Fair Work Act 2009
s.604 - Appeal of decisions

Appeal against decision [2016] FWC 7454 and order PR586503 of Commissioner Cambridge at Sydney on 20 October 2016 in matter number U2016/938.

Introduction and background

[1] Balaclava Pastoral Co Pty Ltd, which trades as the Australian Hotel Cowra (Balaclava), has lodged an appeal, for which permission to appeal is required, against a decision of Commissioner Cambridge issued on 20 October 2016 1 (Decision) and an order issued on the same date2 (Order). The Decision concerned an unfair dismissal remedy application lodged by Mr Darren Nurcombe in respect of the alleged termination of his employment as a part-time barman with Balaclava on 21 February 2016. In the Decision the Commissioner found that Mr Nurcombe had been unfairly dismissed, and ordered that Balaclava pay him compensation in the amount of $18.552.00.

[2] The factual background may shortly be described. Mr Nurcombe commenced working in the Australian Hotel in the NSW country town of Cowra in March 2010. In October 2012 the owners of the Hotel, who had been operating to that point, leased the premises and the operation of license to Balaclava. Balaclava was the business vehicle for Mr Bradley O’Connor and Ms Anita Fifoot, who at that time were in a de-facto relationship. Both were directors of Balaclava and operated the Hotel as joint managers, with Mr O’Connor being the named licensee.

[3] The relationship, both personal and professional, between Mr O’Connor and Ms Fifoot broke down over the period from 2013 to 2015. Mr O’Connor ceased to be a director of Balaclava in 2013. The personal relationship ended in 2014 or 2015. Mr O’Connor ceased to be involved in the day-to-day running of the Hotel in about January 2015. Ms Fifoot became the named licensee in September 2015.

[4] The breakdown in the relationship between Mr O’Connor and Ms Fifoot was the subject of some bitterness. It appears that this flowed into the working relationship between Ms Fifoot and Mr Nurcombe, who we infer was, or was at least perceived to be, in Mr O’Connor’s “camp”.

[5] Ms Fifoot raised some performance issues with Mr Nurcombe in the latter half of 2015. However matters took a more serious turn as a result of an incident which occurred on 30 January 2016. On that day Mr O’Connor attended the Hotel whilst Mr Nurcombe was working, and told him he was taking some beer dispensing equipment including a “miracle box” for use at a party. A miracle box is a device which instantly chills beer flowing through the line from a room-temperature keg to a tap for pouring. It is the antipodean equivalent of turning water into wine.

[6] Ms Fifoot shortly afterwards became aware that Mr O’Connor had been seen leaving the premises with the miracle box and other fittings. She confronted Mr Nurcombe about this, and rebuked him for not reporting the matter to her. She next rang the police to report that the miracle box had been stolen, and then decided to suspend Mr Nurcombe. Mr Nurcombe and Ms Fifoot fell into an argument, with Mr Nurcombe protesting that he had no knowledge of Mr O’Connor’s level of authority in the business. The police then arrived, escorted Mr Nurcombe out of the Hotel, and questioned him about the matter. They were satisfied with his explanation about the matter, and then departed.

[7] Ms Fifoot confirmed Mr Nurcombe’s stand-down the following day in writing, and he was required to attend a formal counselling meeting on 3 February 2016. Mr Nurcombe’s solicitors responded on his behalf, and this led to an exchange of correspondence. In one letter Ms Fifoot made new allegations of conduct/performance issues on Mr Nurcombe’s part, including his refusal to move kegs in the cool room. Mr Nurcombe had long refused to move the kegs because of a medical issue, and it appears that he had much earlier informed Mr O’Connor of this.

[8] Ultimately the formal counselling meeting took place on 9 February 2016. Mr Nurcombe was accompanied by his solicitor, and flatly denied each allegation put to him. He was then allowed to return to work the following day. On his return to work on 10 February 2016 he was issued with a final warning letter for unacceptable conduct and performance.

[9] On 19 February 2016 the Hotel received a delivery of kegs which had to be moved into the cool room. Mr Nurcombe refused to undertake this task on the grounds of physical incapacity. The following day Ms Fifoot, having decided to stand down Mr Nurcombe again, called him into a meeting where she had arranged the presence of a witness. Shortly after the meeting commenced, Mr Nurcombe said that the meeting was a “setup”, left and returned to his duties at the bar. Ms Fifoot’s evidence, which was the subject of dispute, was that later in the day she told Mr Nurcombe that he was stood down again and was not terminated.

[10] Mr Nurcombe nonetheless attended for work the following day, 21 February 2016, at his rostered starting time. Ms Fifoot, seeing him at work, approached him and a discussion ensued. Mr Nurcombe’s evidence was that she told him he was terminated. Ms Fifoot’s evidence was that she told him that he was stood down, and refuted his suggestion that he had been dismissed. Ms Fifoot requested that he return his keys to the hotel, which were necessary for him to perform his duties. He later had them returned.

[11] On 22 February 2016 Ms Fifoot sent a letter to Mr Nurcombe which, among other things:

● stated her belief that “you have engaged in serious misconduct which justifies summary dismissal”;

● particularised the misconduct as including his refusal to move the kegs and his attendance at work on 21 February 2016 despite being stood down;

● stated that “Based on my concerns I am proposing to terminate your employment summarily”, but that Mr Nurcombe would be given “an opportunity to respond to the allegations about your conduct and the proposed dismissal”;

● required Mr Nurcombe to attend a meeting at the Hotel on 24 February 2016 to discuss these matter; and

● advised him that “if you choose not [to] attend this meeting without providing a reasonable excuse, I may move to terminate your employment without further notice to you”.

[12] There followed another exchange between Mr Nurcombe’s solicitors and Ms Fifoot. In a letter dated 24 February 2016, Mr Nurcombe’s solicitors contended that Mr Nurcombe had been dismissed by Ms Fifoot on 21 February 2016, that he would not attend the meeting, and that he intended to make an unfair dismissal remedy application. Ms Fifoot replied the same day, stating that Mr Nurcombe had not been dismissed on 21 February 2016 and rescheduling the meeting for 25 February 2016. Mr Nurcombe’s solicitors replied by re-affirming that Mr Nurcombe had been dismissed and that he would not attended the rescheduled meeting.

[13] There was no dispute that Mr Nurcombe was not rostered for work, or paid, at any time after 21 February 2016. He filed his unfair dismissal remedy application on 3 March 2016.

[14] At the time of the hearing before the Commissioner, Mr Nurcombe had not succeeded in obtaining any alternative employment.

The Decision

[15] The first contested issue dealt with in the Decision was the question of whether Mr Nurcombe had been dismissed. The Commissioner began his consideration of this issue by finding that Mr Nurcombe did not resign, nor did he contend at the hearing that that he was subject to a course of conduct that was intended or likely to lead to the termination of employment. 3 In relation to the disputed issue as to whether Ms Fifoot had told Mr Nurcombe in their exchange on 21 February 2016 that he was terminated, the Commissioner did not make a finding about this but concluded that even if Ms Fifoot had done this, Mr Nurcombe was not entitled “in the absence of broader, contextual considerations” to rely upon words said in the heat of the moment and quickly retracted to demonstrate the termination of his employment.4

[16] The Commissioner then made the following findings of fact relevant to this issue of how the employment came to an end:

● Ms Fifoot had told Mr Nurcombe that he was stood down, not dismissed, on 21 February 2016, and required him to surrender the keys to the Hotel premises. 5

● Mr Nurcombe understood the difference between being stood down and dismissed. 6

● The requirement for the return of the keys reflected an underlying intention on the part of Balaclava to bring the employment to an end. This intention was also reflected in Balaclava’s conduct in relation to the miracle box incident - in particular, the reporting of the matter to the police. 7

● Ms Fifoot was motivated in large part by bitterness and malice arising from the actions of her former partner, Mr O’Connor, and this caused her to implement disproportionate disciplinary and other retaliatory action against Mr Nurcombe in relation to the miracle box incident. 8

● Although Ms Fifoot was aware that it was common practice for Mr Nurcombe not to move the kegs in the cool room, on 19 February 2016 she used this as a basis to suspend Mr Nurcombe for the second time. 9

[17] The Commissioner then concluded:

“[62] … In reality, the employment relationship could not endure a second, unwarranted, stand down, particularly so soon after the embarrassing and humiliating consequences of the miracle box theft incident.

[63] Consequently, despite whatever words may have been said by Ms Fifoot on 21 February, the second, unwarranted and unreasonable stand down of the applicant when properly construed in the context of the circumstances leading up to that event, represented the employer’s repudiation of the fundamental elements of trust and confidence that are necessary for the maintenance of the contract of employment. The applicant was entitled to treat the (second) stand down as conduct of the employer which repudiated any continuation of the employment relationship. These circumstances are akin to what is often described as constructive dismissal, although there is no formalised resignation provided by the employee.

[64] The position that the applicant found himself in on 21 February could be described as a constructive dismissal, where the stated position of the employer disingenuously attempted to continue the employment despite its actions to the contrary. In a practical sense, the applicant could have verbalised his position as one whereby he was entitled to reject the second unwarranted stand down, and treat the actions of the employer as dismissal, notwithstanding any confirmed, spoken suggestion to the contrary. These were circumstances whereby the dismissal was constructed by the actions of the employer, although there may have been no words which conveyed dismissal to the employee, and instead communication was made which was contrary to the intentions of the action taken.

...

[68] In the present case, a careful analysis of the circumstances has established that it was the actions of the employer which operated to bring the employment to an end. Consequently, the applicant was dismissed in satisfaction of the terms of subsection 386 (1) (a) of the Act. That is, the termination of the applicant’s employment occurred on the employer’s initiative.”

[18] The Commissioner referred to Macken’s Law of Employment 10 and the decisions in Mohazab v Dick Smith Electronics (No 2)11 and Allison v Bega Valley Council12 to support his conclusion that there had been a termination of employment in the nature of a constructive dismissal effected by Balaclava.

[19] The Commissioner then dealt with whether the dismissal was unfair. He dealt with all the matters he was required to take into account under s.387. In respect of s.387(a), the Commissioner found that there was no valid reason for the dismissal. 13 His reason for this finding were:

“[79] Following a careful and balanced consideration of the totality of the evidence that was presented in connection with the performance and conduct issues that may have represented basis for the dismissal of the applicant, those issues, could not, either singularly or in combination, provide valid reason for the dismissal of the applicant. Matters such as the applicant’s refusal to move kegs into the cool room, and his other identified performance inadequacies, should have been carefully and properly addressed as part of some measured and documented conduct and performance review. Only in the event that, following such review, the applicant was unable to rectify the reasonable requirements clearly established by the employer, could these issues represent valid reason for dismissal.”

[20] In relation to s.387(h), the Commissioner stated that Mr Nurcombe’s work performance “was clearly not faultless”, but his “performance and conduct inadequacies” were not properly managed through a formal process because of “the employer’s emotive, unwarranted and unreasonable overreaction in circumstances whereby the applicant’s employment was drawn into the broader conflict between Ms Fifoot and Mr O’Connor”. 14 The Commissioner’s ultimate conclusion was that the dismissal was harsh, unjust and unreasonable.15

[21] In respect of the remedy to be awarded to Mr Nurcombe for his unfair dismissal, the Commissioner noted that he did not seek reinstatement, and found that compensation would be an appropriate remedy. 16 The Commissioner then indicated that he approached the question of compensation having regard to the Full Bench decisions in Sprigg v Paul’s Licensed Festival Supermarket17 and as commented upon in the subsequent Full Bench Decision in Smith and Ors v Moore Paragon Australia Ltd.18 The Commissioner’s reasoning for his conclusion that the appropriate amount of compensation was $18.552.00 was, in full, as follows:

“[96] Firstly, I confirm that an Order for payment of compensation to the applicant will be made against the employer in lieu of reinstatement of the applicant.

[97] Secondly, in determining the amount of compensation that I Order, I have 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.

[98] There was no evidence, as opposed to submissions, that an Order of compensation would impact on the viability of the employer’s enterprise.

[99] The applicant had approximately three years and five months service with the employer. The applicant would have been likely to have received remuneration of approximately $773.00 per week if he had not been dismissed. There was some prospect that the employment of the applicant may not have endured for a considerable period. In particular, I have noted that conduct and performance issues including the applicant’s apparent inability to perform the particular task of moving the kegs into the cool room, may have ultimately led to his dismissal.

[100] Following the dismissal, the applicant made efforts to mitigate the loss suffered because of the dismissal. I have noted the submissions of the employer regarding the alleged inadequacy of the applicant’s attempts to find alternative employment and mitigate his loss. However, on balance, particularly given the circumstances which involve a local country community, I have not been persuaded to significantly reduce the quantum of any compensation because of any established failure of the applicant to take reasonable steps to find alternative employment.

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

[102] 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.

[103] In respect to the determination of the quantum of compensation to be provided to the applicant, I have had regard for the loss of non-transferable employment credits associated with employment that was approaching, in total, six years’ duration.

[104] Consequently, for the reasons outlined above, I have decided that an amount approximating with 24 weeks remuneration should be Ordered as compensation to the applicant. That amount is $18,552.00. Accordingly, separate Orders [PR586503] providing for remedy in these terms will be issued.”

Appeal grounds and submissions

[22] Balaclava’s notice of appeal contained seven grounds of appeal, and additionally identified three alleged significant errors of fact. Grounds 1-4 challenged the conclusion that Mr Nurcombe had been terminated at the initiative of Balaclava, ground 5 challenged the findings made by the Commissioner in relation to the factors required to taken into account under s.387, and ground 6 concerned the calculation of compensation under s.392. Ground 7 contended that the Commissioner erred by not resolving the disputed issue of whether Ms Fifoot told Mr Nurcombe that he was terminated on 21 February 2016 on the basis of a credit finding adverse to Mr Nurcombe. The three alleged significant errors of fact concerned findings that Mr Nurcombe had not been the subject of a performance management process 19, that he did not have the opportunity to respond to complaints about his conduct and performance20, and that the dismissal was directly connected with the miracle box incident.21 These alleged errors all related to the Commissioner’s consideration of whether the dismissal was unfair and were raised in support of appeal ground 5.

[23] In relation to the question of whether there was a dismissal, Balaclava submitted that:

● the Commissioner erred in finding that Mr Nurcombe was terminated at Balaclava’s initiative, having found that Mr Nurcombe did not resign and did not articulate a case that conduct on the part of Balaclava was intended or likely to lead to the termination of the employment;

● there was no evidence or even identification by Mr Nurcombe in his case of any repudiatory conduct or action to accept the repudiation;

● there was no action by Balaclava that was intended to bring the employment to an end or had the probable result of bringing the employment to an end;

● Balaclava had done no more than raised performance deficiencies;

● the Commissioner erred by failing to resolve the issue of what was said by Ms Fifoot to Mr Nurcombe on 21 February 2016, a matter which went to Mr Nurcombe’s credit;

● insofar as paragraph [60] of the Decision contained a credit finding adverse to Ms Fifoot, it was erroneous; and

● Balaclava was denied procedural fairness in that the basis upon which the Commissioner found that there had been a dismissal was not raised in Mr Nurcombe’s case, nor did the Commissioner raise it in the course of argument and give Balaclava an opportunity to respond to it.

[24] In relation to the Commissioner’s findings pursuant to s.387, Balaclava submitted that he had made the significant errors of fact pleaded in the notice of appeal, in that:

● he had in fact been subjected to a documented performance counselling process, with meetings to discuss performance issues on 13 August 2016 and 4 September 2016, the stand-down and disciplinary meeting of 30 January/9 February 2016, and the intention to deal with Mr Nurcombe’s repeated failures to perform his duties on 20 February 2016;

● the process described afforded Mr Nurcombe numerous opportunities to respond to the complaints about his performance, which he failed to avail himself of; and

● there was no evidence that the miracle box incident had anything to do with the alleged dismissal.

[25] As to the calculation of compensation, Balaclava submitted that:

● the Commissioner did not assess compensation in accordance with the well-established “Sprigg formula” derived from Sprigg v Paul’s Licensed Festival Supermarket 22;

● the Commissioner erred by not correctly resolving the question of Mr Nurcombe’s estimated period of future employment, which is the necessary first step in the calculation of compensation;

● there was further error in the failure to make a deduction for contingencies, which was necessary having regard to the facts that Mr Nurcombe was on a first and final warning letter and had been the subject of ongoing counselling;

● the Commissioner also erred by not further reducing compensation on account of Mr Nurcombe’s failure to mitigate his loss, in that he had made no formal job applications but merely handed out his business card; and

● the Commissioner failed to provide reasons for his conclusion that 24 weeks’ compensation should be paid, and the amount awarded was inexplicable in light of the earlier matters submitted by Balaclava.

[26] Mr Nurcombe submitted that permission to appeal should be refused on the basis that the appeal raised no issues of general application, was confined to its particular factual circumstances, was not counter-intuitive and did not raise any arguable case of appealable error. In relation to the question of whether there was a termination of employment at the initiative of the employer, he submitted that:

● there was no challenge to the Commissioner’s conclusion that the employment came to an end on 21 February 2016;

● the question which the Commissioner had to determine was therefore who caused the employment to end;

● there was no suggestion on the part of Balaclava in the appeal that the employment came to an end because of any action independent of the parties, and Balaclava accepted in the appeal that the Commissioner’s conclusion that there was no resignation was correct;

● Balaclava otherwise advanced no explanation as to how the employment came to an end;

● the second stand-down (found by the Commissioner to be unjustified), the removal of the keys and Balaclava’s position at the time that the stand-down was justified by serious misconduct on the part of Mr Nurcombe which justified summary dismissal, compelled the conclusion that it was Balaclava which had brought the employment to an end; and

● there was no denial of procedural fairness, and the Commissioner’s reference to repudiation was a shorthand description of his task of examining all the circumstances in order to identify on whose initiative the employment came to an end.

[27] In relation to the alleged errors of fact, Mr Nurcombe submitted that Balaclava had not demonstrated that any such errors had the necessary level of significance required by s.400(2). He further submitted that the Commissioner’s detailed reasoning concerning the inadequacies in Balaclava’s performance management process, and his findings that the performance issues raised concerning the miracle box incident and the refusal to move kegs were not justifiable, were not properly challenged in the appeal, and wholly supported the Commissioner’s conclusions concerning performance management. In relation to the finding under s.387(c) that Mr Nurcombe was not given a proper opportunity to respond to any legitimate complaints about aspects of his performance or conduct, it was submitted that Balaclava’s submission that this finding was incorrect was unsustainable. This was because the conduct said by Balaclava to constitute a valid reason for dismissal occurred on 19 February 2016, but the alleged opportunity to respond was said to have occurred before this date. In relation to the miracle box incident, it was submitted that it was again unsustainable for Balaclava to submit that the first and final warning letter issued as a result of the miracle box incident was appropriate, but then also to submit that the incident had nothing to do with the alleged dismissal.

[28] In relation to compensation, Mr Nurcombe submitted that:

● the Sprigg formula should not be elevated above the statutory criteria in s.392(2);

● the Commissioner took into account the possibility that Mr Nurcombe’s employment may not have lasted for a considerable period, but there was no evidence to suggest that he would likely to have been fairly dismissed;

● if Balaclava had followed a fair and reasonable performance management process, there was no reason to think he would not have met reasonable standards;

● there was no evidence that Mr Nurcombe would have been likely to find alternative employment in a country town; and

● there was no basis for any deduction for contingencies, since that is a consideration that is only relevant to future economic loss, and in this case the Commissioner determined compensation more than six months after the dismissal.

[29] Both parties agreed that in the event we granted permission to appeal and upheld the appeal in respect of any of Balaclava’s grounds of appeal, we should re-determine the matter ourselves on the evidence adduced to date, and not remit the matter to a single member of the Commission for further hearing.

Consideration

[30] An appeal under s.604 of the FW Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker. 23 There is no right to appeal and an appeal may only be made with the permission of the Commission.

[31] This appeal is one to which s.400 of the FW Act applies. Section 400 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.

(2) Despite subsection 604(1), an appeal from a decision made by the FWC in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.

[32] In the Federal Court Full Court decision 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 as “a stringent one”. 24 The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment25. 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.” 26

[33] 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. 27 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.28

[34] An application for permission to appeal is not a de facto or preliminary hearing of the appeal. In determining whether permission to appeal should be granted, it is unnecessary and inappropriate for the Full Bench to conduct a detailed examination of the grounds of appeal. 29

[35] Balaclava’s appeal essentially raises three issues: first, was Mr Nurcombe’s employment terminated at the initiative of Balaclava (appeal grounds 1-4 and 7); second, did the Commissioner make significant errors of fact which vitiated his conclusion that Mr Nurcombe’s dismissal was unfair (appeal ground 5); and third, did the Commissioner err in his quantification of the compensation to be paid to Mr Nurcombe (appeal ground 6). We will deal with each of these issues in turn.

Whether Mr Nurcombe was dismissed by Balaclava

[36] We do not consider that it is in the public interest to grant permission to appeal in relation to this issue. There was no dispute that, by the time Mr Nurcombe lodged his unfair dismissal remedy application on 3 March 2016, his employment relationship with Balaclava had terminated. The difficulty with Balaclava’s case in the appeal is that it was unable to identify any plausible alternative to the conclusion that the employment relationship had terminated at Balaclava’s initiative. It accepted for the purpose of the appeal that Mr Nurcombe had not resigned. There was no suggestion that the employment had terminated because of any factor beyond the control of the parties. While Balaclava criticised, in some respects legitimately, the process by which the Commissioner concluded that the employment was terminated by it on 21 February 2016, it was unable to mount an arguable case that Mr Nurcombe’s employment had not been terminated on its initiative on or around that date.

[37] It is clear that Mr Nurcombe remained ready, willing and able to work, as shown by his attendance at work on 21 February 2016. Notwithstanding this, the employment ended, and the following facts, which were not in dispute, compel the inference that the employment ended on Balaclava’s initiative:

● Mr Nurcombe was stood down because of his incapacity to move kegs, even though this incapacity had manifested itself over a long period beforehand;

● for the first time, Mr Nurcombe had his keys which allowed him to access the work premises removed from him;

● By 22 February 2016 at the latest (as evidenced by Mr Fifoot’s letter of that date), Balaclava had taken the position that Mr Nurcombe had engaged in serious misconduct justifying summary dismissal, and it proposed to terminate his employment summarily, subject to him being given an opportunity to respond at a meeting which he was required to attend;

● Mr Nurcombe was informed that if he did not attend the meeting without reasonable excuse, he might be dismissed without any further notice being provided to him;

● Mr Nurcombe ultimately did not attend any such meeting; and

● Mr Nurcombe was never again rostered for work or paid by Balaclava at any time after 21 February 2016.

[38] The necessary jurisdictional precondition for the Commissioner to determine Mr Nurcombe’s unfair dismissal remedy application was that there had been a dismissal of Mr Nurcombe by Balaclava within the meaning of s.386. It is clear to us that such a dismissal had taken place. It therefore does not matter in jurisdictional terms whether the dismissal actually occurred on 21 February 2016 or shortly afterwards, or whether Ms Fifoot told Mr Nurcombe on 21 February 2016 that he was terminated, or whether the precise mode of analysis by which the Commissioner concluded that there was a dismissal was correct. Nor, if there was any denial of procedural fairness on this issue, does that justify the grant of permission to appeal. Balaclava has now had the opportunity to fully advance all its arguments in relation to the dismissal question, including its arguments in relation to the Commissioner’s analysis, at the appeal hearing, and we are satisfied that the Commissioner was correct in determining that Mr Nurcombe had been dismissed by Balaclava.

[39] Permission to appeal is therefore refused in relation to appeal grounds 1-4 and 7.

Whether Mr Nurcombe’s dismissal was unfair

[40] We likewise consider that it would not be in the public interest to grant permission to appeal in respect of Balaclava’s challenge to the conclusion that the dismissal was unfair based on the alleged significant errors of fact. As earlier set out, the Commissioner found under s.387(a) that there was no valid reason for the dismissal based on Mr Nurcombe’s conduct or capacity, and under s.387(b) that Mr Nurcombe had been denied procedural fairness. The dismissal arose directly from the stand-down effected on 20 February 2016 because of Mr Nurcombe’s longstanding refusal to move beer kegs based on a medical condition. Balaclava’s appeal grounds did not involve any substantive challenge to the Commissioner’s conclusion under s.387(a) that this issue “should have been carefully and properly addressed as part of some measured and documented conduct and performance review”. Whatever may be said about the steps Balaclava had earlier taken to address various issues it had with Mr Nurcombe’s work performance, it is clear that it had not discussed this issue with Mr Nurcombe or investigated any claim of medical incapacity before it sent its letter to him on 22 February 2016 stating that it believed he had engaged in serious misconduct justifying summary dismissal. In those circumstances it seems to us that a finding that the dismissal was unfair on both substantive and procedural grounds was wholly justified. The alleged factual errors raised by Balaclava are incapable of affecting these conclusions, and therefore do not have the requisite level of significance required by s.400(2).

[41] Permission to appeal is therefore refused in relation to appeal ground 5.

Quantification of compensation

[42] The correct approach to the assessment of compensation was summarised by the Full Bench in the recent decision in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Alan Humphries 30 as follows (footnotes omitted):

“[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. 31 This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages32. 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:

‘[33] The first step in this process - the assessment of remuneration lost - is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult, but it must be done. As the Full Bench observed in Sprigg:

‘... we acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step by virtue of the requirement of s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.’

[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the ‘anticipated period of employment’...’

[17] The identification of this starting point amount “necessarily involves assessments as to future events that will often be problematic” 33. 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.34”

[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. 35 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.

[46] The proper quantification of compensation in unfair dismissal cases is an issue of broad application and general importance. We therefore consider that it would be in the public interest for permission to appeal to be granted in relation to appeal ground 6. Permission to appeal must therefore be granted in this respect in accordance with s.604(2). Appeal ground 6 is upheld, and the determination of compensation in the Decision and the Order are quashed.

Re-determination of compensation

[47] It remains necessary to re-determine the amount of compensation to be awarded to Mr Nurcombe for his unfair dismissal. As proposed by the parties, we will undertake that task ourselves rather than remitting the matter to a single member of the Commission. We note that Balaclava did not submit that it was not appropriate for any order for compensation to be made, and we find that the making of a compensation order is appropriate on the basis of the Commissioner’s finding of unfairness.

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

[48] It is clear on the basis of the Commissioner’s findings that Mr Nurcombe’s employment was in considerable difficulty immediately prior to his dismissal. The relationship between himself and Ms Fifoot had clearly broken down to a substantial degree. As the Commissioner found, Ms Fifoot’s “bitterness and malice” arising from the actions of Mr O’Connor 36 had been transferred to Mr Nurcombe. Mr Nurcombe himself was “embarrassed and humiliated” when he was escorted from the bar by police as a result of the miracle box incident, and his attitude towards Ms Fifoot was antagonised to the point where he was reluctant to accept direct instruction from her. This occurred in the context of employment in a country hotel, which was a small and personalised workplace. Additionally, we note the Commissioner’s finding that Mr Nurcombe was not a perfect or even good employee, and that there were legitimate criticisms to be made of his work performance, albeit not to a degree justifying dismissal absent a proper performance management process.

[49] In those circumstances, we consider that if Mr Nurcombe had not been dismissed, the employment would not have lasted for very long before either Mr Nurcombe was dismissed on a proper basis or he left of his own volition. We consider that the anticipated period of employment would have been no longer than 12 weeks. The Commissioner’s finding that Mr Nurcombe would have received approximately $773.00 per week had he not been dismissed was not challenged in the appeal. Therefore we find that, had he not been dismissed, Mr Nurcombe would have earned $9,276.00 (12 x $773.00).

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

[50] There was no evidence that in the 12 weeks after his dismissal Mr Nurcombe was able to earn any other remuneration. Therefore there will be no deduction on this score.

Length of service (s.392(2)(b))

[51] We do not consider that Mr Nurcombe’s length of service calls for any upward or downward adjustment to the compensation amount that should otherwise be ordered.

Other matters (s.392(2)(g))

[52] Because we are not dealing with any element of future economic loss, there is no basis for any deduction for contingencies. In relation to taxation, compensation will be determined as a gross amount and it will be left to Balaclava to deduct any amount of taxation required by law.

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

[53] The Commissioner found that there was no evidence that an order of compensation would have any effect on Balaclava’s viability. There was no challenge to this finding in the appeal, and we accept it. There will be no deduction form the compensation amount on this score.

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

[54] We are satisfied that Mr Nurcombe made adequate attempts to mitigate his loss during the 12 week period. There was certainly no basis to conclude that greater efforts on his part would have led to alternative employment given his residence in a country town. There will therefore be no deduction from the compensation amount on account of any failure to mitigate loss.

Misconduct (s.392(3))

[55] Based on the findings of the Commissioner, with which we agree, Mr Nurcombe did not commit any misconduct contributing to his dismissal that requires a deduction under s.393(3).

Compensation cap (s.392(5))

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

Installments (s.393)

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

Conclusion

[58] The amount of compensation which is derived from the above considerations is $9,276.00, less deduction of any tax as required by law. We consider that is an appropriate amount of compensation in all the circumstances.

Orders

[59] We order as follows:

(1) Permission to appeal is granted in relation to appeal ground 6 of the notice of appeal filed on 10 November 2016.

(2) Permission to appeal is otherwise refused.

(3) The Commissioner’s determination of compensation in the Decision ([2016] FWC 7454) and the Order [PR586503] are quashed.

[60] A separate order (PR589281) will be issued to give effect to re-determination of the compensation amount.

VICE PRESIDENT

Appearances:

B. Cross of counsel and P. Ryan solicitor for Balaclava Pastoral Co Pty Ltd t/a Australian Hotel Cowra.

B. Miles of counsel for D. Nurcombe.

Hearing details:

2016.

Melbourne:

14 December.

 1   [2016] FWC 7454

 2   PR586503

 3   Decision at [54]

 4   Decision at [55]

 5   Decision at [56]

 6   Decision at [56]

 7   Decision at [57]

 8   Decision at [60]

 9   Decision at [61]

 10   Macken’s Law of Employment, Sappideen et al, 2011, seventh edition at [9.20]

 11   (1995) 262 IR 200

 12   [1995] NSWIRComm 175; 63 IR 68

 13   Decision at [80]

 14   Decision at [87]

 15   Decision at [92]

 16   Decision at [93]-[94]

 17   Print R0235, (1998) 88 IR 21

 18   PR942856, (2004) 130 IR 446

 19   Decision at [79]

 20   Decision at [82]

 21   Decision at [70]

 22   Print R0235, (1998) 88 IR 21

 23   This is so because on appeal the Commission has power to receive further evidence, pursuant to s.607(2); see Coal and Allied v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ

 24   (2011) 192 FCR 78 at [43]

 25   O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 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 at [44] -[46]

 26   [2010] FWAFB 5343, 197 IR 266 at [27]

 27   Wan v AIRC (2001) 116 FCR 481 at [30]

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

 29   Trustee for The MTGI Trust v Johnston [2016] FCAFC 140 at [82]

 30   [2016] FWCFB 7206

 31   Print R0235, (1998) 88 IR 21

 32   [2013] FWCFB 431; 229 IR 6

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

 34   Ibid

 35   Decision at [99]

 36   Decision at [60]

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