[2015] FWCFB 2267
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

s.604 - Appeal of decisions

Mr John McCulloch
v
Calvary Health Care Adelaide
(C2015/1131)

 

JUSTICE ROSS, PRESIDENT
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT GOSTENCNIK

MELBOURNE, 15 APRIL 2015

Appeal against decision [2014] FWC 9191 of Commissioner Wilson at Melbourne on 19 December 2014 in matter number U2014/8599 - Appeal upheld [2015] FWCFB 873 - rehearing - calculation of compensation.

[1] Mr John McCulloch (the appellant) was dismissed from his employment with Calvary Health Care Adelaide (Calvary, the respondent) on 28 July 2014, and subsequently lodged an application for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (Cth) (the FW Act). On 19 December 2014 Commissioner Wilson issued a decision1 where he found that Mr McCulloch was unfairly dismissed and ordered the respondent to pay him the amount of $1281.82, less appropriate tax (the First Instance Decision). Mr McCulloch appealed the Commissioner’s decision contending that the amount of compensation ordered was inadequate in the circumstances. There was no challenge to the Commissioner’s finding that reinstatement was inappropriate.

[2] The Fair Work Commission (FWC), as presently constituted, heard the appeal on 19 February 2015 and in a decision dated 5 March 2015 2 (the Appeal Decision) we decided that the Commissioner’s finding (pursuant to s.392(2)(c)) as to the remuneration the appellant would have been likely to receive but for his dismissal constituted a significant error of fact. On that basis we granted permission to appeal, upheld the appeal and quashed the Commissioner’s compensation order. We have decided to rehear the question of compensation ourselves and that is the matter before us.

[3] On 5 March 2015 the parties were directed to file submissions on the question of compensation, specifically addressing among other things, s.392(2)(a)-(g) and s.392(3) of the FW Act. The parties’ submissions were specifically asked to address the length of time the appellant would have remained in employment with the respondent but for the dismissal. The parties have consented to the quantum of compensation being determined ‘on the papers’ and we have given careful consideration to the written submissions filed on behalf of both parties in arriving at our decision.

[4] It is apparent that Mr McCulloch has suffered financial loss as a result of his unfair dismissal and it is appropriate in all the circumstances of his case that he be awarded compensation. We now turn to assess the amount of compensation to be paid.

[5] Section 392 of the FW Act sets out the criteria that the FWC must take into account when determining the amount of compensation to be awarded, which provides:

[6] We have adopted the well established methodology for assessing compensation in unfair dismissal cases which was most recently the subject of consideration in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A Ottrey (‘Bowden’). 3 We now turn to the particular matters we are required to take into account.

s.392(2)(a): effect on the viability of the employer’s enterprise

[7] It is not contended that an order for the payment of compensation would affect the viability of the respondent’s business and we find that the order we propose to make will not affect the viability of the respondent’s business.

s.392(2)(b): length of service

[8] Mr McCulloch was employed by Calvary for about 7 years. This is a period which supports the making of an order for compensation. Certainly no diminution of any amount that might otherwise be determined is warranted because of this circumstance.

s.392(2)(c): remuneration received but for dismissal

[9] On behalf of Mr McCulloch it is submitted that, but for his dismissal, it is likely that he would have remained employed by Calvary for ‘a substantial period’, being at least a further year. It is conceded that because of the appellant’s age (he was 69 years old on 24 March 2015) it cannot reasonably be assumed that his employment would have continued indefinitely. It is submitted that Mr McCulloch was unlikely to leave his employment readily, for the following reasons:

[10] The appellant also submits that there is no evidentiary basis to suggest that Mr McCulloch was likely to engage in further misconduct that might jeopardise his employment. He had not been subject to any disciplinary action in his 7 years of employment, other than the conduct which led to his unfair dismissal.

[11] Calvary contends that we should adopt the Commissioner’s finding at first instance, namely: ‘it is impossible to draw the conclusion that his (Mr McCulloch’s) employment with (the respondent) would have continued to an unspecified date well into the future’.

[12] We accept that because of the appellant’s age it is not reasonable to conclude he would have remained employed by Calvary indefinitely, or for a significant number of years. But the issue is how long would he have been employed by Calvary but for his dismissal? As we have noted, the appellant says he would have remained in his employment for at least a further year.

[13] Calvary’s primary submission is that the Commissioner correctly found that the appellant would have only remained in employment for no more than 8 weeks. At paragraph 16 of its written submission Calvary says:

In the Respondent’s submission if the full bench determines that the Appellant’s future employment was to continue beyond 8 weeks it is submitted that his employment would not have continued for a period which exceeded 6 months 6 for the reasons discussed in this submission.7

[14] As we mention in the Appeal Decision, the Commissioner appears to have relied on three episodes from the appellant’s employment, in addition to the incident which led to the appellant’s dismissal, to support his finding regarding future employment:

[15] These matters are referred to at paragraphs [83]-[85] of the First Instance Decision in the context of a consideration as to whether reinstatement was appropriate. There does not appear to be any other evidence related to the Commissioner’s finding.

[16] In the context of the compensation rehearing the respondent has not referred to any other persuasive material to support the proposition that but for his dismissal the appellant would only have remained in his employment for 8 weeks. As we observed in the Appeal Decision, at [27],:

[17] We do not find the respondent’s primary submission persuasive, (ie. that the appellant would have only continued in his employment for 8 weeks). In the event we rejected the respondent’s primary submission it advanced an alternate submission, at paragraph 17 of its written submission,:

[18] The reasons advanced by the respondent in support of 6 months anticipated employment are primarily those directed at supporting the Commissioner’s original finding 12 - 8 weeks - and the proposition that had he remained in employment ‘it would have likely caused unacceptable problems or seriously affected the harmony of the workplace’. It seems to us that the latter proposition conflates the reasons for not ordering reinstatement with how long Mr McCulloch would have remained in his employment bur for his unfair dismissal.

[19] We find that but for the unfair dismissal Mr McCulloch would have remained in his employment with Calvary for a period of 12 months. For the reasons advanced by the appellant (see [9] - [10] above) we think that Mr McCulloch was likely to have remained in employment for such a period and there is no sufficient evidentiary basis for concluding that he was likely to engage in further misconduct that might jeopardise his employment. We now turn to consider whether we should discount this 12 month period, on account of contingencies.

[20] There has been some variation in cases as to when contingencies should be considered in determining an amount of compensation. For example in Sprigg v Pauls Licensed Festival Supermarket (Sprigg) 13 and Ellawala v Australian Postal Corporation (Ellawala)14 contingencies were considered after both the remuneration the dismissed person would have received, or would have been likely to receive, if they had not been dismissed and the monies earned by them since termination had been considered. However, in Lockwood Security Products Pty Limited v Sulocki and Others15 a Full Bench of the AIRC, in consideration of the particular facts in the case, applied a contingency discount directly to the amount they estimated the dismissed person would have earned but for their dismissal, before making any other deductions.16 Of course, any discount for contingencies depends upon the circumstances of each particular case.17

[21] It is important to appreciate that a deduction for contingencies is applied to prospective losses, that is loss occasioned after the date of the hearing. As the Full Bench observed in Ellawala,: 18

[22] Mr McCulloch was dismissed on 28 July 2014. We have found that but for his dismissal he would have remained in his employment with Calvary for a further period of 12 months. (ie until 28 July 2015). It follows that any contingency calculation would only have relevance for the 3 months between the date of our decision and the end of the anticipated period of employment. A contingency discount necessarily only applies to future circumstances. In the context of the present matter we are not persuaded to make any discount for contingencies.

[23] It follows that the remuneration that Mr McCulloch would have received, or would have been likely to receive, if he had not been dismissed is $20,829.90 - based on a weekly wage of $367.50 and a 9% superannuation entitlement.

s.392(2)(d): efforts to mitigate loss

The reasonableness of the efforts taken to mitigate loss depends on the circumstances of the case. 19 In this case the appellant applied for six jobs and circulated a flyer advertising lawn mowing services. Since these unsuccessful attempts the appellant concluded that he was unlikely to find work and has not sought further employment. The respondent submits that the paucity of the evidence regarding the efforts of the appellant to mitigate his loss warrant a 10% deduction to the amount of compensation to be awarded. In the First Instance Decision the Commissioner characterised Mr McCulloch’s efforts to mitigate his loss as ‘modest’ but did not amend the amount of compensation awarded on account of a failure to mitigate loss. The Commissioner stated:

[24] We agree with the Commissioner’s assessment. While the appellant’s efforts to mitigate his loss were ‘modest’, they were reasonable having regard to his age, limited education and narrow employment experience. We are not persuaded that any deduction to the amount of compensation to be awarded is warranted on account of a failure to mitigate loss.

s.392(2)(e) amount of remuneration earned since dismissal

[25] Mr McCulloch has earned less than $500 in remuneration from other work following the dismissal. On behalf of the appellant it was submitted that no deduction should be made given the negligible amount in question. The appellant remains unemployed.

[26] Calvary submits that given the remuneration earned it is appropriate to apply a deduction to the amount of compensation payable of up to one weeks pay.

[27] At first instance the Commissioner considered the amount of remuneration earned but decided to make no deduction from the amount of compensation to be awarded. The Commissioner deals with this issue at paragraph [100] of the First Instance Decision:

[28] The approach taken by the Commissioner was appropriate and we propose to adopt it.

s.392(2)(f): income likely to be earned during the period between the making of the order and the actual compensation

[29] No submission was advanced by the respondent in relation to this criterion. The appellant has been unemployed since the dismissal and there is no sound evidentiary basis on which to conclude that the appellant is likely to earn remuneration from employment or other work between the making of the order and the payment of compensation.

s.392(2)(g): any other relevant matter

[30] Both parties submit that we should make a deduction of $1,602.32, representing the four weeks’ wages paid inclusive of superannuation by Calvary to the appellant, in lieu of notice. This matter was not the subject of any detailed submissions and we propose to give effect to the consent position of the parties.

[31] Mr McCulloch was in receipt of a part-pension while in employment, and has been in receipt of the full pension rate of $644 per fortnight following his dismissal. The appellant submitted that no amount should be deducted for the appellant’s receipt of the Age Pension. Calvary submitted that there should be a deduction made to the compensation awarded on account of these pension payments.

[32] The FWC, and its predecessors, have not deducted social security payments in the manner proposed by the respondent on the basis that such payments do not constitute ‘remuneration earned ... from employment or other work’ for the purposes of s.392(2)(d). This issue was specifically addressed in Kennedy and Cumnock No.1 Colliery Pty Ltd 24 where the Full Bench said:

[33] The Full Bench then went on to say at [11]:

[34] The most recent consideration of this issue appears to have been in Kim Lee Jarvis v Crystal Pictures Pty Ltd 27 in which Cloghan C declined to make any deduction on account of the receipt of Centrelink payments, for the following reasons:

[35] Given the limited argument advanced in respect of this issue we do not propose to depart from previous authority and accordingly we will not make the deduction sought by the respondent. We have also proceeded on the assumption that the order we propose to make may mean that a proportion of the pension payments received by Mr McCulloch since his dismissal will have to be repaid to the Commonwealth.

s.392(3): misconduct

[36] Section 392(3) provides that if the FWC is satisfied that the applicant’s misconduct contributed to the employer’s decision to dismiss them then,:

[37] We are satisfied that Mr McCulloch’s misconduct contributed to Calvary’s decision to dismiss him, it follows that we must reduce the amount of compensation we would otherwise have ordered, on account of that misconduct. It is apparent from the terms of s.392(3) that any deduction on account of misconduct is to be applied before the application of the legislative cap.

[38] In the First Instance Decision the Commissioner reduced the amount of compensation by 20% on account of Mr McCulloch’s misconduct,:

[39] The approach taken by the Commissioner was appropriate and we intend to adopt it. We will reduce the amount of compensation we would have awarded by 20% on account of Mr McCulloch’s misconduct.

s.392(5): compensation cap

[40] Subsection 392(5) imposes a legislative ‘cap’ on the amount of compensation the FWC can order. In the context of this case the ‘cap’ is the total amount of remuneration which Mr McCulloch received for his employment with Calvary during the 26 weeks immediately before his dismissal (see s.392(6)(a)).

[41] The appellant submits that the legislative cap in this case is $10,414.95. The respondent submits that the ‘cap’ is in fact $9,133.13, that is $10,414.95 less the sum of $1,281.52, being the amount which has already been paid to Mr McCulloch. We reject this submission.

[42] Contrary to the respondent’s submission, the post dismissal sums paid to the appellant are not relevant to the determination of the ‘cap’. The ‘cap’ is calculated by reference to the amount of remuneration received by Mr McCulloch for the period of employment with Calvary during the 26 weeks ‘immediately before the dismissal’. So much is clear from s.392(6)(a). The payments sought to be deducted by the respondent were made after dismissal, and in any event the amount of compensation to be awarded has already been reduced by this amount pursuant to s.392(2)(g).

s.393: instalments

[43] There was no submission that any amount of compensation should be subject to payment by instalments. We are not satisfied that in this case payment by instalments is warranted.

[44] In summary we find as follows:

[45] We have taken into account all of the circumstances of the case and all of the matters we must take into account pursuant to subsections 392(2), (3) and (5). We are satisfied that it is appropriate to order that the respondent pay the appellant compensation in the amount of $10,414.95, less applicable tax. This amount shall be payable within 14 days of the date of this decision. We will issue a separate order to this effect.

PRESIDENT

Final written submissions:

Appellant’s submissions on compensation - 16 March 2015

Respondent submissions in response on compensation - 26 March 2015

1 [2014] FWC 9191

 2   [2015] FWCFB 873

 3   [2013] FWCFB 431

 4   Which meant that Mr Hart was not the aggressor and that the appellant had in fact abused him during the altercation.

 5   Mr John McCulloch v Calvary Health Care Adelaide [2014] FWC 9191 at paragraph [96]

 6   Including the period of notice required for termination of the appellant’s employment

 7   Including for the reason that it would have likely caused unacceptable problems or seriously affected the harmony of the workplace

 8   See transcript evidence at PN102-PN111, PN1480-PN1491, PN1960 and Exhibit R9 at paragraph 4

 9   See transcript evidence at PN90-PN98 and PN1873-PN1879

 10   See transcript evidence at PN247-PN255 and Exhibit R9 at paragraph 9

 11   [2015] FWCFB 873

 12   See paragraphs 10-16 of the respondent’s written submission

 13   (1988) 88 IR 21

 14   Print S5109

 15   PR908053

 16   Ibid at [56].

 17   Enhance Systems Pty Ltd v Cox, PR910779 at [38].

 18   Print S5109 at [43]

 19   Biviano v Suji Kim Collection, PR915963 at [34]

 20   Exhibit A2, paragraphs 40 - 41

 21   Ibid at paragraph 2

 22   [2014] FWC 9191 at [97] - [98]

 23   Ibid at [100]

 24   PR908987; Also see Steggles Ltd v West, Print S5876

 25   Kennedy and Cumnock No.1 Colliery Pty Ltd, PR908987 at [10]

 26   Ibid at [11]

 27   [2010] FWA 3674

 28   [2010] FWA 3674 at [75] - [75]

 29   [2014] FWC 9191 at [103] - [104]

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