1
Fair Work Act 2009
s.604—Appeal of decision
Megan Smith
v
Fearon Howard Real Estate Pty Ltd T/A Ray White (Balmain)
(C2020/8721)
VICE PRESIDENT CATANZARITI
DEPUTY PRESIDENT ANDERSON
COMMISSIONER BISSETT
SYDNEY, 5 FEBRUARY 2021
Appeal against decision [2020] FWC 6049 of Deputy President Dean at Sydney on 11
November 2020 in matter number U2020/8238 - permission to appeal granted - appeal
upheld.
[1] Ms Megan Smith has applied for permission to appeal and, if permission is granted,
appeals against a decision (the Decision)1 and an associated order2 of Deputy President Dean,
both made on 11 November 2020. The Deputy President found that Ms Smith had been
unfairly dismissed from her employment with Fearon Howard Real Estate T/A Ray White
(Balmain) (the Respondent) and determined that compensation of $10,000 should be paid. It
is only in relation to the determination of the amount of compensation that Ms Smith appeals.
[2] Directions were issued with respect to the filing of submissions as to permission and
the merits of the appeal. Subsequent to filing materials both parties indicated they were
content for the Full Bench to determine permission to appeal and the appeal on the basis of
written submissions.
The decision
[3] Ms Smith was employed as a salesperson and commenced her employment with the
Respondent in October 2017. Her duties were to prospect, list and sell properties. Her
employment was terminated on 26 May 2020. Ms Smith was employed on a wage with a
debit/credit commission structure, meaning her wage was debited from her future commission
payments.
[4] In her Decision, the Deputy President considered the evidence in relation to Ms
Smith’s performance and determined that the evidence did not support a finding of a valid
reason for dismissal in relation to her capacity or conduct. In particular the Deputy President
1 Megan Smith v Fearon Howard Real Estate Pty Ltd T/A Ray White Balmain [2020] FWC 6049.
2 PR724455.
[2021] FWCFB 581
DECISION
E AUSTRALIA FairWork Commission
[2021] FWCFB 581
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said that Ms Smith’s requests to receive JobKeeper payments could not provide a valid reason
for her dismissal.
[5] After considering the remaining criteria in s.387 of the Fair Work Act 2009 (Cth) (FW
Act) the Deputy President determined that the decision to dismiss Ms Smith was harsh, unjust
and unreasonable.3
[6] Following this, the Deputy President turned to consider what remedy should be
afforded Ms Smith.
[7] The Deputy President first determined that reinstatement was not appropriate. Having
reached that conclusion the Deputy President turned her mind to compensation. The Deputy
President considered each of the criteria in s.392 of the FW Act and found as follows:
“Remuneration received, or likely to be received (s392(2)(c))
[64] While the evidence in this regard is limited, I consider that it is likely that Ms
Smith’s employment would not have continued for a lengthy period if the friction that
had developed between Ms Smith and Ms Fearon was not resolved. While there is
clearly an element of speculation in determining specifically how long Ms Smith
would have remained employed, I consider it would not have been longer than six
months.
Remuneration earned and income likely to be earned (s392(2)(e) and (f))
[65] Ms Smith gave evidence that she commenced alternative employment on 22 June
2020, approximately four weeks’ after her dismissal. She received the JobSeeker
payment between 26 June 2020 and 21 August 2020 for which she received a total
amount of $6,320.50.
Length of service (s392(b))
[66] Ms Smith’s employment with Ray White Balmain from 11 October 2017 to 26
May 2020 is a relatively short period and I consider it does not support reducing or
increasing the amount of compensation ordered.
Viability (s392(a))
[67] There is no evidence before me as to the effect of an order for compensation
might have on the viability of Ray White Balmain.
Mitigation efforts (s392(d))
[68] Ms Smith was successful in obtaining alternative employment after her dismissal.
This was a reasonable effort to mitigate her loss. I do not consider it appropriate to
reduce the amount of compensation otherwise calculated for this factor.
Other relevant matters (s392(g))
3 Decision at [57].
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[69] There are no other matters relevant to this consideration. Specifically, I do not
consider it necessary to discount or increase the amount for ‘contingencies’. This step
is a means of taking into account the possibility that the occurrence of contingencies to
which Ms Smith was subject might have brought about some change in earning
capacity or earnings.
Shock, distress etc (s392(4))
[70] The amount of compensation does not include a component for shock,
humiliation or distress.
Conclusion
[71] In Hanson Construction Materials Pty Ltd v Pericich4, the Full Bench said that:
“Sprigg is a useful servant, but is not to be applied in a rigid determinative
manner. In deciding the amount of a compensation order the Act directs that
the Commission ‘must take into account all of the circumstances of the case’
including the particular matters set out at s.392(2)(a) to (g).”
[72] Ms Smith’s base wage was $916.95 per week. She seeks 22 weeks’ pay which
she says equates to $65,736, and which is inclusive of commission.
[73] Having considered all of the matters necessary in determining an appropriate
quantum of compensation, I find that $10,000 is appropriate in all of the
circumstances.
[74] This amount is approximately equivalent to four weeks’ remuneration, and is less
than the amount of remuneration Ms Smith would have been entitled in her
employment with Ray White Balmain during the 26 weeks immediately before the
dismissal. I am satisfied there is no basis to reduce the amount by reason of s 392(5) of
the Act.
[8] An order reflecting the conclusion was issued separately.5
The appeal
[9] Ms Smith’s notice of appeal asserts 5 errors in the Decision.
(a) Jobseeker was erroneously considered as income earned for the purpose of
determining compensation;
(b) Jobseeker is a social security payment, replacing Newstart and it is well established
that such payments should be excluded from remuneration earned when calculating
compensation;
4 [2018] FWCFB 5960 at [39].
5 See PR724455.
http://www.fwc.gov.au/decisionssigned/html/2018fwcfb5960.htm
[2021] FWCFB 581
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(c) The principal enunciated in Hanson Construction Materials Pty Ltd v Pericich6 was
apparently applied with no explanation as to how it was applied to the circumstances
of the case;
(d) The way in which the final compensation amount was arrived at is not apparent from
the decision;
(e) The decision incorrectly concluded that Ms Smith was earning income after 4 weeks
of employment without an evidentiary basis.
Appeal principles
[10] An appeal under s.604 of the Act is by way of rehearing, however the Commission’s
powers on appeal are only exercisable if there is error on the part of the primary decision-
maker.7 An appeal may only be made with the permission of the Commission. This appeal is
one to which s.400 of the 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.”
[11] In Coal & Allied Mining Services Pty Ltd v Lawler and others,8 the Full Court of the
Federal Court characterised the test under s.400 as ‘stringent’.
[12] The fact that the Member at first instance has made an error is not necessarily a
sufficient basis for the grant of permission to appeal in the public interest.9 The task of
assessing whether the public interest test is met is a discretionary one involving a broad value
judgment.10 In GlaxoSmithKline Australia Pty Ltd v Makin, a Full Bench identified some of
the considerations that may attract the public interest:
“[27] Although 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, it seems to us that none of those elements is present in
this case.”11
6 [2018] FWCFB 5960.
7 See Coal and Allied v AIRC (2000) 203 CLR 194 at [17].
8 [2011] FCAFC 54 at [43], per Buchanan J, Marshall and Cowdroy JJ concurring.
9 Lawrence v Coal & Allied Mining Services Pty Ltd, 202 IR 388 at [28], affirmed on judicial review in Coal & Allied Mining
Services Pty Ltd v Lawler [2011] FCAFC 54.
10 O’Sullivan v Farrer [1989], HCA 61, per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch [2011]
HCA 4, at [69]; Coal & Allied Mining Services Pty Ltd v Lawler and others [2011] FCAFC 54, at [44]-[46].
11 197 IR 266, at [26] – [27].
[2021] FWCFB 581
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[13] 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.12
However, it is necessary to engage with the appeal grounds to consider whether they raise an
arguable case of appealable error.
[14] The appeal in this matter raises an issue of importance and general application
surrounding the appropriate deduction for social security payments in the calculation of
compensation pursuant to s.392(2) of the Act. We are satisfied that the Deputy President has
not clearly articulated her reasoning in drawing her conclusion as to the appropriate quantum
of compensation. In this respect the Decision manifests an injustice and so we are satisfied
that it is in the public interest for permission to appeal to be granted, and we do so.
Consideration
[15] Before considering the grounds of appeal it is worth setting out the approach generally
adopted by Members of the Commission in determining the amount of compensation
following a finding of unfair dismissal.
[16] The Full Bench of the Commission in Bowden v Ottrey Homes Cobram and District
Retirement Villages13 (Bowden) enunciated the approach to be taken under the current
legislative framework to the determination of compensation. The Full Bench in Bowden
endorsed the approach in Ellawala v Australian Postal Corporation14 (Ellawalla) where the
Full Bench of the AIRC articulated the approach to the determination of compensation in
respect of s.170CH(7) of the WR Act, prior to the Work Choices amendments. The Full
Bench in Bowden commenced its review of Ellawala as follows:
“[24] In Ellawala the Full Bench commenced its analysis of the correct approach as
follows:
[31] The principles applicable to determining an amount to be ordered in lieu
of reinstatement are dealt with in Sprigg. In that case the Full Bench endorsed
the following approach:
Step 1: Estimate the remuneration the employee would have received,
or have been likely to have received, if the employer had not terminated
the employment (remuneration lost).
Step 2: Deduct monies earned since termination.
Step 3: Discount the remaining amount for contingencies.
Step 4: Calculate the impact of taxation to ensure that the employee
receives the actual amount he or she would have received if they had
continued in their employment.”
12 Trustee for The MTGI Trust v Johnston [2016] FCAFC 140 at [82].
13 [2013] FWCFB 431.
14 Print S5109.
[2021] FWCFB 581
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[17] Sprigg is a reference to Sprigg v Paul’s Licensed Festival Supermarket.15
[18] Whilst we endorse the approach in Bowden, the determination of compensation
outlined in Ellawala, with all due respect to that Full Bench, has abbreviated the test set out in
Sprigg and any member relying on Ellawala (or decisions which have used the Sprigg
approach outlined in Ellawala) may fail to correctly determine compensation where social
security (or workers compensation) payments are involved.
[19] The Full Bench of the AIRC in Sprigg said:
“26. Ross VP addressed the construction of the relevant provision through a detailed
examination of decisions by Members of the Court. The substance of his decision is
adequately summarised in the following passages:
“It can be seen that the approach taken in a number of cases in the Industrial
Relations Court is to assess the appropriate amount of compensation in the
light of all relevant circumstances, including the remuneration that the
employee would have received, or have been likely to have received, if the
employer had not terminated the employment and, if that amount exceeds the
permissible figure, reduce the compensation to that figure.16 The following
general principles regarding reinstatement and compensation may be extracted
from the cases referred to:
(5) Lost remuneration is a fundamental element in assessing compensation
though it is not the only matter that may be considered: Krupp-Geir v Open
Family (Australia) Inc.
(6) In assessing the amount of compensation to be awarded the following
approach has been adopted by the Court:
STEP 1: Estimate the remuneration the employee would have received,
or have been likely to have received, if the employer had not terminated
the employment.
STEP 2: Deduct moneys earned since termination. Workers
compensation payments are deducted but not social security payments.
The failure of an applicant to mitigate his or her loss may lead to a
reduction in the amount of compensation awarded.
STEP 3: The remaining amount of compensation is discounted for
contingencies.
STEP 4: The impact of taxation is calculated to ensure that the employee
receives the actual amount he or she would have received if they had
continued in their employment.
15 Print R0235.
16 70 IR 360 at 379.
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STEP 5: The legislative cap on compensation is applied…17
[our emphasis, footnotes omitted]”
[20] That no deduction is to be made for social security payments was affirmed by the Full
Bench in McCulloch v Calvary Health Care Adelaide18:
“[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 Ltd19 where the Full Bench said:
“We note that allowance is generally not made for social security payments in
assessing an amount to be ordered in lieu of reinstatement pursuant to
s.170CH(6): Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR
21; Australian Postal Commission v Ellawalla 17 April 2000, [Print S5109].
The relevant part of the decision in each of these cases was influenced to some
extent by the decision in Shorten v Australian Meat Holdings Pty Ltd (1996) 70
IR 360.”20
[33] The Full Bench then went on to say at [11]:
“It is not our intention that the remuneration lost should be discounted for social
security payments which the applicant is required to repay. Equally we think it
would be inequitable to permit recovery of lost remuneration from the
employer when social security payments referable to loss of income could be
retained.”21
[34] The most recent consideration of this issue appears to have been in Kim Lee
Jarvis v Crystal Pictures Pty Ltd22 in which Cloghan C declined to make any
deduction on account of the receipt of Centrelink payments, for the following reasons:
“[74] I should note for the benefit of both parties that Ms Jarvis advised that
during between her termination of employment and 15 April 2010, she
received Centrelink payments. Ms Jarvis did not disclose the amount received.
For my purposes under s.392(e) of the Act, I do not consider Centrelink
payments as “…remuneration earned by [Ms Jarvis] from employment or work
during the period between the dismissal and the making of the order for
compensation”. Further, I do not consider it “relevant” for the purposes of
s.392(g) of the Act, as it would be inappropriate for Australian taxpayers to
effectively subsidise compensation (foregone wages) payable to an employee,
where the employer has instantly dismissed that employee unfairly.
17 70 IR 360 at 380-381.
18 [2015] FWCFB 2267.
19 PR908987; Also see Steggles Ltd v West, Print S5876.
20 Kennedy and Cumnock No.1 Colliery Pty Ltd, PR908987 at [10].
21 Ibid at [11].
22 [2010] FWA 3674.
http://www.fwc.gov.au/decisionssigned/html/2010fwa3674.htm
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[75] Having said that, if the Centrelink payments received by Ms Jarvis have to
be repaid or there is discretion for repayment, that is a matter between Ms
Jarvis and the relevant Commonwealth officers.”23
[21] The requirement to give adequate reasons was stated by the Full Bench in Barach v
University of New South Wales24:
“[16] The duty to give adequate reasons for decision has been considered on many
occasions.25 Important public policy considerations underlie this duty. In particular, the
reasons for decision must be sufficient to allow the parties to exercise such rights of
appeal as may be available and to enable an appeal bench to determine whether or not
error has occurred in relation to a decision. Consequently the reasons given must
articulate the essential grounds for reaching the decision and must address material
questions of fact and law in a manner which discloses the steps which lead to a
particular result. However the reasons for decision of a tribunal member need not be
lengthy or elaborate and need not spell out every detail in the reasoning process or deal
with every matter of fact or law which was raised in the proceedings.”
[22] We now turn to consider each of the grounds of appeal.
Grounds 1 and 2 – Jobseeker payments
[23] In the Decision (at [64]) the Deputy President said, in relation to remuneration earned
and income likely to be earned:
“Ms Smith gave evidence that she commenced alternative employment on 22 June
2020, approximately four weeks’ after her dismissal. She received the JobSeeker
payment between 26 June 2020 and 21 August 2020 for which she received a total
amount of $6,320.50.”
[24] Jobseeker is the name currently applied to social security benefits.
[25] It can be gleaned from the Decision that the Deputy President, in determining
compensation, took into account the Jobseeker payments received by Ms Smith following the
termination of her employment.
[26] Whilst Ms Smith apparently received the Jobseeker payments after the commencement
of her new employment, that is a matter for Ms Smith to resolve with the relevant
Government agency. It is not remuneration earned by Ms Smith from employment post the
termination of her employment or remuneration that should otherwise be taken into account.26
[27] Ms Smith says that there is a divergence of decisions of the Commission on the
treatment of social security payments in determining compensation such that guidance on the
23 [2010] FWA 3674 at [75] - [75].
24 [2010] FWAFB 3307.
25 See generally Soulemezis v Dudley Holdings Pty Ltd (1987) 10 NSWLR 247, at 269-271, 280; Re Astec Pty Ltd (1992) 45
IR 261; Edwards v Giudice (1999) 169 ALR 89 at [10]-[11], [44]-[48]; Alchin v Daley [2009] NSWCA 418 at [35]).
26 See Kim Lee Jarvis v Crystal Pictures Pty Ltd [2010] FWA 3674 at [74]-[75].
[2021] FWCFB 581
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matter is required from this Full Bench. Conversely the Respondent says that the question of
whether social security payments should be deducted is well settled and no guidance is
required from this Full Bench.
[28] To the extent that the Deputy President did not follow the established authority in the
Decision and did make a deduction for, or otherwise took into account, Jobseeker payments
the Deputy President was in error.
[29] While this matter alone may not provide sufficient grounds on which to grant the
appeal, it needs to be considered in conjunction with the following grounds.
Grounds 3 & 4 – No apparent reason for the decision
[30] In the Decision, the Deputy President set out each of those matters she was required to
take into account in considering compensation in accordance with s.392(2)(a)-(g). She did
not, on a consideration of each of these factors, indicate the amount of compensation
calculated by their application.
[31] The Deputy President does appear to have applied the decision in Hanson in coming to
her conclusion that $10,000 in compensation is appropriate (at [71]-[73] of the Decision).
[32] In so doing the Deputy President has not given an indication as to how this figure of
$10,000 was arrived at, and if the application of Hanson resulted in an increase or decrease of
the amount otherwise determined. Further, there is no indication as to what matters were
taken into account in concluding that $10,000 was adequate compensation. This error on the
part of the Deputy President is compounded by her finding that there were no other relevant
matters to take into account under s.392(2)(g) of the FW Act in determining the amount of
compensation. Clearly there were other matters the Deputy President took into account. The
failure to identify “other matters” limits any understanding of why an adjustment to an
amount otherwise determined is necessary or why the final amount of compensation ordered
is warranted.
[33] Considered overall, it is not apparent from the Decision the basis on which the Deputy
President reached her conclusion as to compensation. The essential grounds, including any
factual basis, for reaching the decision are not adequately set out. How the application of
Hanson affected the compensation amount otherwise determined is unclear.
[34] It would be wrong, in our view, to consider that the decision in Hanson provides the
grounds to disregard an amount of compensation otherwise determined using established
authority in Bowden and Ellawalla. The Full Bench in Hanson said:
“Sprigg is a useful servant, but is not to be applied in a rigid determinative manner. In
deciding the amount of a compensation order the Act directs that the Commission
‘must take into account all of the circumstances of the case’ including the particular
matters set out at s.392(2)(a) to (g).”
[35] In taking into account “all of the circumstances” it is necessary to articulate those
circumstances and provide reasons as to why an amount arrived at is considered appropriate.
This did not occur in this case.
[2021] FWCFB 581
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[36] When the failure to provide adequate reasons is considered in conjunction with a lack
of clarity as to the consideration of Jobseeker payments we consider that the Decision is
attended by appealable error.
Ground 5 – Ms Smith was earning income after 4 weeks
[37] In considering this ground of appeal we note the minimal evidence of Ms Smith in
relation to her earnings and her apparent unwillingness to disclose her commission or likely
commission payments. We also note that neither party engaged with the Deputy President on
how commission payments earned but not yet paid should be treated in determining
compensation.
[38] Given our conclusions above, we do not need to further consider this ground of appeal.
Conclusion
[39] For the above reasons, we are satisfied that the decision of the Deputy President is
attended by sufficient doubt to warrant its reconsideration.
[40] Permission to appeal is granted and the appeal, insofar as it relates to the
determination of compensation, is granted.
[41] The decision, in relation to compensation, is quashed.
[42] The matter of compensation will be referred back to Deputy President Dean for
redetermination.
VICE PRESIDENT
Final written submissions:
7 January 2021
Printed by authority of the Commonwealth Government Printer
PR726703
THE FAIR WORK COMMIS SSION THE SEAA
