If an employee is found to have been unfairly dismissed, the Fair Work Act 2009 empowers the Fair Work Commission to award compensation, if reinstatement is inappropriate (as it almost always is) and if compensation is appropriate in the circumstances.
The maximum amount is set as the highest amount earned or which the dismissed employee was entitled for any period during the last 26 weeks of the employment.
Some of the factors considered in awarding and calculating compensation are set out in section 392 of the Act:
- the effect of the order on the viability of the employer’s enterprise; and
- the length of the person’s service with the employer; and
- the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
- the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
- 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; and
- 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 FWC considers relevant.
It can be seen that the employee has to attempt to obtain other employment between the dismissal and the Commission hearing and such attempts, whether successful or not, are taken into account in working out compensation.
The Commission can also reduce the amount to be awarded if some misconduct by the employee contributed to the decision to dismiss.
The Commission is not allowed to add any compensation for shock, distress or humiliation, or other analogous hurt, caused to the employee by the manner of their dismissal.
For further information please contact Peter on 8362 6400 or email Peter Jakobsen. Join our mailing list to receive updates and advice on current issues.