Fair Work Act 2009

s.394 - Unfair dismissal

Application for an unfair dismissal remedy - remedy.

[1] I issued a decision[1] in which I found that Mr Condello's termination by the Respondent, Fresh Cheese Co (Aust) Pty Ltd (Fresh Cheese Co), was harsh, unjust or unreasonable. I was unable to come to a concluded view, based on the materials that were before me, on an appropriate remedy. I advised the parties that directions would be issued following my decision with respect to the filing of submissions addressing remedy.

[2] Directions were issued and the parties each filed written submissions addressing remedy. In the directions the parties were notified that I intended to determine the issue of remedy on the papers, however if either party sought a hearing they were to advise my chambers by the date set down. Neither party made a request to be heard.

[3] Mr Condello did not seek reinstatement and instead sought an order for significant compensation.[2] Fresh Cheese Co sought an order for minimal compensation to be paid to Mr Condello.[3]

[4] The Fair Work Act 2009 (Cth) (the Act) provides the following with respect to remedy:

"390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person's reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

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

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

[5] Mr Condello does not seek reinstatement, submitting he has no desire to be re-employed by Fresh Cheese Co. Fresh Cheese Co strongly opposes reinstatement.

[6] In all of the circumstances I am satisfied there would be little prospect of re-establishing a productive and cooperative relationship and I do not consider reinstatement would be appropriate or practical. I find an order for compensation is appropriate.

[7] Section 392 of the Act sets out the criteria to which I must give regard in determining any amount of compensation I might order Fresh Cheese Co to pay Mr Condello. I will consider each of these in succession below.

[8] In determining the amount of compensation to be ordered, the Act provides:

(1) An order for the payment of compensation to a person must be an order that the person's employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer's enterprise; and

(b) the length of the person's service with the employer; and

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

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

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

(3) If the FWC is satisfied that misconduct of a person contributed to the employer's decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person's dismissal.

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

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

(6) The amount is the total of the following amounts:

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

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period - the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations."

The effect of the order on the viability of the employer's enterprise

[9] Mr Condello submitted that there was no suggestion that a substantial award would affect the viability of the Respondent's enterprise. [4]

[10] Fresh Cheese Co submitted that the Respondent was under severe financial pressures and required to regularly submit budgets and updates to its bank. They submitted that any compensation awarded will not have been budgeted for and will not be looked upon favourably by its bank.[5]

[11] Fresh Cheese Co submitted that it is highly probable that a significant penalty may place them in a position from which they are not able to recover.[6]

[12] Fresh Cheese Co also submitted that they had incurred significant increased compulsory quality testing costs arising from the contamination of food product and packaging resulting from poor workplace adherence to the rules, advising that these costs have almost doubled when compared to the year prior to Mr Condello's termination. Fresh Cheese Co submitted that it would be harsh to further penalise them for implementing and enforcing appropriate practices.[7]

[13] Mr Condello submitted that Fresh Cheese Co's submissions as to its financial situation are not supported by any evidence, and as such little or no weight should be given to them.[8]

[14] Similarly, Mr Condello submitted that Fresh Cheese Co's submissions regarding their increased compliance costs are not supported by evidence and further that the submission does not relate to any of the statutory criteria for determining compensation.[9]

[15] Where an employer seeks to rely on the circumstances referred to in s.392(2)(a) of the Act, the employer must present evidence and/or argument as to the financial situation of the enterprise and the likely effect that an order for compensation would have on the viability of the enterprise.[10]

[16] In K. Beames v BDRP Falconer Pty Ltd[11], Deputy President Hamilton made the following observation:

"[48] In this present matter the employer is experiencing difficult business conditions, and further redundancies have been made. This is not in contention. However, no witness evidence was led that an order of the amount sought would have an effect on the viability of the employer, or what the effect would be of such an order, or what extent that effect would relate to the viability of the business. The submission was however made by Tercel that 'any additional expense will certainly be a problem for the business' [PN478].

[49] The question is whether I should be prepared to infer an effect on viability from the material before me about difficult trading conditions, and ongoing redundancies. Such an inference must not be simply 'conjecture or speculation', and there must be facts which in my view make an effect on viability of the enterprise sufficiently probable. The existence of trading difficulties and a general submission that 'any additional expense will certainly be a problem for the business' is not a submission that the viability of the business will be affected or even that it will probably be affected. On those submissions, even if accepted, the problem may or may not affect viability, and the factor I must have regard to is of course effect on viability: '(a) the effect of the order on the viability of the employer's undertaking, establishment or service;'. At most it is a submission that problems will occur that might or might not, with no real likelihood either way, extend to affecting the viability of the business. Nor has the applicant been given an opportunity to respond to any submission or evidence that the problem will or probably will affect viability. Nor am I able to predict what the result of such a contest, if it had taken place, would have been. A mere submission that difficulties for the business will occur is, with respect, not enough. If some specific evidence had been led on the point perhaps the result would be different, or perhaps not." (endnotes omitted)

[17] Fresh Cheese Co did not file any evidence in support of their submission regarding this factor. Accordingly, on consideration of the evidence I am unable to find that any order I make will affect the viability of Fresh Cheese Co.

Length of the person's service with the employer

[18] Mr Condello was employed by the Respondent from 26 February 2001 until his dismissal on 17 August 2017.[12] He was therefore a long serving employee of over 16 years.

Remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed

[19] Mr Condello submitted that there was no evidence that his employment would otherwise have ceased, suggesting that he would have earned significant remuneration but for the dismissal.[13]

[20] I found no evidence that Mr Condello had been or was being performance managed prior to his dismissal and no evidence was provided of any performance concerns regarding Mr Condello other than the warning he had received in 2015. Accordingly, I find that Mr Condello would have remained in employment for a further 12 months.

[21] The parties agreed that Mr Condello's gross weekly salary was $714.90.[14] This equates to $37,174.80 over 52 weeks.

The efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[22] Mr Condello submitted that his failure to obtain alternative employment is reasonable given the obstacles he faces in this regard, and as such no deduction should be made on this account.[15]

[23] Fresh Cheese Co submitted that Mr Condello had provided no evidence as to what efforts had been made by him to find alternative employment. They submitted that Mr Condello could not use the excuse that he does not think he will find alternative employment as an excuse for not looking.[16] They submitted that any amount of compensation ordered should be discounted considerably due to the failure of Mr Condello in seeking alternative employment.[17]

[24] Mr Condello submitted that his failure to mitigate his loss is explained by his age and health as he reasonably anticipates that he will be unable to find employment.[18]

[25] The question of what steps are reasonable in the mitigation of loss is a question of fact to be determined having regard to the particular circumstances.[19] I do not accept that Mr Condello's anticipation that he will be unable to find employment is reasonable in the circumstances and do not consider that it is sufficient justification from his apparent failure to make any attempt to secure employment.

[26] Further, whilst Mr Condello submitted that his health issues would prevent him from securing employment, he has provided no evidence as to what these issues are and how they would do so. Accordingly, I find that it would be appropriate to deduct 30% from the amount awarded to Mr Condello for his failure to mitigate his loss.

The amount of remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation.

[27] I have adopted the approach of the Full Bench of the AIRC in Ellawala v Australian Postal Corporation[20] as follows;

"Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the "anticipated period of employment". This amount is then reduced by deducting monies earned since termination. Only monies earned during the period from termination until the end of the "anticipated period of employment" are deducted. An example may assist to illustrate the approach to be taken.

In a particular case the Commission estimates that if the applicant had not been terminated then he or she would have remained in employment for a further 12 months. The applicant has earned $3,000 a month for the 18 months since termination, that is $54,000. Only the money earned in the first 12 months after termination (that is $36,000) is deducted from the Commission's estimate of the applicant's lost remuneration. Monies earned after the end of the "anticipated period of employment", 12 months after termination in this example, are not deducted. This is because the calculation is intended to put the applicant in the financial position he or she would have been in but for the termination of their employment."

[28] Mr Condello submitted that he had earned minimal remuneration since his dismissal.[21] He submitted that he had performed odd jobs changing washers or pruning plants and estimated the total amount earned to be about $300 or $400.[22]

[29] Fresh Cheese Co submitted that it was unclear what Mr Condello has actually received by way of remuneration since his termination. They submitted that Mr Condello has a history of working for cash and that it was possible that any amount disclosed by Mr Condello would not be accurate. Fresh Cheese Co submitted that any compensation awarded should be discounted as a result of this remuneration that has been received by Mr Condello.[23]

[30] Mr Condello has provided no evidence as to the actual amount earned since his dismissal other than his submission, and as such I find it appropriate to deduct the higher of the amounts suggested by Mr Condello, being $400.

Any amount of income reasonably likely to be earned during the period between the making of the order and the actual compensation.

[31] Mr Condello submitted that he is unlikely to earn significant further sums of money prior to receipt of any compensation.[24]

[32] I accept that Mr Condello is unlikely to earn "significant sums" of money during the period between the making of the order and the actual compensation. I find that it is appropriate to deduct 20% from the amount ordered to Mr Condello for contingencies.

Any other matter that the FWC considers relevant.

[33] Mr Condello submitted that he will face particular difficulties in finding alternative employment given his health, advanced age, narrow field of work experience and limited education.[25]

[34] Fresh Cheese Co submitted that the misconduct of Mr Condello breached the workplace rules and accepted behaviour, therefore contributing to their decision to dismiss him.[26]

[35] They submitted that Mr Condello, by his own admission, was aware of the misconduct and suggested the penalty that should be imposed upon him. As such they submitted that any amount awarded to Mr Condello should be discounted considerably as a result of this misconduct.[27]

[36] Mr Condello submitted that his conduct should not be regarded as misconduct as it did not give rise to a valid reason for dismissal. As such, he submitted that no deduction should be made for misconduct.[28]

[37] I am not satisfied that Mr Condello's conduct in using his mobile phone in the production facility can be classed as misconduct. Accordingly I make no deduction for misconduct.

[38] I do not include any component by way of compensation for shock, distress or humiliation caused by the manner of the dismissal.

[39] There were no objections by the parties to making a decision on remedy based on the materials before me.

[40] I have found that Mr Condello would have remained in employment for a further 12 months, during which time he would have earned a total of $37,174.80. I deduct $400 from this amount for remuneration earned by Mr Condello since his termination until the end of the anticipated period of employment. This results in a figure of $36,774.80.

[41] I deduct from this figure 20% for contingencies and 30% for Mr Condello's failure to mitigate his loss. This results in a figure of $18,387.40. As this figure is below the compensation cap I make no further deductions.

[42] Accordingly, Fresh Cheese Co must pay to Mr Condello the amount of $18,387.40 plus applicable superannuation, less appropriate taxation as required by law.

[43] Fresh Cheese Co requested that, in the event that I decide to impose a monetary penalty, they be given time to pay such a penalty.[29]

[44] I take into account that Fresh Cheese Co is not likely to have budgeted for an order of compensation in these circumstances. I also take into account that they are a relatively small enterprise and, whilst Fresh Cheese Co have not provided sufficient evidence to satisfy me that this order will impact the viability of their enterprise, I am satisfied that they will encounter difficulties in making a large lump sum payment.

[45] I therefore deem it appropriate that the compensation be paid to Mr Condello in three equal instalments over a period of 90 days from the date of the accompanying order[30] with the first payment to be made within 30 days and the second to be made within 60 days. Fresh Cheese Co is at liberty to apply for a variation to this time period.

[1] Condello v Fresh Cheese Co (Aust) Pty Ltd [2018] FWC 2025

[2] Applicant's submissions on remedy (23 April 2018), 1

[3] Respondent's submissions as to remedy (4 May 2018), 1

[4] Applicant's submissions on remedy (23 April 2018), 1a

[5] Respondent's submissions as to remedy (4 May 2018), 1a

[6] Respondent's submissions as to remedy (4 May 2018), 1a

[7] Respondent's submissions as to remedy (4 May 2018), 1b

[8] Applicant's reply submissions as to remedy (15 May 2018), 1

[9] Applicant's reply submissions as to remedy (15 May 2018), 2

[10] D.A. Moore v Highpace Pty Ltd (AIRCFB, Boulton J, Watson SDP, Whelan C, 18 May 1998) Print Q0871

[11] K. Beames v BDRP Falconer Pty Ltd (AIRC, Hamilton DP, 28 March 2002) PR916075 [49]

[13] Applicant's submissions on remedy (23 April 2018), 1c

[15] Applicant's submissions on remedy (23 April 2018), 1d

[16] Respondent's submissions as to remedy (4 May 2018), 1c

[17] Respondent's submissions as to remedy (4 May 2018), 1c

[18] Applicant's reply submissions as to remedy (15 May 2018), 3

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

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

[21] Applicant's submissions on remedy (23 April 2018), 1e

[23] Respondent's submissions as to remedy (4 May 2018), 1d

[24] Applicant's submissions on remedy (23 April 2018), 1e

[25] Applicant's submissions on remedy (23 April 2018), 1f

[26] Respondent's submissions as to remedy (4 May 2018), 1e

[27] Respondent's submissions as to remedy (4 May 2018), 1e

[28] Applicant's reply submissions as to remedy (15 May 2018), 5

[29] Respondent's submissions as to remedy (4 May 2018), 2

[30] PR608508

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