Compensation

See Fair Work Act 2009 s.392

Compensation may be considered only after the Fair Work Commission is satisfied that reinstatement is inappropriate.[1] Compensation will only be ordered where the Commission considers it appropriate.[2] It is designed to compensate an unfairly dismissed employee in lieu of reinstatement for losses reasonably attributable to the unfair dismissal.[3]

Compensation cannot be awarded for shock, distress or humiliation, or other analogous hurt, caused to a dismissed employee by the manner of the person's dismissal.[4]

Section 392(2) of the Fair Work Act sets out the criteria for determining the amount of compensation that may be ordered.

The Commission is to take all circumstances into account, including:

• the effect of the order on the viability of the employer's enterprise
• 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 they had not been dismissed
• the efforts of the person (if any) to mitigate the loss suffered because of the dismissal
• 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
• 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, and
• any other matter that the Commission considers relevant.[5]

No one consideration 'is to be regarded as paramount but regard must still be had to each of them'.[6]

See Fair Work Act s.392(2)(a)

The employer must 'present evidence and/or argument as to the financial situation' of the business and 'the likely effect that an order for compensation' will have on the viability of the business.[7]

'A mere submission that difficulties for the business will occur' is not sufficient.[8] Evidence should be produced in order for the Commission to properly consider this issue.

See Fair Work Act s.392(2)(b)

A short period of service 'on its own is not a powerful force making for a compensation remedy (or a compensation order of significant quantum)'.[9]

A period of 20 months' employment has been considered not to be a lengthy period of time but in those particular circumstances did not incline the Commission to reduce any order for compensation.[10]