Nguyen v Vietnamese Community in Australia [2014] FWCFB 7198

What happened

Thinh Nguyen and Thanh Le were teachers employed by the Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australian Chapter. They were dismissed on 3 February 2014 and applied to the Fair Work Commission for unfair dismissal remedies under s.394 of the Fair Work Act 2009 (Cth) (FW Act) ([1]).

The employer conceded at the determinative conference that both teachers had been unfairly dismissed. The Senior Deputy President accepted that concession and found that the Commission's discretion to award a remedy was enlivened. The appellants sought reinstatement and lost remuneration. The employer opposed reinstatement, relying on the damaged relationship and concerns about the school and its students ([2], [6]). On 8 July 2014, the Senior Deputy President concluded reinstatement was inappropriate and ordered compensation ([2]).

The teachers appealed the remedy decision. The appeal was not a fresh determination of the appropriate remedy without constraint: under s.604, the Commission's appellate powers were exercisable only if there was error, and permission to appeal was necessary ([3]). Because the original decision was made under the unfair dismissal provisions, s.400(1) required the Full Bench to be satisfied that granting permission was in the public interest. The Full Bench refused permission ([4], [43]).

The decision is significant in two connected ways. It restates how the Commission should approach reinstatement, including claims of lost trust and confidence, and it identifies a specific error: an employee's pursuit of an underpayment claim cannot properly count against reinstatement merely because the claim has contributed to acrimony ([27]-[28], [37]-[38]). The Full Bench nevertheless refused permission to appeal because it considered that the other matters relied on at first instance independently supported the remedy decision ([40]-[43]).

Why the court decided this way

The Full Bench began with the statutory structure. Section 390 allows reinstatement or compensation after a finding of unfair dismissal, but compensation cannot be ordered unless the Commission is satisfied reinstatement is inappropriate and compensation is appropriate in all the circumstances ([8]). The Act's stated object includes providing remedies with an emphasis on reinstatement, so reinstatement is the primary remedy. That does not mean it is automatic: the question remains whether reinstatement is appropriate in the individual case ([10], [35]).

The decision explains that appropriateness is broader than the earlier statutory concept of practicability. The Full Bench agreed with the observation in Australia Meat Holdings Pty Ltd v McLauchlan that assessing appropriateness involves a broader range of factors than asking whether reinstatement is practicable ([14]-[15]). Examples given by the Full Bench include a futile reinstatement, such as where serious misconduct discovered after dismissal would almost certainly lead to a further termination, or where the employer no longer operates the business into which the employee might return ([17]). The position being filled is not, without more, usually enough to make reinstatement inappropriate ([17]).

Loss of trust and confidence was central to the parties' dispute. The Full Bench drew on Perkins v Grace Worldwide (Aust) Pty Ltd, while explaining that the relevant trust and confidence is the level needed to make the employment relationship workable. A bare assertion that trust has been lost is not enough. The claim must be soundly and rationally based, and the decision-maker should examine the evidence and the effect of the asserted loss on the workplace ([21]-[28]). The nature of the work matters, as does whether the employment relationship can withstand some friction and doubt. Trust is a matter of degree, not an all-or-nothing test ([21], [27]-[28]).

The Full Bench also distinguished this remedial use of trust and confidence from an implied contractual term of mutual trust and confidence. It noted that the High Court had rejected such an implied term in Commonwealth Bank of Australia v Barker, while stating that this was not the concept being applied in the reinstatement inquiry ([23]).

Applying those principles, the Full Bench accepted that some of the first-instance findings could support refusal of reinstatement. The Senior Deputy President had observed the parties' interaction at the conference and concluded that the relationship appeared too damaged to be re-established ([30]-[31], [40]). There was also a declaration signed by 20 school teachers identifying potential disruption and conflict, and evidence from the School Supervisor about the possible effect of changing teachers during the school year ([32], [41]). The Full Bench considered the relationship damage and potential conflict with other teachers provided a sound and rational basis for finding reinstatement inappropriate ([42]).

But the Senior Deputy President had also relied on the likelihood of continued litigation over underpayment and the resulting ill-will ([36]). The Full Bench held that this was an irrelevant consideration. Pursuit of an underpayment claim is the exercise of a workplace right under s.341(1)(b). The FW Act's protections against adverse action for exercising a workplace right made it incongruous to let that exercise operate as a barrier to reinstatement ([37]-[38]).

The existence of error did not determine the appeal. Section 400(1) imposed a separate public interest test. The Full Bench concluded the error did not manifest injustice because, without the underpayment litigation consideration, the other findings still supported the same outcome ([39]-[43]). It therefore refused permission to appeal.

Before and after state of the law

The Full Bench presented its reasoning as an explanation and application of the statutory approach, rather than a departure from an earlier rule. It traced federal unfair dismissal remedies from s.170EE(2) of the Industrial Relations Act 1988, which permitted compensation where reinstatement was “impracticable”, through the Workplace Relations Act 1996 and to s.390 of the FW Act, which focuses on whether reinstatement is “inappropriate” ([11]-[14]).

The Full Bench adopted McLauchlan's view that appropriateness invites a broader assessment than practicability. It also reaffirmed the remedial priority given to reinstatement by s.390(3) and the object in s.381(1)(c), while emphasising that priority does not create an automatic right to return to work ([10], [15], [35]).

On trust and confidence, the judgment consolidates propositions drawn from earlier cases, particularly Perkins. It states that loss of trust may matter, but an employer must establish it on a sound and rational basis. The decision-maker must consider the whole employment context and whether sufficient trust can be restored to make the relationship viable and productive ([21]-[28]). The Full Bench also cautioned against treating ordinary friction, embarrassment, or an employer's continued belief in alleged wrongdoing as necessarily demonstrating that reinstatement is inappropriate ([21], [27]).

The more specific clarification concerns workplace rights. A worker's pursuit of an underpayment claim, and acrimony associated with that claim, should not be used against reinstatement ([37]-[38]). The Full Bench treated that consideration as legally irrelevant in this remedial inquiry. It did not, however, find that this error required the appeal to succeed: s.400(1)'s public interest requirement remained a distinct threshold ([39]-[43]).

Key passages with plain-English translation

At [10], the Full Bench says the relevant question is whether reinstatement is appropriate in the particular case. In plain English, the finding that a dismissal was unfair does not decide the remedy automatically. The decision-maker must still apply the statutory test to the circumstances.

At [27], the Full Bench says a loss-of-trust claim must be soundly and rationally based, carefully scrutinised, and established by the party making it. In practical terms, saying “we no longer trust this person” is not enough. The claim needs a proper evidential foundation and must be assessed in the context of the job and workplace.

At [28], the Full Bench identifies the ultimate question as whether enough trust and confidence can be restored to make the relationship viable and productive. The standard is not perfect confidence or the absence of all tension. The focus is whether the working relationship can function.

At [38], the Full Bench states that the appellants' underpayment claim and the acrimony it caused should not be considered in deciding whether reinstatement is appropriate. In plain English, employees should not be disadvantaged in the reinstatement assessment simply because they pursued a workplace claim.

At [42], the Full Bench explains why it still refused permission to appeal. It considered the observed relationship damage and potential conflict at the school sufficient to support the refusal of reinstatement, even without reliance on the underpayment claims. This was important to the public interest analysis: the error did not, in the Full Bench's view, change the outcome.

At [43], the Full Bench records the result: permission to appeal was refused. It did not substitute a reinstatement order or remake the first-instance remedy decision.

What fact patterns trigger this precedent

The decision is most relevant where an unfair dismissal has been established and the remedy in dispute is reinstatement rather than compensation. It is particularly pertinent where the employer says reinstatement is unsuitable because trust and confidence has broken down. The judgment requires attention to the factual basis for that assertion, the nature of the employment, the evidence about workplace operations, and whether the relationship could function despite some friction ([21]-[28]).

It also bears on cases where an employer relies on the employee's pursuit of an underpayment claim or another workplace right as evidence of acrimony. In this case, the Full Bench expressly rejected using the underpayment claim and the acrimony associated with it as a reason against reinstatement ([37]-[38]). The decision does not say that every dispute between an employee and employer is irrelevant. Its specific finding concerns the exercise of a workplace right and the claim-related acrimony in the circumstances before it.

A further fact pattern is an appeal where an error has been identified but the challenged decision rests on multiple considerations. Nguyen shows that the appellate question is not only whether an error occurred. For an unfair dismissal appeal, the public interest threshold still applies, and the significance of the error may depend on whether it affected the result or otherwise manifested injustice ([39]-[42]).

The decision also cautions against treating the fact that a role has been filled as sufficient by itself to defeat reinstatement, and it identifies disruption, workplace conflict, incapacity, futility, and the continued existence of the employer's business as potentially relevant matters. These are examples, not an exhaustive checklist or automatic outcomes ([17]-[19]).

How later courts have treated it

The judgment provided here does not contain decisions after 21 October 2014, so it cannot establish how later courts or tribunals treated Nguyen. It does, however, describe the authorities it relied upon and certain appeal outcomes known at the time.

The Full Bench adopted the reasoning in Perkins v Grace Worldwide (Aust) Pty Ltd on the careful scrutiny required where loss of trust is advanced as a reason against reinstatement ([21]-[22]). It also relied on Australia Meat Holdings Pty Ltd v McLauchlan for the distinction between practicability and appropriateness and for the continuing relevance of Perkins under the later statutory wording ([15], [22]).

The judgment discusses Colson v Barwon Health, including the view that a claimed loss of trust should be examined for its effect on workplace operations, rather than accepted as a formula for resisting reinstatement ([25]-[26]). The Full Bench notes that permission to appeal in Colson had been refused ([26]). It also refers to Smith v Moore Paragon Australia Ltd for the proposition that a position having been filled would rarely, on its own, justify refusing reinstatement ([17]).

These are the relationships stated in the judgment itself. They show the Full Bench positioning its decision within an existing line of remedy authorities. The materials supplied do not support conclusions about subsequent treatment beyond those references.

Still-open questions

The judgment leaves the application of its principles dependent on the circumstances of each case. It does not prescribe a formula for deciding how much trust is enough, or how a decision-maker should weigh a particular form of workplace conflict against the statutory emphasis on reinstatement. Its stated standard is whether trust can be restored sufficiently to make the relationship viable and productive ([28]).

The decision also does not define every circumstance in which workplace conflict may be relevant. It identifies the pursuit of an underpayment claim and the acrimony arising from it as irrelevant in this case, while separately accepting evidence of observed relationship damage and potential conflict with other teachers as relevant to the remedy decision ([37]-[42]). The boundaries between these categories may depend on the source of the conflict and the evidence connecting it to the operation of the workplace.

Finally, the judgment does not establish that an error involving an irrelevant consideration will always be immaterial if other reasons are given. Its conclusion depended on its assessment that the remaining findings were independently sufficient and that the result would have been the same ([40]-[42]). Whether an error affected the outcome, manifested injustice, or engages the public interest must therefore be assessed on the record of the particular appeal.

This is general legal information, not legal advice. Zoe can make mistakes. Before acting on this, relying on it, or using any draft, have a qualified Australian lawyer check it.