencies and, as such, he may not have been terminated at all, meaning his loss would easily exceed the statutory cap.

• [8] He further submitted that even if he did not - within a reasonable time period - remedy the deficiencies, his employment would still have continued well into Term 4 of 2024 and potentially through to the conclusion of Term 1 in 2025, given his contract provided for a notice period of one term. I note that in this latter case, his employment would have continued for a period in excess of six months and so once again exceeded the cap in the first instance.

• [9] The Respondent drew my attention to the findings of Deputy President Anderson in Petz v Jamieson Sales and Service Pty Ltd (Petz) where the Deputy President found as follows:

"Considering the circumstances overall, the dismissal was not unfair but summary dismissal was. The dismissal is harsh on that ground, but that ground only. Mr Petz should have been dismissed on notice. In the circumstances, that would have been five weeks' notice or payment in lieu."[1]

• [10] In the present matter, I had also found that there was a valid reason for termination but that the behaviour of the Applicant did not meet the test of serious misconduct and as such the summary dismissal was harsh.[2] However, despite this finding, the Respondent submitted that the notice required by the Applicant's contract, being a "term" was not appropriate in this case. It proposed that the Applicant's conduct was such that he could have been issued with a final warning about performance and conduct and that any future breaches could result in dismissal. Had this happened, the Respondent submitted that the Applicant's employment would not have lasted more than a further two weeks.

• [11] The Respondent attributes this to further conduct issues discovered post-termination. Specifically, the Applicant's excessive internet browsing and personal use of his work computer, and his failure to undertake tasks such as documenting behaviour management, updating and implementing the "School Plan" and updating and implementing a Quality Improvement Plan. I note that the Respondent relied upon the witness evidence of Ms Robinson to support these submissions.

• [12] The Respondent also takes issue with the notion proposed by the Applicant that he would have responded positively to a direction to remedy the performance deficiencies identified. The Respondent noted that the Applicant had sought to deflect blame from himself with respect to the responsibility for updating policies and had in his remedy submissions proposed that the lack of an up-to-date policy on Reportable Conduct disadvantaged no-one but himself. Further, the Respondent submits that the Applicant has tried to downplay his deficiencies in a manner that was not consistent with my findings in the case.

• [13] The submissions from the parties postulate a number of different scenarios that might have played out had the termination not taken place as it did. The Applicant suggests that his employment may have lasted for some considerable time - potentially even years. The Respondent submits that it could have been a period of as little as two weeks. The circumstances of this case once again highlight the difficulties in speculating about what might have been.

• [14] In considering the appropriate approach, I am mindful of the finding of the Full Bench in Johnson v North West Supermarkets T/A Castlemaine IGA as follows (with my emphasis):

"[42] The identification of this starting point amount 'necessarily involves assessments as to future events that will often be problematic,' but, as the Full Bench observed in McCulloch v Calvary Health Care Adelaide, 'while the task of determining an anticipated period of employment can be difficult, it must be done.'

[43] Once this first step has been undertaken, various adjustments are made in accordance with s.392 and the formula for matters including monies earned since dismissal, contingencies, any reduction on account of the employee's misconduct and the application of the cap of six months' pay. This approach is however subject to the overarching requirement to ensure that the level of compensation is in an amount that is considered appropriate having regard to all the circumstances of the case."[3]

• [15] Mindful of the requirement to find an amount that is considered appropriate having regard to all of the circumstances of the case, I have decided as follows with respect to the Applicant's anticipated period of employment. Firstly, I am going to allow an initial period of two weeks being a period I regard as necessary for the Respondent to have conducted a more appropriate investigation into the Applicant and one that would have provided him with an opportunity to properly present his defence and have it considered.

• [16] I anticipate that this opportunity would also have provided the Applicant with a chance to address the additional concerns unearthed by the Respondent during its investigation into his activities. With respect to those concerns, I note as follows. Firstly, I regard the Applicant's use of the internet for personal business to have been unwise in the circumstances but not such that it would provide a reason for termination and certainly not summary termination. Secondly, and with respect to the other matters raised such as failure to undertake certain duties, I note that the Applicant rejects these accusations. However, even if they were to be true, I do not regard them as being such that they would have allowed summary termination.

• [17] Rather, they would have buttressed the Respondent's case that the Applicant had been derelict in his duties. Given that I have already expressed the view that the Applicant's failures were such that they provided a valid reason for termination, I find that the other concerns would have been such that if proven to be founded, would have merely strengthened the case of termination rather than have moved the Respondent into a position where it could have validly summarily terminated the Applicant.

• [18] Given this, I find that the Applicant, in addition to the initial two weeks, would have received payment of notice, being a time period equivalent to a term. There was some difference of opinion between the parties as to what was meant by a term. The Respondent submitted that it should be taken to mean the time when students were at school and thus it is a figure that excludes holidays. The other interpretation is that it is the period between the start of one school term and the beginning of the subsequent term - a period that includes holidays. The relevant provision of the Applicant's employment contract is clause 17(b) which states as follows:

"Once the probationary period is successfully completed, and except in the case of serious misconduct, either you or the Governing Body may terminate the employment by the giving to the other party 1 Term's notice in writing."[4]

• [19] Without seeking to definitively interpret this clause, I am inclined to adopt a construction that term means the time when students are at school. To include the holiday period would beg the question of how to calculate notice when the holiday period between Term one and Term two is two weeks, but the holiday period between Term four and Term one in the new year is closer to eight weeks. This would suggest a teacher giving notice would have a different notice period depending on the time of year at which they submitted their resignation. I also note for clarity that I do not take the provision of the contract to mean that if the employment is ended by either party in the middle of a school term then the notice must be the balance of that term plus an additional term.

• [20] I note that the length of a term, if judged from Monday in the first week to Sunday in the final week is ten weeks. In addition to the initial two weeks, this puts the Applicant's anticipated period of employment at twelve weeks. As such, his employment would have ended on 12 December 2024. Given his annual salary of $144,544.00 this equates to a figure of $33,356.31 in lost remuneration.

• [21] I regard this outcome as being appropriate in the circumstances. For clarity, I do so -consistent with the approach taken in Petz - because I take the view that the valid reason for termination would have allowed the Respondent to terminate the Applicant with notice, but not summarily. The Applicant may well take issue with this position. He has made some submissions regarding the reason for his termination where he has indicated some concerns with my findings.

• [22] For example, the Applicant has attempted to suggest that he was aware of the particular provisions of the Reportable Conduct Scheme. He does so by noting that in the show cause letter written by his representative the correct clause in the relevant Act was referenced. However, as the Respondent correctly notes in its submissions[5], the Applicant himself did not use the correct terminology either in his witness statement - drafted subsequent to the show cause letter - or in his oral evidence. To reiterate my finding in the substantive matter, I regard the Applicant actions as being a serious misjudgement and a significant performance deficiency.[6]

Remuneration earned - s.392(2)(e) and income reasonably likely to be earned - s.392(2)(f) and (g)

• [23] The second step in calculating compensation is to deduct monies earned since termination during the anticipated employment period. The Applicant submitted that he had found some casual work and had received payment of "approximately $2,000.00." No paperwork or other evidence was provided to confirm this figure. It is also somewhat unclear from the Applicant's evidence as to the period during which this money was earned but it appears that it was all during Term four and so within the anticipated employment period. In fairness to the Respondent I am going to place full value on the figure nominated by the Applicant. As such, I am going to make a deduction of $2,000.00 from the figure derived at [19] above, leaving the compensation figure at $31,356.31.

• [24] The third step is to discount the amount for contingencies. Given the period of employment that I have assumed has already passed I do not propose to make any deduction for contingencies.

Length of service - s.392(2)(b) and any other matters - s.392(2)(g)

• [25] The Applicant has just under four years of service with the Respondent. The Applicant characterised this figure as "significant" but the Respondent submitted that it was "modest". I find this to be a length of service that does not suggest any need to increase or decrease the compensation figure.

• [26] The fourth step is to calculate the impact of taxation. Consistent with past practice of the FWC I have resolved to leave the amount payable as a gross figure and leave calculation of taxation to the Respondent.

Mitigation efforts - s.392(2)(d)

• [27] I should now turn to the remaining items in s.392(2). In the first instance I will examine the Applicant's efforts to mitigate his loss as per s.392(2)(d). I should note that I am only considering the period of anticipated employment when looking at the Applicant's efforts to mitigate his loss. Such efforts as he has made after the expiry of that period are in my view not relevant to my assessment.

• [28] In his submissions the Applicant conceded that he had not immediately sought alternative work but further submitted that:

he was always unlikely to quickly find alternative employment in his circumstances; and

his subsequent success in finding a relatively low-paying position 4 months after his dismissal indicates the level of challenge he faced in mitigating his loss."[7]

• [29] At hearing, the Applicant gave evidence that he had suffered from considerable stress and anxiety and that this had impacted his ability to search for work. The Respondent noted that the Applicant had produced no medical evidence to support that contention, while the Applicant submitted in reply that the absence of such evidence did not undermine the evidence he had given under oath.

• [30] The Respondent submitted that the Applicant had not made appropriate attempts to mitigate his loss. It named a number of positions for which the Respondent suggested the Applicant could have made application but chose not to. At hearing the Applicant addressed this by suggesting that some of the roles highlighted by the Respondent were not appropriate because they were either with schools in the Catholic Education system or with a Christian school whereby he would be required to be an adherent of the particular faith. The Respondent did not necessarily accept that this was a genuine requirement. However, I have examined the websites of both Catholic Education Western Australian[8] and the Geraldton Christian College[9] and I am satisfied that those institutions have at the very least a preference for adherents of their faith and in any case a requirement to undertake duties in such a way as to promote the tenets of those faiths.

• [31] The Applicant also rejected the notion that he should have applied for positions at schools such as the Geraldton Grammar School as he submitted that he would not be appropriately qualified for the positions on offer. At hearing it emerged that the Applicant had been in contact with the Western Australian Education Department (WAED) - via a Ms Lisa Criddle - early in October 2024. It appears that the Applicant was seeking any work available with WAED that would suit his qualifications. While this approach eventually bore fruit with a part time position commencing in late January 2025, the Respondent took issue with the Applicant's limited efforts to secure other work in the interim.

• [32] It drew my attention to the findings of Commissioner Bissett in Simpson v KAP Motors T/A Kerry's Automotive Group where the Commissioner found as follows:

"That Ms Simpson's elbow injury stops her doing work of the same kind as the work she was performing with KAG is no reason for her not to make any effort to find alternative employment that might mitigate her loss."[10]

• [33] The Respondent also highlighted the findings of Commissioner Bisset in Renton v Bendigo Health Care Group where the Commissioner found as follows:

"Mr Renton seems to be of the view that the only thing he needs to do to demonstrate mitigation is to look for jobs equivalent to the one he previously held. Having found this may be difficult, he has done nothing to seek other employment. That is, he has not made any effort to mitigate his loss."[11]

In that matter, the Commissioner reduced the compensation payable by 30% as a result of the Applicant's failure to properly mitigate his loss. The Respondent suggested that any compensation payable in the present matter should also be reduced by 30%.

• [34] The Respondent also took issue with the Applicant's actions in trying to have his employment reinstated by what he himself described in his evidence as a "differently constituted governing body". The Respondent suggested that the evidence demonstrated that the Applicant was trying to get a campaign underway with parents of students at the school to replace the governing board and that his actions in doing so suggested that he was not, as he had proposed, so unwell with mental health issues that he could not seek alternative employment.

• [35] As has been noted[12] the FWC will consider the relevant circumstances of each case in deciding whether an applicant has made appropriate efforts to mitigate his loss. In the present circumstances, I am not persuaded that I should give great weight to the Applicant's claims of mental illness. This is not to say that I do not accept that he was feeling anxious and depressed. However, as is often stated in cases where an applicant is seeking an extension of time to lodge an application, it is to be expected that a person will experience such things when they have been dismissed.

• [36] However, to rely on those experiences to buttress a claim for an extension of time, an applicant will need to provide compelling medical evidence of a high level of incapacity. I am of the view that an applicant seeking to claim that they were unable to mitigate their loss for similar reasons should also provide some medical evidence to support that claim. The Applicant has not done so.

• [37] It appears from the evidence that the timeline of the Applicant's efforts are such that he met with Ms Criddle in early October and pursued employment with the WAED. He appears to have had such employment confirmed in December albeit that he was not required to commence until January. Other than that, he has secured some limited casual work that has only paid him $2,000.00. While I accept that there were some positions identified by the Respondent for which he was clearly not suitable - such as those in the religious schools - I find that in some cases it was perhaps his admitted lack of confidence[13] that led him to avoid applications that may have been appropriate to his skills and experience.

• [38] However, I am mindful of his unchallenged evidence regarding the nature of roles in education in that they often commence at the beginning of a school year or term. I am also mindful that while it has been found that applicants should not restrict themselves to seeking "like-for-like" roles, this notion must be approached in a practical manner. It is not to be expected that a person such as the Applicant who is in his sixties and has thirty years' experience in white collar education roles should - if dismissed - start applying for any positions advertised. In the first instance the roles outside of his main experience would need to be within his realistic skill set, which given his age might preclude some heavy manual labouring roles, roles in sales or roles requiring appropriate experience.

• [39] I am also not persuaded that a person should be required to apply for roles that may cause them some level of personal discomfort - for example, in a religious school where the person is not an adherent of the particular faith. Another example of such discomfort might be a person whose religion forbids the consumption of alcohol: it would be unreasonable to expect them to apply for jobs in, for example, a liquor store.

• [40] Given all of this, while I am minded to make a deduction for the Applicant's failure to address the issue of mitigation as diligently as is appropriate, I am only prepared to make the deduction ten percent. Given this, the figure at [20] is reduced by $3,135.63, leaving a compensation figure of $28,220.68.

Viability of the Respondent - s.392(2)(a)

• [41] The Applicant submitted that there was no evidence before the FWC to suggest that a compensation order would impact on the Respondent's viability. The Respondent did not seek to make such a suggestion but noted that the FWC has previously found that compensation orders are not intended to act as pecuniary penalties.[14] Nevertheless, there is no evidence before me that suggests that the compensation order contemplated will threaten the viability of the Respondent.

• [42] 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] In this instance, I am satisfied that the amount of compensation represents an appropriate outcome, consistent with my views expressed at [21] above.

Misconduct - s.392(3)

• [43] Section 392(3) provides that if an applicant's misconduct contributed to their dismissal, the FWC must reduce the amount it would otherwise order by an appropriate amount. In this case, the Respondent submitted that the Applicant's conduct is such that a deduction should be made at this step. I do not agree. Essentially, the Applicant's performance was the reason for his termination rather than misconduct and so I do not propose to make any deduction from his compensation on this ground.

Compensation Cap - s.392(5) and (6)

• [44] The FWC cannot award an amount that exceeds the compensation cap, which was calculated at [4] above and found to be $72.272.00. Given that the calculated compensation amount of $28,220.68 is below the compensation cap, the amount does not need to be adjusted.

• [45] Finally, I note that this amount does not include an amount for shock, distress, humiliation or hurt. As the Respondent has not sought to have any payments due made in instalments, an order will issue for the Respondent to pay the Applicant $28,220.68 less taxation plus 11.5% superannuation within fourteen days of the date of the order.

C Dowling for Leaning Tree Steiner School Incorporated, the Respondent.

[1] Petz v Jamieson Sales and Service Pty Ltd [2020] FWC 4451 at [179]

[2] See Friday v Leaning Tree Steiner School Inc [2025] FWC 537 at [80]

[3] [2017] FWCFB 4453

[4] See substantive hearing Court Book at page 46

[5] See Respondent Submissions on Remedy page 9 para 27

[6] See Friday v Leaning Tree Steiner School Inc [2025] FWC 537 at [74]

[7] See Applicant Submission on Remedy page 5 para 24

[8] See https://www.cewa.edu.au/careers/career-opportunities

[9] See https://gcc.wa.edu.au/about/available-positions.

[10] Simpson v KAP Motors T/A Kerry's Automotive Group [2016] FWC 5019 at [47]

[11] Renton v Bendigo Health Care Group [2017] FWC 921 at [56]

[12] See for example Biviano v Suji Kim Collection PR915963 at [54]

[13] See Supplementary Witness Statement of Mr Friday para 4.

[14] See Virata v NSW Motel Management Services [2015] FWC 7932 at [79]

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

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