[2016] FWCFB 7206
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

s.604 - Appeal of decisions

Double N Equipment Hire Pty Ltd t/a A1 Distributions
v
Alan Humphries
(C2016/5287)

VICE PRESIDENT HATCHER
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER HARPER-GREENWELL



SYDNEY, 21 DECEMBER 2016

Appeal against decision [2016] FWC 5927 of Commissioner Platt at Adelaide on 22 August 2016 in matter number U2016/5951.

Introduction

[1] Double N Equipment Hire Pty Ltd t/a A1 Distributions (A1 Distributions) has applied for permission to appeal and appealed a decision of Commissioner Platt issued on 22 August 2016 1 (Decision). In the Decision, the Commissioner found that A1 Distributions’ summary dismissal of Mr Alan Humphries on 29 March 2016 for serious misconduct was harsh, unjust and unreasonable, and ordered it to pay Mr Humphries compensation in the amount of $32,305.00 as a remedy. A separate order was issued to give effect to the Decision on 22 August 20162 (Order).

[2] The grounds of appeal contained in A1 Distributions’ notice of appeal were as follows:

[3] It may be seen that grounds 3, 4 and 6 involve a challenge to the Commissioner’s finding that Mr Humphries’ dismissal was harsh, unjust and unreasonable, and grounds 1, 2 and 5 challenge in the alternative the Commissioner’s quantification of the compensation to be paid to Mr Humphries.

[4] The appeal was one to which s.400(1) of the Fair Work Act 2009 (FW Act) applied. Section 400(1) provides:

[5] Accordingly it was necessary for A1 Distributions to demonstrate that it was in the public interest that permission to appeal be granted. Its notice of appeal identified only the following matter as attracting the public interest:

[6] No public interest consideration was identified as relevant to those grounds which were concerned with the finding that the dismissal was unfair - that is, grounds 3, 4 and 6.

[7] The issue of permission to appeal was the subject of a preliminary hearing before a differently constituted Full Bench (Hatcher VP, Clancy DP and Cirkovic C) on 10 October 2016. On 28 October 2016 the Full Bench informed the parties that it had determined that it had decided to grant permission to appeal in respect of grounds 1, 2 and 5, and that permission to appeal was otherwise refused. This decision was made on the basis that grounds 1, 2 and 5 were arguable and the nature of the errors alleged meant that it was in the public interest to grant permission to appeal in respect of those grounds, but no reason was advanced by A1 Distributions or was identifiable as to why permission to appeal should be granted in relation to grounds 3,4 and 6.

[8] Pursuant to the limited grant of permission to appeal, A1 Distributions’ appeal against the compensation amount was heard before us on 12 December 2016.

The Decision

[9] The Commissioner’s factual findings in the Decision record three matters of relevance to the assessment of compensation:

[10] Having found that Mr Humphries’ dismissal was unfair, the Commissioner firstly considered whether reinstatement was the appropriate remedy. He recorded that Mr Humphries did not seek reinstatement, and that he was satisfied that it was not appropriate to order reinstatement. We note that neither party challenged that finding in the appeal.

[11] The Commissioner then turned to consideration of the remedy of compensation, and took the approach of dealing with each matter required to be dealt with in s.392(2) in turn and assessing compensation in accordance with the approach taken in Sprigg v Paul’s Licensed Festival Supermarket. 6 In accordance with that approach the Commissioner first found that, for the purpose of s.392(2)(a), there was no evidence that any order for compensation would affect the viability of A1 Distributions, and then in relation to s.392(2)(b) took into account that Mr Humphries’ length of service was five years and three months. In relation to s.392(2)(c), which concerned “the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed”, the Commissioner’s conclusions were as follows:

[12] Under s.392(2)(d) (mitigation of loss), the Commissioner found that Mr Humphries had “actively sought alternative employment without success”. 7 Under s.392(2)(e) and (f) (“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 “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”) the Commissioner found:

[13] The Commissioner then under s.392(2)(g) took into account that Mr Humphries was not paid the five weeks’ notice to which he was entitled on termination. His final conclusions were as follows (footnotes omitted):

[14] The calculation used to arrive at the amount of $32,305.00 appears to have been as follows:

The Appeal - consideration

[15] Section 392 of the FW Act relevantly provides as follows:

392 Remedy - compensation

[16] The well-established approach to the assessment of compensation under s.392 of the FW Act, taking into account the matters specified in s.392(2), is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul Licensed Festival Supermarket. 8 This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages9. Under that approach, the first step to be taken in assessing compensation is to consider s.392(2)(c) - that is, to determine what the applicant would have received, or would have been likely to receive, if the person had not been dismissed. In Bowden this was described in the following way:

[17] The identification of this starting point amount “necessarily involves assessments as to future events that will often be problematic” 10. Once this first step has been undertaken, various adjustments are made in accordance with s.392 and the formula for matters including monies earned since dismissal, contingencies, any reduction on account of the employee’s misconduct and the application of the cap of six months’ pay. This approach is however subject to the overarching requirement to ensure that the level of compensation is in an amount that is considered appropriate having regard to all the circumstances of the case.11

[18] In this case, the critical factual consideration relevant to the assessment of compensation was that, having been on workers’ compensation benefits for a period of about six months prior to 21 March 2016 because of a shoulder injury, Mr Humphries then suffered a re-injury upon his return to work on 21 March 2016 and prior to his dismissal on 29 March 2016. This caused him to go back on workers’ compensation benefits, and he remained on such benefits at the time of the hearing before the Commissioner. The incapacity caused by this re-injury was necessarily determinative of Mr Humphries’ future earnings capacity, whether he was dismissed or not.

[19] We consider that the Commissioner failed adequately to take account of this factual situation, and this caused him, with respect, to depart from the well-established approach we have described and to err in his assessment of compensation in the following respects:

[20] We therefore consider that the Decision was attended by appealable error. Accordingly, permission to appeal having been granted, we order that:

Re-determination of compensation amount

[21] It remains necessary to re-determine the amount of compensation to be awarded to Mr Humphries for his unfair dismissal. We propose to undertake that task ourselves rather than remitting the matter to a single member of the Commission. We note at the outset that it was not in dispute that it was appropriate for an order for compensation to be made.

[22] We determined at the hearing to admit further evidence adduced by each party. A1 Distributions relied upon an affidavit sworn by Ms Tracey Anne Kerrigan, a solicitor, on 4 November 2016, which annexed a number of documents. Mr Humphries relied upon a further witness statement made by himself on 23 November 2016, which also has a number of documents annexed, and a witness statement made by his wife, Ms Lizabeth Humphries, on the same date. The matters which appear to us to be relevant arising from this additional evidence are as follows:

[23] It is also necessary to pay some attention to the provisions of the RTW Act, because they are relevant to assessing what Mr Humphries future income-earning prospects are. We have already referred to the amounts of compensation Mr Humphries is liable to receive because of his injury. In addition to the following rights and obligations under the RTW Act are relevant:

[24] Of critical importance is that the obligation on the employer in s.18(1) to provide suitable employment, and the right of the employee to seek an order from the Tribunal under s.18(5) if such suitable employment is not provided upon the provision of written notice under s.18(3), survives any dismissal of employee after the commencement of the incapacity for work. This was confirmed by the Tribunal (Deputy President Judge PD Hannon) in Walmsley v Crown Equipment Pty Ltd 14, which said (footnote omitted): 

[25] We will assess compensation having regard to these matters.

Remuneration that would have been received if the dismissal had not occurred (s.392(2)(c))

[26] We consider that, had he not been dismissed, Mr Humphries would have been employed by A1 Distributions for at least another 2 years. We accept that his desire had been to continue to work for A1 Distributions for another 3 years, but we consider his age and his injury would probably have caused the employment to end sooner than that.

[27] The income that Mr Humphries has received since his dismissal to the date of this decision consists, as earlier stated, of his workers’ compensation payments - presumably paid by reference to his weekly income of $1,815.00 (although the precise figure is not clearly ascertainable on the material before us. He was paid at 100% of weekly income until September 2016, and at 80% since that time. The income he would have earned over the same period had he not been dismissed would have been the same.

[28] Mr Humphries would have continued to be paid at 80% of his former weekly earnings until the 104 weeks of weekly compensation ceased in about September 2017 unless he recovered sufficiently to return to work at his full former rate of pay. On the medical evidence before us there was some prospect that that would have occurred, but only if Mr Humphries underwent the surgery recommended by Dr Wallwork. Mr Humphries has not decided to undergo such surgery, so we can only assess that there is a 50% prospect that he would have done so had he not been dismissed. If he did, there is a 60% chance the surgery would be successful and he would be able to return to pre-injury duties and earn his full weekly wage. Allowing for recovery, the earliest time Mr Humphries could have returned to work if the surgery occurred and was successful would be about March 2017, one year on from the date of his dismissal. That makes an overall chance of 30% of a return to work at the pre-injury rate for the last 12 months of the 2-year period. That represented a 30% chance of receiving an additional 20% remuneration in the period March-September 2017, and a 30% chance of receiving the whole amount of $1820 from September 2017 until March 2018. For the last six months period, if there had not been a return to work, Mr Humphries might have received social security benefits or lump sum compensation, but we do not propose to take this into account for the purpose of the calculation.

[29] The amount Mr Humphries would have earned but for the dismissal may therefore be calculated as follows:

26 x $1820 =

$47,320.00

52 x $1456 (80% x $1820) =

$75,712.00

30% x 26 x $364 (20% x $1820) =

$2,839.20

30% x 26 x $1820 =

$14,196.00

TOTAL =

$140,067.20

[30] Thus the “starting point” amount is $140,067.20

Remuneration earned (s.392(2)(e)) and income reasonably likely to be earned (s.392(2)(f) and (g))

[31] Remuneration earned from the date of dismissal to the date of any compensation order is required to be taken into account under s.392(2)(e). Remuneration reasonably likely to be earned from the date of any compensation order to the date the compensation is paid is to be taken into account under s.392(2)(f). Any remuneration likely to be earned after that date to the end of the period of anticipated employment determined for the purpose of s.392(2)(c) is, we consider, a relevant amount to be taken into account under s.392(2)(g) in accordance with the Sprigg formula. This would include any future workers’ compensation payments likely to be made.

[32] The unusual but critical feature of this case is that it is not possible to identify any basis upon which Mr Humphries’ dismissal could have affected the remuneration he has and is likely to receive in the future over the period of anticipated employment. Having suffered a re-injury to his shoulder, his income over the 2-year period of anticipated employment was determinable by reference to his rights under the RTW Act, which were not as explained affected by his dismissal. The workers’ compensation payments he has actually received since his dismissal to date are the same as he would have received had he not been dismissed. Likewise there is no basis to conclude that Mr Humphries’ future rights to workers’ compensation payments, and his future prospects of a return to work at his pre-injury rate of pay, were in any way affected by his dismissal. He remains in the same position by reason of his injury.

[33] In mathematical terms, that means the actual and likely income of Mr Humphries in the two-year period from the date of his dismissal would be the same as the amount calculated for the purpose of s.392(2)(c) - $140,067.20. That amount is deducted from the starting point amount and leaves zero compensation.

Length of service (s.392(2)(b)) and other matters (s.392(2)(g))

[34] We note that in the Decision the Commissioner found that Mr Humphries’ was denied five weeks’ pay in lieu of notice because he was summarily dismissed for serious misconduct which he determined had not actually occurred. 15 We consider that this is a matter connected to Mr Humphries’s length of service and is therefore to be taken into account under s.392(2)(b), and/or is a relevant matter under s.392(2)(g). We consider that Mr Humphries should be compensated for this loss which he suffered because of his unfair dismissal. Five weeks’ pay at $1,820.00 per week gives a total of $9,100.00. We will not attempt to assess this amount net of taxation, but simply require this amount to be paid subject to any deduction of taxation required by law.

Viability (s.392(2)(a))

[35] An order for compensation in the amount of $9,100.00 would not affect the viability of A1 Distributions.

Mitigation efforts (s.392(2)(d))

[36] We agree with the Commissioner that Mr Humphries has made reasonable efforts to mitigate his loss by seeking alternative employment. 16 There will be no adjustment on this score.

Misconduct (s.392(3))

[37] Based on the findings of the Commissioner, Mr Humphries did not commit any misconduct requiring a deduction under s.393(3).

Compensation cap (s.392(5))

[38] The amount of compensation proposed is below the compensation cap.

Instalments (s.393)

[39] We do not consider that there is any reason for compensation to be made by way of instalments.

Conclusion

[40] The amount of compensation which is derived from the above considerations is $9,100.00, less deduction of any tax as required by law. We consider that is an appropriate amount of compensation in all the circumstances. A separate order will be issued giving effect to this conclusion.

al of the Fair Work Commission with the memeber's signature.

VICE PRESIDENT

Appearances:

S. Richter of counsel for A1 Distributions.

D. Fabbro of counsel and P. Botros solicitor for A. Humphries.

Hearing details:

2016.

Melbourne:

10 October and 12 December.

 1   [2016] FWC 5927

 2   PR584520

 3   Decision at [10]

 4   Decision at [3]

 5   Decision at [11]

 6   Print R0235, (1998) 88 IR 21

 7   Decision at [88]

 8   Print R0235, (1998) 88 IR 21

 9   [2013] FWCFB 431; 229 IR 6

 10   Smith v Moore Paragon Australia Ltd PR942856, [2004] AIRC 57; (2004) 130 IR 446 at [32]

 11   Ibid

 12   Print S5109, [2000] AIRC 1151

 13   [2013] FWCFB 431 at [24]; (2013) 229 IR 6

 14   [2016] SAET 4

 15   Decision at [90]

 16   Decision at [88]

Printed by authority of the Commonwealth Government Printer

<Price code C, PR586203>