[2014] FWCFB 236

[2014] FWCFB 236

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.604—Appeal of decision

Brett Haigh
v
Bradken Resources Pty Ltd T/A Bradken
(C2013/6494)

VICE PRESIDENT WATSON
DEPUTY PRESIDENT SAMS
COMMISSIONER RIORDAN

SYDNEY, 24 JANUARY 2014

Appeal against decision [[2013] FWC 7493] of Commissioner Cloghan at Perth on 3 October 2013 in matter number U2013/4952 - permission to appeal - appeal principles - whether public interest in granting permission to appeal - unfair dismissal remedies - whether reinstatement appropriate - compensation - principles for assessing amount of compensation - deductions applied before legislative cap - Fair Work Act 2009 ss. 604, 392.

Introduction

[1] This decision relates to an application for permission to appeal against the decision of Commissioner Cloghan handed down on 3 October 2013 1 in relation to an unfair dismissal application by Mr Haigh arising from the termination of his employment by Bradken Resources Pty Ltd (Bradken) in December 2011.

[2] The matter has a lengthy history. The original unfair dismissal application was heard by Commissioner Williams in August and September 2012. In a decision handed down in November 2012 2 the Commissioner found that the termination was not harsh, unjust or unreasonable and dismissed Mr Haigh’s application. Mr Haigh appealed against that decision and in June 20133 a Full Bench allowed the appeal and found that the dismissal was unfair. It decided to remit the question of remedy to Commissioner Cloghan who determined in October 2013 that reinstatement was not appropriate and that an order of compensation of 12 weeks pay should be made. Mr Haigh has sought permission to appeal against that decision.

[3] The basis on which the Full Bench found the dismissal to be unfair is dealt with in paragraphs [55] - [65] of the Full Bench decision. The Full Bench found that there was a valid reason for the dismissal based on Mr Haigh’s conduct of engaging in an unsafe work practice. However if found that Mr Haigh was not given an adequate opportunity to respond to the allegations about his conduct because he was not involved in a mock of the safety incident carried out by the employer to determine whether it was a significant safety breach. On balance the Full Bench concluded that the decision to dismiss Mr Haigh was harsh in all the circumstances.

[4] In the subsequent proceedings Commissioner Cloghan found that the employer had lost trust and confidence in Mr Haigh and in those circumstances it would be inappropriate to reinstate Mr Haigh in his employment. The Commissioner then considered the various criteria in Section 392 of the Fair Work Act 2009 (the Act) in coming to his conclusion that 12 weeks pay is the appropriate amount of compensation. This figure was determined by starting at the maximum amount of 26 weeks able to be awarded for compensation for unfair dismissal under the Act and deducting certain amounts relating to the payments made to him on termination, Mr Haigh’s contribution to his dismissal through his misconduct and a failure to make reasonable efforts to mitigate his loss following his dismissal.

[5] In unfair dismissal matters, permission to appeal can only be granted if the Commission considers that it is in the public interest to do so: s.400 (1) of the Act. The decision sought to be appealed is a discretionary one. In Coal and Allied v CFMEU, Gleason CJ, Gaudron and Hayne JJ said:

“Because a decision-maker charged with the making of a discretionary decision has some latitude as to the decision to be made, the correctness of the decision can only be challenged by showing error in the decision-making process. And unless the relevant statute directs otherwise, it is only if there is error in that process that a discretionary decision can be set aside by an appellate tribunal. The errors that might be made in the decision-making process were identified, in relation to judicial discretions, in House v The King in these terms:

"If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so." (references omitted)

[6] The grounds of appeal concern the Commissioner’s conclusions with regard to reinstatement and compensation. We will consider the grounds of appeal with respect to each of these matters in turn.

Reinstatement

[7] As far as reinstatement is concerned, Mr Haigh’s grounds of appeal and submissions appear to us to be an attempt to re-argue the case that was presented to the Commissioner. In our view he has not established that there is any appealable error in the analysis of the Commissioner, any error in the decision-making process or any reason why it is in the public interest to grant permission to appeal on these grounds. We deny permission to appeal on the grounds relating to reinstatement.

Compensation

[8] In relation to compensation, the grounds of appeal include the contention that the Commissioner erred in starting from the compensation cap figure and reducing the amount by various amounts rather than starting from an assessment of actual loss, deducting any appropriate amounts and then applying the compensation cap. Bradken concedes that this is an error, and based on existing authorities, the assessment should not have started at the statutory maximum but ended by reducing any higher figure by reference to the cap. It also concedes that having found that employment would have continued for an unspecified period in the future it would have been appropriate to start with a figure of 12 months pay as an indicator of actual loss and that the deductions determined would not have reduced the amount of compensation below the statutory cap.

[9] In our view an error of this type attracts the public interest because it concerns the application of the Act to unfair dismissal remedies generally. It is appropriate that we deal further with the authorities on the calculation of compensation.

[10] The frequently quoted case on compensation calculations is Sprigg v Paul Licensed Festival Supermarket 4 in which a Full Bench of the Australian Industrial Relations Commission (AIRC) confirmed the following steps in determining compensation under the unfair dismissal provisions of the Workplace Relations Act:

“1. Estimate the amount the employee would have received or would have been

likely to receive if the employment had not been terminated,

2. Deduct monies earned since termination,

3. Deductions for contingencies,

4. Calculate any impact of taxation,

5. Apply the legislative cap.”

[11] The legislation has been amended since that time by permitting a reduction in an amount otherwise payable if an employee’s misconduct contributed to the employers decision to dismiss. The Full Bench decision in Sprigg has also been the subject of comment by other Full benches. In Smith v Moore Paragon 5 a Full Bench of the AIRC said:

“COMMENT IN RELATION TO THE GUIDELINES IN SPRIGG

[32] It seems to us that the amounts arrived at by the application of the guidelines in Sprigg in the present matter are on their face manifestly inadequate for employees with the length of service of the Appellants, the circumstances of their dismissal and their poor prospects for future employment. This causes us to sound a warning in relation to the application of Sprigg. The guidelines laid down in Sprigg and refined in Ellawala v Australian Postal Commission are clearly designed to serve the proper and desirable purpose of fostering uniformity and consistency in decision-making by individual members of the Commission when assessing compensation pursuant to s.170CH(6). However, those guidelines are not a substitute for the words of the Act29. By virtue of s.170CH(2), any remedy ordered by the Commission must be a remedy that the Commission considers "appropriate" having regard to all the circumstances of the case including the matters set out in s.170CH(2). Section 170CH(6) confers a general discretion "if the Commission considers it appropriate in all the circumstances of the case" to "make an order requiring the employer to pay the employee an amount ordered by Commission in lieu of reinstatement" subject to the Commission having regard "to all the circumstances of the case including" the matters listed in s.170CH(7) - the same list of matters set out in s.170CH(2) - and subject also to the `cap' provided for in s.170CH(8) and (9). If an application of the guidelines in Sprigg yields an amount which appears either clearly excessive or clearly inadequate, then the member should reassess any assumptions or intermediate conclusions made or reached in applying the guidelines so as to ensure that the level of compensation is in an amount that the member considers appropriate having regard "to all the circumstances of the case" including the matters listed in s.170CH(7) and subject to the `cap' provided for in s.170CH(8) and (9). In this context it should be borne in mind that the result yielded by an application of the Sprigg guidelines may vary greatly depending upon particular findings in relation to the various steps including, in particular, step one, which necessarily involves assessments as to future events that will often be problematic.”

[12] Full Benches of the Fair Work Commission have applied the approach in Sprigg generally in Tabro Meat Pty Ltd v Heffernan 6, Read v Golden Square Child Care Centre7 and Bowden v Ottrey Homes Cobram8. It is clear from those authorities that any deduction on account of misconduct is also applied before the application of the legislative cap. One further clarification is needed. The assessment of the amount the employee would have received if the employment had not been terminated is referable to the entire circumstances including the basis on which the termination was found to be unfair. Where a procedural defect is the main reason for the termination being held to be unfair, this is a factor to be taken into account in determining the estimate of loss arising from the unfair dismissal.

[13] In this case, the assessment by the Commissioner that employment would have continued to an unspecified date well into the future is not challenged by Bradken. Bradken concedes that the proper application of the principles for determining compensation in the circumstances of this case based on the findings of the Commissioner would be that the maximum amount of 26 weeks should have been awarded in lieu of the 12 weeks actually ordered.

[14] In relation to this ground of appeal we grant permission to appeal and allow the appeal. We quash the order made by Commissioner Cloghan and will make an alternative order that Bradken pay an amount of 26 weeks calculated in a similar manner as determined by the Commissioner. We will provide that the additional payment required to be paid in accordance with our order be made within 14 days of this decision.

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