Compensation and other remedies

Reinstatement

Reinstatement is the Fair Work Commission's primary remedy for unfair dismissal. An order for reinstatement must be to reappoint the person to the position they had immediately before the dismissal or appoint them to another position that has terms and conditions no less favourable than the position they held previously. The Fair Work Commission can make a reinstatement order applying to an associated entity of the person’s previous employer where the person’s position no longer exists with the original employer but that position, or an equivalent position, is available in an associated entity [s 391(1A)]. An associated entity is defined under section 50AAA of the Corporations Act 2001(Cth). It includes “related bodies corporate”. In unfair dismissal matters, the Fair Work Commission has the power to order the reinstatement of an employee to an associated entity.

The Fair Work Commission can make any other order that it considers appropriate to maintain the person’s continuity of employment and the period of the person’s continuous service with the employer.

The Fair Work Commission can also make any other order it considers appropriate for an employer to pay an amount for remuneration lost or likely to have been lost because of the dismissal. This could include any money the person may have earned during the period since the dismissal. As these orders are only to compensate for lost remuneration, they cannot extend to include any component by way of compensation for shock, distress or humiliation caused by the manner of the person’s dismissal [s 391].

Compensation

The Fair Work Commission can make an order for payment in lieu of reinstatement if it is satisfied that reinstatement is inappropriate and that compensation is appropriate. The Fair Work Commission must take into account all of the circumstances of the case in determining the amount of compensation, including:

  • the effect of the order on the viability of the employer’s business;
  • the length of the person’s service with the employer;
  • the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed;
  • the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal;
  • the amount of any pay earned by the person between the dismissal and the order for compensation;
  • the amount of any pay likely to be earned by the person between the dismissal and the order for compensation; and
  • any other matter the Fair Work Commission considers relevant.

The Fair Work Commission can reduce the amount of compensation if it is satisfied that the person’s misconduct contributed to the employer’s decision to dismiss the person.

Any compensation ordered by the Fair Work Commission will not include compensation for shock, distress or humiliation caused by the manner of the person’s dismissal [s 392].

What is the maximum amount that can be paid in compensation?

There is a cap on the compensation that can be ordered by the Fair Work Commission for an unfair dismissal case. The compensation cap is the lesser of:

  • half the amount of the high income threshold - for full-time employees that is $71 00 (half of the $142 000 high income threshold as at 1 July 2017 and indexed annually each year on 1 July)
  • the amount of remuneration received by the person, or that they were entitled to receive (whichever is higher) in the 26 weeks before the dismissal.

The compensation cap will be the same for all employees, regardless of what workplace arrangement they are employed under (for example modern award or enterprise agreement).

Compensation and other remedies  :  Last Revised: Mon Jul 31st 2017
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