Marion Cole and Rebecca Best

Two approaches to unfair dismissal remedies

Marion Cole and Rebecca Best

24 February 2014

Employment Disputes

Reinstatement following an unfair dismissal may not be the worst outcome of a careless dismissal, as two recent cases illustrate.

Reinstatement not appropriate, compensation increased on appeal


In Brett Haigh v Bradken Resources Pty Ltd T/A Bradken, the Full Bench was asked to determine an appeal as to remedy in a long running unfair dismissal case.


Mr Haigh was dismissed from his employment because of a serious safety breach in 2011. His initial unfair dismissal application was dismissed in November 2012; however Mr Haigh successfully appealed to the Full Bench, which held that although the dismissal was valid, it was harsh in the circumstances. In June 2013, the Full Bench referred the matter to Commissioner Cloghan to determine remedies.


The remedies available under the Fair Work Act 2009 (Cth) (FW Act) for unfair dismissal are reinstatement, or if that is not appropriate, an order for compensation if such an order is appropriate in all the circumstances of the case.


Commissioner Cloghan determined that reinstatement was not appropriate because the employer had lost trust and confidence in Mr Haigh primarily because he did not accept that his conduct (which resulted in his dismissal) was unsafe.


Commissioner Cloghan referred to the criteria for deciding compensation, as set out at paragraphs 392(2)(a)-(g) of the FW Act. The Commissioner commenced with the compensation cap and reduced that amount by the amount of notice received (five weeks), an amount reflecting the contribution of Mr Haigh’s conduct to his dismissal (five weeks) and Mr Haigh’s failure to mitigate his loss (four weeks). Commissioner Cloghan awarded Mr Haigh 12 weeks’ compensation.


Mr Haigh appealed against Commissioner Cloghan’s decision not to reinstate him and, in the alternative, to only award 12 weeks’ compensation. The Full Bench determined that there had been no error in finding that reinstatement was inappropriate in the circumstances, but it determined that Commissioner Cloghan had erred in his approach to the compensation calculations.


The Full Bench held that the amount of compensation should have been calculated by considering the amount the employee would have received had his employment not been terminated, less deductions for moneys earned, contingencies, failure to mitigate the loss, any employee misconduct and only then should the legislative cap be applied.


As Mr Haigh had been out of work since the date of his dismissal in 2011, the Full Bench determined that he was entitled to the full compensation available under the FW Act, that being 26 weeks’ pay.


Dismissal disproportionate, reinstatement appropriate with an order for remuneration lost


Mr Homes was employed by Coles Group Limited as a full time stock controller in the warehouse freezer section. He had worked in this position from 2007 until his dismissal on 10 September 2013.


Coles provided its employees in the freezer section with access to hot drinks during their breaks, including Milo. Mr Homes was accused of putting the Milo provided by Coles into his personal container and taking it from the workplace. Mr Homes was also accused of engaging in dishonest and misleading conduct (when asked about the alleged theft), making a threat against his supervisor and breaching Coles’ Code of Conduct.


Mr Homes asserted that his normal practice was to mix the Milo provided at work with his own supply of drinking chocolate powder, coffee and raw sugar. He usually kept this mix in his own container in his locker, only taking it home to replenish its contents. Other employees gave evidence that they were aware that Mr Homes consumed a Milo mix from his own container which was typically kept in his locker.


Senior Deputy President O’Callaghan accepted that, when questioned by the employer on 30 August 2013 about the source of either the Milo or the container in his bag, Mr Homes was surprised and said it was from home. The Senior Deputy President accepted that, and that Mr Homes’ may not have answered clearly in response to an ambiguous question, and also accepted that it was Mr Holmes’ practice to make his own drink mix from his own ingredients and those provided by Coles.


While the Senior Deputy President also accepted that Coles has a legitimate interest in protecting against fraud and misuse of assets and facilities, it was not clear that Mr Homes’ conduct constituted a breach of this interest, particularly in the absence of an express direction to employees not to take the Milo offsite or to place it in their own containers.


The Senior Deputy President held that there was not a valid reason for Mr Homes’ dismissal and that he had been using the Milo for the purpose for which it was intended. In the circumstances, Mr Homes’ dismissal was disproportionate to his conduct.


In assessing the appropriate remedy, the Senior Deputy President noted that a loss of mutual trust and confidence can represent an impediment to reinstatement; however the loss of trust and confidence must be soundly and rationally based. In addition, the Senior Deputy President did not accept that Mr Homes had uttered a threat to his supervisor and determined, that despite a previous first and final warning for inappropriate conduct in January 2013, reinstatement was appropriate.


Coles was ordered to reinstate Mr Homes to the position he held immediately before the termination of his employment, or to another position on terms no less favourable. Coles was also ordered to maintain Mr Homes’ continuity of service and to pay his remuneration from the date of termination to the date of reinstatement, less any amounts received by Mr Homes from Centrelink.


Matters for consideration


In any dismissal, employers must ensure that the process adopted before the dismissal is thorough, transparent and fair and allows the employee an opportunity to respond. Any dismissal must be proportionate to the employee’s actions or conduct.


Where a dismissal:


  • has occurred without a valid reason;
  • was not proportionate to the conduct; or
  • is otherwise harsh, unjust or unreasonable in the circumstances;

the Fair Work Commission may order remedies, including:

  • reinstatement, including an order to maintain continuity of service and/or to pay wages to the employee for the period of their termination; or
  • compensation.

The process for determining the quantum of compensation to an unfairly dismissed employee requires the Fair Work Commission to assess what amount the employee would have received if the employment had not been terminated and then deduct:

  • monies earned since termination;
  • contingencies;
  • impact of taxation;
  • an amount reflecting any employee misconduct as a contributing factor to the termination;

It is only after these amounts are deducted that the legislative cap (currently 26 weeks’ salary or $64,650) is applied. As was shown in Haigh v Bradken, this can result in an unfairly dismissed employee being awarded 26 weeks’ compensation in circumstances where they have been unable to secure alternative work in the period following the dismissal.


Thomsons Lawyers can assist you in evaluating your disciplinary processes or responding to unfair dismissal complaints.