[2011] FWAFB 1080 |
FAIR WORK AUSTRALIA |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
SENIOR DEPUTY PRESIDENT ACTON |
MELBOURNE, 16 MARCH 2011 |
Appeal against decision [[2010] FWA 9101] and order [PR504926] of Commissioner Bissett at Melbourne on 10 December 2010 in matter number U2010/9843 - compensation.
Introduction
[1] On 28 October 2010 Commissioner Bissett handed down a decision 1 pursuant to s.394 of the Fair Work Act 2009 (FW Act) in which she found that the termination of the employment of Mr Kevin Heffernan by Tabro Meat Pty Ltd (Tabro Meat) was unreasonable and harsh. On 10 December 2010 the Commissioner handed down a decision2 in which she decided to order pursuant to s.392 that the amount of $17,437 less tax be paid by Tabro Meat to Mr Heffernan by way of compensation for the unfair dismissal.3 An order to that effect was issued on the same day.4
[2] On 30 December 2010 Tabro Meat filed a notice of appeal pursuant to s.604 of the FW Act against the decision and order on the remedy. Tabro Meat has not appealed the Commissioner’s decision of 28 October 2010. Tabro Meat maintains the Commissioner erred by ordering compensation which was manifestly excessive, by failing to disclose adequate reasons, by failing to reduce the amount of compensation payable due to Mr Heffernan’s misconduct and by assuming that Mr Heffernan would have been employed for a further three years. They claim there is public interest in permitting the appeal arising from the need for compensation to be reasonable and in order to accord a fair go all round. They also say such public interest is aroused by the need for reasons to show a proper basis for arriving at compensation, for misconduct not to be limited to the valid reason for termination and for remuneration to be calculated in the context of all relevant information.
Permission to appeal
[3] The Commissioner’s order of compensation was made pursuant to s.392 of the FW Act which provides:
“392 Remedy—compensation
Compensation
(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.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), FWA 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 FWA considers relevant.
Misconduct reduces amount
(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by FWA 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.
Compensation cap
(5) The amount ordered by FWA 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:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(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.”
[4] Section 392 requires Fair Work Australia (FWA) to take into account various factors in determining a compensation remedy. The Commissioner made findings in relation to each of the factors in s.392, however the connection between the findings and the order of $17,437 less tax that was issued is not apparent. The Commissioner’s reasoning as to the quantum of the compensation order is inadequate.
[5] In Re Australian Industrial Relations Commission; Ex parte Construction, Forestry, Mining and Energy Union, 5 the Full Court of the Federal Court said the following in regard to the arbitration power exercised by the Australian Industrial Relations Commission in respect of an application for relief in respect of termination of employment made on the ground the termination was harsh, unjust or unreasonable:
“[73] A breach by an employer of the obligation, impliedly created by Div 3, not to terminate employment harshly, unjustly or unreasonably may give rise to proceedings in the Commission to enforce rights which are quite unlike proceedings of the type with which the Commission (and its predecessors) has been traditionally involved, namely, proceedings to prevent and settle, by conciliation and arbitration, industrial disputes extending beyond the limits of a State. Proceedings under Div 3 involve the enforcement of individual rights by reference to past events. They involve a process of hearing and determination which is (at least) quasi-judicial in character. The Commission must ascertain what the relevant facts are and whether the established facts demonstrate contravention of the standard established by Div 3 and, if demonstrated, what the statutory remedy should be.
[74] The Act uses the word `arbitration' to describe the adjudication undertaken by the Commission under Div 3: see ss 170CG and 170CH. However, the use of that word does not mean the Commission's power under that Division is arbitration of the type referred to in s 51(xxxv) of the Constitution. The word might have been adopted in order to signify that the Commission was not being invested with judicial power. The process of hearing and determination under Div 3 is not the same as the arbitral process which involves the Commission determining what quasi-legislative regime should regulate the future industrial relationship between an employer and its existing and future employees. The industrial arbitral power is primarily exercised, not for the purpose of vindicating rights having regard to past conduct, but rather to prevent or settle a dispute that may cause future difficulties or losses. The purpose is consistent with the objective stated in s 3(h) of the Act.” 6
[6] In Edwards v Giudice and others, 7 Moore J said:
“... The powers exercised by the Commission in relation to an application under s 170CE in an arbitration involve the vindication of personal rights conferred by the WR Act. The proceedings result in inter partes orders: see s 170CI. As is apparent from the passage quoted from Re Australian Industrial Relations Commission, above, the exercise of those powers gives rise to quasi-judicial proceedings with a conditional right of appeal. An appeal is by leave. Though it was decided in Public Service Board of New South Wales v Osmond (1986) 159 CLR 656; 63 ALR 559 that there is no general obligation to give reasons, there are many cases where the obligation does arise: see Fleming v R (1998) 158 ALR 39 at [22] and particularly when a right of appeal exists: see T v Medical Board of South Australia (1992) 58 SASR 382; Re Saunders [1993] 2 QdR 335 and Attorney-General (NSW) v Kennedy Miller Television Pty Ltd (1998) 43 NSWLR 729.” 8
[7] Marshall J, in the same case, said:
“[43] The Commission, although an administrative tribunal, does arbitrate on the claims of competing parties in a quasi-judicial setting. It is obliged to act judicially and afford procedural fairness to persons with business before it. See, for example, Re Australian Railways Union; Ex parte Public Transport Corporation[1993] HCA 28; (1993) 117 ALR 17, (at 23-24). See also Re Media, Entertainment and Arts Alliance v Ex parte Arnel [1994] HCA 1;(1994) 179 CLR 84 (at 94) where Mason CJ, Brennan, Dawson and Gaudron JJ referred to the requirements of procedural fairness as being an essential feature of the arbitral power. (Notwithstanding that the nature of the arbitral power of the Commission in dismissal cases differs from the nature of its arbitral power in its award making function the Commission is also bound to act judiciously in dealing with dismissal cases, no doubt because of the consequences for the persons immediately concerned.)
[44] In a seriously contested case before a tribunal which is required to afford procedural fairness and act judicially, an arbitrator is obliged to disclose the steps involved in the reasoning which leads to a particular result. There does not appear to be any obligation expressed in the Act to require a member of the Commission to give adequate reasons for a decision. It does not thereby follow however that in some cases such as strongly contested ones where a final order of significant consequence may be made that full reasons should not be given.
[45] As Deane J said in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, 366:
A duty to act judicially (or to accord procedural fairness or natural justice) extends to the actual decision-making procedure or process, that is to say, to the manner in which and the steps by which the decision is made.
[46] The obligation to give adequate reasons may more readily arise when a right of appeal lies from the order which gives effect to the decision at first instance, as is the case in the instant circumstances. Indeed a statutory right of appeal was considered by the New South Wales Court of Appeal as being a relevant ‘special circumstance’ in the context of the portion of the judgment of Gibbs CJ in Osmond cited above. See Attorney-General of New South Wales v Kennedy Miller Television Pty Ltd (1998) 43 NSWLR 729, per Priestly JA with whom Powell JA agreed, (at 734-735) and per Handley JA, (at 739).
[47] It should be noted that Full Benches of the Commission have thoroughly reviewed the obligation of Commission members to provide adequate reasons for decision on previous occasions and that their decisions accord with the views expressed above. See, for example, Re Astec Pty Ltd (1992) 45 IR 261 and Confectionery Workers Union of Australia v Australian Chamber of Manufactures (1991) 38 IR 49, (at 52).” 9
[8] In light of this authority, we have no doubt the Commissioner had a duty to give adequate reasons for making an order of $17,437 less tax as compensation for Mr Heffernan’s unfair dismissal.
[9] While s.601(2) of the FW Act provides that “FWA may give written reasons for any decisions that it makes”, we do not apprehend s.601(2) as relieving FWA of the duty to give adequate reasons when determining a remedy of compensation in an unfair dismissal remedy application. We are fortified in this view by the Explanatory Memorandum to the Fair Work Bill 2008 which says in respect of the proposed s.601(2):
“2310. Subclause 601(2) provides that FWA may give written reasons for any decision that it makes. It is expected that FWA will provide written reasons for all decisions of significance. An example where a written decision may not be necessary is a procedural decision.”
[10] A failure to give adequate reasons can be an error of law if the decision-maker is under a duty to give reasons. 10
[11] We are satisfied the Commissioner’s failure to give adequate reasons for making the order of $17,437 less tax constitutes an error of principle of sufficient magnitude that it is in the public interest that we grant permission to appeal. We will deal with the issue of remedy in respect of Mr Heffernan’s unfair dismissal by Tabro Meat ourselves.
Remedy
[12] The object of Part 3-2 of the FW Act concerning unfair dismissal is set out in s.381 of the FW Act as follows:
(1) The object of this Part is:
(a) to establish a framework for dealing with unfair dismissal that balances:
(i) the needs of business (including small business); and
(ii) the needs of employees; and
(b) to establish procedures for dealing with unfair dismissal that:
(i) are quick, flexible and informal; and
(ii) address the needs of employers and employees; and
(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.
(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that 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 in re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95.”
[13] The FW Act provides for FWA to order a person’s reinstatement, or the payment of compensation to them, if satisfied the person was protected from unfair dismissal and has been unfairly dismissed. 11 As previously indicated, Tabro Meat has not lodged an appeal in respect of these two matters.
[14] Section 390(3) of the FW Act provides that FWA must not order the payment of compensation unless it is satisfied reinstatement is inappropriate and it considers an order for compensation is appropriate in all the circumstances of the case.
[15] At first instance, the Commissioner said the following in respect of reinstatement:
“[69] The Respondent submits that reinstatement is not appropriate in these circumstances. Mr Brorsen has indicated that he would be unable to work with Mr Heffernan. In the Respondent’s submission Mr Brorsen is a ‘hands-on, on the ground general manager, and the two of them would be in frequent contact with each other.’ Mr Brorsen’s evidence was that he, Mr Brorsen would ‘have to go’ if Mr Heffernan was reinstated.
[70] The presumption in the legislation is that, should an application be made, reinstatement is the preferred remedy. Compensation is such cases will only be considered where Fair Work Australia is satisfied that reinstatement is not appropriate (s.390(3)(a)).
[71] Whilst Mr Heffernan has applied for reinstatement I do not, in the circumstances of this case, consider that an appropriate remedy. In this case the owner - and the person with whom Mr Heffernan had the exchange - is on the shop floor most of the time. It is inevitable that they will come across each other. This is not a satisfactory situation and I would be concerned, should I order reinstatement, it may lead to further issues between the two people in question.
[72] Having determined that reinstatement is not appropriate I must consider what compensation if any should be payable.” 12 [Footnote omitted]
[16] We respectfully agree with the Commissioner’s conclusions in respect of reinstatement. As a result, we are also satisfied that reinstatement is inappropriate in this case. We turn then to consider the matter of compensation.
Compensation
Remuneration that would have been received (s.392(2)(c))
[17] Mr Heffernan’s gross average weekly earnings for the financial year 2009/10 were $854.50. 13 This is $44,434.00 per annum.14
[18] Tabro Meat submits that had procedural fairness been followed in the period leading up to the termination of Mr Heffernan’s employment, he would still have been dismissed. Accordingly, Tabro Meat says that Mr Heffernan’s employment with Tabro Meat would have continued for only a matter of days beyond the date he was dismissed if he had been afforded procedural fairness. We note that this submission fails to take into account the Commissioner’s conclusion that Mr Heffernan’s dismissal was harsh. A conclusion not appealed by Tabro Meat.
[19] Mr Heffernan submits his employment would have continued indefinitely but for his dismissal.
[20] We think it is more reasonable to assume that, but for the dismissal, Mr Heffernan’s employment would have continued with Tabro Meat for a year. We have come to this conclusion given Mr Heffernan’s age of 53 years, his 11 years employment with Tabro Meat and his generally good employment record, but also taking into account the animosity between Mr Heffernan and the managing director of Tabro Meat, Mr Brorsen.
[21] Accordingly, we calculate the remuneration that Mr Heffernan would have received, or would have been likely to receive, if his employment had not been terminated, at $44,434.00 gross. While superannuation forms part of remuneration, 15 we have not included that in our calculations because we have no evidence about the superannuation Mr Heffernan earned from the work he undertook after he was dismissed by Tabro Meat.
[22] Between his dismissal on 10 June 2010 and the making of any order for compensation on 17 March 2011, therefore, the remuneration Mr Heffernan would have received, or would have been likely to receive, if his employment had not been terminated is $34,180.00 gross. 16 From 18 March 2011 to 9 June 2011, being the remainder of the year that we consider Mr Heffernan’s employment would have continued with Tabro Meat but for his dismissal, the remuneration Mr Heffernan would have received, or would have been likely to receive, if his employment had not been terminated is $10,254.00 gross.17
Remuneration earned (s.392(2)(e))
[23] Mr Heffernan was unemployed for nearly five weeks after the termination of his employment on 10 June 2010. He then gained temporary employment. We accept that during the course of the temporary employment following his dismissal, Mr Heffernan earned around $25,583.00 gross and that his temporary employment ended on or around 5 December 2010. 18 In our view, Tabro Meat’s submission at first instance that the amount he earned from the temporary employment was $30,811.00 gross is based on inferences that cannot reasonably be drawn from the further statement of Mr Heffernan.
[24] From the figure of $34,180.00 gross, therefore, we deduct $25,583.00 gross being Mr Heffernan’s earnings during the period between his dismissal and the making of any order for compensation. This results in an amount of $8,597.00 gross.
Income reasonably likely to be earned (s.392(2)(f))
[25] We do not need to deduct anything for the income reasonably likely to be earned by Mr Heffernan between the making of any order for compensation and the actual compensation from the $10,254.00 gross that Mr Heffernan would have received, or would have been likely to receive, if his employment had not been terminated. This is because the employment Mr Heffernan engaged in subsequent to his dismissal ended on or around 5 December 2010.
Other matters (s.392(2)(g))
[26] From the amount of $10,254.00 gross, however, we do deduct 25% for contingencies. 19 While the percentage to be deducted for contingencies is a matter of judgment, we think a deduction of 25% is warranted in the circumstances of this matter, including the uncertainties associated with Mr Heffernan’s continuing unemployment. This results in a figure of $7,690.50 gross.
[27] Mr Heffernan’s lost remuneration between the date of his dismissal and the making of any order for compensation of $8,597.00 gross, together with the remainder of his lost remuneration adjusted for contingencies of $7,690.50 gross, results in provisional compensation of $16,287.50 gross.
[28] There are no other matters that we consider are relevant in determining an amount of compensation instead of reinstatement, apart from those in ss.392(2)(a), (b) and (d), 392(3) and 392(5) with which we now deal.
Viability (s.392(2)(a))
[29] There is no evidence that an order for $16,287.50 gross payable to Mr Heffernan by Tabro Meat would affect the viability of Tabro Meat’s enterprise.
Length of service (s.392(2)(b))
[30] Mr Heffernan’s 11 years of service with Tabro Meat is a lengthy period of employment. It provides no basis for further reducing any compensation to him.
Mitigation efforts (s.392(2)(d))
[31] We consider Mr Heffernan has made reasonable efforts to mitigate the loss he has suffered because of his dismissal by Tabro Meat, as demonstrated by his earnings between 10 June 2010 and December 2010 and his further statement that he has been seeking other work. In our view, Mr Heffernan’s efforts at mitigation are sufficient to exclude any further deduction from the quantum of $16,287.50 gross. We do not accept we should make any deduction for Mr Heffernan’s failure to apply to Poowong Abattoir for work, as we do not know if that abattoir has been seeking employees.
Misconduct (s.392(3))
[32] We do, however, make a further deduction from the amount of $16,287.50 gross in compensation that we would otherwise order having regard to the misconduct of Mr Heffernan that contributed to Tabro Meat’s decision to dismiss Mr Heffernan. Tabro Meat submits that where the valid reason for dismissal concerns a serious health and safety breach, any compensation for a breach of procedural fairness in effecting the dismissal should be minimal. Further, they submit any compensation ordered should also be reduced for Mr Heffernan’s swearing at Mr Brorsen as it contributed to Tabro Meat’s decision to dismiss Mr Heffernan. In the circumstances, we deduct another 15% having regard to the nature of the misconduct and its effect. In Tenix Defence Pty Ltd v Galea 20 a Full Bench deducted, in effect, around 10% for misconduct. That deduction was made in the circumstances of that case and in circumstances where the Workplace Relations Act 1996 (Cth) did not specifically provide for such deduction and there was little or no deduction made on account of misconduct at that time. The FW Act specifically provides for deduction for misconduct. The deduction results in an amount of $13,844.37 gross.21
Compensation cap (s.392(5))
[33] Since this amount of $13,844.37 gross is less than the compensation cap in s.392(5) of the FW Act, we make no further reduction for that reason.
Conclusion
[34] We are satisfied an order for payment of compensation of $13,844.37 gross by Tabro Meat to Mr Heffernan is appropriate in all the circumstances of the case. It accords a fair go all round to both Tabro Meat and Mr Heffernan.
[35] Accordingly, we will vary the order 22 made by the Commissioner on 10 December 2010 to require that Tabro Meat pay to Mr Heffernan an amount of $13,844.37 gross, less taxation as required by law, on or before 25 March 2011.
[36] An order to this effect will be issued shortly.
SENIOR DEPUTY PRESIDENT
Appearances:
R Nelson of counsel on behalf of Tabro Meat Pty Ltd.
C Buckley and Mr C Ross of The Australasian Meat Industry Employees’ Union on behalf of Kevin Heffernan.
Hearing details:
2011
Melbourne
16 February
Endnotes:
1 Heffernan v Tabro Meat Pty Ltd, [2010] FWA 8192.
2 Heffernan v Tabro Meat Pty Ltd, [2010] FWA 9101.
3 Ibid at paragraph 66.
5 (1999) 164 ALR 73.
6 Ibid at p. 97.
7 (1999) 169 ALR 89.
8 Ibid at p.93.
9 Ibid at pp.99-100.
10 See, for example, Dornan v Riordan, (1990) 95 ALR 451.
11 Fair Work Act 2009 (Cth), s.390(1).
12 Heffernan v Tabro Meat Pty Ltd, [2010] FWA 8192 at paragraphs 69-72.
13 Heffernan v Tabro Meat Pty Ltd, [2010] FWA 9101 at paragraph 14.
14 $854.50 gross x 52 weeks.
15 Rofin Australia Pty Ltd v Newton, Print P6855 at page 4; and Deane v Paper Australia Pty Ltd, PR929820 at paragraphs 16-20. Contrast s.332 of the Fair Work Act 2009 (Cth).
16 $44,434.00 gross x 40/52 weeks.
17 $44,434.00 gross - $34,180.00 gross.
18 Heffernan v Tabro Meat Pty Ltd, [2010] FWA 9101 at paragraphs 20-23.
19 See Slifka v JW Sanders Pty Limited, (1995) 67 IR 316 at 328; and Enhance Systems Pty Ltd v Cox, PR910779 at paragraphs 39-40 regarding a reduction for contingencies on future losses.
20 Tenix Defence Pty Ltd v Galea, PR928494.
21 Fair Work Act 2009 (Cth), s.392(3).
22 Heffernan v Tabro Meat Pty Ltd, PR504926.
Printed by authority of the Commonwealth Government Printer
<Price code C, PR506876>