A correction has been made in [16] to insert the word "not" in the final sentence.

Fair Work Act 2009

s.394 - Application for unfair dismissal remedy

Application for an unfair dismissal remedy - no valid reason for dismissal - dismissal unfair - reinstatement inappropriate - compensation ordered.

[1] Ms Victoria Russell has applied pursuant to s 394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy. Ms Russell was employed by Edustellar Pty Ltd from 7 November 2024. She was employed as a trainee at Bright Future Childcare Centre in Baulkham Hills in Sydney NSW. Her employment came to an end on 16 September 2025.

[2] Edustellar Pty Ltd contests the application. It contends that Ms Russell was not dismissed, she resigned. Edustellar also submits that in early September 2025 Ms Russell was given warnings about her conduct and told to complete the required training.

[3] Ms Russel and Edustellar signed a training contract on 7 November 2024. The nominal term of the contract was 18 months. The traineeship was on a full time basis and was towards a Community Services - Early Childhood Education and Care Certificate III. The Registered Training Organisation for the traineeship was Benchmark Resources Pty Ltd. Ms Russell's Trainer/Assessor was Ms Marilyn Molina.

[4] During the course of 2025, Ms Russell had health problems which led her to tender her resignation twice. On both occasions Edustellar convinced her to stay. Ms Russell and Edustellar agreed on a reduction of hours from full time to 15 hours per week part-time commencing on 13 June 2025.

[5] I was told as part of the traineeship Ms Russell was required to either have or be in the process of training for a Child Protection certificate. Edustellar said that this certificate was required to be completed within 3 months of commencing a traineeship. In early September 2025 Ms Russell had not completed this training and Edustellar told Ms Russell she must complete the certificate to be able to continue working.

[6] Ms Russell had completed the requirements for the certificate save that she still needed a final practical observation. On 14 September 2025 arrangements were being made for Ms Molina, her assessor, to do the required observations. Ms Molina was later told that Ms Russell had resigned.

[7] On 16 September 2025 Ms Zhou, one of the owners of Edustellar, sent Ms Russell a text message which read:

After careful consideration, I regret to inform you that you will no longer be able to continue working at Bright Future Childcare, Baulkham Hills.

This decision has been made due to the following concerns:

1. Reports from staff and parents regarding inappropriate interactions with children.

2. Observations of children expressing fear and distress in your care.

3. Concerns from staff about your conduct in the workplace, including time spent away from children and use of inappropriate language.

4. Incomplete training requirements: despite beginning your training last November, no units have been completed to date.

5. Failure to complete the mandatory Child Protection course, which is required for employment in childcare.

Given these circumstances, you are not permitted to continue working with children at our centre.

We appreciate the time you have spent with us and wish you the best in your endeavours.

[8] Ms Russell responded with a text message expressing disappointment at the decision and asked for more information about the concerns raised as some of the matters came as a surprise to her. She referred specifically to the reports, observations and incidents that had been raised against her.

[9] Ms Russell stated that she had not been provided with any complaints from parents or colleagues criticising her performance. Ms Zhou said she had spoken to Ms Russell about her work performance and that she understood her supervisors had also spoken to her. Ms Zhou provided a number of written complaints about Ms Russell's work which I was told were from parents and workmates. Ms Russell denies being spoken to or being given any warning about her work performance.

[10] Section 390 of the Act provides that the Commission may order a person's reinstatement, or the payment of compensation to a person, if satisfied that the person was protected from unfair dismissal at the time of being dismissed and the person has been unfairly dismissed.

[11] Section 382 provides that a person is protected from unfair dismissal if the person is an employee who has completed a period of employment of at least the minimum employment period and the person is covered by a modern award, an enterprise agreement applies to the person, or the person earns less than the high-income threshold. It was not contested, and I am satisfied, that Ms Russell is protected from unfair dismissal for the purposes of s. 382.

[12] Section 385 provides that a person has been unfairly dismissed if the Commission is satisfied of four matters; the person has been dismissed, the dismissal was harsh, unjust or unreasonable, the dismissal was not consistent with the Small Business Fair Dismissal Code, and the dismissal was not a case of genuine redundancy. Edustellar contended that Ms Russell was not dismissed, she resigned. It relied on a resignation letter. It became clear that the letter was the resignation letter in the July that did not lead to the termination of the employment but to an agreement that Ms Russell work part-time. I find that for the purposes of this application the termination of employment came about by the email from Ms Zho to Ms Russell on 16 September 2025 which constituted a dismissal as described in s 386(1)(a) as it was a termination at the initiative of the employer. I was told that Edustellar employs 13 employees in three childcare centres, so it is a small business, so the Small Business Fair Dismissal Code does apply. It was not suggested that the dismissal was in accordance with the Code and I find in any event that it was not. The dismissal was also not said to be a case of genuine redundancy.

[13] The issue for determination is whether the dismissal was harsh, unjust, or unreasonable.

[14] Section 387 of the Act sets out the matters that are to be taken into account in determining whether the Commission is satisfied that the dismissal was harsh, unjust, or unreasonable.

[15] I find based on the material before me that there was no valid reason for the dismissal (s 387(a)). In the text message giving effect to the dismissal, and in the proceedings, Edustellar relied upon two things to establish misconduct. First allegations made about how her conduct at work going to her interaction with the children she cared for and that she had not completed her training, in particular her Child Protection course.

[16] I am not satisfied that Ms Russell was guilty of the allegations about her interaction with children. Nothing in the material established the allegations set out in the text message dismissing her that she had inappropriate interactions with children, that children expressed fear and distress in her care or that she spent time away from children or used inappropriate language. The material provided went no further than undated letters that made vague references to concerns about unspecified incidents reported by children to their parents and then raised with Edustellar. It was not clear when the incidents occurred or when they were reported to Edustellar. There was no investigation or assessment made to verify the allegations. It seems they were accepted at face value. They do not provide a basis for concluding that there was a valid reason for dismissal.

[17] The issue of Ms Russell's failure to complete training and in particular the Child Protection certificate was raised with Ms Russell and she was taking steps to ensure the qualification was completed. She had completed the training and was waiting t5o be assessed. In the days prior to dismissal she was arranging her Trainer/Assessor to make the final practical observations to complete the qualification. Edustellar merely needed to wait for that to occur and the qualification would be complete.

[18] There was no valid reason for dismissal and so Ms Russell was not notified of a valid reason for her dismissal (s 387(b)) Ms Russell was dismissed by text message. There was no chance prior to receiving the message for Ms Russell to respond to the reasons for dismissal (s 387(c)). There was no opportunity to have a support person in any discussions about the dismissal as there were no discussions (s 387(d)). There was a suggestion from Ms Zhang that there had been warnings about poor performance. It was said that the management committee had told Ms Russell's supervisor to raise issues with her but the detail of when and whether those warnings were given were not provided. Ms Russell denies that she was ever given those warnings (s 387(e)). As to ss 387(f) and (g), I consider that the small size of the respondent's enterprise and the absence of human resources advisers had a negative impact on the process followed in effecting the dismissal. I find the fact that Ms Russell was a trainee is a relevant factor in considering harshness (s 387(h)). Ms Russell was pursuing qualifications in childcare. She had not started well and her health had prevented her from progressing quickly in obtaining those qualifications. Edustellar should have provided her with more support.

[19] Taking into account the matters in s. 387 I find that the dismissal was harsh, unjust and unreasonable. There was no valid reason for the dismissal. The procedure followed was flawed and Edustellar did not provide the type of support that organisations who take on trainees can be expected to provide.

[20] Ms Russell has moved to Newcastle and no longer wants to work for Edustellar. Edustellar also opposes reinstatement. Ms Russell seeks $3,500.00 in compensation. She has worked casual shifts at a kebab shop since she was dismissed and has earned $900.00 doing that work.

[21] Given the parties' position on reinstatement and my view that Ms Russell should not be reinstated due to her personal circumstances I find that reinstatement is inappropriate. I am satisfied that it's appropriate to make an order for compensation in lieu of reinstatement.

[22] While Ms Russell has nominated an amount of compensation, I am not constrained by what is sought. I am required to apply the statutory test on compensation in the Act. In circumstances such as these, I need to consider each of the matters in section 392 of the Act.

[23] Relevant to those considerations Ms Russell was part-time and her remuneration over the last 6 months of employment was $13,405.20. When she moved top part time employment in July 2025 she was working 15 hours per week and paid $22.00 per hour or $330 per week. I note that Edustellar is a small business and Ms Russell received a modest income as a part-time employee undergoing a traineeship.

[24] The well-established approach to the assessment of the quantum of compensation under s.392 of the Act is to apply the "Sprigg formula". That formula is derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul's Licensed Festival Supermarket [1998] AIRC 989; (1998) 88 IR 21 which concerned compensation in similar provisions in earlier legislation. The application of that formula, in the context of the current legislation, was explained by the Full Bench in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206.

[25] The first step is to consider what remuneration Ms Russell would have received, or would have been likely to receive, if she had not been dismissed. This requires an assessment of how long she would have remained at Edustellar and the remuneration she would have earned. The next step is to make the various adjustments in accordance with s.392 for matters that include the impact on the business, monies earned since dismissal, any reduction on account of the employee's misconduct and the application of the cap of no more than earnings in the six months prior to the dismissal. A reduction for contingencies has also been commonly applied to take into account likely changes in circumstances that may impact ongoing employment. This approach is subject to the overarching requirement to ensure that the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.

[26] Some speculation is required in this case in determining what Miss Russell would have earned had she not been dismissed. Ms Russell's traineeship was for 18 Months and was due to be completed in mid-May 2026. I find that she would have worked for Edustellar at least until that time. She was dismissed on 16 September 2025 and given one week's pay in lieu of notice. Her lost earnings were 8 months earning less the week of notice paid. That would have seen her earn around $10,230.00 up until the end of her traineeship.

[27] Applying the next step in coming to a final figure involves making various adjustments for matters that include the impact on the business, monies earned since dismissal, any reduction on account of misconduct and a possible reduction for contingencies which may take into account likely changes in circumstances that may impact ongoing employment such as completing her studies. The length of employment is also a factor to take into account. Ms Russel commenced employment in November 2024 so worked for 10 months. The effect on the business is also relevant. I was not told that a compensation order would threaten the viability of the business. I do not propose to make an adjustment to the compensation for these factors.

[28] I will not make any adjustments in relation to misconduct because of the findings that I've made about the uncertainty of the allegations made in at the time of dismissal. I find there was no misconduct justifying a deduction.

[29] My assessment of the loss is total loss is $10,230.00. As she earned $13,405.20 in the six months prior to dismissal, that figure is less than the statutory cap in s. 392(5).

[30] I will order the payment of compensation of $10,320.00. Applicable taxes will need to be remitted to the ATO in relation to that amount. Superannuation will also apply at 12% and so a payment of $1,227.60 into Ms Russell's superannuation account will also be ordered.

[31] My conclusion in these proceedings then is that I find that Ms Russell was unfairly dismissed. I find that it is inappropriate to order reinstatement and that it is appropriate to order compensation in lieu of reinstatement. The sum of compensation that I find is appropriate is $10,320.00 to be taxed as required and a payment on account of superannuation of $1,227.60.

[32] As Edustellar is a small business with a two week payment cycle I will permit the payment to be made in instalments of $2,580 per fortnight until the total is paid. The schedule for those instalments being:

1. $2,580 and $306.90 in superannuation contributions to be paid by close of business 13 February 2026.

1. $2,580 and $306.90 in superannuation contributions to be paid by close of business 27 February 2026.

1. $2,580 and $306.90 in superannuation contributions to be paid by close of business 13 March 2026.

1. $2,580 and $306.90 in superannuation contributions to be paid by close of business 27 March2026.

[33] Orders for the payment of the compensation will issue separately.

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