[2018] FWCFB 4149
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.604—Appeal of decision

Chesson Pty Limited t/a Pay Per Click
v
Nicole Knutson
(C2018/2732)

VICE PRESIDENT HATCHER
DEPUTY PRESIDENT ANDERSON
COMMISSIONER WILSON

SYDNEY, 30 JULY 2018

Appeal against decision [[2018] FWC 2080] of Commissioner Cambridge at Sydney on 1 May 2018 in matter number U2017/13095.

Introduction and background

[1] Chesson Pty Limited t/a Pay Per Click (Chesson) has lodged an appeal, for which permission to appeal is required, against a decision of Commissioner Cambridge issued on 1 May 2018 (Decision). 1 In the Decision, the Commissioner granted Ms Nichole Knutson’s application for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (FW Act) on the basis of a determination that the dismissal of Ms Knutson by her former employer Chesson on 6 November 2017 was harsh, unjust and unreasonable, and determined that Chesson should be required to pay Ms Knutson $22,882.00 in compensation.

[2] An order was issued by the Commissioner on 1 May 2018 to give effect to the Decision 2 (Order). The Order was in the following terms:

[3] Chesson’s notice of appeal, which was lodged on 21 May 2018 (the day before the compensation amount was required by the Order to be paid), sought a stay of the Decision and the Order pending the hearing and determination of the appeal. In a decision issued on 25 May 2018 3 (Stay Decision), Vice President Hatcher determined to issue an order staying the Decision and Order pending the hearing and determination of the appeal subject to the condition that Chesson pay Ms Knutson the reduced sum of $14,806.00 by 1 June 2018 (later extended to 5 June 2018). An order giving effect to the Stay Decision was also issued on 25 May 2018 (Stay Order).4

[4] The facts of the matter relevant to Chesson’s appeal may briefly be described. Ms Knutson commenced employment with Chesson in November 2014. The contract of employment attached to her letter of appointment provided that her hours of work were 9.00am to 5.00pm Monday to Friday, with a half hour lunch break per day “with flexibility depending on client liaison requirements”. The contract did not contain any provision concerning the period of notice required if Chesson terminated her employment.

[5] In September 2017 Chesson provided Ms Knutson, as well as other employees, with proposed new contracts of employment. The proposed new contract for Ms Knutson provided that her hours of employment would be 9.00am to 5.30pm, with one hour for lunch. It also provided for notice of termination of employment periods consistent with those in s 117(3) of the FW Act, and contained a restraint of trade provision.

[6] Ms Knutson did not agree to the revised hours of employment, since it would preclude her attendance at pre-paid Pilates classes on Mondays and Wednesdays. She also did not agree to the restraint of trade provision and another provision which contemplated her being required to work on weekends and public holidays. There was correspondence and a meeting about this, and it was agreed that the restraint provision would be removed. Ms Knutson ultimately proposed as a compromise an amendment to the proposed new hours provision so that on Mondays and Wednesdays she would work until 5.15pm with a 45-minute lunch break. This was refused, and on 2 November 2017 Ms Knutson was advised in an email from Chesson’s director, Mr Stephen Murphy, that she needed to sign the new employment contract to remain in employment and “If you still feel, you cannot and do not wish to sign, I need to find staff that will support the business as it grows and continually changes”. On 6 November 2017 Ms Knutson advised by email that “... due to the inability to meeting me in the middle ... by allowing me to leave at 5.15pm on Monday and Wednesdays, I will not be signing the new contract”. That evening in a reply email Mr Murphy said:

[7] On 7 November 2017 Ms Knutson replied that she had sought medical advice and would not be returning to work until 20 November 2017 in accordance with her doctor’s instructions. She asked for “Jenny” to provide her with written confirmation of her termination and notice period. Chesson did not respond to this email, so on 10 November 2017 Ms Knutson again emailed Mr Murphy requesting advice concerning her notice period, but received no direct reply. However on 14 November 2017 Mr Murphy sent her a lengthy email in which he challenged the medical certificate Ms Knutson had provided to support her claim for personal leave and requested further evidence to support her personal leave claim. The email also stated “Naturally we cannot determine the correct rates for your termination pay, as they vary depending upon sick leave, or unpaid leave and days worked. Once fairly resolved, the correct termination pay will be made in line with our scheduled pay cycles”. It ended by requesting that Ms Knutson return her office keys by post.

[8] At this point Ms Knutson engaged lawyers to act on her behalf, and in a letter sent by her lawyers to Chesson dated 15 November 2017 it was contended that the notice of termination of employment had not informed Ms Knutson of the amount of notice given to her or the last day of her employment as required by s 117 of the FW Act. The letter also noted that Ms Knutson had not been paid for the period she had been on personal leave, and demanded such payment. Mr Murphy responded in an email on 17 November 2017 at 9.57am, in which he expressed concern that Ms Knutson had made a false personal leave claim based on a number of documents which he attached, and asked for a response by 20 November 2017. He noted that if the response was not considered satisfactory, “we may take disciplinary action against Nicole, which could include summary termination of employment”. Ms Knutson’s lawyers indicated in an email the same day at 1.31pm that a response would be forthcoming by the end of the following week, but again requested a response from Chesson concerning “the failure to provide proper notice, the notice period and last day of employment”. At 3.18pm Mr Murphy replied by insisting on a response by Monday (20 November 2017), “Otherwise ... we will proceed on the basis that she does not wish to provide a response”. He then went on to say:

[9] On 20 November 2017 Ms Knutson’s lawyers responded in a lengthy letter which recounted the history of the matter, including that on 7 November 2017 Chesson had changed Ms Knutson’s work email password to prevent her from accessing work emails and had told another employee that Ms Knutson was “away on stress leave and would not be returning”, and that on 8 November 2017 Chesson had changed Ms Knutson’s password on her Google Profile Account and removed her from all social media connections. The letter then stated:

[10] In a letter dated 20 November 2017 but sent the following day, lawyers acting for Chesson replied at length to the correspondence from Ms Knutson’s lawyers. The main propositions advanced in the letter were as follows:

[11] On 23 November 2017 Ms Knutson’s lawyers sent another lengthy response letter. This letter attached a further medical certificate which had just been obtained and which addressed the concerns earlier raised by Chesson about the earlier medical certificate and the validity of Ms Chesson’s personal leave claim. The letter reiterated that Ms Knutson had been forced to resign due to stress and anxiety caused by Chesson’s conduct. It also rejected the proposition that Ms Knutson had maintained that there was no effective termination of employment, but instead claimed Ms Knutson had taken the position that notice had not been given in accordance with s 117 of the FW Act and had simply wanted to obtain an understanding of the length of the notice period and her last day of employment.

[12] There was a further lengthy reply from Chesson’s lawyers dated 28 November 2017, which maintained the position that Ms Knutson had not provided sufficient evidence to support her personal leave claim. Ms Knutson was paid her termination of employment entitlements the following day, but was never paid the claimed personal leave.

The Decision

[13] The issues to be determined by the Commissioner were primarily whether Ms Knutson had been dismissed, whether the dismissal was unfair and, if it was unfair, how much compensation ought be awarded to her. Chesson was a small business employer as defined in s 12 of the FW Act, but it did not provide any evidence that it had complied with the Small Business Fair Dismissal Code. It did not attempt to establish at the hearing that Ms Knutson had made a false or unsubstantiated personal leave claim or that this provided any justification for the dismissal, if there was found to be one. Ms Knutson did not seek reinstatement as a remedy and neither party contended that it would be practicable for her to be reinstated.

[14] The Commissioner noted at the outset of the Decision that Ms Knutson’s application contended that her dismissal took effect on 27 November 2017 and consequently that the application was made within the 21 day time limit prescribed by s 394(2) of the FW Act. 5

[15] In relation to the question of whether Ms Knutson had been dismissed, the Commissioner found as follows:

“[37] In this case, there was a question raised as to whether the applicant had been dismissed or, as was suggested in a communication from the applicant’s lawyer, forced to resign. However, the suggestion of the applicant providing a forced resignation was raised as a proposition that was contingent upon there being validity to the employer’s purported withdrawal of the termination of employment as had been advised on the evening of 6 November 2017. In an email dated 17 November 2017, Mr Murphy indicated that “no termination of employment has taken place.”

[38] However, the employer’s attempted retraction of the dismissal was made in response to the applicant’s lawyers directing attention to defects that existed in the notice of the dismissal made in the email communication of 6 November from Mr Murphy. The evidence clearly established that the applicant was advised of her dismissal at 8:53pm in the email of 6 November 2017. Although that advice contained defects such as the absence of any specified period of notice that the applicant was required to work out, that communication clearly operated to dismiss the applicant. The applicant was entitled to act upon that advice and seek to clarify and rectify the attendant deficiencies. There was simply no capacity for the employer to unilaterally withdraw the dismissal. In any event, the evidence undeniably established that the applicant’s employment was terminated on the initiative of the employer.”

[16] The Commissioner then proceeded to consider whether the dismissal was unfair, and in doing so dealt with each of the matters required to be taken into account by s 387 of the FW Act. The Commissioner identified the reason for the dismissal as being that Ms Knutson “refused to sign a new employment contract which extended her daily hours of work finish time from 5 to 5:30pm”, 6 and found that this did not, for the purpose of s 387(a), constitute a valid reason for dismissal. The Commissioner also found that, for the purpose of s 387(b), Ms Knutson was “not provided with an opportunity to respond to the prospect that the continued refusal to sign the new employment contract would result in dismissal”.7 In relation to s 387(h), pursuant to which the Commissioner was required to take into account any other matter he considered to be relevant, the Commissioner gave consideration to Chesson’s refusal to pay Ms Chesson for the personal leave she had claimed for her non-attendance at work after 6 November 2018 and found as follows:

“[57] The refusal to pay the applicant personal leave despite her entitlement to that payment meant that the applicant was paid wages only up until that day of her dismissal, 6 November 2017. The refusal to pay the applicant personal leave during the period that Mr Murphy had (imprecisely) declared as a notice period created an outcome whereby the dismissal of the applicant was summary in nature. That is, although notice was putatively given, the applicant was entitled to be absent during that period in accordance with the Medical Certificate. The failure to pay the applicant her personal leave entitlement during the notice period has meant that she was summarily dismissed without notice on and from 6 November 2017.

[58] There was no serious misconduct on the part of the applicant which could have possibly justified what has become her summary dismissal.”

[17] The Commissioner’s overall conclusion was that Ms Knutson’s dismissal has harsh, unjust and unreasonable. 8 The Commissioner then turned to the question of remedy. After finding that reinstatement was impracticable, he determined that an award of compensation would be appropriate and proceeded to the quantification of the amount of compensation to be ordered.9 Reference was made to the factors required to be taken into account under s 392 of the FW Act and to a number of decisions including Sprigg v Paul Licensed Festival Supermarket,10 and the Commissioner asserted that he had taken into account “all of the circumstances of the matter including the factors set out in paragraphs (a) to (g) of subsection 392 (2) of the Act”.11 The Commissioner reasoned and concluded as follows:

“[68] There was no evidence provided which established that an Order of compensation would impact on the viability of the employer’s enterprise. However, I have recognised that the employer is a small business, although it may be inferred from some of the evidence that the business has been and is growing, and presumably financially sound.

[69] The applicant had been employed for approximately three years. The applicant would have been likely to have received remuneration of approximately $1,346.00 per week if she had not been dismissed.

[70] There was no evidence to suggest that the employment of the applicant would not have continued for a significant period of time. In particular, it should be noted that the applicant had received approval to take planned annual leave involving travel to the USA. Further, the applicant had recently received an increase in her remuneration.

[71] Following the dismissal, the applicant has sought alternative employment. The applicant secured alternative employment which commenced on 5 March 2018. The alternative employment provides a level of remuneration commensurate with that which she received when engaged with the employer.

[72] Thirdly, in this instance there was no established element of misconduct of the applicant which contributed to the employer's decision to dismiss.

[73] Fourthly, I confirm that any amount Ordered does not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt caused to the applicant by the manner of the dismissal.

[74] Fifthly, the amount Ordered does not exceed the compensation cap as prescribed by s. 392 (5) of the Act.

[75] The applicant was not paid any notice upon termination. The applicant’s dismissal was essentially summary in nature.

[76] Consequently, for the reasons outlined above I have decided that an amount approximating with 17 weeks remuneration should be provided as compensation to the applicant. That amount is $22,882.00. Accordingly, separate Orders [PR601919] providing for remedy in these terms will be issued.”

Appeal grounds and submissions

[18] Chesson’s notice of appeal contained eight grounds of appeal, but it abandoned the second and third grounds in its submissions. The first ground of appeal challenged the Commissioner’s conclusion that Chesson had dismissed Ms Knutson. Chesson submitted that the Commissioner erred in concluding that the notice given by Chesson to Ms Knutson on 6 November 2017 was effective to terminate her employment. The notice was ineffective, it was submitted, because it did not specify the time the termination was to take effect or permit that to be ascertained. Ms Knutson’s previous employment contract did not have a provision relating to notice of termination, which explained why Ms Knutson and her lawyers were unable to ascertain Ms Knutson’s notice period and were seeking clarification in later correspondence with Chesson. The correspondence of both parties during the relevant period demonstrated that they accepted that the notice was ineffective to bring about a termination of the employment, and Ms Knutson treated the employment as still on foot by claiming personal leave. Ms Knutson, it was submitted, had through her lawyers resigned from her employment on 20 November 2017, and it was this resignation that had effected the termination of her employment.

[19] In relation to the fourth, fifth, sixth and seventh grounds of appeal, Chesson submitted that the Commissioner erred in concluding that Ms Knutson was entitled to be paid personal leave from 7 November 2017. Chesson states that it became aware of social media posts that cast doubt over whether Ms Knutson was unfit for work. On 17 November 2017, Chesson determined that it could not be satisfied by her medical evidence and that she was not eligible for paid personal leave under s 107(4) of the FW Act. However, the Commissioner found that Ms Knutson was entitled to paid personal leave on the basis that she had provided to Chesson a medical certificate and had accrued personal leave to cover the period. Chesson submitted that the Commissioner’s process was insufficient; the Commissioner failed to independently consider the veracity of Ms Knutson’s medical evidence as to whether it would have satisfied a reasonable person that she was in fact unfit for work under s 107(3)(a) of the FW Act. On this basis, the Commissioner erred in concluding that Ms Knutson was entitled to paid personal leave.

[20] Chesson submitted that the Commissioner further erred in concluding that its decision to deny Ms Knutson’s paid personal leave amounted to a summary dismissal, which the Commissioner backdated to 6 November 2017. Chesson had not given any notice of summary dismissal; the notice of dismissal of 6 November 2017, which was ineffective and later withdrawn, was for a dismissal on notice. A summary dismissal could not be found where an employer refused an employee paid personal leave on the erroneous assumption that the employee’s medical evidence was insufficient and, in any event, a summary dismissal could not be backdated to 6 November 2017 in circumstances where the refusal of the personal leave claim was not communicated until 17 November 2017. Chesson submitted that, were it determined that Chesson terminated Ms Knutson’s employment on 6 November 2017, her unfair dismissal application was lodged outside of the 21-day time period specified in s 394(2)(a) of the FW Act. On the basis of these matters, it was submitted that the Commissioner erred in finding that the Respondent’s claim for an unfair dismissal remedy was established.

[21] The eighth ground of appeal challenged the Commissioner’s quantification of compensation. Chesson submitted that the Commissioner erred in awarding compensation to Ms Knutson equating to 17 weeks remuneration ($22,882.00) in two respects:

[22] Chesson submitted that permission to appeal should be granted because its appeal grounds were reasonably arguable and raised issues of general importance, and the Decision manifested an injustice and was disharmonious with other recent Commission decisions.

[23] Although not raised in its grounds of appeal, Chesson also made submissions concerning the tax treatment of any compensation payable to Ms Knutson. Chesson submitted that in accordance with Taxation Ruling TR 2003/13 it was required to withhold tax at the rate of 32% from an employment termination payment (ETP) to remit to the Australian Taxation Office (ATO). Chesson submitted that should the Full Bench uphold the Stay Order sum of $14,806.00, which Chesson had paid to Ms Knutson in accordance with that order, it should remit 32% of that figure to Chesson for tax purposes pursuant to s 607(3)(b) of the FW Act. Chesson submitted that Ms Knutson would otherwise be unjustly enriched.

[24] Ms Knutson submitted in relation to the first ground of appeal that the notice on 6 November 2017 was effective to terminate her employment, given the surrounding circumstances of Chesson’s conduct. Ms Knutson submitted that she was entitled to rely on the notice as Chesson failed to respond to her requests for identification of the notice period and termination date, which demonstrated their disregard for continuing the employment relationship. In relation to Chesson’s submission that Ms Knutson resigned her employment, it was submitted that Chesson was not entitled to rely on the resignation in circumstances where it was conditional on the notice of termination being invalid, which was never accepted, and also conditional on it being forced by Chesson, which Chesson sought to deny was the case.

[25] In relation to the fourth, fifth and sixth grounds of appeal, Ms Knutson submitted that she was entitled to paid personal leave and had provided appropriate evidence to Chesson.

[26] In relation to the eighth ground of appeal, Ms Knutson initially submitted that Chesson had incorrectly stated that her period of annual leave was for three weeks when in fact it was only for eight days, but she subsequently conceded that she had informed the Commissioner that it was for three weeks and accepted that she was bound by this. Ms Knutson submitted that her entitlement to paid personal leave (not her salary) for the period 6-27 November 2017 was properly payable as compensation.

Consideration

[27] The appeal is made under s 604 of the Fair Work Act 2009 (FW Act). There is no right to appeal and an appeal may only be made with permission of the Commission. If permission is granted, the appeal is by way of rehearing. The Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker. 12

[28] Section 400 of the FW Act applies to this appeal. It provides:

(1) Despite subsection 604(2), the FWC must not grant permission to appeal from a decision made by the FWC under this Part unless the FWC considers that it is in the public interest to do so.

[29] In Coal & Allied Mining Services Pty Ltd v Lawler and others, Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s 400 of the FW Act as “a stringent one”. 13 The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.14 In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:

“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of Decisions at first instance so that guidance from an appellate court is required, or where the Decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent Decisions dealing with similar matters”. 15 

[30] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error. 16 However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.17

[31] In relation to the first ground of appeal, we are not satisfied that it has sufficient merit to justify the grant of permission to appeal in the public interest. There are a number of problems with Chesson’s argument, including the following:

(3) In any event, it has not been established that the period of notice and date of termination were not ascertainable. The email of 6 November 2017 referred to the notice period being “as per your previous employment contract”. The evidence did not clearly establish what the terms of Ms Knutson’s employment contract were as at 6 November 2017. On one view, the parties had agreed to the notice period provisions of the proposed new contract such as to give them contractual force, but even if the original terms attached to the letter of appointment constituted the entire contract of employment, there would by implication of law be a right to terminate on reasonable notice.

[32] We are also not satisfied that the grant of permission to appeal in respect of the fourth, fifth, sixth and seventh grounds of appeal would be in the public interest. The matters raised by Chesson could not be sufficient to displace the conclusion that Ms Knutson’s dismissal was unfair, and that it was appropriate to award her compensation, in circumstances where there was no challenge to the Commissioner’s findings that there was no valid reason for her dismissal and that she was denied procedural fairness. The issue raised concerning the finding that there was a summary dismissal is however relevant to the issue of the quantification of compensation, and will be considered in that context.

[33] We are satisfied that the grant of permission to appeal in relation to the eighth ground of appeal would be in the public interest, because it is apparent that the Commissioner’s quantification of compensation was attended by appealable error and raises issues of general application. There is a difficulty at the outset in identifying, from the Decision, the basis upon which the Commissioner arrived at the conclusion that the amount of $22,882.00 should be awarded. We have earlier set out the process of reasoning in the Decision which led to this conclusion. Although nominal regard was had to the matters required to be taken into account under s 392(2), there was no identification of how each matter was taken into account in a mathematical sense. It is important to remember that the discretion to award compensation is not at large; it is a guided discretion, and it is not sufficient merely to mention the matters which are required to be taken into account without treating them as matters of significance. Further, although the Decision 23 made reference to the decision in Sprigg v Paul Licensed Festival Supermarket,24 which sets out a well-established, structured and transparent methodology for the assessment of compensation, that methodology was not followed. It is necessary to reiterate what was said in the Full Bench decision in Balaclava Pastoral Co Pty Ltd v Nurcombe,25 where the same type of error was identified:

“[43] We would add to this that in quantifying compensation, it is necessary to set out with some precision the way in which the various matters required to be taken into account under s.392(2) (and s.392(3) if relevant), and the steps in the Sprigg formula, have been assessed and quantified. That is to say, the way in which a final compensation amount has been arrived at should be readily apparent and explicable from the reasons of the decision-maker.

[44] We consider (consistent with two arguments advanced by Balaclava in support of appeal ground 6) that the Commissioner’s quantification of compensation did not conform to these principles and manifested appealable error in two respects. First, there was no proper engagement with the critical first step in the Sprigg formula to assess the anticipated period of employment. Engagement with this step is necessary in order to make the finding required by s.392(2)(c) concerning “the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed”. The Commissioner observed that there was some prospect that the employment may not have endured for a considerable period, and that the conduct and performance issues may ultimately have led to Mr Nurcombe’s dismissal. However no anticipated period of employment was identified for the purpose of the first step in the Sprigg formula, and no amount of remuneration lost because of the dismissal was quantified for the purpose of s.392(2)(c).

[45] Second, the Commissioner concluded that 24 weeks’ pay, amounting to $18,552.00, should be awarded as compensation without adequately identifying the basis upon which this amount was calculated. It is clear that the Commissioner took into account at least the anticipated period of employment, Mr Nurcombe’s period of service, and the loss of non-transferable employment credits in assessing compensation. However the monetary value assigned to these components was not identified, making it impossible to determine whether the compensation amount was properly calculated pursuant to s.392 in accordance with established principle.”

[34] The same difficulty was raised in the Full Bench decision in Jimenez v Platypus Pty Limited: 26

“[20] We make the observation that we have grave reservations about the manner in which the Commissioner dealt with the issue of remedy, particularly his assessment of the amount of compensation to be awarded. The Decision does not articulate any basis for the conclusion in paragraph [83] that Mr Jimenez “may have been properly terminated within a very short period” if he had not been dismissed. It is not clear how each matter required to be taken into account under s.392(2) was considered and weighed. The manner by which the final amount of one week’s pay as compensation was arrived at was not explained. Nor was s.392(3) applied in the process.”

[35] The Decision does not, for example, disclose whether the “recognition” that Chesson was a small business led to a reduction in the amount of compensation that would otherwise have been awarded; 27 how long the Commissioner assessed Ms Knutson would have been employed if not dismissed (beyond being a “significant period of time”);28 or precisely what period of monetary loss the award of 17 weeks’ pay actually related to.29 As to this last matter we infer that, since the Commissioner appears to have found that there was no monetary loss after Ms Knutson gained new employment from 5 March 2018, the compensation was for the 17 week period ending on that date. Such a period would commence on or about 6 November 2017, the date upon which Chesson gave notice of the dismissal to Ms Knutson.

[36] Ms Knutson advanced her case on the basis that the termination of her employment took effect on or about 27 November 2017, she having been dismissed on notice. Her claim for personal leave was advanced on the basis that she was serving a period of notice commencing on 6 November 2017, although she was awaiting confirmation as to what that period of notice was. She never contended that she was summarily dismissed, and there is no evidence that she was summarily dismissed. The fact that she may not have been paid for a period of personal leave to which she was entitled did not have the effect of retrospectively converting a dismissal on notice to a summary dismissal effective from 6 November 2017. In those circumstances, it was not open for the Commissioner to find that she had been summarily dismissed on that date. As Chesson pointed out, if she had been dismissed on that date, then her application was lodged beyond the 21-day time period prescribed by s 394(2); that would have the consequence that, because she was never granted an extension of time pursuant to s 394(3), she could not validly have been granted an unfair dismissal remedy. That makes plain the nature of the error.

[37] The inference we have drawn as to the basis upon which the amount of 17 weeks’ pay was awarded by the Commissioner suggests that he awarded compensation for a three week period prior to the dismissal taking effect. That was an error of principle. The function of compensation ordered pursuant to s 392 is to compensate for loss arising from the dismissal. Any loss which Ms Knutson suffered in the period 6-27 November 2017 is the result of her not being afforded her personal leave entitlements under the NES, and is not the result of her dismissal. Unfair dismissal remedies are not the means by which unpaid NES entitlements are to be recovered; separate provision for that is made in Pt 4-1 of the FW Act.

[38] We also accept that the Commissioner erred in quantifying compensation in the second respect identified by Chesson. The evidence and submissions before the Commissioner demonstrated that Ms Knutson had obtained approval to use her accrued annual leave entitlements for an overseas holiday prior to her dismissal. She was paid those accrued entitlements upon the termination of her employment, and took the holiday as planned. That holiday was, on the basis of what was put to the Commissioner, for a period of three weeks. It cannot be said therefore that during the holiday period Ms Knutson suffered any loss arising from the dismissal. That three week period should not have been included in the assessment of compensable loss.

[39] Because of the two identified instances of error, the amount of compensation awarded exceeded what it should have been by six weeks’ pay. The correct amount should have been eleven weeks’ pay, which at the weekly rate of pay of $1,346.00 identified in the Decision 30 totalled $14,806.00. We will therefore uphold the eighth ground of appeal, quash the Decision insofar as the assessment of compensation is concerned, as well as the Order, and replace it with a further order for the payment of compensation inthe amount of $14,806.00. That amount has already been paid by Chesson pursuant to the Stay Order, so no further payment will be required by Chesson.

[40] Chesson sought an order that Ms Knutson pay it an amount of $4,737.20 in order to cover the tax which it says it is liable to pay, at the rate of 32%, on the amount of $14,806.00. It contends that the Stay Order did not permit it to deduct tax on that amount, and accordingly it made the payment without deducting tax.

[41] The Order made by the Commissioner did not require any deduction of tax but, as earlier set out, identified the amount of compensation as a “gross figure”, and stated that “appropriate taxation treatment is a matter for the Parties”. The difficulty with this is that it does not actually identify what the payment required to be made is; the more usual approach is to identify an amount to be paid by the employer to the applicant less any tax required to be deducted by law. The Stay Order required the amount of $14,806.00 to be paid as condition of the stay that was granted, and Chesson did not raise prior to making the payment any issue of tax liability. Even if Chesson has a tax liability on the amount it has paid pursuant to the Stay Order (a matter about which we make no finding), we do not consider that it can now be rectified by the making of an order that the relevant amount of the liability be paid back to Chesson by Ms Knutson. There is no power under Pt 3-2 to make an order requiring an employee to pay money to an employer, and we doubt that s 607(3)(b), which empowers an appeal bench to “make a further decision in relation to the matter that is the subject of the appeal...”, means that the bench is at large to make any decision as it considers appropriate, as distinct from a decision (in an appeal in an unfair dismissal case) in substitution for the original decision under Pt 3-2. Ms Knutson herself will no doubt have to bring to account for taxation purposes the amount she has been paid.

Orders

[42] We make the following orders:

scription: Seal of the Fair Work Commission with the member's signature.

VICE PRESIDENT

Appearances:

N. Knutson on her own behalf.

S. Melbourne, Solicitor, on behalf of Chesson Pty Ltd t/a Pay Per Click.

Hearing details:

2018.

Sydney:

13 June.

 1   [2018] FWC 2080

 2   PR601919

 3   [2018] FWC 2967

 4   PR607446

 5   Decision at [2]

 6   Decision at [41]

 7   Decision at [50]

 8   Decision at [62]

 9   Decision at [63]-[64]

 10   Print R0235, (1998) 88 IR 21

 11   Decision at [67]

 12   Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194, 99 IR 309 at [17] per Gleeson CJ, Gaudron and Hayne JJ

 13   (2011) 192 FCR 78, 207 IR 177 at [43]

 14   O’Sullivan v Farrer (1989) 168 CLR 210 at 216-217 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 243 CLR 506 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78, 207 IR 177 at [44] - [46]

 15   [2010] FWAFB 5343, 197 IR 266 at [27]

 16   Wan v Australian Industrial Relations Commission (2001) 116 FCR 481 at [30]

 17   GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343, 197 IR 266 at [26]-[27]; Lawrence v Coal & Allied Mining Services Pty Ltd T/A Mt Thorley Operations/Warkworth [2010] FWAFB 10089, 202 IR 388 at [28], affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78, 207 IR 177; New South Wales Bar Association v McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663, (2014) 241 IR 177 at [28]

 18   [2017] FWCFB 4878 at [41] – [42]

 19   (2010) 201 IR 64 at [82]

 20   (1946) 72 CLR 435 at 454, 468

 21   (1995) 185 CLR 410

 22   [1984] FCA 419, 5 FCR 447, 9 IR 101

 23   At [65]

 24   Print R0235, (1998) 88 IR 21, since updated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages [2013] FWCFB 431, 229 IR 6

 25   [2017] FWCFB 429 at [42]-[46]

 26   [2016] FWCFB 7201 at [20]

 27   See Decision at [68]

 28   Decision at [70]

 29   See Decision at [76]

 30   At [69]

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