Australian Industrial Relations Commission|1998-07-10|Before: Mr P, Ross VP, Justice P

T. Sprigg v Paul's Licensed Festival Supermarket - 1534/98 S Print R0235 [1998] AIRC 989; (10 July 1998)

T. Sprigg v Paul's Licensed Festival Supermarket - 1534/98 S Print R0235

s.45 appeal against decision [Print Q3468] and order [Print Q3476]

issued by Senior Deputy President Watson on 10 July 1998

Appeal against award of compensation on termination of employment; whether error of principle in assessment; subsection 170CH(7): basis for determining amount ordered in lieu of reinstatement; failure to have regard to remuneration lost; leave to appeal; order of compensation varied and order for amount in lieu of reinstatement made.

1. This is an appeal lodged, on 31 July 1998, under Section 45 of the Workplace Relations Act 1996 (the Act) by Mr Timothy Sprigg against an order of Watson SDP on 10 July 1998[1]. Watson SDP found that the termination of the employment of Mr Sprigg by Vrondis Nominees Pty Limited trading as Paul's Licensed Festival Supermarket (Paul's) was harsh, unjust and unreasonable. He ordered that Mr Sprigg be paid "compensation of $3,500".

2. In response to directions issued on 31 August 1998, written submissions on the appeal were lodged by 23 September 1998. At the hearing of the appeal on 23 September 1998, Ms M. Young, of counsel, was granted leave to appear for Mr Sprigg. Mr P. Burchardt, of counsel, was granted leave to appeal for Paul's.

3. The appeal is in effect against the amount ordered in lieu of reinstatement. The appellant argues that the amount of $3,500 is too low. The assessment of compensation at $3,500 was said to be inconsistent with the requirements of section 170CH. In the appellant's contention the assessment had not, but should have been, guided by principles of assessment corresponding to those set out by Ross VP in Shorten and ors v Australian Meat Holdings[2] (Shorten), which were later described as "an appropriate guide" by the Full Bench decision in Leemon v Treasure Books Australia Pty Ltd trading as Merchant Sampler Advertising[3] (Leemon). The essential points in the appellant's case that the order was founded upon an error in exercising the discretion under subsections 170CH(6) and (9) of the Act, were:

* the Senior Deputy President failed to take into account that the gross earnings of Mr Sprigg were $36,000;

* the decision does not disclose how the Senior Deputy President reached his conclusion that $3,500 was an appropriate amount to be awarded and the Commission should infer that there has been a failure to properly exercise the discretion resulting in a substantial wrong; and

* The Senior Deputy President did not have regard to one factor or circumstance specified in paragraph 170CH(7)(c): the remuneration that Mr Sprigg would have received, or would have been likely to have received, had the termination not occurred.

4. The respondent submitted that Watson SDP's assessment was not based on any misconception of fact, or upon any error of principle, applicable to a proper assessment of compensation.

5. Both parties agreed that leave to appeal should only be granted if the Commission is satisfied that the matter of the appeal is of such importance that it is in the public interest for leave to appeal to be granted. Each party relied on the principles stated in Westend Pallets Pty Ltd v Lally.[4] Therefore, it is common ground that it is necessary for the appellant to establish an arguable case that Watson SDP made a legal error or acted upon a wrong principle, gave weight to irrelevant matters, failed to give sufficient weight to relevant matters, or made a mistake as to the facts.

2. First Ground of Appeal: Was it a Fundamental Misconception of the Facts to not take into account that the gross earnings of Mr Sprigg were $36,000:

6. The Senior Deputy President's findings about the remuneration on which his assessment of compensation was based were as follows:

"On the uncontested evidence of the applicant his remuneration consisted of:

This amounted to remuneration, inclusive of superannuation and payment in kind, of $524.03 per week. In addition, the applicant was paid $15 per hour cash for overtime."[5]

In setting out the considerations he had regard to in his assessment, the Senior Deputy President listed:

"the loss of weekly remuneration, in cash or kind of the order of $520 per week exclusive of overtime".[6]

7. We have reviewed the evidence relevant to his Honour's finding. The principal item of evidence, (apart from Mr Sprigg's own statement that his income was $36,000 per annum), is a letter dated 24 October 1997 To Whom it may Concern. It certifies that Mr Sprigg's current gross salary is $36,000 per annum. This document is Attachment 2 to Mr Sprigg's statement exhibit T1 in the proceedings before the Senior Deputy President. In evidence in chief[7] Mr Sprigg said the $36,000 was made up of:

"a weekly gross amount of just over $400, there was $50 bonus a week for managing the shop, there was $50 for - around $50 for groceries each week and there was overtime paid at $15 an hour, which was cash in hand, and Saturdays".

8. The pay slip produced as Attachment 3 to exhibit TS2 identifies a superannuation levy payment on behalf of Mr Sprigg of $24.03 per week. Mr Sprigg's evidence about overtime[8] is that `in most weeks' he would do five hours overtime, but it could be up to 10 hours a week. The Saturday work played a significant part in the merits of the case but it does not concern us now. Mr Sprigg stated he worked every second Saturday and paid himself $150 for that from the till on the instructions of one of the supermarket's co-owners.

9. We do not consider that Watson SDP's findings ignored overtime. The only items to which he did not refer are the Saturday work, and the claimed overall figure of $36,000. In the light of the evidence before him we do not consider the Senior Deputy President was required to take that last-mentioned figure as the only basis of calculation. He preferred the itemised approach. It was open to him to do so. The Saturday work is, on the face of the decision, omitted from consideration in the itemised approach. All others that were itemised are accounted for. We do not consider that any possible discrepancy amounts to a fundamental misconception of the facts in the circumstances of the case. It is clear from the decision that Watson SDP was aware of the practice as to Saturday work. He did not take that part of the remuneration into account in assessing the amount he ordered and did not explain if he had a reason for the omission. Whatever error may be involved in that omission is not of a kind or degree to cause the matter of the appeal to be of such importance that it is in the public interest that leave to appeal should be granted.

3. Second Ground of Appeal: Claimed Errors of Principle in Assessment: 10. There were two limbs to the argument advanced on the appeal that the assessment of the amount ordered was based on an error of principle. It is convenient to deal with both limbs of the argument. In substance, the error of principle relied upon was either to be inferred from the failure to disclose the reasoning behind the conclusion, or was manifest by the failure to enter into the reckoning at all the circumstance that paragraph 170CH(7)(c) stipulates must be taken into account.

12. The appellant's grounds in support of this contention may be summarised:

* the annual earnings were $36,000 gross (we have already dealt with that point and will not further consider it);

* the decision does not disclose how the quantum of compensation was reached, because:

* there is no statement showing how the factors identified as relevant considerations were applied;

* there is no reasoning about why the maximum allowable amount was discounted and it is difficult to understand how the figure was arrived at.

* the decision apparently gives no consideration to the length of time the appellant would have been employed but for the termination;

* the correct approach is that set out in Shorten and Leemon whilst taking into account the factors now required to be considered by s.170CH(7) of the Act.

12. The relevant part of Watson SDP's decision read:

"In considering appropriate compensation I have considered

* The absence of any firm basis upon which it could be concluded that an order for compensation would affect the viability of the respondent.

* The lengthy service of the applicant with the respondent, with his employment with the respondent constituting the bulk of his employment history;

* The loss of weekly remuneration, in cash or kind, of the order of $520 per week, exclusive of overtime;

* Alternate earnings of the order of $10,00 since his termination;

* The continuation of workcare payments in respect of one day per week at the base rate until Christmas 1997;

* The difficulties in finding alternate employment of a comparable kind because of his back injury, whilst recognising that the applicant is obviously a resourceful person who has had success in finding other employment, albeit not of the same nature or certainty of his employment with the respondent; and

* The failure of the respondent to give or pay notice."[9]

13. We do not accept the submission that the decision does not disclose how the conclusion was reached. We accept that there is no working out of the individual factors identified as having been considered but we do not find this unacceptable. Subject to specific subsection 170CH(7) requirements, what is to be taken into account is at large. That width is underscored by paragraph 170CH(7)(e) requiring consideration of any other matter considered relevant by the Commission. We therefore do not consider the Senior Deputy President was required, for instance, to identify the weight given to the factors as individual considerations. We also do not find it a mortal flaw that the Senior Deputy President has not explained why he did not order the maximum amount. Shorten and Leemon do not require this. Those decisions required that, in assessing the amount of compensation to be awarded, an estimate be made of the remuneration the employee would have received if the employment had not been terminated. In relation to that point of the appeal, it is difficult to identify where that circumstance of the termination was taken into account by Watson SDP in his decision to award $3,500 as compensation. This introduces for our consideration the balance of the appellant's submission as summarised earlier.

4. The Statutory Duty Applicable to Assessing an Amount in lieu of Reinstatement: 14. An examination of the principles applicable to the assessment of the amount that may be ordered in lieu of reinstatement must start from the most directly relevant provisions; subsections 170CH(6), (7) and (8):

"(6) If the Commission thinks that the reinstatement of the employee is inappropriate, the Commission may, if the Commission considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay the employee an amount ordered by the Commission in lieu of reinstatement.

(7) Subject to subsection (8), in determining an amount for the purposes of an order under subsection (6), the Commission must have regard to all the circumstances of the case including:

(a) the effect of the order on the viability of the employer's undertaking, establishment or service; and

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

(c) the remuneration that the employee would have received, or would have been likely to receive, if the employee's employment had not been terminated; and

(d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and

(e) any other matter that the Commission considers relevant.

(8) In fixing an amount under subsection (6) for an employee who was employed under award conditions immediately before the termination, the Commission must not fix an amount that exceeds the total of the following amounts:

(whichever is higher) for any period of employment with the employer during the period of 6 months immediately before the termination (other than any period of leave without full pay); 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."

16. Subsection 170CH(7) is couched in mandatory terms. It requires the Commission, in determining an amount for purposes of an order, to have regard to each of the circumstances stipulated in subparagraphs 170CH(7)(a) to (e). The subsection requires that regard be paid also to all the circumstances of the case. All the circumstances include the extension in paragraph 170CH7(e) "any other matter that the Commission considers relevant".

17. The width of that extension and the generality of the direction to have regard to all the circumstances of the case, do not diminish the strength of the statutory command to have regard to each circumstance identified in paragraphs 170CH(7)(a), (b), (c) and (d). In Queensland Medical Laboratories v Blewett, Gummow J construed a similar obligation imposed by Part 6.1 of a Schedule determining principles to be applied by a Committee established under the Health Insurance Act. Part 6.1 stipulated that the committee "shall have regard to" certain matters determined by the Minister:

"The expression "shall have regard to" in Pt 6 requires the committee to take the matters so identified into account and give weight to them as fundamental elements in the conduct of its activities under Pt 6: R v Hunt; Ex parte Sean Investments Pty Ltd [1979] HCA 32; (1979) 25 ALR 497; 53 ALJR 552 at 554 per Mason J, with whom Gibbs J agreed. The mere assertion by the committee that it has so acted will not be conclusive, if it is demonstrated that regard has not been had to these matters in any real sense: Turner v Minister for Immigration and Ethnic Affairs [1981] FCA 65; (1981) 35 ALR 388 at 392 per Toohey J. But, of course, in proceedings of this kind the limited role of the court must be borne in mind (Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 66 ALR 299; 162 CLR 24 at 40-1 per MasonJ)[10]

17. Similarly Mason J, in R v Hunt; Exparte Seas Investment Pty Ltd[11], expressed the force of a similar duty on the Departmental Head under the National Health Act 1953:

"When subsection (7) directs the Permanent Head `to have regard to' the costs, it requires him to take those costs into account and to give weight to them as a fundamental element in his determination".

18. Subsection 170CH(7) should be construed as requiring that in determining an amount to be ordered in lieu of reinstatement, the Commission should take all circumstances into account and in particular should take into account, as fundamental elements in the determination, each of the particular circumstances specified in paragraphs 170CH(7)(a), (b), (c) and (d), as well as any relevant matter within the scope of paragraph 170CH(7)(e).

19. It is apparent on the face of the part of the decision that we have quoted, that the Senior Deputy President had regard to the circumstances in paragraph 170CH(7)(a): the effect of the order on the viability of the employer's undertaking; in paragraph 170CH(7)(b): the length of the employee's service with the employer; in paragraph 170CH(7)(d): efforts in mitigation; and in paragraph 170CH(7)(e): other matters considered relevant: for example, the difficulty for the appellant in finding other employment because of his back injury.

20. Paragraph 170CH(7)(c) requires that consideration be given to any remuneration the employee would have received, or would have been likely to receive, if the employee's employment had not been terminated: in abbreviated form we will call that lost remuneration. The consideration required is no more than that to be given to any other of the circumstances stipulated by the subsection, but no less. We have deliberated about whether or not the Senior Deputy President gave consideration to that factor on this occasion. We have decided that either he did not, or if he did, it is sufficiently manifest from the language he used that he did not do so in any real sense. For a determination applying subsection 170CH(7), his Honour would have had to estimate lost remuneration in a way that took into account likely future remuneration. We do not think that occurred, at least not on the face of the decision. We do not regard the sentence:

"The loss of weekly remuneration, in cash or kind, of the order of $520 per week."

as going as far as estimating future remuneration. Rather, we regard it as a statement of the weekly loss. It is not an assessment of a loss over time which, in our view, s.170CH(7)(c) requires.

21. Because subsection 170CH(7) requires that the circumstance of estimated contingent lost remuneration be considered, an omission to do so is a failure properly to exercise the discretion conferred by s.170CH(6). We are satisfied that this failure constitutes an error of principle of sufficient magnitude to cause the matter of the appeal to be of such importance that it is in the public interest that we should grant leave to appeal. In the circumstances it is necessary for us to consider whether we should confirm, quash or vary the order that an amount of $3,500 be paid. Effectively that is the only issue to be determined, leave to appeal having been granted.

5. Principles Applicable to Determining an Amount to be Ordered in lieu or Reinstatement:

22. The amount that is to be determined in these matters is "in lieu of reinstatement" [s.170CH(6)]. Guidance in the determination of that amount is given by the Act in s.170CH(7). The sub-section falls in Division 3 of Part VIA of the Act. The object of that Division is set out in s.170CA. That states:

(a) to establish procedures for conciliation in relation to certain matters relating to the termination or proposed termination of an employee's employment in certain circumstances; and

(b) to provide, if the conciliation process is unsuccessful, for recourse to arbitration or to a court depending on the grounds on which the conciliation was sought; and

(c) to provide for remedies appropriate to a case where, on arbitration, a termination is found to be harsh, unjust or unreasonable; and

(d) to provide for sanctions where; on recourse to a court, a termination or proposed termination is found to be unlawful; and

(e) by those procedures, remedies and sanctions, and by orders made in the circumstances set out in Subdivisions D and E, to assist in giving effect to the Termination of Employment Convention.

(2) The procedures and remedies referred to in paragraphs (1)(a) and (b), and the manner of deciding on and working out such remedies, are intended to ensure that, in the consideration of an application in respect of a termination of employment, a "fair go all round" is accorded to both the employer and employee concerned.

Note: The expression "fair go all round" was used by Sheldon J in re Loty and Holloway v Australian Workers' Union [1971] AR (NSW) 95."

23. Much of the appellant's case was devoted to having us adopt the approach in Shorten for the assessment of compensation. But there are differences in the context. Shorten was decided under the relevant provisions of the Industrial Relations Act 1988 (the former Act). So too was Leemon. Under the former Act, s.170CA relevantly was as follows:

"170CA(1) [Reason for Division defined] The object of this Division is to give effect, or give further effect, to:

(a) the Termination of Employment Convention; and

(b) the Termination of Employment Recommendation, 1982, which the General Conference of the International Labour Organisation adopted on 22 June 1982 and is also known as Recommendation No. 166, and a copy of the English text of which is set out in Schedule 11."

24. Further, under the former Act, the sections giving power and guidance for determination of compensation were ss170ECA and 170EE. The relevant subclauses thereof were ss.170ECA(4), 170EE(2) and (3):

"170EC(4) [Commission may make an award] The Commission may, on completion of a consent arbitration, make an award:

(a) that provides for a remedy of the kind able to be granted by the Court under section 170EE; or

(b) that provides that there is no entitlement to any such remedy."

"170EE(2) [Reinstatement impractical] If the Court thinks, in respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may, if the Court considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate."

"170EE(3) [Calculation of compensation] In working out the amount of the compensation for the purposes of subsection (2), the Court is to have regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment, but the amount of compensation:

(a) must not exceed, in respect of any employee, the amount of the remuneration that would have been received by the employee in respect of the period of 6 months that immediately followed the day on which the termination took effect if the employer had not terminated the employment and the employee had continued to receive remuneration in respect of the employment at the rate at which he or she received remuneration immediately before the termination took effect; and

(b) must not exceed, in respect of any employee who is not employed under award conditions, the applicable amount on the day on which the termination took effect." (emphasis supplied).

25. The effect of those provisions as they applied to the Commission for the purpose of consent arbitration, was considered at length by Ross VP in Shorten v Australian Meat Holdings[12]. In that decision, dated 28 November 1996, VP Ross was determining whether or not to grant a remedy under the then section 170EC(4) of the Industrial Relations Act 1994. As we have shown, that subsection stated that, on completion of a consent arbitration, the Commission could make an award providing for a remedy of the kind, able to be granted by the then Industrial Relations Court under section 170EE of the then Act. The power of the Court to make an order for "compensation" to be paid to the employee was conditioned upon the Court's belief that reinstatement of the employee was impracticable. As we have already noted and emphasised, subsection 170EC(3) required that the Court have regard to a form of lost remuneration when working out the amount of compensation.

26. Ross VP addressed the construction of the relevant provision through a detailed examination of decisions by Members of the Court. The substance of his decision is adequately summarised in the following passages:

"It can be seen that the approach taken in a number of cases in the Industrial Relations Court is to assess the appropriate amount of compensation in the light of all relevant circumstances, including the remuneration that the employee would have received, or have been likely to have received, if the employer had not terminated the employment and, if that amount exceeds the permissible figure, reduce the compensation to that figure.[13] The following general principles regarding reinstatement and compensation may be extracted from the cases referred to:

(5) Lost remuneration is a fundamental element in assessing compensation though it is not the only matter that may be considered: Krupp-Geir v Open Family (Australia) Inc.

(6) In assessing the amount of compensation to be awarded the following approach has been adopted by the Court:

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.

STEP 2: Deduct moneys 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 awarded.

STEP 3: The remaining amount of compensation is discounted for contingencies.

STEP 4: The impact of taxation is calculated to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.

STEP 5: The legislative cap on compensation is applied. Section 170EE(3) limits the Court and the Commission to an amount not exceeding the amount of remuneration that the employee would have earned in the six months immediately following the termination, if the termination had not occurred. This is simply an arbitrary cap on the amount that may be awarded. It does not operate as a maximum amount to be awarded only in the most grievous or serious cases: [Perrin v Des Taylor Pty Ltd; Bean v Milstern Retirement Services Pty Ltd; Cox v South Australian Meat Corp; Messervy v Maldoc Pty Ltd t/as Toongabbie Hotel; Slifka v J W Sanders Pty Ltd (see generally Slifka v J W Sanders Pty Ltd).]

In my view it is appropriate that, in the absence of any Commission decision to the contrary, I apply the principles developed by the Court in respect of the assessment of compensation in unlawful termination cases. The consistent application of such principles is necessary to promote certainty and avoid the arbitrary determination of compensation.[14]"

27. In Leemon, a decision of 5 May 1997, a Full Bench comprised of Ross VP, Watson DP and Gay C, endorsed the principles stated in Shorten.[15] The authorities cited by the Full Bench in Leemon included Burazin v Blacktown City Guardian Pty Ltd. The analysis of section 170EE in that decision included the observation:

"We accept that the words `the remuneration that the employee would have received or would have been likely to have received' can be described as `a reference point' for the calculation of compensation. But they are no more than that. They do not exhaustively state the matters to be taken into account."[16]

28. Upon passage of the Workplace Relations and Other Legislation Amendment Act 1996, section 170EE and with it the associated regime of the former Act, was repealed. The provisions of section 170CH(7) were substituted. We consider that one point is almost immediately apparent from an examination of subsection 170CH(7). The lost remuneration, or "reference point" for determining compensation under the repealed section 170EE, was reproduced in substantially similar terms. It is now one of the four circumstances to which the Commission "must have regard" when determining an amount to be ordered in lieu of reinstatement. We do not consider that the slight variation in the wording to make the circumstance apply to remuneration received "if the employee's employment had not been terminated" is a difference of any significance. A more obvious change was made by subsection 170CH(7). Lost remuneration was no longer given the same prominence, as it had been when it was the consideration to which regard had to be paid in working out the amount of compensation. However, the construction of subsection 170EE(3) of the former Act was well established by passages of the kind found in Burazin, which we have quoted. That construction may be taken to have been carried over when the reference to lost remuneration, in almost identical words, was specified in subsection 170CH7(c) as one of the circumstances to which regard must be paid. Indeed we think it may be accepted that 170CH(7) is a form of statutory expression of the passage we have quoted from Burazin.

29. Several first instance decisions applying section 170CH(7) were cited to us by Ms Young and Mr Burchardt. It is apparent from these cases that the principles stated by Ross VP in Shorten have been widely accepted to be applicable to the exercise of jurisdiction in applying subsection 170CH(7). There have also been a number of instances where a broader approach, without recourse to the decisional steps used in Shorten, have been applied. In K N Murdoch v K's By Kiez Pty Ltd [17] Watson SDP himself examined the effect of the relevant provisions on the exercise of his discretion. He determined that the Shorten approach remained relevant subject to the objects of Division 3 of Part VIA of the Act provided in section 170CA (i.e a fair go all round) and the specific factors in section 170CH(7). He applied that approach taking in to account "the fair go all round" object and the factors in section 170CH(7) in Step 3 of the Shorten principles. A generally similar approach was applied by Watson SDP in P A Rush v East West Freightliners[18]; b_y Hodder C in A M Bardell v A P Ford Pty Ltd trading as Southside Ford[19]; and by_ Deegan C in several decision including: F J Cody-Law v Barry Cavigan trading s San Remo Hotel & Ors[20]; D J McInnes v McElligott Pty Ltd[21]and Ingrid Nagy-Hanley v Molomby and Molomby, Solicitors[22]. Other decisions in which the Shorten formula, or a modification of it, was applied to result in an award of maximum or maximum amounts were J Doble v Vanbrew Pty Ltd trading as St. Clair Sawmills[23], D J McAdam v Swersky & Velos[24] by Raffaelli C and S Tadd v Electronic Services Canberra Pty Ltd [25] by Larkin C.

30. However the Shorten approach has not been given the same formulaic weight in working out amounts in a number of other instances: in S Martini v Flairinvest Pty Ltd[26] Smith C adopted a broader approach to determining "compensation", concluding that:

"All in all I have decided that in adopting a "fair go all round" this results in me awarding four weeks salary as compensation".

It would appear that Smith C adopted a similar approach in P R Pinner v Ipec Road Express[27] and P Robinson v Wavesea Pty Ltd trading as I.C.S. Security Group III. On Ms Young's submission[28] other decision in which the approach in Shorten, or an explained modification of it, has not been applied and which show little reasoning as to the assessment of amounts ordered are: S Asker v Woolworths (SA) Pty Ltd[29] per Lewin C; Jobson v Gerrard Strapping Systems[30] per Whelan C; Stankovic v Electronic Resources Australia[31] per Whelan C; D Galinec v Canberra Hotel[32] per Wilks C; C R Wimberley v Langfield Industries[33] per Bacon C.

31. Thus it appears there is an array in the degree to which principles identified with the decision in Shorten are being consistently applied in determinations made in the different statutory context of subsections 170CH(6) and (7). For the reasons given by Ross VP in Shorten, it is desirable that a consistent and predictable technique for determining an amount to be ordered in lieu of reinstatement should emerge in Commission practice.

32. In the circumstances it is appropriate to detail the approach we consider should be applied to the current case. It is necessary to start by putting the object of Division 3 of Part VIA in perspective with the specific conditions for exercise of the discretion under section 170CH. In subsection 170CA(2) the object of a "fair go all round" is given substance as the intended outcome of the consideration of an application for a termination of employment to be dealt with. Thus "the procedures and remedies referred to paragraphs 1(a) and 1(b), and the manner of deciding on and working out such remedies are intended to ensure that, in consideration of the application" the fair go is achieved. We note that the fair go object does not expressly apply to the remedy provided, as distinct from the arbitration or judicial powers through which it is determined. As several cases have now noted, the fair go object does not constitute a basis for ignoring, or for rolling into one amorphous act of judgement, the procedures or conditions associated with the powers and discretions to determine remedies[34]. For instance, the object of achieving a fair go all round ought properly influence the Commission's consideration of all the circumstances of the case when determining whether or not to award compensation under section 170CH. However, it cannot displace the direct duty to have regard to the circumstances nominated in paragraphs 170CH(7)(a), (b), (c), (d) and (e). Although, and importantly, paragraph 170CH(7)(e) requires the Commission to have regard to any other matter considered relevant. Thereby any consideration believed to be crucial to achieving a fair go all round may, and should, be taken into account in the overall assessment of any amount ordered in lieu of reinstatement.

33. When comparing subsection 170CH(7) with the legislation considered in Shorten, the most obvious point is that remuneration lost is now but one of the statutory matters to which the Commission must have regard. Remuneration lost was the single reference point identified in the repealed counterpart to section 170CH. Potentially a wide spread of circumstances may be taken into account under paragraph 170CH(7)(e).

Moreover, the direction in subsection 170CH(7) is to have regard to a plurality of circumstances. Consequently several other less determinate reference points are to be used in determining an amount to be ordered in lieu of reinstatement. There is no suggestion that any one such circumstance is to receive more weight than the others. Thus for instance, consideration of the effect on viability might, at the least, affect the amount otherwise determined to be appropriate.

34. None the less, as we have noted, the reference to remuneration lost is very similar in both subsections 170CH(7) of the Act and subsection 170EE(3) of the former Act_._ The guidelines in S_horten_ covered a number of matters not relevant to this case such as reinstatement under the former Act. We have quoted at paragraph 26 above the two most relevant principles (5) and (6). Principle 5 in Shorten, is the general requirement that the Commission have regard to remuneration lost. On a proper construction subsection 170CH(7), causes that circumstance or consideration to still be "a fundamental element" in assessing an amount to be ordered. That remains so, albeit the Commission needs have regard also to each of the other circumstances identified in section 170CH.

35. Steps 1 to 4 set out as part of principle 5 in Shorten in our view continue to be appropriate and relatively necessary steps in the estimation and appropriate assessment of remuneration lost. Remuneration lost is a necessary element in determining an amount to be ordered in lieu of reinstatement. Any amount provisionally arrived at by application of these steps is subject to whatever offsetting weight is given to other circumstances, including those that need now to be taken into account under paragraphs 170CH(7)(a), (b) and (e). The legislative cap on the amount able to be ordered and referred to in step 5 of the Shorten process, is now required by subsections 170CH(8) and (9).

36. In determining the appeal, we therefore take into account the appellant's service of 10 years, a substantial period. In the absence of any significant evidence about the effect of any order on the viability of the employer's enterprise, we see no good reason to reduce the amount that might otherwise be determined.

37. We will use 4 steps in the calculation of the lost remuneration, the remuneration the appellant would have received or would have been likely to receive if employment had not been terminated. The First step is that, we estimate that but for the termination of the employment, the appellant would have been employed for a reasonable period of time. On the evidence, the appellant was highly regarded by his employer. The respondent submitted to Watson SDP:

"There was no suggestion that anything other than a long standing relationship was going to continue and it had already been a long standing relationship by then, marginally short of ten years at the time of the meeting" [at p.163 of transcript]:.

However we describe the further period as reasonable because there had been discussions about the future. Given Mr Sprigg's evidence before the Commission, we do not assume that Mr Sprigg would have been content with his situation for years into the future. We therefore assess the further period as one year. We accept the figure advanced by the parties as the result of Watson SDP's calculation of wages as $27,000. We therefore estimate $27,000 as the gross remuneration lost figure for the purposes of this step. Before leaving this point, we acknowledge that there is a speculative element of involved in all such assessments. We believe it is a necessary step by virtue of the requirement in s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.

38. As the second step, we deduct the $10,000 found by the Senior Deputy President to have been earned since termination. We can make no deduction at this stage for Workcover payments made since the termination. We note that we are satisfied that the appellant made serious and successful efforts to mitigate his losses. This leaves $17,000 lost remuneration, subject to Workcover arrangements.

39. As the third step, in accordance with the principle and the allowance made by North J in Slijka v. J.W. Sanders Pty Ltd[35]

(i) the uncertainty referred to in our consideration of Step 1; and,

(ii) the fact that the moneys are to be received as a lump sum.

40. As the fourth step, we have considered the impact of taxation but, as was done in Leemon, we elect to settle a gross amount and leave taxation for determination.

41. Because the provisional amount resulting from the first four steps under the legislative cap, no adjustment is required for that reason.

42. We can therefore summarise considerations to which by statute we must have regard, we find:

(i) There is no firm basis on which it can be concluded that an order for the amount determined to be paid in lieu of reinstatement would affect the viability of the respondent [s.170CH(7)(a)];

(ii) The lengthy service of the appellant is an adequate circumstance to weigh significantly in favour of there being compensation. Certainly no diminution of any amount that might otherwise be determined is warranted because of that circumstance [s.170CH(7)(b)];

(iii) The total remuneration lost because of the termination is assessed at $12,750 [s.170CH(7)(c)];

(iv) The efforts at mitigation by the appellant have resulted in income that has been taken into account in estimating total remuneration lost. The applicant's effort, and the relative lack of success from it, are sufficient to exclude any further deduction [s.170CH(7)(d)];

(v) We see no reason to add to, or to detract from, the amount based on total remuneration lost for any other matter. We note that Watson SDP made some allowance in favour of the applicant for the difficulty that he may have in finding work because of his work related injury. We accept that to be a relevant matter but do not consider that it weighs significantly in our determination beyond the mention we have made of it in relation to mitigation. We note also that the final payment to Mr Sprigg included some allowances for long service leave and other entitlements. We consider those payments are a neutral factor in the assessment we have made.

43. We are satisfied that all circumstances have properly been taken into account. There are no other factors or circumstances that we consider should, or must be taken into consideration. For that reason, among others, we are also satisfied that a fair go all round is achieved in the arbitral consideration of the application. Accordingly we determine that the order made by Watson SDP should be varied by substituting for the order that $3,500.00 compensation be paid, an order that the respondent pay the amount of $12,750.00 to Timothy Sprigg in lieu of reinstatement, on or before 5 January 1999.

The order herein is published in conjunction with this decision as Print R0236.

[2] (1996) 70 IR 360; also in Print P6928.

[7] See p.5 of transcript of 2 June 1998.

[8] See p..6 of transcript of 2 June 1998.

[12] [Print N6928], also reported in 70 IR 360

[34] Nhut Chau Bank v Bridgestone T G Australia Pty Ltd Print Q4039 at pp 5-7

Termination of employment - unfair dismissal - appeal - full bench - compensation - s170CH(7) Workplace Relations Act 1996 - whether SDP failed to properly exercise discretion in making award of compensation in lieu of reinstatement - whether fundamental misconception of fact regarding applicant's total remuneration - SDP entitled to take itemised approach to determining total remuneration rather than evidence of gross annual salary - omission of certain income from calculation in itemised approach did not involve error of such degree that leave to appeal should be granted on ground of mistake as to facts - whether assessment of compensation based on error of principle - failure to take into account remuneration applicant would have received if employment had not been terminated - s170CH(7) in mandatory terms - for a determination applying s170CH(7) there would have to be estimate of lost remuneration in way that took into account likely future remuneration - failure to take account of lost remuneration is failure to properly exercise discretion - leave to appeal granted - desirable that there should be consistent and predictable technique for determining amount of compensation in lieu of reinstatement - approach to assessment of compensation including approach to calculation of lost remuneration in Shorten v Australian Meat Holdings [Print 6928] considered - Full Bench set out 4 step approach to calculation of lost remuneration component of assessment of compensation under s170CH(7) - compensation order varied from $3500 to $12750.Sprigg v Pauls Licensed Festival SupermarketC No 35979 of 1998Print R0235Munro J

Relations and Other Legislation Amendment Act 1996

Industrial Relations Act 1994

T. Sprigg v Paul's Licensed Festival Supermarket - 1534/98 S Print R0235 [1998] AIRC 989;

At a glance

Court

Decision date

Before

Source

Judgment (138 paragraphs)

T. Sprigg v Paul's Licensed Festival Supermarket - 1534/98 S Print R0235 [1998] AIRC 989; (10 July 1998)

T. Sprigg v Paul's Licensed Festival Supermarket - 1534/98 S Print R0235

Parties

Legislation Cited (5)

Cases Cited (8)