19.1 wrongful termination by...

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SECTION: Chapter

ChapterNum: 19

Title: Remedies for Wrongful or Unfair Termination

19.1 Wrongful Termination by Employees

[19.01] Any unauthorised termination of employment is wrongful and may enable the ‘innocent’ party to seek relief at common law. In the case of wrongful termination by employees, however, this rarely happens. Even if the employer can identify substantial loss, an action for damages would rarely be cost effective, given that most employees would lack the means to meet any judgment (including costs) obtained against them.1

[19.02] The more obvious remedy in this situation will generally lie in self-help. For example, the employer may withhold wages due for work done before the departure. Any action by the employee to recover these wages can then be met by a counter-claim for damages. But an employer has to be careful in this situation. If the wages were due under an industrial instrument or legislation, the employer may be subject to a penalty for failing to comply with its obligations, even if it succeeds in a damages claim. On the other hand, modern awards now expressly permit an employer to withhold moneys otherwise due on termination, though only up to the amount the employee would have received for any period of notice they have failed to give under the award.2 Such a clause will not apply if the employer waives the requirement for the employee to give notice.3

[19.03] Some contracts also fix a ‘bond’, or a sum by way of ‘agreed damages’, to be given up in the event of a premature departure by the employee. However, in order to avoid the rule against penalties, the amount in question must constitute a genuine pre-estimate of the loss likely to be occasioned by the employer as a result of any wrongful termination, rather than being an arbitrary sum.4 Many provisions are likely to fail to satisfy that requirement.5 However, in Tullett Prebon (Australia) Pty Ltd v Purcell6 a financial services company recovered over $500,000 from one of its brokers, who had insisted on leaving to work for a competitor several months before the end of his fixed-term contract. The relevant clause in his contract required him to pay a sum that was calculated as a percentage of

1But see Oldcastle v Guinea Airways Ltd [1956] SASR 325. 2See the model provision formulated in Award Modernisation (2008) 177 IR 364 at [54]. 3AWU v Mason and Cox Foundries (1996) 66 IR 27. 4See Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656; Carter et al 2007: 871–80. 5See eg Arlesheim v Werner [1958] SASR 136; Amos v Commissioner for Main Roads (1983) 6 IR 293. 6[2009] NSWSC 1079. See also Pigram v Attorney-General (NSW) (1975) 132 CLR 216; Surveillance

Australia Pty Ltd v McClennan (Mag Ct of SA, Eldridge SM, 20 May 2004) (overturned on other grounds: McLennan v Surveillance Australia Pty Ltd (2005) 142 FCR 105). Note also McKellar v Jetstar Airways Pty Ltd (No 2) [2010] FMCA 509, where a promise to reimburse $30,000 in training costs was enforced.

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his average net brokerage fees, and this was held to be a genuine estimate of the loss likely to be suffered from his early departure.

[19.04] According to basic principles of contract law, the employer may decline to accept a wrongful termination and call for performance of work until such time as the contract is lawfully terminated.7 However, if the employee refuses to comply, the employer has little prospect of obtaining a court order to compel a return to work, given the reluctance of the courts to make orders in the nature of specific performance of an employment contract.8 As Young J has explained:9

This disinclination stems from two factors: (a) that it is to the community’s advantage to have people’s talents available to be used for the community’s benefit; and (b) that it is undesirable to re-introduce servile employment where a person has virtually no [option] but to serve an employer with whom there is no bond.

[19.05] There is at least one partial exception to this principle. Where a contract contains a promise by the employee not to work for other employers during the currency of the employment, an injunction may sometimes be granted to restrain a breach of this promise, at least until such time as the contract has lawfully been terminated.10 The practice is often traced back to Lumley v Wagner,11 where a singer was restrained from performing at any theatre other than the plaintiff’s during her contracted engagement. Even so, the courts are generally concerned to avoid making orders that require the specific performance of contracts of employment. If, for example, enforcement of such a stipulation would have the effect in practice of compelling the employee to work for the original employer, this being the only means of earning a livelihood, no injunction will normally be granted.12 The same principle may prevent an injunction being granted to restrain a firm from ‘poaching’ a competitor’s employees by interfering with those employees’ contracts.13 On the other hand, the employer may succeed where the stipulation merely restrains the performance of similar work for other employers and the court is satisfied that the employee has the capacity to find suitable work in another field;14 or where the court feels able to enforce the stipulation to an extent which at least keeps the

7See Tullett Prebon (Australia) Pty Ltd v Purcell [2009] NSWSC 1079 at [38]–[62]; and see further

[19.07]. Cf Zuellig v Pulver [2000] NSWSC 7 (even if employees had failed to give adequate notice of termination, employer had accepted repudiation).

8See eg Tradition Australia Pty Ltd v Gunson (2006) 152 IR 395. 9TCN Channel Nine Pty Ltd v Northern Star Holdings Ltd (1990) 32 AILR ¶298. See also De

Francesco v Barnum (1890) 45 Ch D 430 at 438. 10See generally Davis G 1996. 11(1852) 1 De G M & G 604; 42 ER 687. For background on this case, and the related decision in

Lumley v Gye (1853) 2 El & Bl 216; 118 ER 749, see Waddams 2001. 12See eg Heine Bros (Aust) Pty Ltd v Forrest [1963] VR 383; Heath Lambert Australia Pty Ltd v

Keenan (2000) 102 IR 306; Bearingpoint Australia Pty Ltd v Hillard [2008] VSC 115. Cf the use of injunctions to restrain industrial action by groups of employees: see [22.63].

13See eg TCN Channel Nine Pty Ltd v Northern Star Holdings Ltd (1990) 32 AILR ¶298. 14See eg Warner Bros Pictures v Nelson [1937] 1 KB 209; Curro v Beyond Productions Pty Ltd (1993)

30 NSWLR 337; Tullett Prebon (Australia) Pty Ltd v Purcell (2008) 175 IR 414.

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employee out of the hands of the employer’s competitors.15 There have also been cases in which an employer has been able to secure an injunction by making a reasonable offer to pay wages for the remainder of the contract, without requiring any work from the employee.16 But some courts have derided such a practice as, in effect, allowing an employer to ‘purchase’ an injunction.17 An injunction that involves compelling an employee to take ‘garden leave’ may also be refused on the basis that it would breach an implied right for the employee to be given work to perform.18

19.2 Wrongful Dismissal: Common Law Remedies

[19.06] An action for ‘wrongful dismissal’ is a claim that an employer has terminated or purported to terminate an employment contract without authority.19 Historically, opportunities for wrongful dismissal suits have been limited. Since most public sector workers have a variety of statutory remedies open to them,20 recourse to the law of contract has been largely unnecessary for them. In the private sector, the capacity of most employers to terminate employment for any reason merely by giving the appropriate notice (or payment of wages in lieu) has meant that there are few situations where employees can establish that they have been wrongfully dismissed. Even where this does prove possible, the remedies available in all but highly exceptional cases have been such as to make the time and expense involved in civil proceedings of dubious practical value. Moreover, as explained later in the chapter, many workers have for a number of years had access, to a greater or lesser extent, to tribunals that are empowered to inquire into the fairness of their dismissal. As against that, reforms to unfair dismissal laws have excluded certain classes of employee, notably those on higher salaries, from bringing a statutory claim.21 For those workers, a common law action is in general their only form of recourse if they believe their rights have been infringed.22 Since it is the higher paid managers and professionals who are more likely to have the resources to contemplate litigation in the ordinary courts, it is not altogether surprising that actions for wrongful dismissal have now assumed greater practical significance than had been the case historically.

15See eg Buckenara v Hawthorn Football Club Ltd [1988] VR 39; Bulldogs Rugby League Club Ltd v

Williams [2008] NSWSC 822. But cf Hawthorn Football Club Ltd v Harding [1988] VR 49. 16See eg Evening Standard Co Ltd v Henderson [1987] ICR 588; BDO Group Investments (NSW-Vic)

Pty Ltd v Ngo [2010] VSC 206. 17See eg Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 at 349–50. 18See eg William Hill Organisation Ltd v Tucker [1999] ICR 291; and see further [13.43]. 19See Rothenberger Australia Pty Ltd v Poulsen (2003) 58 NSWLR 288 at 300–1. 20See Chapter 19.6. 21See eg [19.41]–[19.43]. 22For a while, it was popular in New South Wales for non-award, high-earning employees to

challenge the fairness of their dismissals by invoking the unfair contract provisions in the Industrial Relations Act 1996 (NSW). However, amendments have limited that option, and in any event the provisions no longer apply to national system employees: see [17.10]–[17.15].

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(a) Reinstatement

[19.07] The principal shortcoming of an action for wrongful dismissal, as far as employees are concerned, is that it very rarely results in reinstatement in their employment. There is no power at common law for an employer to be ordered to hire an employee. In order to obtain reinstatement, therefore, the worker must be able to establish that the original contract remains on foot, a task which is rarely feasible.23 Theoretically, as the High Court confirmed in Watson’s case,24 and more recently in Visscher v Giudice,25 a wrongful dismissal is no more than a repudiatory breach of the contract which the employee may elect not to accept as determining the contract.26 In practice, however, there may be little point in an employee seeking to affirm a contract that their employer is determined to end. This practical reality is sometimes encapsulated in the observation that, while the employment contract may survive a wrongful dismissal, the employment relationship rarely does.27 As Heydon, Crennan, Kiefel and Bell JJ put it in Visscher, in such a case ‘the possible continuation of [the contract] will rarely be of significance’.28 If the employer refuses to allow any work to be done, the employee will not normally be able to assert that wages are payable for any period of enforced idleness, and instead will be left to find a remedy in damages.29 If the employee is to secure reinstatement, therefore, it will be necessary to wait out what is likely to be a substantial period from the time of dismissal to the conclusion of the litigation without a regular source of income. Acceptance of an alternative position will almost certainly be viewed as an election to treat the contract as terminated.30 This is true even if the employee is unaware of the right to keep the contract alive.31 All that can safely be done is to undertake temporary work, and then only if the employee remains ready and willing to work for the original employer.32 The employee may also find that they are in a kind of ‘Catch-22’ situation by virtue of the fact that failure to accept (or indeed seek) alternative

23Re Associated Dominions Assurance Society Pty Ltd (1962) 109 CLR 516 at 518; Wheeler v Philip

Morris Ltd (1989) 97 ALR 282 at 310–11. 24Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435. 25(2009) 239 CLR 361 at [53]. See further [9.16]; and see also Keats 2010. 26See also Re Associated Dominions Assurance Society Pty Ltd (1962) 109 CLR 516; Turner v

Australasian Coal & Shale Employees’ Federation (1984) 55 ALR 635; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 427. The same is true of any action by the employer which, while not a dismissal in itself, constitutes a repudiation of the employment contract: see eg Rigby v Ferodo Ltd [1988] ICR 29 (unilaterally imposed pay cut).

27See eg Watson (1946) 72 CLR 435 at 450–1, 461, 463–4, 466; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 427–8; Jarratt v Commissioner of Police (NSW) (2005) 224 CLR 44 at [7]. See further Honeyball & Pearce 2006, exploring some of the conceptual issues presented by this distinction.

28(2009) 239 CLR 361 at [55]. By contrast, in Visscher itself the continuation of the contract was found to be significant: see [9.16].

29See eg Sterling Commerce (Australia) Pty Ltd v Iliff (2008) 173 IR 378; and see further [13.54]. 30Wheeler v Philip Morris Ltd (1989) 97 ALR 282 at 310–11. 31Ford v Council of the City of Lismore (1989) 28 IR 68. 32Ibid at 77; Reilly v Victoria (1991) 5 VIR 1; Conway-Cook v Town of Kwinana (2001) 108 IR 421.


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employment may, under the doctrine of mitigation, reduce the amount of damages that may be recovered for the wrongful dismissal.33

[19.08] In any event, even if the employee survives this period, there is a general rule or presumption against the grant of an injunction to restrain the employer from proceeding with or acting on a wrongful dismissal.34 One explanation of the resistance to such orders lies in the obverse of the principle quoted above in relation to actions against employees: that if employers cannot seek specific performance, then neither should employees be able to do so. The more usual rationale, however, is that ‘trust and confidence’ will typically be lacking between the parties and that the court will not compel the mending of a relationship that has irretrievably broken down.35 In Turner v Australasian Coal & Shale Employees Federation36 it was pointed out that this concern is redolent of a different era, when the typical employment relationship (or more accurately the domestic master/servant paradigm which underpins the common law of employment) was more personal in nature.37 It is true that in recent years it has become increasingly common for courts to grant injunctions to restrain a dismissal, or declarations recognising the subsistence of the employment contract. However, most of these cases can readily be reconciled with a general rule against specific performance.38 In some, trust and confidence clearly remained between the parties, the employer feeling impelled to dismiss the employee but being satisfied as to their conduct and competence.39 In others, the employee was seeking to keep the contract alive for a specific and temporary reason such as the accrual of rights through length of service,40 or to allow for a contractual or statutory procedure to be completed.41 Moreover, in most instances the injunction obtained was merely an interlocutory order, restraining prejudicial action pending a full trial of the plaintiff’s claim.

[19.09] Nevertheless, it remains hard to see just why there has been such judicial reluctance to order reinstatement. There is no evidence to suggest that the availability of the remedy, through industrial tribunals in

33See further [19.16]. 34Lucy v Commonwealth (1923) 33 CLR 229 at 237; Byrne v Australian Airlines Ltd (1995) 185 CLR

410 at 428; Jarratt v Commissioner of Police (NSW) (2005) 224 CLR 44 at [30]. 35See eg Gregory v Philip Morris Ltd (1988) 80 ALR 455. 36(1984) 55 ALR 635 at 648–9. See also AMIEU v G & K O’Connor Pty Ltd (2000) 100 IR 383 at

394–5. 37See further [2.02]. 38But cf Walsh v Police Association (2000) 140 IR 58, where an injunction was granted without

reference at all to the general rule, or the authorities that support it. 39See eg Powell v Brent London Borough Council [1988] ICR 176; Reilly v Victoria (1991) 5 VIR 1.

See also Downe v Sydney West Area Health Service (No 2) (2008) 71 NSWLR 633, where a declaration was made as to the invalidity of a suspension order (see [13.45]).

40See eg Hill v C A Parsons & Co Ltd [1972] Ch 305. 41See eg Baker v Corp of the City of Salisbury (1982) 2 IR 168; Reilly v Victoria (1991) 5 VIR 1; Paras

v Public Service Body Head of the Department of Infrastructure (2006) 152 IR 75. See also AMIEU v Frugalis [1990] 2 Qd R 201, in which the union obtained a declaration that the defendant employer was obliged to observe the terms of a collective agreement, in so far as they called for the reinstatement of certain workers.

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particular, has caused chaos or hardship, probably because in cases where difficulties would genuinely be occasioned the tribunals are capable of recognising reality, either making no order or seeking some compromise such as re-engagement in a different position.42 In light of this well established experience, there is no compelling reason why the common law could not reverse its presumption and order specific performance unless the evidence disclosed a reason for not doing so.43

(b) Damages

[19.10] Where an employee is dismissed in breach of contract, they are entitled to an award of damages that will compensate them for any loss suffered as a result of the breach.44 As previously indicated, the general purpose of such an award is to place the injured party in the same position as if the contract had been properly performed.45 In accordance with this principle, and depending on the circumstances, a wrongfully dismissed employee may be able to seek compensation for various types of financial loss. For example, a person who has incurred substantial expenses (such as removal costs) in order to take up a new job, only to find that the employer has reneged, may be able to recover damages for that wasted expenditure.46 Another possible claim may be for entitlements (for example, under a superannuation scheme) to which the employee would have had some claim, or a greater claim, but for the unlawful dismissal.47 But there are limits to such recovery in relation to the loss of statutory unfair dismissal rights. As noted in the previous chapter, a wrongfully dismissed employee cannot claim as damages the costs of pursuing an unfair dismissal claim.48 But there is also British authority for the proposition that damages cannot be claimed at common law for the compensation that would or might have been recovered on a statutory claim, had the employee not been wrongfully dismissed before completing the qualifying period for such a claim.49

[19.11] By far the most common type of loss suffered by a wrongfully dismissed employee is that they are deprived of the opportunity to earn

42It should be noted, however, that industrial tribunals have also become somewhat reluctant

to make orders for the reinstatement of employees who have been unfairly dismissed: see [19.74]–[19.75].

43See Bostik (Australia) Pty Ltd v Gorgevski (1992) 36 FCR 20 at 36–8; Quinn v Overland [2010] FCA 799 at [97]–[104]; and see further Ewing & Grubb 1987; Furness 1989; Creighton et al 1993: 264–88; Brodie 1998b.

44As to whether such an award may be precluded by an express term fixing a severance payment in the event of termination, see Guthrie v News Ltd [2010] VSC 196.

45See [16.60]. 46See eg Blakeley v Vanpress Pty Ltd (1989) 5 SR (WA) 133; Goldburg v Shell Oil Co of Australia Ltd

(1990) 95 ALR 711. 47See eg Ryan v Commonwealth (1936) 57 CLR 136; Ford v Council of the City of Lismore (1989) 28

IR 68. 48Russell v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2008) 72 NSWLR

559: see [18.38]. 49Harper v Virgin Net Ltd [2005] ICR 921. As to the qualifying period for an unfair dismissal

claim under the FW Act 2009, see [19.35]–[19.38].


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their agreed remuneration. ‘Remuneration’ for this purpose may include not just wages or salary as such, but also the pecuniary value of other benefits that the employer is obliged to provide. Aside from superannuation contributions (whether the minimum required by statute or any greater amount determined by agreement),50 such benefits might, for instance, include the provision of a motor vehicle or of health insurance,51 as well as any bonus or incentive payments that the employee would necessarily have received.52 However, no claim may be made in respect of fringe benefits which are entirely a matter for the employer’s discretion.53 This is because of a general principle that, where damages are being assessed, it will be assumed in the defendant’s favour that they would have performed the contract in the manner least financially burdensome in the circumstances.54

[19.12] This principle also explains why the maximum period in respect of which an employee may claim loss of remuneration normally extends from the date of dismissal to the earliest date at which the employer could lawfully have terminated the contract.55 Where the contract is simply terminable on notice, this means that damages may in general only be claimed for wages and other benefits lost over the relevant period of notice.56 In contrast, in the case of a fixed-term agreement which cannot be terminated on notice, the employee may claim for wages and benefits lost up to the date on which the contract was due to expire.57 A similar principle applies to a contract for the duration of a particular task.58

[19.13] There also circumstances in which a claim may extend to loss sustained beyond the ordinary end-date of the contract. For example, if it can be shown that the defendant’s breach has denied the plaintiff the chance to seek other employment at the conclusion of their expected period of engagement, that may be the subject of an award of damages for the value of that lost opportunity.59 More generally, and despite the ‘least

50See Macauslane v Fisher & Paykel Finance Pty Ltd [2003] 1 Qd R 503. 51See eg Burton v Litton Business Systems Pty Ltd (1977) 19 SASR 162; Kilburn v Enzed Precision

Products (Australia) Pty Ltd (1988) 4 VIR 31; Conway-Cook v Town of Kwinana (2001) 108 IR 421.

52See eg Reilly v Praxa Ltd [2004] ACTSC 41. 53Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130; NSW Cancer Council v Sarfaty

(1992) 28 NSWLR 68; Reynolds v Southcorp Wines Pty Ltd (2002) 122 FCR 301. Cf Dyer v Peverill (1979) 2 NTR 1.

54Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 92–3; Saad v TWT Ltd [1998] NSWSC 282.

55Bostik (Australia) Pty Ltd v Gorgevski (1992) 36 FCR 20 at 32–3. 56See eg Kelderman v SHRM (Australia) Pty Ltd (1989) 32 AILR ¶89; Walker v Zurich Australian

Insurance Ltd [2001] QCA 296. 57See eg Scharmann v APIA Club Ltd (1983) 6 IR 157; Patterson v Middle Harbour Yacht Club (1996)

64 FCR 405; Conway-Cook v Town of Kwinana (2001) 108 IR 421. Note, however, that a term in a contract that automatically requires a dismissed employee to be paid out for the full remuneration due over the remainder of their contract may be unenforceable as a penalty clause (see [19.03]), where it appears unlikely the employee will actually suffer that amount of loss: see Biodiesel Producers Ltd v Stewart [2007] FCA 722.

58See eg Bryant v Defence Housing Authority [2002] ACTSC 43. 59WT Partnership (Aust) Pty Ltd v Sheldrick (1999) 96 IR 202; Quinn v Gray (2009) 184 IR 279.

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burdensome’ principle, it should also be open to a wrongfully dismissed employee to claim damages for the loss of the chance that the employment contract would have been renewed at the expiry of a fixed term, or that the employer would not have given notice at the earliest opportunity. Such an award would be consistent with the approach taken by the High Court to the assessment of damages for breach of contract in Commonwealth v Amann Aviation Pty Ltd.60 In Murray Irrigation Ltd v Balsdon61 this notion was firmly rejected by the New South Wales Court of Appeal. However, other courts have disagreed, and awards of this type have been made in a number of cases.62 The most notable of these was Walker v Citigroup Global Markets Australia Pty Ltd,63 in which a market analyst was found to have been offered a highly paid position with a guarantee of employment until the end of 1998, and thereafter on the basis that either party could terminate on one month’s notice. He was not allowed to take up the position and sued for breach of contract.64 The Full Court of the Federal Court found that, if he had been allowed to commence work, he would have remained until at least July 2003. On that basis, it awarded damages of $2,346,553 for lost earnings over that period. The court highlighted the absence of any ‘direct evidence’ that the employer would have exercised its power to terminate the contract without cause:

That NatWest would have sacked a skilled and competent employee holding a high profile position within the company without cause is not a natural inference to be drawn without direct evidence. To act in that fashion would deprive it of the services of a valuable employee and risk damage to its reputation in the financial community.65

On the other hand, it would seem that no claim will be possible where the court is satisfied that, even if the employer had complied with the contract, it would not in any event have wanted or been prepared to extend the employment.66

[19.14] In the relatively rare instances in which employment cannot be terminated without cause being shown, the employee may potentially claim wages lost up to their projected or likely date of retirement.67 This includes cases where, as in Gregory v Philip Morris Ltd,68 the contract is taken to contain a provision prohibiting unfair dismissal. In such cases the court’s task is to ‘consider the matter upon the basis that, were it not for the unlawful dismissal, it was likely that the employment would have

60(1991) 174 CLR 64: see Stewart 1993. 61(2006) 67 NSWLR 73. See also Clunne v Nambucca Shire Council (1995) 63 IR 304. 62See eg Tasmania Development and Resources v Martin (2000) 97 IR 66; Macdonald v Australian

Wool Innovations Ltd [2005] FCA 105; and see also Northern Land Council v Hansen [2000] NTCA 1.

63(2006) 233 ALR 687. 64As to his separate claim for misleading and deceptive conduct, see [17.07]. 65Ibid at [83]. 66See eg Guthrie v News Ltd [2010] VSC 196. 67Lucy v Commonwealth (1923) 33 CLR 229. 68(1988) 80 ALR 455: see [9.22].


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continued indefinitely’.69 Where the employer fails to fulfil an obligation to accord procedural fairness, but the dismissal is in other respects justified, the measure of damages may be the value of the chance that the dismissal would not have occurred had an appropriate procedure been followed.70 On the other hand, where the employer, although obliged to follow a specific procedure in order to effect a dismissal, retains an absolute discretion at the end of the process as to whether or not to dismiss, the employee may claim only for wages lost during the time it would have taken to complete the procedure.71

[19.15] In some instances then an employee may have a prima facie claim for remuneration lost over a very lengthy period. However, this is subject to a discount being made for ‘foreseeable events which might have brought the employment to an end’,72 including the possibility that the employee might have died or become incapacitated, or resigned to take up other employment, or taken early retirement, or engaged in conduct that would have provided grounds for a (lawful) early termination. Thus, in assessing the loss sustained by a worker dismissed in breach of a term prohibiting unfair dismissal, a discount must be made for the possibility that the employment might at some later point have been terminated fairly.73 Similarly, in Walker a 25% ‘discount’ was applied ‘to take account of the possibility of earlier termination for one reason or another’.74 By the same token, it would seem logical to allow as well for contingencies which might operate in the employee’s favour, such as the chance of a wage rise.75

[19.16] A further factor that bears on the assessment of damages is the doctrine of mitigation. This ensures that no account will be taken of any loss that the plaintiff either has in fact avoided by obtaining substitute income,76 or which the employer can show the plaintiff could reasonably have avoided by seeking alternative work of a comparable nature.77 The employee is not necessarily expected to accept different or inferior work.78 Nor, ordinarily, will they be expected to accept an offer of re-employment with the employer that dismissed them, at least where it is clear that

69Bostik (Australia) Pty Ltd v Gorgevski (1992) 36 FCR 20 at 33; Wheeler v Philip Morris Ltd (1989)

97 ALR 282 at 311–12; and see further Brooks 1995. 70Bostik (1992) 36 FCR 20 at 34–5; Byrne v Australian Airlines Ltd (1994) 120 ALR 274 at 285. 71Gunton v Richmond-upon-Thames London Borough Council [1981] Ch 448. 72Wheeler v Philip Morris Ltd (1989) 97 ALR 282 at 311. See eg Lucy v Commonwealth (1923) 33

CLR 229; Dyer v Peverill (1979) 2 NTR 1; Carr v Blade Repairs Australia Pty Ltd (No 2) [2010] FCA 688.

73Gregory v Philip Morris Ltd (1988) 80 ALR 455 at 484; Bostik (Australia) Pty Ltd v Gorgevski (1992) 36 FCR 20 at 33. See also Barnes v Ranger Uranium Mines Pty Ltd (1993) 50 IR 38.

74(2006) 233 ALR 687 at [84]. 75See eg Kilburn v Enzed Precision Products (Australia) Pty Ltd (1988) 4 VIR 31; Quinn v Jack Chia

(Australia) Ltd [1992] 1 VR 567; L’Huillier v Victoria [1996] 2 VR 465. 76See eg Wheeler v Philip Morris Ltd (1989) 97 ALR 282; Hutt v Cascade Brewery Co Ltd (1991) 34

AILR ¶179; Patterson v Middle Harbour Yacht Club (1996) 64 FCR 405. 77See eg Lucy v Commonwealth (1923) 33 CLR 229; Harding v Harding (1928) 29 SR (NSW) 96. 78Scharmann v APIA Club Ltd (1983) 6 IR 157; Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567.

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relations have broken down.79 Nevertheless, unless the employee’s skills are in over-supply, or the position formerly occupied is of a kind not readily available elsewhere, the amount of lost remuneration that may be claimed will be significantly reduced by the operation of this doctrine.

[19.17] In awarding damages the court will also allow the employer to offset any severance payment it has made to the employee, whether on an ex gratia basis or pursuant to a pre-existing obligation.80 This is unless the payment is one that the employer would have been obliged to make even if the contract had continued to its lawful conclusion.81 Likewise, the court will deduct any social security payments (such as unemployment benefits) to which the employee is automatically entitled as a result of the dismissal.82 The question of deducting taxation that would have been payable on the lost income is more difficult, and has indeed prompted significant disagreement amongst the judiciary. On one view no deduction should be made, since the damages award itself will be taxed as an ‘employment termination payment’ (ETP) within the meaning of (currently) s 82-130 of the Income Tax Assessment Act 1997 (Cth).83 Those who adopt this position distinguish High Court decisions to the effect that allowance should be made for notional tax where only a small portion of a damages award representing lost income is taxable,84 by emphasising that in general the whole award is taxable. However, a competing line of authorities suggests that, at least where the lost income would have been taxed at a much higher rate than the rate applicable to ETPs, a more complex approach should be adopted. This involves assessing lost income net of taxation, then ‘grossing up’ the resulting figure so as to allow for the tax that the plaintiff will have to pay on the award itself.85

[19.18] As to non-pecuniary losses, the established view is that distress or humiliation inflicted on the employee is not as a general rule compensable, no matter how obvious a consequence of the dismissal or the way it is handled.86 This approach, generally associated with the House of Lords’ decision in Addis v Gramophone Co Ltd,87 has often been criticised.88

79Bostik (Australia) Pty Ltd v Gorgevski (1992) 36 FCR 20; Whittaker v Unisys Australia Pty Ltd

(2010) 192 IR 311. 80Black v Brimbank City Council (1998) 152 ALR 491; Furey v Civil Service Association of WA (Inc)

(1999) 91 FCR 407. Cf Haley v Public Transport Corp of Victoria (1998) 119 IR 242. 81Reynolds v Southcorp Wines Pty Ltd (2002) 122 FCR 301. The position is similar with

superannuation benefits: L’Huillier v Victoria [1996] 2 VR 465. 82McCasker v Darling Downs Co-operative Bacon Association Ltd (1988) 25 IR 107; but cf Burton v

Litton Business Systems Pty Ltd (1977) 19 SASR 162. 83Kilburn v Enzed Precision Products (Australia) Pty Ltd (1988) 4 VIR 31; Wheeler v Philip Morris

Ltd (1989) 97 ALR 282; Grout v Gunnedah Shire Council (No 3) (1995) 59 IR 248. 84See Atlas Tiles Ltd v Briers (1978) 144 CLR 202 at 224–7, 235–6; Cullen v Trappell (1980) 146 CLR

1. 85See eg NSW Cancer Council v Sarfaty (1992) 28 NSWLR 68; Slifka v JW Sanders Pty Ltd (1995) 67

IR 316; Patterson v Middle Harbour Yacht Club (1996) 64 FCR 405. 86Tucker v Pipeline Authority (1981) 3 IR 120; Beck v Darling Downs Institute of Advanced Education

(1990) 140 IR 364; Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 at 147–51. 87[1909] AC 488. This case constrains the remedies available for wrongful dismissal in other

common law countries as well: see eg Fudge 2007.


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Nevertheless, in Baltic Shipping Co v Dillon89 the High Court not only affirmed the general rule that such loss is not compensable in the law of contract, but specifically alluded to its application in employment cases.

[19.19] On the other hand, the principles applied by the High Court in Baltic Shipping also suggest that the restriction does not apply to claims for psychiatric illness resulting from the employer’s breach of contract, in so far as that can be considered a ‘physical’ injury.90 Nor would it apply where, as in Baltic Shipping itself, the very object of the obligation breached (in that instance to provide a holiday) is to afford enjoyment, peace of mind or freedom from stress. Hence, if the obligation to maintain trust and confidence in the employment relationship does indeed extend to the way in which the employer handles the termination of the relationship,91 a breach of that obligation should logically expose the employer to claims for any resulting distress occasioned to the employee.92 So much was indeed held to be the case in Quinn v Gray,93 where Byrne J rejected a challenge to the decision of an arbitrator to award damages for distress caused to a dismissed school principal. The breach of the duty of trust and confidence identified here was said to be a failure to accord procedural fairness in the way the decision to dismiss was taken. It is difficult, however, to see how this decision can be reconciled with the approach taken in cases such as Russell v Trustees of the Roman Catholic Church for the Archdiocese of Sydney.94 In that case Basten JA observed that ‘to uphold a claim to damages because of steps taken by an employer leading up to a dismissal’ would be to ‘sidestep the rule in Addis’.95

[19.20] What is clearer is that some workers, particularly in the entertainment industries, can claim that, since the opportunity to enhance their reputation is an inherent aspect of their employment, the deprivation of that opportunity through their wrongful dismissal should be the subject of compensation.96 In Malik v Bank of Credit and Commerce International SA97 the House of Lords also recognised a potential claim for ‘damage to reputation’ (in the form of diminished employment prospects) on the part of employees ‘stigmatised’ by their association with a corrupt business;

88See eg Byrne v Australian Airlines Ltd (1994) 120 ALR 274 at 334; Gray 1994. Cf Gibson 2006. 89(1993) 176 CLR 344. 90See eg Clunne v Nambucca Shire Council (1995) 63 IR 304; Goldman Sachs JB Were Services Pty

Ltd v Nikolich (2007) 163 FCR 62; but cf Alderslea v Public Transport Corp (2001) 3 VR 499; New South Wales v Paige (2002) 115 IR 283 at 305–6. See also Brackenridge v Toyota Motor Corp Australia Ltd (1996) 142 ALR 99, emphasising that a causal link must in any event be established between the relevant breach and the illness.

91But see [18.35]–[18.38]. 92Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 at 152. 93(2009) 184 IR 279. 94(2008) 72 NSWLR 559: see [14.44], [18.38]. 95Ibid at [63]. 96See eg White v Australian and New Zealand Theatres Ltd (1943) 67 CLR 266. 97[1998] AC 20.

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though the employees in question were unable in subsequent proceedings to prove such loss.98

[19.21] The net result of the application of these various principles as to the assessment of damages for wrongful dismissal is that the common law generally offers significant awards only to employees who (a) are dismissed well before the date on which their employment could lawfully have been terminated, and (b) cannot readily find comparable employment elsewhere. For most workers, therefore, the amount of damages they are likely to recover, even if they succeed in establishing wrongful dismissal, means that litigation will rarely be worthwhile.

19.3 Unfair Dismissal: History and Development of Statutory Remedies

(a) State Laws and the ‘Individual Right’ Model

[19.22] At least before Work Choices, the legislative authority of the States allowed them to address the issue of unfair or arbitrary dismissal in any way they saw fit – so long as they did not do so in a manner that was inconsistent with a valid law of the Commonwealth.99 For most of the 20th century no positive provision was made by the States on the matter at all, other than in relation to certain forms of ‘victimisation’.100 At most a claim for the reinstatement of a dismissed worker might become the subject of an industrial dispute in the same way as any other issue.101 However, in 1972 South Australia enacted a provision explicitly conferring power on the Industrial Court to hear and determine claims by individual workers that their dismissal was ‘harsh, unjust or unreasonable’.102 This provision soon generated what in comparison to the other jurisdictions was a large number of applications for relief. Its popularity was further boosted in 1984 by the transfer of the jurisdiction to the Industrial Commission, and the creation of a power to award compensation in lieu of reinstatement.103

[19.23] Each of the other States followed suit in giving individual workers the capacity to seek relief, rather than having to rely on a trade union notifying a dispute over the dismissal; although in New South Wales this was actively resisted by the union movement. Ironically, it took a Liberal Government in 1991 to give workers in that State the right to lodge their own complaint of unfair dismissal.104 For the most part the procedures based on the South Australian model have worked reasonably well, offering a cheap and speedy form of redress when compared to the ordinary courts. 98Bank of Credit and Commerce International SA v Ali (No 2) [2002] ICR 1258. 99See eg R v Industrial Court of SA; Ex parte General Motors-Holden Pty Ltd (1975) 10 SASR 582. 100See [17.64]. 101See generally Davidson 1980. 102Industrial Conciliation and Arbitration Act 1972 (SA) s 15(1)(e). 103Industrial Conciliation and Arbitration Act (later renamed Industrial Relations Act) 1972 (SA)

s 31. 104See Stewart 1992f.


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Part of the reason for this is the provision that is usually made for a conciliation conference to be held within a few weeks of an application being made, allowing an early opportunity for the parties to air their views and explore the possibility of a negotiated settlement.105 This has resulted in a high proportion of claims not proceeding to a formal hearing. Moreover, costs are only awarded in exceptional circumstances. However, while each of the States that retain industrial systems still make provision for unfair dismissal claims,106 outside Western Australia they apply now only to public sector workers and (except in Tasmania) local government employees.

(b) Introduction of Federal Laws

[19.24] Before the enactment of Division 3 of Part VIA of the Industrial Relations Act 1988, which took effect on 30 March 1994, federal industrial law had relatively little to say on the issue of termination of employment. Leaving aside provisions dealing with victimisation on the grounds of union membership or activities,107 no statutory remedy was offered to workers who were unfairly dismissed. And unlike the State systems, constitutional considerations made it unclear whether the arbitral tribunal could resolve disputes over claims for the reinstatement of dismissed employees. What the tribunal usually did, instead, was to conciliate and even arbitrate such disputes with the agreement of the parties. Lacking any formal jurisdiction, however, the tribunal could do no more than issue non-binding recommendations as to how the dispute should be settled.108 During the 1980s and early 1990s, the obstacles to formally notifying a dispute over reinstatement to the Arbitration Commission were gradually overcome, thanks to a series of High Court decisions.109 Nevertheless, notifying a dispute remained an option fraught with difficulties, especially if the employer was inclined to contest the issue of jurisdiction. Moreover, although in 1984 the Commission had accepted the ACTU’s argument for the inclusion in federal awards of a provision prohibiting harsh, unjust or unreasonable termination,110 the only option for those dismissed in breach of this provision was to seek to enforce the award through the imposition of a penalty. As previously explained, an attempt by the Federal Court to offer contractual remedies for breach of the prohibition was closed off by the 105For a valuable study of this process, see Meredith 2001. 106See Industrial Relations Act 1996 (NSW) Ch 2 Pt 6; Industrial Relations Act 1999 (Qld) Ch 3; Fair

Work Act 1994 (SA) Ch 3 Pt 6; Industrial Relations Act 1979 (WA) ss 23A, 29, 29AA; Industrial Relations Act 1984 (Tas) ss 29–31.

107See [17.64]. 108See O’Donovan 1976: 639–40. 109See Re Ranger Uranium Mines Pty Ltd; Ex parte Federated Miscellaneous Workers Union of

Australia (1987) 163 CLR 656; Re Federated Storemen and Packers Union of Australia; Ex parte Wooldumpers (Victoria) Ltd (1989) 166 CLR 311; Re Boyne Smelters Ltd; Ex parte Federation of Industrial Manufacturing and Engineering Employees of Australia (1993) 177 CLR 446; Re Printing and Kindred Industries Union; Ex parte Vista Paper Products Pty Ltd (1993) 67 ALJR 604.

110TCR case (1984) 8 IR 34; 9 IR 115.

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decision in Byrne v Australian Airlines Ltd.111 Award provisions of this type in any event became non-allowable after 1996.

[19.25] In the light of this background, the provisions introduced by the Industrial Relations Reform Act 1993 marked a dramatic change in the Commonwealth’s approach.112 The new laws were not limited to the question of unfair dismissal, but imposed on employers a whole series of obligations, compliance with which was necessary for any termination to be lawful. A claim for unlawful termination could be pursued in the Industrial Relations Court of Australia, with the court empowered to grant a range of remedies including reinstatement or compensation. In such proceedings, the employer carried the burden of proving that the termination was lawful. Provision was also made for the AIRC to exercise certain powers in relation to dismissals on account of redundancy.113 The new laws were based squarely on ILO Convention 158 on Termination of Employment – indeed, in places the wording was almost identical. This reflected the Commonwealth’s extreme caution in establishing a constitutional foundation through the external affairs power.114 By using that power, it was possible for the legislation to apply to all employees, regardless of whether they were covered by federal awards. However, certain categories of worker – those employed for a fixed term or specific task, probationers and short-term casuals – were excluded from protection.115

[19.26] The 1993 legislation provoked heated and at times hysterical opposition from employer groups and commentators,116 even though the broad thrust (if not the precise detail) of the new laws was similar to regimes that had been in operation in most of the States for several years. Persistent lobbying from employers led to a series of backdowns by the Keating Government, which saw the legislation amended to exclude a wider range of workers (notably those earning more than $60,000 per year), to modify the burden of proof, and to cap compensation for successful applicants at six months’ remuneration.117

111(1995) 185 CLR 410: see [9.22]–[9.24]. 112See Pittard 1994b. 113See [18.62]. 114In Victoria v Commonwealth (1996) 187 CLR 416 the constitutional validity of the new

provisions was largely upheld. The exception was s 170DE(2), which the High Court interpreted to prohibit dismissals even where the employer had a ‘valid reason’ for termination within the meaning of the Convention. Cf Chapman et al 1997: 2–4, criticising this analysis by reference to preparatory material on the Convention.

115Such exclusions are permissible under Article 2 of Convention 158, provided they are made prior to the member state submitting its first report to the ILO under Article 22. Since Australia’s first report on Convention 158 was submitted in September 1995, subsequent exclusions (such as the ‘small business’ exemption later introduced by the Howard Government) would not conform to the Convention even if otherwise authorised by the terms of Article 2: see Creighton 1997b: 41–2.

116For a more reasoned (but still very strong) critique of the 1993 provisions, see ACCI 1995. 117See Industrial Relations Amendment Act (No 2) 1994; Industrial Relations and Other Legislation

Amendment Act 1995.


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(c) Curtailment of Rights under the Howard Government

[19.27] The Howard Government’s Workplace Relations and Other Legislation Amendment Act 1996 made further changes to the termination of employment provisions in what by now was Division 3 of Part VIA of the WR Act 1996.118 Aside from vesting the AIRC with primary jurisdiction over unfair dismissal claims, many of these changes were intended to strike a ‘fairer’ balance between the interests of employers and employees by eliminating or modifying features of the 1993 legislation that were considered unduly to favour applicants. The system now more closely resembled the State laws developed on the South Australian model. Indeed, it expressly incorporated the language used in one of the best known State unfair dismissal cases, Re Loty and AWU,119 in stating that the procedures and remedies established by Division 3 were intended to ensure that a ‘fair go all round’ was accorded to both employer and employee (s 170CA(2)).120 Importantly, however, the 1996 reforms also narrowed the scope of the unfair dismissal jurisdiction so as to confine it primarily to workers employed under federal awards by incorporated employers. Aside from reflecting greater reliance on the corporations power, this shift effectively marked the abandonment of the Keating Government’s goal of establishing a genuinely national system of protection through use of the external affairs power. However, key parts of the Division were still based on the external affairs power, notably Subdivision C. This prohibited termination on certain grounds, in particular for the discriminatory reasons listed in s 170CK. Applicants had the option of lodging a complaint of ‘unlawful termination’ with the AIRC, either as well as or instead of an unfair dismissal claim. If the AIRC was unable to resolve the matter by conciliation, the applicant could elect to pursue the matter in court. Most of the limitations on unfair dismissal claims did not apply to unlawful termination applications.

[19.28] After 1996, the Howard Government sought to limit still further the impact of termination of employment legislation on employers. In particular, it repeatedly proposed to exempt small businesses (those with fewer than 15 employees, or in later iterations 20 employees) from exposure to unfair dismissal claims. The rationale for this reform was said to be that unfair dismissal laws hinder job creation in small enterprises. The government persistently quoted claims, usually based on spurious surveys or commissioned research, that the exemption would create thousands of new jobs.121 In fact, there has never been any persuasive evidence that unfair dismissal laws (at least of the type found in Australia) have any more

118See Chapman 1997. 119[1971] AR (NSW) 95 at 99: see [19.60]. 120Cf the widely publicised remark by Gray J in Fryar v Systems Services Pty Ltd (1995) 130 ALR

168 at 189 under the previous legislation that ‘the realm of the “fair go all round” … is not a realm which [the Industrial Relations Court] inhabits’.

121See eg Senate Employment, Workplace Relations and Education Legislation Committee 2003, exposing the shortcomings of one such study (Harding 2002).

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than a modest impact at most on employment levels.122 Even if there were, there would still be a powerful case on grounds of both equity and efficiency for laws of general application which protect workers against the arbitrary or unnecessary deprivation of their livelihood, regardless of the size of their employer.123 Nevertheless, the Coalition persisted with its efforts to create an exemption – and was just as persistently blocked by the Senate.124

[19.29] The Howard Government’s opportunity came in 2005, when it gained control of the upper House. The Work Choices reforms did not make major changes to the way in which unfair dismissal claims were handled, under what was now Division 4 of Part 12 of the WR Act. But s 643 significantly limited access to such claims.125 Instead of a ‘small business’ exemption, there was a bar on any claims against an employer with 100 or fewer employees at the date of termination.126 The cut-off figure of 100 seems to have been chosen as a more or less arbitrary compromise between those in the government who wished to stick to a small business exemption, and those pushing to remove unfair dismissal protection entirely. For employees who worked at larger employers, it was necessary to serve a ‘qualifying period’ of six months before being able to lodge a claim;127 while for some employees it remained possible for longer probationary periods to be set.128 In addition, no claim could be made in relation to any dismissal effected ‘for genuine operational reasons or for reasons that include genuine operational reasons’. This was most obviously intended to prevent redundancy dismissals being challenged, though the broad definition of the term ‘operational reasons’ potentially gave it a wider application.129 These various exclusions were complemented by two further limitations. Employees working for constitutional corporations were now precluded by s 16(1) from bringing unfair dismissal claims under State law, even if they had previously been covered by a State instrument. And unions were

122See eg Robbins & Voll 2005; Freyens & Oslington 2007; Bryson & Howard 2008; and see also

the OECD analysis quoted in FW Bill EM paras [r.238]–[r.2.41]. The Howard Government’s expert witness was forced to concede the lack of evidence when pressed on the point in Hamzy v Tricon International Restaurants (2001) 115 FCR 78, a case concerning the validity of a regulation excluding casual employees from unfair dismissal protection. The Full Federal Court noted (at 95) that there was ‘no basis for us to conclude that unfair dismissal laws make any difference to employers’ decisions about recruiting labour’. See further Dowling & Howe 2002.

123See Stewart 1995: 106–9; Waring & de Ruyter 1999. It is also worth pointing out that a small business exemption might, on the Howard Government’s own logic, actually dissuade successful small businesses from growing!

124See eg Workplace Relations Amendment (Fair Dismissal Reform) Bill 2004; and see further Pittard 2002; O’Neill 2008.

125See generally Chapman 2006b; Pittard 2006. 126Then, as now (see [19.36]), the count included employees in any related corporation. 127This was an increase from the requirement of serving three months that had been

introduced by the Workplace Relations Amendment (Termination of Employment) Act 2001. 128As to the reasonableness of such probationary periods, see the case law surveyed in

Donaghey 2006: 103–23. As to the relationship between the concepts of a qualifying period and a probationary period, see Baker v University of Ballarat (2005) 151 IR 122.

129See further [19.72]–[19.73].


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prohibited from seeking to include protections against unfair dismissal in collective agreements negotiated under the WR Act.130

[19.30] The effect of these changes on the number of unfair dismissal claims lodged under the WR Act was dramatic.131 During the first year after the Work Choices amendments took effect in March 2006, total claims fell by 18.5% – this at a time when the number of employees covered by the federal system had increased dramatically. In Victoria, where there had been no change in coverage, claims fell from 3688 to 1994. There was, by contrast, an increase in applications under the unlawful termination provisions, which were largely unaffected by the reforms.

(d) Forward with Fairness: A New Regime

[19.31] In its ‘Forward with Fairness’ policy, Labor committed itself to establishing ‘a simpler unfair dismissal system which balances the rights of employees to be protected from unfair dismissal, with the need for employers to manage their workforce, and to ensure a faster, less costly and less complex process for all’ (Rudd & Gillard 2007a: 19). Only higher paid non-award employees would be excluded altogether. All other employees would become eligible after serving a qualifying period that allowed their employer an ‘adequate opportunity’ to determine their suitability. The needs of small business would be acknowledged by imposing a longer qualifying period – 12 months, rather than the six months required for larger employers.132 There would also be a Fair Dismissal Code which, if complied with by a small employer, would shield them from any claim. As for the process for resolving claims, it would involve a single, informal conference at which FWA would be required to reach a conclusion. There would be ‘no formal written submissions, no cross examination and no hearing’ (Rudd & Gillard 2007a: 20). The new regime would be ‘a fast and simple system, which left lawyers out of the picture and encouraged an end to the matter after a conference, not endless days of hearings before the Industrial Relations Commission’ (Rudd & Gillard 2007b: 18).133 It was also confirmed that a ‘genuine redundancy’ would not be treated as an unfair dismissal (ibid: 19).

[19.32] Labor’s plans were implemented in the form of the provisions as to unfair dismissal in Part 3-2 of the FW Act.134 The objects of the Part are set out in s 381. They include establishing a framework that balances the needs of business (including small business) and of employees, that has ‘quick, flexible and informal’ procedures, and that places an ‘emphasis on

130See WR Act s 356; WR Regs 2006 Ch 2 reg 8.5(5). Note that some State laws purported to

allow federal system employers to make unregistered agreements consenting to the arbitration of unfair dismissal claims by the relevant State Commission: see [6.67].

131See Chapman 2009a: 211–12, from which the figures quoted in this paragraph are taken. 132Cf Chapman 2009a: 225, criticising the absence of any evidence or research to justify this

distinction. 133For criticism, see Mourell & Cameron 2009. 134See generally Chapman 2009c.

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reinstatement’ in providing remedies for a dismissal found to be unfair. The relevant procedures and remedies are specifically ‘intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned’ (s 381(2)).135 The provisions of Part 3-2 are described in detail below, followed by an examination of the separate provisions in the Act dealing with unlawful termination. In terms of coverage, the new regime operates more or less exactly as described in Forward with Fairness. Its effect has been to bring an estimated 100,000 previously exempt businesses, employing between them around 3 million employees, back within the scope of the federal unfair dismissal system.136 Unsurprisingly, given what has already been said, that restoration of unfair dismissal rights appears to have had no obvious impact on employment levels. Where the FW Act differs from Forward with Fairness, however, is in the process used to handle claims. As will be seen, it is far from being the lawyer-free, conference-focused regime that had been promised.

19.4 Unfair Dismissal Claims under the Fair Work Act

(a) Eligibility

[19.33] Under s 390(1)(a) of the FW Act, FWA may not grant a person a remedy in respect of an unfair dismissal unless it is satisfied that, at the time of being dismissed, the person in question was ‘protected from unfair dismissal’. Section 382 provides that an employee is so protected if they can satisfy two requirements. In the first place, they must have completed the ‘minimum employment period’ prescribed by s 383. Secondly, they must either be covered by an award or enterprise agreement, or have annual earnings that are less than the ‘high income threshold’ prescribed under s 333. In addition, they will need to show that they have been dismissed, within the meaning of s 386. These various requirements are explored in more detail below, together with the provisions in the Act that seek to preclude an employee from making multiple applications in relation to their dismissal. It should also be noted that only national system employees are eligible to bring a claim.137 This not only excludes non-national system employees, but independent contractors and other workers who do not meet the common law description of an employee.138 As will appear later, however, non-national system employees can access the unlawful termination jurisdiction.139

135Once again, a note adverts to the origin in this phrase in Re Loty and AWU [1971] AR (NSW)

95 at 99. 136FW Bill EM: para [r.13]. 137See s 380, which states that any reference in Part 3-2 to an ‘employee’ or ‘employer’ is to a

national system employee or employer. 138See eg Zhou v Aims Real Estate [2009] FWA 1135. The only exception concerns certain police

officers: see [5.08], [8.39]. 139See Chapter 19.5.


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[19.34] Importantly, the new legislation omits a series of qualifying requirements or exclusions that had been progressively introduced by the Keating and Howard Governments. Aside from once again permitting claims against employers with less than 100 employees, the most significant reform in this regard is the removal of the blanket exclusion of employees (including trainees) on fixed term, fixed task or seasonal contracts.140 If such employees are not re-hired at the end of their engagement, they will not have been ‘dismissed’ and hence will not be eligible to seek relief, as explained below.141 But if they are let go in the middle of their contracts, they can now potentially make a claim unless excluded on some other basis. A further exclusion that has disappeared is that relating to probationary employees.142 While employers may still want to nominate a probationary period, for the purpose of assessing a new employee, that employee will generally become eligible to make an unfair dismissal claim as soon as they have served the applicable minimum employment period. There is no scope under the FW Act for varying that minimum period by agreement. Finally, many ‘regular’ casuals need no longer wait 12 months to become eligible to challenge their dismissal.143 Unless they are working for a small business employer, they need only serve the standard six-month minimum employment period.

(i) Minimum employment period

[19.35] The minimum employment period required by s 383 is ordinarily six months. That period must be dated from the time the employee was given notice of their dismissal, or immediately before the dismissal itself, whichever happened earlier. But the period extends to 12 months in the case of a ‘small business employer’. That term is generally defined in s 23 to mean an employer that has fewer than 15 employees. This is calculated on a ‘headcount’ basis – all workers (whether full-time or part-time) are counted, with the sole exception of casuals who are not employed on a regular and systematic basis. However, under a compromise negotiated by the government to secure support for the Fair Work Bill in the Senate, this definition does not apply for the first 18 months of the new legislation. Instead, Schedule 12A to the TPCA Act provides that for unfair dismissal purposes a small business employer is one that has fewer than 15 full-time equivalent positions. The calculation is determined by a complex formula, which essentially involves totalling the number of ordinary weekly hours worked in the business (averaged over the four weeks preceding the dismissal), then dividing that total by 38. Hence a business might have considerably more than 15 workers on its books, yet still fall below the threshold if many of them work on a part-time basis. After 1 January 2011,

140Cf WR Act (as amended) s 638(1)(a)–(b),(e),(g). 141See [19.48]–[19.50]. 142Cf WR Act (as amended) s 638(1)(c). 143Cf WR Act (as amended) s 638(1)(d).

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however, the definition will revert to the simple headcount as provided by s 23.

[19.36] In all cases, both before and after that date, the count includes the employee who is claiming unfair dismissal, and any other employee dis-missed at the same time. It also includes any employees who work for an ‘associated entity’ of the employer, within the meaning of s 50AAA of the Corporations Act 2001.144 This is an important provision, since it would otherwise allow a business to minimise its exposure to unfair dismissal claims by dividing its workforce between a series of small employing entities. It appears that related bodies overseas count for this purpose.145 This means that what might otherwise appear to be a ‘small’ employer in Australia will not be treated as a small business employer for the purposes of the FW Act, because it is part of a larger multinational group.146

[19.37] Under s 384(1), an employee’s period of employment is generally determined by the ‘continuous service’ they have completed with their employer, as defined in s 22. As noted in an earlier chapter,147 that provision refers to the ‘period during which the employee is employed by the employer’, excluding (among other things) certain periods of unpaid leave.148 Although neither s 22 nor s 384 say so explicitly, it would seem clear that an employee’s service with an employer is not taken to restart for this purpose every time they change jobs with that employer, even if they are engaged under a new contract. The only exception might be where there is a sufficient break between separate engagements to justify a conclusion that the employee was not ‘employed’ throughout the period.

[19.38] As far as a period of casual employment is concerned, s 384(2)(a) makes it clear that this will not count towards the minimum period unless the employment in question was ‘on a regular and systematic basis’, and the employee had a reasonable expectation of ongoing employment on that basis.149 Consistent with what has been said above, however, it would seem that a ‘regular’ casual who met those criteria, and was then offered a permanent position, would not be taken to restart their minimum period. It

144As to the critical question of whether one body ‘controls’ another for the purpose of this

definition, see eg Adams v Condamine Catchment Natural Resource Management Corp Ltd [2010] FWA 5374.

145See eg Wilkinson v Hospitality Marketing Concepts Pty Ltd (AIRC, PR973660, 11 August 2006); Bomford v Porta (Tas) Pty Ltd [2009] AIRC 880.

146But note the practical difficulties that may arise in determining the ‘true’ relationship between local and foreign affiliates: see eg Arulchelvam v MCH Cargo Australia Pty Ltd [2008] AIRC 575.

147See [10.28]. 148Unauthorised absences or periods of unpaid leave do not generally break an employee’s

continuity of service, as s 22(3) makes clear. But they may be sufficient to prevent an employee reaching the minimum service needed to make a claim: see eg Webster v Toni and Guy Port Melbourne Pty Ltd [2010] FWA 4540. A period of work as an independent contractor, rather than as an employee, will also not count for the purpose of satisfying the minimum employment period: see eg Wright v Runge ICT Group Pty Ltd [2010] FWA 3148.

149See the extensive discussion in Ponce v DJT Staff Management Services Pty Ltd [2010] FWA 2078 as to the circumstances in which this requirement will be satisfied.


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is also clear from s 22(5) that, as a general rule, an employee will maintain their continuity of service when they move to new a job with a related employer within three months of having been dismissed, or when they are a transferring employee who is re-employed following a transfer of business.150 Hence there is no need to re-start the minimum employment period. The only exception is where the new employer informs the employee that their previous service will not be counted for this purpose. But this must be done in writing before the new employment commences,151 and does not apply where the new employer is an associated entity of the old employer (s 384(2)(b)).

(ii) High income earners

[19.39] The exclusion of higher paid non-award employees was originally introduced by the Keating Government to meet employer concerns about the possibility of high-paid executives using the new laws to increase the size of their severance payments, as indeed had become a feature of some State unfair dismissal systems in the 1980s and early 1990s.152 This fear was fuelled by a number of highly publicised claims that were lodged as soon as Division 3 became operative in 1994. The government argued at the time that the amendment was necessary to prevent the Industrial Relations Court being ‘clogged’ by the length and technicality of the proceedings involved in such claims. The exclusion has been retained ever since, with the ‘salary cap’ generally being indexed to rise with inflation. Little if any attempt has been made by successive governments to justify the exclusion by reference to hard and fast evidence, or to consider the extent to which those excluded can meaningfully be expected to protect themselves against unfair termination by negotiating appropriate contractual arrangements.

[19.40] Under the FW Act, and regardless of how much they earn, an employee is eligible to bring an unfair dismissal claim if they are covered by a modern award, or if an enterprise agreement applies to them (s 382(1)(b)(i),(ii)). The same is true if they are covered by an ‘old’ award, or a transitional agreement applies to them (TPCA Act Sch 3 item 36; Sch 3A item 51).153 Even if a high-earning employee has accepted a ‘guarantee’ of their earnings under Division 3 of Part 2-9, so that a modern award does not apply to them,154 the employee can still complain of unfair dismissal – because they remain covered by that award. [19.41] On the other hand, if there is no award coverage, and no agreement applies, an employee can only bring a claim if the sum of their 150As to the definitions of a ‘transferring employee’ and a ‘transfer of business’, see [12.100]–

[12.102]. Under the WR Act, by contrast, a qualifying period would generally restart on a transmission of business: see eg Aged Care Services Australia Group Pty Ltd v Ziday (2008) 172 IR 385.

151See eg Ahmed v Serco Australia Pty Ltd [2010] FWA 5121. 152See Stewart 1995: 90, 110–11. 153Cf Taylor-Hunt v Downer EDI Works Pty Ltd [2010] FWA 4626, where the applicant was

found not to fall within the coverage of either an award or an agreement. 154See [11.60]–[11.63].

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‘annual rate of earnings’ at the time of dismissal, and any amounts prescribed by the regulations, is less than the ‘high income threshold’ (s 382(b)(iii)). This is a figure which is calculated in accordance with regulations made pursuant to s 333, under which it can be indexed to rise, but never to fall. In accordance with reg 2.13, the threshold had risen to $113,800 as from 1 July 2010. Unlike the position with award-related guarantees, the threshold is not prorated for part-time employees, but simply operates as a set limit.155

[19.42] In calculating an employee’s annual rate of earnings, it is necessary to refer to the definition of ‘earnings’ in s 332.156 Besides the employee’s wages (s 332(1)(a)), the term includes ‘amounts applied or dealt with in any way on the employee’s behalf or as the employee directs’ (s 332(1)(b)). This would, for instance, cover amounts paid to a childcare centre or a car park as part of a package of benefits; but not, it would appear, the value of accommodation or a motor vehicle supplied by an employer other than as part of such a package.157 Also included are any ‘non-monetary benefits’ to which the employee is entitled in return for performing their work, and for which a ‘reasonable money value’ has been agreed between the parties (s 332(1)(c),(3)) – for example, the use of a car when included in a salary package. But by virtue of s 332(2) an employee’s earnings are taken not to include reimbursements, or any payment ‘the amount of which cannot be determined in advance’. A note suggests that this would include ‘commissions, incentive-based payments and bonuses, and overtime (unless the overtime is guaranteed)’. Also excluded are ‘compulsory’ superannuation contributions, for example made to avoid a charge under the Superannuation Guarantee legislation, or to discharge an obligation under a defined benefit or statutory scheme (s 332(2)(c),(4)). But additional superannuation contributions required from an employer under the terms of an enterprise agreement or employment contract, for example as part of a salary package, would count towards an employee’s earnings.

[19.43] Regulations may be made under s 332 either including or excluding certain benefits in calculating ‘earnings’, but at the time of writing no such regulations had been promulgated. However, a regulation has been made under s 382(b)(iii). Regulation 3.05 of the FW Regs requires that, in determining whether an employee is over the high income threshold, account must be taken not just of their annual rate of earnings, but of certain other amounts. In the first place, where all or part of an

155This is because the prorating provision in s 329(2) does not appear to be picked up by the

reference in s 382(b)(iii) to the high income threshold set by s 333. 156Note that the previous legislation, in a similar context, used the (undefined) term

‘remuneration’: see WR Act (as amended) s 638(6)–(7)); and see Donaghey 2006: 135–9. Given that the terms are different, caution should be exercised before applying pre-Fair Work Act authorities on this point.

157See eg Batley v Cocos Islands Co-operative Society Ltd [2010] FWA 2289, suggesting (at [34]) that to be included the amount in question must be ‘distinguishable as a discrete amount expended on behalf of the employee as part of their total “cashable” salary or wages and not an amount which is indistinguishable from the normal operational costs of employing employees’.


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employee’s income is paid at piece rates that are set by reference to a ‘quantifiable output or task’, rather than time worked, any income of that type over the previous 12 months is to be taken into account (reg 3.05(2)–(5)).158 Secondly, FWA is given a discretion to include a benefit that is not a payment of money, and that does not qualify as a ‘non-monetary benefit’ within the meaning of s 332(3). It may do so where it is satisfied that it is appropriate to take it into account, and that it can attribute a ‘real or notional’ value to the benefit, in default of any agreement by the parties (reg 3.05(6)).

(iii) The need for a dismissal

[19.44] Where the WR Act required an applicant to show that there had been a ‘termination of employment at the initiative of the employer’,159 the FW Act requires FWA to be satisfied that a person has been ‘dismissed’ before there can be any finding of unfair dismissal (s 385(a)). While the term ‘dismissal’ has been more commonly used in the State systems, it has often been treated as synonymous with the phrase used in the previous federal statute.160 This is reinforced by the definition of ‘dismissed’ in s 386 of the FW Act, which not only incorporates the WR Act terminology but is evidently intended to be a codification of the case law under that statute.

[19.45] Section 386(1)(a) commences by indicating that a person is dismissed if their employment ‘has been terminated on the employer’s initiative’. As the FW Bill EM confirms (at para 1528), this is intended to ‘capture’ previous case law on that phrase, such as the decision of the Industrial Relations Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd (No 2).161 As the Full Court put it in that case:

[A] termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship …

[I]t is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship.162

On this approach, a wrongful attempt by the employer to dispense with the employee’s services can clearly constitute a dismissal, even if in a strict

158Note that these provisions contain formulae to deal with a situation where the employee has

not been employed for the whole of that 12 months, or has been on leave without full pay during that period.

159See the definition of ‘termination’ in s 642(1) of the WR Act (as amended). 160See eg Fryar v Systems Services Pty Ltd (1994) 1 IRCR 246 at 254; Advertiser Newspapers Pty Ltd

v Industrial Relations Commission of SA (1999) 74 SASR 240 at 259. 161(1995) 62 IR 200. 162Ibid at 205–6; and see also Pawel v AIRC (1999) 94 FCR 231 at 237–8.

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sense it is the employee who puts an end to the employment contract by accepting the employer’s repudiatory breach.163

[19.46] Section 386(1)(b) goes on to include a situation where ‘the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer’. A forced resignation is often referred to as a ‘constructive dismissal’. Even in the absence of an express formulation of the type found in s 386(1)(b), State and federal tribunals had been prepared to treat this as a ‘dismissal’, or a ‘termination’ by the employer.164 For example, in Mohazab itself, an employer’s direction to an employee to resign or have the police ‘called in’ to investigate an alleged act of dishonesty was held to be the ‘critical action’ that brought the employment to an end. The court emphasised that the employee, who wanted to spare both himself and his family the ordeal of a police investigation, had no real choice other than to agree. By contrast, there is no dismissal where it is apparent that the employee has resigned of their own accord, without the employer being at fault.165

[19.47] The more difficult situation is where an employee leaves in response to unacceptable conduct by the employer that amounts to a repudiation of its obligations. Before Work Choices, there was certainly authority for treating this as a constructive dismissal, even if the employer may not have been seeking to bring the employment relationship to an end.166 The only question is what to make of the term ‘forced’, first added to the legislation by the Work Choices amendments,167 and retained by s 386(1)(b) of the FW Act. On one view, it might be taken as requiring the employee to show that they were effectively compelled to resign, that they had no real choice to remain.168 But on a broader interpretation, it would be enough that the employer had seriously breached its obligations in such a way that resignation could be regarded as a ‘probable result’ of the employer’s actions.169 In Australian Hearing v Peary,170 the first Full Bench decision to deal with the new formula, it was confirmed that the employee did not have to prove that the employer intended them to resign. However, in upholding a decision that an employer’s conduct had been so unreasonable that it gave the employee ‘no effective or real choice but to

163See eg Siagian v Sanel Pty Ltd (1994) 1 IRCR 1; Advertiser Newspapers Pty Ltd v Industrial

Relations Commission of SA (1999) 74 SASR 240 at 247–9. 164See eg Roberts v Prince Alfred College (1979) 46 SAIR 598; Allison v Bega Valley Council (1995)

39 AILR ¶5-064; Attorney-General v WA Prison Officers Union of Workers (1995) 62 IR 225. Cf McCarry 1994a.

165See eg Gunnedah Shire Council v Grout (1995) 134 ALR 156; Pacific National (NSW) Ltd v Bell (2008) 175 IR 208; Pritchard v ISS Security Services Pty Ltd [2010] FWA 1740.

166See eg Smith v Department of Administrative Services (1993) 35 AILR ¶384; Woolworths (SA) Pty Ltd v Russian (1996) 66 IR 13; Stevenson v Guardian Hall Pty Ltd (2005) 149 IR 93. The extension of the doctrine of constructive dismissal to such cases is clearly accepted in the UK: see [14.41].

167See WR Act (as amended) s 642(4). 168See eg Hastie v Impress Australia Pty Ltd (2008) 171 IR 311 at [55]–[62]. 169See eg O’Meara v Stanley Works Pty Ltd [2006] AIRC 496 at [23]. 170(2009) 185 IR 359.


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resign’,171 the Full Bench did not indicate whether such a finding was necessary for the resignation to be treated as ‘forced’. It did, on the other hand, make it clear that just because an employer’s conduct has been sufficiently unreasonable to trigger a forced resignation, that does not automatically mean that the dismissal must be treated as unfair.

[19.48] According to s 386(2)(a), there is no dismissal where an employee is engaged for a specified period, task or season, and the employment terminates at the end of that period or season, or the completion of that task. But this will not apply where a ‘substantial purpose’ of the employee’s engagement under a contract of that kind is to avoid the employer’s obligations under Part 3-2 (s 386(3)). Section 386(2)(a) is plainly intended to reflect previous case law to the effect that allowing a contract to expire and not offering a further period of employment cannot be treated as a dismissal.172 It is a question of fact as to whether employees have or have not been engaged for a specified period.173 There have, for example, been cases in which workers apparently engaged under a series of short fixed-term contracts have been held as a matter of fact to have an ongoing employment contract.174 However, this may be difficult to establish in practice, where the employer has been clear as to the nature of the arrangement.175 As a Full Bench of the AIRC noted in Department of Justice v Lunn,176 the practice of engaging staff on a succession of fixed-term contracts may be ‘viewed by some as industrially contentious’. But ‘subject to legislative constraints, employers are entitled to structure their affairs, including the contracts they offer to employees, in the way that they think best suits their interests’. So long as the parties’ intent, viewed objectively, was to create a contract with a fixed end date, that intent should be respected.

[19.49] In Lunn the contract in question was not, strictly speaking, a contract for a ‘specified period’, because it could be terminated on notice during the term.177 Nevertheless, the employer could not be said to have terminated such an ‘outer limits’ contract if it simply allowed the agreed term to expire.178 A similar view has been taken by FWA in Drummond v 171Peary v Australian Hearing [2009] AIRC 152 at [210]. 172See eg Victoria v Commonwealth (1996) 187 CLR 416 at 520; Fisher v Edith Cowan University

(No 2) (1997) 72 IR 464; Saarinen v University of Tasmania (1997) 7 Tas R 154; Griffin v Australian Postal Corp (1998) 155 ALR 369.

173See eg Primus v State Rail (Passenger Fleet Maintenance) (1999) 90 IR 26 (contract ‘expected to continue’ until a certain date held not to be for a specified period).

174See eg D’Lima v Board of Management, Princess Margaret Hospital for Children (1995) 64 IR 19; Minister for Health v Ferry (1996) 65 IR 374.

175See eg Fisher v Edith Cowan University (No 2) (1997) 72 IR 464; D’Ortenzia v Telstra Corp (No 2) (1998) 82 IR 52;

176(2006) 158 IR 410 at [42]. 177For earlier decisions to that effect, see eg Cooper v Darwin Rugby League Inc (1994) 1 IRCR

130; Andersen v Umbakumba Community Council (1994) 1 IRCR 457; O’Hara v Victoria (2004) 133 IR 118. These decisions had the effect that such a contract would not fall within the blanket exclusion that then existed for employees on specified period/task contracts. As noted in [19.34], the FW Act no longer contains such an exclusion.

178See also Marsh v Macquarie University (2005) 147 IR 401.

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Canberra Institute of Technology.179 In that case Deegan C, with whose views a Full Bench later expressed agreement in refusing leave to appeal,180 accepted that an outer limits contract was not a contract for a specified period within the meaning of s 386(2)(a). Nonetheless, it was still open to the employer to argue that allowing such a contract to expire was not a dismissal, as defined in s 386(1).181 It should be noted that in both Lunn and Drummond, short shrift was given to any suggestion that the employer had adopted its fixed-term contract strategy to ‘avoid’ unfair dismissal obligations. It is indeed hard to see how a worker could ever establish that they had been put on a fixed term merely for avoidance purposes, given the many plausible reasons for such an arrangement.

[19.50] The fact that a refusal to re-hire will not be treated as a dismissal has obvious implications for any casual employee seeking to bring an unfair dismissal claim. Certainly a ‘true’ casual who is hired under a short-term contract, and who is refused further work at the end of that contract, can have no claim, regardless of how much they might have expected to receive more work.182 But as noted in Chapter 8, it is not all unusual for tribunals to find that a ‘permanent’ casual does in fact have a single, ongoing contract.183 In contrast with the carefully structured arrangements considered in Lunn and Drummond, many such casuals are engaged on an informal basis, with little attention to the duration of their hiring. If a casual is able to meet the minimum employment requirement by showing regular and systematic engagement over a period of either six or 12 months, and nothing has been done by the employer to establish a pattern of limited-term hirings, the casual may well be able to show that they have been dismissed rather than refused a further contract.184

[19.51] Having dealt more generally with specified period/task contracts, s 382(2)(b) provides that there is no dismissal where employment is terminated at the end of a training arrangement, and the employment was either for a specified duration or otherwise limited to the duration of the arrangement.185 Likewise, no dismissal occurs if an employee is demoted, but accepts the demotion and remains in the employer’s service. But this is so only where there is no ‘significant reduction’ in their remuneration or duties (s 386(2)(c)). Where there is a significant reduction, the better view is that the employee can claim to have been dismissed. So long as the demotion has put an end to the contract under which the employee had 179[2010] FWA 3534. 180Drummond v Canberra Institute of Technology [2010] FWAFB 5455. 181As the Commissioner noted ([2010] FWA 3534 at [51]), this view was supported by the FW

Bill EM at para 1532. 182See eg Pacific Waste Management Pty Ltd v Saley (1993) 51 IR 339; Thompson v Big Bert Pty Ltd

(2007) 168 IR 309. 183See [8.06]. 184See eg M v LD Pty Ltd [2009] FWA 1676 (upheld without reference to this point in Mills v

Lextor Developments Pty Ltd [2010] FWAFB 979). 185See eg Qantas Airways Ltd v Fetz (1998) 84 IR 52 (fixed-term apprenticeship held to be for

‘specified period’ even though duration capable of variation by Commissioner for Vocational Training).


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been engaged, the employee should not lose the right to complain about it merely because they accept what is in effect an offer to do a different job.186 So much indeed was assumed by the High Court in Visscher v Giudice.187

[19.52] There appear to be at least three further ways, not specifically mentioned in s 382(2), in which an employment contract may come to an end without there being a ‘dismissal’. One is where an employee ‘abandons’ their job.188 A second is where the employer and employee agree to terminate the employment by mutual consent.189 Thirdly, there is no dismissal where an employment contract is frustrated or otherwise ends automatically by operation of law.190 As noted in the previous chapter, however, the courts are generally reluctant to allow an employer to plead frustration in the case of a contract that is readily terminated by notice.191

(iv) Avoiding multiple claims

[19.53] Section 725 of the FW Act seeks to prevent multiple applications in relation to a dismissal. It provides that if any application or complaint of a type listed in ss 726–732 is made by or on behalf of a dismissed employee, then no other application or complaint of those types can be made by that employee. The types listed are:

• s 726 – an application to FWA for a bargaining order, on the ground that the employee has been dismissed in breach of the good faith bargaining requirement in s 228(1)(e);192 s 727 – an application to FWA under s 365 to deal with a dispute

over a dismissal alleged to be in contravention of the general protections in Part 3-1;193

s 728 – a general protections court application relating to a dismissal;

s 729 – an unfair dismissal application under Part 3-2; s 730 – an application to FWA to deal with a dispute over what is

alleged to be an unlawful termination;194 s 731 – an unlawful termination application to a court; s 732 – an application or complaint in relation to a dismissal under

any other federal law, or a State or Territory law.

186See Advertiser Newspapers Pty Ltd v Industrial Relations Commission of SA (1999) 74 SASR 240;

Charlton v Eastern Australia Airlines Pty Ltd (2006) 154 IR 239; but cf Brackenridge v Toyota Motor Corp Australia Ltd (1996) 142 ALR 99.

187(2009) 239 CLR 361 at [30], [37]. Their observations were made in the context of s 170CD(1B) of the WR Act, which was to the same effect as s 386(2)(c).

188See eg Erbacher v Golden Cockerel Pty Ltd [2007] AIRC 491; and see further [18.48]–[18.49]. 189It is unclear whether this is what happens where an employee accepts a voluntary

redundancy package: see [18.47]. 190See University of WA v NTEU (2003) 129 IR 348. 191See [18.45]. 192See [21.25], [21.29]. 193See [17.102]–[17.104]. 194As to unlawful termination, see Chapter 19.5.

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This last would plainly include an application under any type of anti-discrimination law,195 as well as any measure that was concerned with protecting employees against victimisation. The broad reference to an application or complaint ‘in relation to’ a dismissal would also, arguably, cover an action by way of judicial review seeking to invalidate a purported termination,196 an appeal process provided under public sector legislation,197 or the activation of a dispute resolution procedure in an enterprise agreement.198 Presumably, however, a common law action for wrongful dismissal would not be caught, on the basis that the reference to a ‘law’ in s 732 is to a statute, or to an instrument having effect under a statute.

[19.54] The effect of these provisions is that, if an employee complains of unfair dismissal under the FW Act, they are barred from pursuing any other type of dismissal-related claim. Conversely, pursuing an action under the general protections or an anti-discrimination law will preclude an unfair dismissal complaint. However, as ss 726–732 each make clear, any bar is lifted whenever an application is withdrawn, or fails for want of jurisdiction on the part of the body to which the application has been directed. Other proceedings may also be instituted if FWA certifies that it has been unable to resolve a general protections or unlawful termination dispute (ss 727(1)(b)(iii), 730(1)(b)(iii)). Similarly, an unfair dismissal applicant can pursue other avenues if their claim fails because FWA is satisfied the dismissal was a case of genuine redundancy (s 729(1)(b)(iii)).199 Otherwise, however, the mere fact that an application or complaint is unsuccessful will not mean that the applicant can then try a different action. On the other hand, it is specifically provided that no bar will arise from a proceeding relating solely to a failure to provide a benefit (such as notice, or severance pay) to which an employee was entitled on dismissal (s 733). It would also appear that while a dismissed employee might be barred by s 725 from lodging a certain type of application because of a previous complaint that they had made, it would still be open – subject to any arguments about res judicata or issue estoppel200 – for someone else acting on their behalf to seek a remedy: for example, a union initiating a dispute resolution process under

195See eg Deva v University of Western Sydney (2009) 191 IR 268; Lin v University of Melbourne

(2009) 179 IR 242; Emerald Ocean Developments Pty Ltd v Johnson (2002) 120 IR 381. Where a complaint under the Australian Human Rights Commission Act 1986 is amended so that it relates to a dismissal, where it had not done so before, it is from that point taken to be a complaint relating to a dismissal (FW Act s 732(3)).

196See eg Baker v University of Ballarat (2005) 151 IR 122; but cf Stannard v McIntyre (2004) 140 FCR 249. Note that these cases were decided under the more narrowly worded s 170HB of the WR Act. As to actions for judicial review, see [19.82].

197Ilardo v Rail Corp NSW [2010] FWA 3892, distinguishing decisions such as State Transit Authority v Caine (2004) 135 IR 73 made under s 170HB.

198As to the possibility of invoking such procedures in relation to dismissals, see [19.85]. Cf Alcoa of Australia Ltd v Barrett (2008) 170 IR 254, again decided under the more narrowly worded s 672 of the post-Work Choices WR Act.

199See [19.73]. 200As to whether a decision by a tribunal on an unfair dismissal application can raise an issue

estoppel, see Miller v University of NSW (2003) 132 FCR 147.


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an agreement. But the reverse would not be true. If the union made its application first, this would arguably bar any subsequent application by the employee.201 Furthermore, where an employee lodged an unfair dismissal application, then was allowed (perhaps mistakenly) to pursue another application which was ultimately rejected, s 725 would not bar them reopening the unfair dismissal claim; but the employer could nonetheless ask FWA to dismiss the claim under s 587 as being vexatious.202

(b) Procedures for Dealing with a Complaint

[19.55] An unfair dismissal complaint is commenced by the dismissed worker lodging an application with FWA under s 394(1). A filing fee (currently $60.60) must be paid by each applicant, unless FWA is satisfied this would cause serious hardship to the applicant (s 395; reg 3.07). An application must ordinarily be made within 14 days of the dismissal taking effect (s 394(2)). FWA does, however, have a discretion under s 394(3) to accept late applications in ‘exceptional circumstances’, taking into account the following factors:

(a) the reason for the delay; and (b) whether the person first became aware of the dismissal after it had

taken effect; and (c) any action taken by the person to dispute the dismissal; and (d) prejudice to the employer (including prejudice caused by the delay);

and (e) the merits of the application; and (f) fairness as between the person and other persons in a similar position.

As the FW Bill EM (paras 1573–4) confirms, this list is based on the principles articulated by the Industrial Relations Court in Brodie-Hanns v MTV Publishing Ltd,203 with the addition of the factor set out in paragraph (b). What has also been added, however, is that the circumstances justifying the extension must be ‘exceptional’. It has been suggested that this has created a ‘higher hurdle’ for extensions of time, although it is not necessary for the circumstances to be ‘unique’ or ‘unprecedented’.204 Even under the WR Act, late applications would generally only be accepted where the applicant had a good explanation for missing the deadline, and the respondent would not be unduly prejudiced by the delay.205 That appears to remain the case: for example, it has been held that incorrect advice or representative error may still provide a good reason for a delay in lodging and make it equitable to grant an extension, as

201This is because the operation of s 725 would be triggered by s 732, which (like ss 726–731)

refers to an action ‘by, or on behalf of, the person in relation to the dismissal’. It is only s 725 itself, the barring provision, which refers solely to the ‘person who has been dismissed’ making an application or complaint.

202See eg Austin v Victoria (Department of Education and Training) (2008) 170 IR 45. 203(1995) 67 IR 298 at 299–300. 204Johnson v Joy Manufacturing Co Pty Ltd [2010] FWA 1394 at [25]–[28]. 205See eg Nottage v National Australia Bank Ltd (2007) 166 IR 380.

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was the case under the previous legislation.206 On the other hand, while ignorance of the time limit may sometimes be excused, a failure by a worker to seek any advice or information until well after the time limit has expired will count against any extension.207

[19.56] The Act itself has relatively little to say about how an application should be handled. Section 396 requires that FWA must, before considering the merits of an application, consider whether the application was made within the required period; whether the applicant was protected from unfair dismissal within the meaning of the provisions discussed above; whether the dismissal was consistent with the Small Business Fair Dismissal Code (if applicable); and whether it was a case of genuine redundancy. The last two of those matters are discussed later on.208 After considering these preliminary issues, it is then for FWA to determine whether to deal with the matter ‘on the papers’, or to convene a conference or a hearing.209 Unlike the position under the previous legislation, or most of the State systems, there is no requirement to proceed through conciliation to arbitration. What the Act does say, however, is that FWA must conduct a conference or hold a hearing if the matter involves disputed facts (s 397). Any conference to deal with an unfair dismissal claim must be held in private (s 398(2)). FWA must also consider ‘any difference in the circumstances of the parties’, as well as the wishes of those parties, in determining how to deal with the application in such a conference (s 398(3)–(4)). On the other hand, it must not hold a hearing unless it considers it appropriate to do so, taking into account the parties’ wishes and ‘whether a hearing would be the most effective and efficient way to resolve the matter’ (s 399(1)). If it does decide to hold a hearing, however, it may still decide to deal with parts of the matter in some other way (s 399(2)). Conversely, it is not prevented from moving into a hearing either before, during or after a conference (s 399(1)).

[19.57] A person reading this part of the Act might gain the impression that unfair dismissal applications are handled in a highly flexible manner, with cases being dealt with in different ways according to their circumstances. The reality is otherwise. Since the new system commenced in July 2009, FWA has chosen to adopt a set procedure for applications. Over its first year in operation, that procedure has gradually been refined – and also applied more strictly and consistently across the country. It is a process that seeks to resolve matters more quickly than had been the case under the system it replaced. But it bears only a passing resemblance to the procedure described in Forward with Fairness.210

206See eg Johnson v Joy Manufacturing Co Pty Ltd [2010] FWA 1394; Bradbury v Interact Australia

(Victoria) Ltd [2010] FWA 4829. The second of these cases dealt with a similarly worded power under s 366(2) to grant an extension of time (beyond 60 days) for a general protections application: see [17.103].

207See eg Wemyss v Mission Australia Employment Services [2010] FWA 1798. 208See [19.68]–[19.73]. 209As to FWA’s general powers in dealing with a matter, see [6.16]–[6.19]. 210See [19.31].


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[19.58] After an application is lodged, FWA gives a copy to the employer and asks it to complete a form outlining the reasons for the dismissal and the employer’s response to the applicant’s contentions. The employer is also given an opportunity, if it wishes, to object to the application being dealt with at all. It may, for instance, argue that the applicant was not eligible to make a claim, or ask FWA to exercise its power under s 587 to dismiss the application on the ground that it is ‘frivolous or vexatious’ or has ‘no reasonable prospects of success’.211 In some, though by no means all, cases where such an objection is made, the matter will go to a preliminary hearing by a Member of FWA. More often though, the matter is swiftly listed for conciliation. This is usually conducted by telephone, rather than face-to-face, by a specialist conciliator. The conciliators who handle this part of the process generally have a background in alternative dispute resolution, and/or workplace relations. They are not Members of FWA as such, but public servants appointed to the staff of FWA. So far as the authors are aware, they have not been formally delegated with the power to conduct conferences, as s 625(1)(c) would plainly allow. This rather curious omission means that the processes they conduct have no status under the Act. In other words, conciliation is completely voluntary – a fact acknowledged by FWA,212 but not always advertised to parties.213 It also means that the conciliators cannot, for instance, make determinations on whether a party may be assisted or represented by a lawyer or paid advocate. Nonetheless, most parties choose to participate, and in the first nine months of the new system 81% of claims were settled at conciliation, with only 2% in total going on to ‘merits arbitration’.214 One reason for this is that any claim not settled at conciliation is immediately listed for determination by a Member, with directions to the parties to file witness statements and outlines of argument. No further opportunity is offered for conciliation, although the parties may be offered an opportunity for the matter to be dealt with by means of a conference, rather than a more formal hearing. Either way, given the preparation costs involved, there is a powerful incentive to settle at or soon after conciliation.215

211Under the WR Act the view was taken that an application should be dismissed on this basis

only where it was ‘manifestly untenable or groundless’: Wright v Australian Customs Service (2003) 120 IR 346 at 358. However, in Applicant v Respondent [2010] FWA 1765 it was suggested that the different scheme of the FW Act requires a less stringent approach, and that it is enough to conclude that the applicant does not have ‘evidence of sufficient quality and weight to be able to succeed at trial’.

212See eg Acton 2010: 9. 213At the time of writing, for example, the otherwise helpful material about unfair dismissal

claims on FWA’s website (www.fwa.gov.au) made no mention of this fact. 214See Acton 2010: 10–11, which also records that conciliations were on average held 25 days

after lodgement of the application, with 92% being conducted by telephone. By comparison, under the WR Act around 75% of claims typically settled at conciliation, with the first conference typically being held between 45 and 55 days after lodgement: AIRC 2009: 10, 47.

215In the Forward with Fairness Implementation Plan, Labor had promised that it would effectively end the payment of ‘go away money’ by employers to settle unmeritorious claims: Rudd & Gillard 2007b: 18. Needless to say, the practice is still very much alive,

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[19.59] Where a matter does go to a hearing, whether on a preliminary point or on the merits, it will be conducted in much the same way as an arbitration under the previous system. As noted in an earlier chapter, certain lawyers and paid advocates can be excluded, but in practice are generally allowed to represent their clients.216 Where a decision of any kind is issued, any person aggrieved may lodge an appeal with a Full Bench under s 604. However, s 400(1) makes it clear that the Full Bench must not grant leave to appeal unless it is in the public interest to do so. This effectively sets a higher threshold for intervention than in relation to other matters under the Act, where it might be sufficient simply to demonstrate error.217 So much was noted in GlaxoSmithKline Australia Pty Ltd v Makin,218 where although the Full Bench was reluctant to offer any definition of the ‘public interest’, it suggested that:

[T]he 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 …219

Section 400(2) also states that where an appeal under Part 3-2 involves a question of fact, it can only be made on the ground that the decision ‘involved a significant error of fact’.

(c) ‘Harsh, Unjust or Unreasonable’

[19.60] For any finding of unfair dismissal to be made, FWA must be satisfied that the dismissal was ‘harsh, unjust or unreasonable’ (s 385(b)). These epithets have long been used, either singly or in combination, to denote the type of dismissal or termination that may call for redress. They have been described as ‘ordinary non-technical words which are intended to apply to an infinite variety of situations where employment is terminated’.220 Even before they appeared in legislation, they had been adopted by some of the State tribunals in order to provide a consistent basis for the resolution of disputes over dismissals. In applying these criteria, the tribunals have generally tried to avoid what has been described as ‘adjectival tyranny’.221 But in doing so they have frequently had recourse to

though the amounts in question are often very low – a reflection of the generally very meagre amounts of compensation on offer to successful applicants: see further [19.76].

216See [6.20]–[6.21]. 217See [6.25]. 218[2010] FWAFB 5343. 219Ibid at [27]. 220Bostik (Australia) Pty Ltd v Gorgevski (1992) 36 FCR 20 at 28; Byrne v Australian Airlines Ltd

(1995) 185 CLR 410 at 467. 221Re Loty and AWU [1971] AR (NSW) 95 at 99.


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vague concepts such as securing ‘a fair go all round’,222 or ensuring the observance of ‘industrial fair play’.223

[19.61] Historically, the State tribunals in particular tended to accord a degree of deference to the notion of managerial prerogative. Emphasis was consistently placed on the need to ensure that management was not entirely deprived of the power to make employment decisions and that a dismissal was not unfair merely because the tribunal might have reached a different decision if it were in the employer’s place.224 As against that, there was a strong emphasis on procedural fairness, particularly in terms of affording the employee a reasonable opportunity to respond to allegations of misconduct.225 It also became firmly established that an employer should not in ordinary circumstances dismiss for incompetence or poor work performance without first alerting the employee to the problem and giving them a reasonable chance to improve. Although common sense and principles of sound management might suggest that this should be the case, this insistence has helped to ensure the widespread adoption of a standard procedure for dealing with alleged incapacity. Typically, this involves employees receiving a series of warnings, escalating in seriousness, as a precursor to dismissal. A similar procedure may also be employed in relation to absenteeism or misconduct of a minor nature.226

[19.62] The relevance of factors such as whether the employee has been given a fair hearing or any chance to improve their performance has now been given legislative expression. This has been done by including these factors in a list of considerations that a tribunal is directed to take into account in dealing with allegations of unfair dismissal.227 In the FW Act, the relevant provision is s 387:

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and (c) whether the person was given an opportunity to respond to any

reason related to the capacity or conduct of the person; and

222Ibid; Re Registered Nurses Conciliation and Arbitration Board (1984) 9 IR 19 at 30; Undercliffe

Nursing Home v Federated Miscellaneous Workers Union of Australia (1985) 65 WAIG 385 at 386.

223Minchin and Gorman v St Jude’s Child Care Centre (1973) 40 SAIR 106 at 116–17; Hallett Brick Industries Ltd v Kenniwell (1976) 43 SAIR 477 at 488–9.

224See eg Western Suburbs District Ambulance Committee v Tipping [1957] AR (NSW) 273 at 279–80; North West County Council v Dunn (1971) 126 CLR 247 at 263; Woolworths (SA) Ltd v Schutz (1985) 52 SAIR 281 at 287.

225See eg Bunnett v Henderson’s Federal Spring Works Pty Ltd (1989) 31 AILR ¶356; Bi-Lo Pty Ltd v Hooper (1992) 53 IR 224; and see further Johnstone et al 1991.

226See [14.54]. 227As to the duty cast on the tribunal by such a provision to consider each of the nominated

factors, see Edwards v Giudice (2000) 169 ALR 89 at 92; Re AIRC; Ex parte Smith (2004) 134 IR 316.

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(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that FWA considers relevant.

This is essentially the same list that appeared in the WR Act,228 with the addition of the factor listed in paragraph (d).229

[19.63] The first of the factors listed in s 387 speaks of a ‘valid reason’ for dismissal.230 It has been said that a valid reason is one that is ‘sound, defensible or well founded’, rather than ‘capricious, fanciful, spiteful or prejudiced’.231 A reason may be valid even if there would not be grounds for summary dismissal at common law.232 Conversely, there may be no valid reason for a termination even where the employer is legally entitled to dismiss the employee.233 To provide a flavour of the case law in this area, recent Full Bench decisions have treated the following as valid reasons for dismissal:

• assaulting, or fighting with, a co-worker;234 unauthorised access to co-workers’ e-mails and computer files;235 leaking confidential documents;236 misappropriation of funds;237 refusing to comply with legitimate directions;238

228See WR Act s 170CG(3); WR Act (as amended) s 652(3). These two provisions were identical,

except in so far as s 170CG(3)(a) referred to a ‘valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer’s undertaking, establishment or service’. The italicised words were omitted from s 652(3)(a), because of the exclusion that had been introduced by Work Choices for operational reasons dismissals. Section 387(a) of the FW Act likewise omits those words, because of the separate treatment of ‘genuine redundancy’ dismissals: see [19.73].

229As to the significance of not being given a chance to call upon a ‘support person’, see eg N v The Bakery [2010] FWA 3096.

230As to the breadth of this term, see eg Qantas Airways Ltd v Cornwall (1998) 84 FCR 483; and see further Chapman et al 1997. As to the meaning of the term ‘capacity’, see Crozier v AIRC [2001] FCA 1031.

231Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 at 373. 232Annetta v Ansett Australia Ltd (2000) 98 IR 233; Shanahan v AIRC (No 2) (2006) 236 ALR 612;

Royal Melbourne Institute of Technology v Asher (2010) 194 IR 1. 233Miller v University of NSW (2003) 132 FCR 147 at 154, 170–1. 234Kleidon v Toyota Motor Corp Australia Ltd (2009) 187 IR 243; Spillard v Patrick Stevedores

Holdings Pty Ltd (2010) 193 IR 184. 235Metricon Homes Pty Ltd v Bradley (2009) 181 IR 115. 236Ziogas v Telstra Corp Ltd [2010] FWAFB 2664. 237Royal Melbourne Institute of Technology v Asher (2010) 194 IR 1.


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breach of safety procedures;239 offensive and intimidating behaviour;240 testing positive at work for alcohol use, in breach of a clear

policy;241 repeated speeding by a truck driver;242 ‘high range’ drink driving, on the part of a brewery worker.243

In most of these cases, the Full Bench went on to uphold the dismissal. However, the presence of a valid reason is not determinative. An employer may have a perfectly good reason for the dismissal of a worker, but the dismissal may nonetheless be found to be unfair because of the way it was handled, or because the worker has a long record of hitherto unblemished service.244

[19.64] The same point applies to the question of giving the employee an opportunity to ‘respond’ to whatever reason was the basis for their dismissal. It seems this does not just refer to the employee being given a chance to respond to any allegations made against them, but contemplates that they will have an opportunity to persuade the employer not to dismiss them by (for example) putting forward extenuating circumstances or emphasising their previous record.245 Under the original 1993 legislation, any failure to accord a fair hearing would in itself render a termination unlawful, regardless of whether the employee’s conduct or performance appeared to merit dismissal.246 But under s 387, it is just one factor to be considered. This accords with the approach adopted by the High Court in Byrne v Australian Airlines Ltd247 in relation to an award provision forbidding harsh, unjust or unreasonable dismissal. Two baggage handlers who worked at an airport were accused of pilfering from passengers’ bags. The evidence principally relied on by the employer was a video recording of them at work. Although the actions portrayed were suspicious, the evidence was far from conclusive. The employees were not shown the video until five months later. When they failed to give an immediate explanation for their behaviour, they were dismissed. The Full Court of the Federal Court held that the award had been breached, since among other things the employer had not clearly explained the accusation against them and had not given them a reasonable opportunity to present their side of the story,

238Darvell v Australia Postal Corp [2010] FWAFB 4082. 239GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343. 240Randall v Australian Taxation Office [2010] FWAFB 5626. 241Gane v Rail Corp of NSW [2010] FWAFB 3788. 242Rand Transport (1986) Pty Ltd v Gervasoni (2010) 193 IR 279. 243Kolodjashnij v Lion Nathan [2010] FWAFB 3258. 244See eg Royal Melbourne Institute of Technology v Asher (2010) 194 IR 1; GlaxoSmithKline

Australia Pty Ltd v Makin [2010] FWAFB 5343; Francis v Kalgoorlie Consolidated Gold Mines Pty Ltd [2010] FWA 5472.

245Shields v Carlton & United Breweries (NSW) Pty Ltd (1999) 86 FCR 446. 246See Industrial Relations Act 1988 s 170DC; and see eg Shields v Carlton & United Breweries

(NSW) Pty Ltd (1999) 86 FCR 446. 247(1995) 185 CLR 410.

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especially in light of the time delay involved.248 However, this finding was overturned by the High Court. The dismissal could not be regarded as harsh, unjust or unreasonable merely by reason of a lack of procedural fairness, without at least considering whether the employees’ conduct nonetheless warranted dismissal.249

[19.65] The High Court in Byrne also confirmed that an employer may justify a dismissal by reference to circumstances that subsequently come to light, even though they were not a reason as such for the termination.250 By the same token, the emergence of facts not known at the time can make a dismissal harsh, unjust or unreasonable, where it might otherwise have appeared fair – as for instance where it becomes apparent that the employee was not in fact guilty of misconduct.251 The fact that the employer might in such a case have acted ‘reasonably’ will not preclude a finding that the dismissal was unfair – subject to what is said in the next section about the effect of the Small Business Fair Dismissal Code.

[19.66] It is notable that, just like the previous legislation, the FW Act does not formally put the burden of establishing unfairness on the applicant. However, since FWA must be ‘satisfied’ that a dismissal is unfair, there is in a practical sense a burden on the applicant to establish a case for relief. Where an employer alleges misconduct by the applicant, and that allegation is denied, there is an ‘evidentiary onus’ on the employer to put forward some evidence to suggest that the misconduct occurred.252 Nevertheless, studies have shown that in cases decided on the merits (that is, on non-jurisdictional grounds), employees can expect to succeed in establishing unfair treatment in only one out of every two cases.253

[19.67] From what has been said, it should be clear that most unfair dismissal cases essentially turn on their own facts. Conduct that may appear to justify dismissal in one context will be excused in another – perhaps because the employer concerned has not properly communicated its policy on that issue to its workforce, or has not applied its policy in a consistent manner, or has not properly investigated the matter, or has failed to take

248Byrne v Australian Airlines Ltd (1994) 120 ALR 274. 249See also Crozier v AIRC [2001] FCA 1031 (dismissal justified on ‘capacity’ grounds despite

lack of procedural fairness). 250(1995) 185 CLR 410 at 430, 467, applying Lane v Arrowcrest Group Pty Ltd (1990) 99 ALR 45 at

74–5; and see also Metricon Homes Pty Ltd v Bradley (2009) 181 IR 115. Cf Wheeler v Philip Morris Ltd (1989) 97 ALR 282 at 308. This is in line with common law authority on this point: see [18.25].

251Australia Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1. Cf Bi-Lo Pty Ltd v Hooper (1994) 53 IR 224.

252Hinchey v North Goonyella Coal Mines Pty Ltd (2009) 178 IR 252. Cf Article 9 of ILO Convention 158, which stipulates that a worker should not have to ‘bear alone the burden of proving that the termination was not justified’. For an interesting analysis of cases involving alleged misconduct, and how the employees concerned sought to defend their actions, see Southey 2010.

253See eg Chelliah & D’Netto 2006: 489; Southey 2008: 35. See also Southey & Fry 2010, noting a ‘mildly significant’ correlation between the background of the arbitrator (that is, whether they previously represented employers or workers) and their propensity in such cases to find in favour of employers or employees.


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proper account of the employee’s length of service and previous good record. This makes it difficult if not impossible to distil from the case law a clear set of principles, even though experienced practitioners may develop a ‘feel’ for how FWA (or a particular Member) is likely to react in any given situation. In the end, the familiar generalisations such as ‘ensuring a fair go all round’ may have to suffice.254

(d) The Small Business Fair Dismissal Code

[19.68] Under s 385(c), a dismissal cannot be regarded as unfair unless FWA is satisfied that it was ‘not consistent with the Small Business Fair Dismissal Code’. The Code is an instrument declared by the Minister for Workplace Relations (s 388(1)). A dismissal will be taken to be consistent with the Code where two requirements are satisfied (s 388(2)). The first is that the employer was a small business employer at the time the employee was given notice or dismissed (whichever happened earlier). Hence the requirement is only relevant to employees with fewer than 15 employees.255 The second is that the employer complied with the Code in relation to the dismissal. If that can be established, the application must be dismissed. If not, FWA will then proceed to consider the matter by reference to the factors listed in s 387.256

[19.69] The Small Business Fair Dismissal Code formally declared in June 2009 is extremely short and simple.257 It provides that:

• A dismissal will be deemed to be fair whenever the employer has reasonable grounds to believe that the employee was guilty of serious misconduct, such as theft, fraud, violence or serious breaches of occupational health and safety requirements. It is ‘sufficient, though not essential’ that the employer reports the allegation to the police or some other relevant authority. For other dismissals, an employee must be given a valid reason that

is based on their conduct or capacity. This must be preceded by a warning, preferably but not necessarily in writing,258 that they risk being dismissed if there is no improvement. The employee must also be given an opportunity to respond to the warning and a reasonable chance to rectify the problem.

254For attempts, nonetheless, to derive principles of general application from the cases

(generally under the WR Act) on what constitutes ‘harsh, unjust or unreasonable’ treatment, see eg Donaghey 2006: 204–24, ch 7; Sappideen et al 2009: 432–7.

255See [19.35]. 256See N v The Bakery [2010] FWA 3096 at [12]. 257See Declaration under subsection 388(1), Legislative Instrument F2009L02570, 24 June 2009.

The Code and its accompanying documents (including the preamble and checklist discussed below) can be accessed on FWA’s website (www.fwa.gov.au).

258For an example of verbal warnings being accepted as complying with the Code, see Maczkowiack v B & A Gleeson Pty Ltd [2010] FWA 3940.

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Employees can have another person present to assist them in any ‘circumstances where dismissal is possible’. But that person cannot be a lawyer acting in a professional capacity.

If the employee lodges an unfair dismissal complaint with FWA, the small business employer will be required to ‘provide evidence of compliance with the Code’. That may include ‘a completed checklist, copies of written warning(s), a statement of termination or signed witness statements’.

At the same time as releasing the Code, the government issued a Small Business Fair Dismissal Code Checklist as a ‘tool’ to help small employers comply with the Code. Both this checklist and the preamble to the Code were revised in July 2010,259 following criticism by some FWA Members that they did not accurately reflect the Code itself or other aspects of the legislation.260 Among other things, it is now stated that ‘[c]ompleting the Checklist does not mean that the Code has been complied with, nor is it a requirement of the Code that the Checklist be completed’. It is also made clear that the Code does not deal with redundancy dismissals, which instead are dealt with in s 389 of the FW Act, considered below.

[19.70] The Code does make some important concessions to small employers. In particular, the employer may be able to rely on a reasonable belief that an employee was guilty of serious misconduct, even if the allegation turns out to have been unfounded. But even in such cases, there are still procedural requirements. And in other situations, it remains open to FWA to conclude that a particular reason was not ‘valid’, or that an employee was not given a ‘reasonable chance’ to rectify a problem with their performance. As the Code stands, therefore, it is far from being a licence to small employers to dismiss at will. But it would be open to a future government to vary the Code to reduce FWA’s capacity to scrutinise dismissals and essentially require small businesses merely to follow a few basic procedural steps.

(e) Redundancy Dismissals

[19.71] One interesting subset of unfair dismissal cases involves claims by workers who have been made redundant.261 Before Work Choices, it was clear that a retrenched worker could not attack the actual decision that their job should be abolished. Both federal and State tribunals consistently took the view that, provided the employer had acted in good faith,262 its judgment

259See ‘Crean changes Dismissal Code checklist’ Workplace Express, 20 July 2010. 260See eg N v The Bakery [2010] FWA 3096 at [74]; Nalevansky v Thought Equity Motion Inc [2010]

FWA 3707 at [13]–[14]. 261As to the concept of redundancy, see generally [18.50]. 262As opposed, for instance, to having invented a redundancy situation merely to disguise

what is in truth an attempt to be rid of a specific individual: cf Kilworth v Zweck (1973) 40 SAIR 458.


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as to the needs of the enterprise must be respected.263 Nevertheless, a claim that the dismissal was harsh, unjust or unreasonable could be established by challenging other aspects of the decision-making process.264 It might be argued, for instance, that the applicant was not properly consulted before the decision to retrench was implemented;265 or that the applicant was unfairly selected for redundancy ahead of another worker;266 or that in selecting the applicant out of a group by reference to their relative conduct or performance, no opportunity was afforded to them to respond (before any final decision on selection) to any concerns management might have over the applicant’s record or capabilities.267 A further ground for challenge, accepted in some jurisdictions but not others, was that any severance benefits provided by the employer did not conform to ‘contemporary industrial standards’.268

[19.72] Under s 643(8) of the amended WR Act, by contrast, no unfair dismissal claim could be maintained where the applicant’s employment had been terminated for genuine operational reasons, or for reasons that included such reasons.269 ‘Operational reasons’ were defined to mean ‘reasons of an economic, technological, structural or similar nature relating to [all or part of] the employer’s undertaking, establishment, service or business’ (s 643(9)). Once an employer could establish that such reasons had genuinely played a part in a dismissal, it was not for the AIRC to inquire further as to whether the dismissal was a ‘logical’ or appropriate response, or more broadly whether the employee had been fairly treated. This was emphasised in Village Cinemas Australia Pty Ltd v Carter,270 where the manager of a cinema that was closed down was not permitted to argue that he should have been allowed to take long service leave while waiting to see whether another position was available elsewhere in the company.

[19.73] While the operational reasons defence was in force, doubts persisted about its potential application to situations not otherwise involving redundancy.271 By contrast, the equivalent provision in the FW

263See eg Mitchell v Tecalemit (Australia) Pty Ltd (1985) 27 AILR ¶475; Quality Bakers of Australia

Ltd v Goulding (1995) 60 IR 327 at 333. 264See Garbett v Midland Brick Co Pty Ltd (2003) 129 IR 270 at 286–7. 265See eg Quality Bakers of Australia Ltd v Goulding (1995) 60 IR 327; RJ Gilbertson (Qld) Pty Ltd v

Lloyd (1996) 71 IR 377. 266See eg Diprose v Simplot Pty Ltd (1999) 94 IR 330; Smith v Moore Paragon Australia Ltd (AIRC,

PR915674, 21 March 2002); and see also Re AIRC; Ex parte Smith (2004) 134 IR 316. 267See eg Kenefick v Australian Submarine Corp Ltd (1996) 65 IR 366; Windsor Smith v Liu (1998)

140 IR 398; Clarke v Formfile Infosoft Pty Ltd (2003) 122 IR 348. 268See eg Jackson v Atco Ltd (1986) 53 SAIR 95; Coleman v Aluminium Anodisers Pty Ltd (No 3)

(1988) 30 AILR ¶474; Fosters Brewing Group Ltd v Industrial Commission of SA (1993) 61 SASR 329; Serco Gas Services Pty Ltd v Alkemade (AIRC, R6090, 21 June 1999). But cf Epath WA Pty Ltd v Adriansz [2003] WASCA 175.

269As to the interpretation and effect of this defence, see Forsyth 2007c, 2008; Chapman 2009a: 214–17.

270(2007) 158 IR 137. See also Boeing Australia Ltd v Acworth (2007) 166 IR 371; Cruickshank v Priceline Pty Ltd (2007) 164 IR 259.

271On a broad reading, just about any termination could be said to have a basis in an ‘economic, technological, structural or similar’ reason. The AIRC resisted the view that an

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Act is more limited. Under s 385(d), a dismissal may only be treated as unfair if FWA is satisfied it is ‘not a case of genuine redundancy’. According to s 389(1), a dismissal falls into this category if the employer ‘no longer required the [applicant’s] job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise’. As emphasised in the previous chapter,272 what matters for this purpose is whether the applicant’s position has been abolished; there may still be a redundancy even if some of the tasks formerly performed by the applicant have been redistributed to other positions.273 Importantly, however, as s 389(1)(b) makes clear, the employer cannot rely on the genuine redundancy defence unless it has also complied with any obligation in an applicable award or enterprise agreement to consult about the redundancy.274 There must also have been no reasonable opportunity for the person to be redeployed within the employer’s enterprise, or the enterprise of an associated entity (s 389(2)).275 This last proviso seems clearly designed to address the situation in the Village Cinemas case. However, if an employer can establish that the redundancy was genuine, that any consultation obligations have been met, and that redeployment would not have been a reasonable alternative, then no unfair dismissal claim can succeed. In such a case it would be irrelevant, for example, that the employer may not have acted fairly in selecting the applicant for redundancy.276 On the other hand, the mere fact that an employer cannot rely on the genuine redundancy defence – for example because of a failure to consult – does not mean that the dismissal will automatically be treated as unfair. The employer may still argue that the dismissal was not harsh, unjust or unreasonable in all the circumstances.277

employer could plead operational reasons for a dismissal based on poor work performance: see eg Evans v CLB No 1 Pty Ltd (AIRC, PR973439, 4 August 2006). But in Cruickshank v Priceline Pty Ltd [2007] AIRC 1005 it was held that an employer could put forward an ‘economic’ reason for replacing an employee with someone who would do the same job for lower wages or less generous conditions.

272See [18.50]. 273Ulan Coal Mines Ltd v Howarth [2010] FWAFB 3488. Note that a casual employee may be

made redundant in this sense: see eg M v LD Pty Ltd [2009] FWA 1676 (upheld in Mills v Lextor Developments Pty Ltd [2010] FWAFB 979).

274This includes an obligation to consult under an applicable transitional instrument: TPCA Act Sch 3 item 36, Sch 3A item 51. For an example of this requirement being satisfied, see Ulan Coal Mines Ltd v Howarth [2010] FWAFB 3488.

275See eg Campbell Australasia Pty Ltd v McNay [2010] FWAFB 6048, where this issue was determined by reference to the requirements of an applicable collective agreement. Cf Howarth v Ulan Coal Mines Ltd [2010] FWA 4817 (redeployment opportunities found to exist at associated entities); Ho v A P Eagers Ltd [2010] FWA 5897 (failure to offer more junior position created in course of restructure that abolished applicant’s job).

276See eg Johnston v Blue Circle Southern Cement Pty Ltd [2010] FWA 5149. Though note that if that reason fell into one of the categories prohibited by the general protections in Part 3-1, a claim could still be brought under those provisions: FW Bill EM para 1553.

277See eg Di Masi v Coastal Fisheries Pty Ltd [2010] FWA 6280 (despite failure to consult, redundancy still a ‘sound reason’ for dismissal). Cf Aleckson v Tewantin Noosa RSL & Citizen’s Memorial Club Inc [2010] FWA 6452 (failure to consult or offer redeployment rendered dismissal unfair).


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(f) Remedies

[19.74] If FWA is satisfied that a dismissal is unfair, there are two possible remedies it may grant. It may either reinstate the employee or order that they be compensated (s 390(1)). But compensation must not be ordered unless FWA is satisfied that reinstatement is ‘inappropriate’, and that compensation is ‘appropriate in all the circumstances of the case’ (s 390(3)). An order for reinstatement may involve either ‘reappointing’ the employee to their former position, or appointing them to ‘another position on terms and conditions no less favourable’ than those they formerly enjoyed (s 391(1)).278 If the original position no longer exists, but the same or an equivalent position can be identified at an associated entity of the employer, the reinstatement order may be made against the associated entity instead (s 391(1A)). Where FWA considers it appropriate, the reinstatement order may be accompanied by an order doing anything necessary to preserve the employee’s continuity of service with the employer or the associated entity (s 391(2)). FWA may also order the employer (but not, it would seem, any associated entity) to pay the employee an amount in respect of remuneration lost as a result of the termination, taking into account anything the employee has earned or could reasonably have earned from other work during the period between being dismissed and reinstated (s 391(3)–(4)). While some employees are reinstated with full back pay, it is not at all unusual for an applicant to be denied some or all of their lost wages, especially where they have been guilty of misconduct.279 Once reinstated, however, the employee is entitled to be given meaningful work to do.280

[19.75] For much of the 20th century, and in marked contrast to the position at common law, reinstatement was the standard form of relief for unfair dismissal in Australia. But once tribunals were given the power to award compensation, reinstatement became the exception rather than the rule.281 While no official statistics are yet available, it appears that this pattern is continuing under the FW Act. In reality, many applicants (or their advisers) are ultimately willing to settle for monetary compensation, especially if it is offered by way of a settlement that obviates the need to proceed to a hearing. But even where an applicant persists with a claim for reinstatement, the arbitrator may be unwilling to consider that to be an ‘appropriate’ remedy in the face of opposition by the employer. In a case of this kind, any element of trust and confidence between the parties will have broken down and it will be difficult to envisage them working with each other again. It has been emphasised that this should not become an

278See generally Meggiorin 1999; Wheelwright 2001. 279See eg GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343. 280Blackadder v Ramsey Butchering Services Pty Ltd (2005) 221 CLR 539: see [13.44]. 281From the time when the WR Act 1996 took effect up until the end of June 2009, only 300

orders for reinstatement were made by the AIRC, compared with nearly 1300 awards of compensation (AIRC 2009: 11). For similar patterns under the State systems, see Hagglund 1999 (SA) and Brown et al 2004 (WA).

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automatic reason for refusing reinstatement, and that where the statutory criteria are satisfied an order should be made.282 Indeed, it appears that in exceptional cases a reinstatement order may be made even in favour of employees who are not fit to perform the full range of duties associated with their original positions.283 Nevertheless, only in a minority of cases will a dismissed employee be ‘imposed’ on an employer that claims to have lost confidence in them.284 This is unfortunate. Even allowing that reinstatement may only be a remedy of lasting value where the applicant is supported by a union which can help to ‘enforce’ the order in the workplace,285 there is much to be said for the view that tribunals should adopt a more robust attitude to restoring employees to the jobs of which they have unfairly been deprived.286

[19.76] The general willingness of applicants to accept compensation cannot be explained by any particular largesse on the part of the tribunals. Compensation awards have always tended to be fairly low,287 as indeed have the amounts paid by way of negotiated settlements.288 The FW Act is unlikely to be any different in this regard. Section 392(2) directs FWA, in determining an amount of compensation to be paid in lieu of reinstatement, to have regard to certain factors.289 These are the effect of any order on the ‘viability’ of the employer’s business;290 the length of the employee’s service; the remuneration that the employee would be likely to have received but for the dismissal,291 and any efforts by the employee to mitigate their loss,

282See eg Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186; Tenix Defence Pty Ltd v Galea

(AIRC, PR928494, 11 March 2003). Cf Diamond Offshore General Co v Robertson (2003) 128 IR 297 (reinstatement not appropriate because employment was due to terminate for redundancy in any event).

283See eg Smith v Moore Paragon Australia Ltd (2004) 130 IR 446. Cf Qantas Airways Ltd v Meyer (2004) 130 IR 473, which reflects what is perhaps the more normal position of an employee being denied reinstatement for lack of evidence that they were able to perform their original job.

284For exceptions, see eg Fletcher v Commonwealth (2007) 164 IR 245; GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343.

285See Sherman 1989. 286Cf Leonardis v Salvation Army William Booth Hostel (1992) 59 SAIR 107; Liddell v Lembke (1994)

127 ALR 342 at 367–8. 287See eg Southey 2008: 36, recording that in over 40% of the decisions sampled in which

compensation was awarded, the amount was less than $5000. Around the same number involved sums of between $5000 and $15,000, with less than 10% exceeding $20,000.

288See eg Hagglund & Provis 2002: 228–9, whose study of unfair dismissal claims in the South Australian jurisdiction revealed that the great majority of cash settlements agreed to following conciliation involved payment of two to four weeks’ pay, with 60% amounting to less than $2000.

289The factors listed below are broadly similar to those listed in s 170CH(2) and (7) of the WR Act and s 654(2) and (8) of the post-Work Choices WR Act. As to the requirements imposed on the AIRC by those provisions, see Henderson v Department of Defence (AIRC, S8591, 28 July 2000) at [16]–[20].

290The inclusion of this factor is highly contentious, in so far as it suggests that an employer in financial difficulty should somehow be treated more leniently than they might otherwise be. No such concession is made in relation to liability for breach of contract, tort or just about any other form of breach of duty. In practice, it is hard to find an award that has been reduced on this ground.

291See Re Lewin; Ex parte He (2004) 133 IR 217.


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including any income earned from other sources after the dismissal.292 In addition, if FWA is satisfied that misconduct by the employee contributed to their dismissal, the amount of compensation that would otherwise be awarded must be reduced by an appropriate amount (s 392(3)).293 Furthermore, FWA is barred from awarding any compensation for ‘shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal’ (s 392(4)).294 In all cases, the amount of the compensation cannot exceed the ‘cap’ imposed by s 392(5) and (6). This is either the total amount of remuneration to which the applicant was entitled during the six months before dismissal,295 or half the high income threshold ($56,900 at the time of writing), whichever is the lesser amount.

[19.77] Under the WR Act, the AIRC developed an approach to the assessment of compensation that was broadly similar to that used for calculating damages for wrongful dismissal at common law. As set out in Sprigg v Paul’s Licensed Festival Supermarket,296 a decision which is still being followed under the FW Act,297 it primarily involves estimating the remuneration the employee would have received but for the dismissal. From that will be deducted any compensatory payments from the employer, together with any amounts the applicant either has subsequently earned or could reasonably have been expected to earn from other sources. The resulting figure may then be discounted to allow for various contingencies. Finally the cap will be applied, if necessary, to reduce the figure that would otherwise be awarded. The cap is simply an arbitrary limitation – it does not operate as a maximum amount to be awarded only in the most grievous or serious cases.298 In practice, it is rare for the cap to preclude the award of larger amounts; most applicants are generally in a position to find alternative employment some time within six months of dismissal, or alternatively could not reasonably have expected to keep their job for that long in any event. Nevertheless, for some the cap has a severe

292See further [19.16]. Note that an employee may be expected, by way of mitigating their loss,

to accept a genuine offer by the employer of reinstatement: see eg Bechara v Gregory Harrison Healey & Co (1996) 40 AILR ¶3-421.

293See eg Theoctistou v Austaron Pty Ltd [2010] FWA 1695. 294This limitation was introduced by Work Choices: see WR Act (as amended) s 654(9). Before

that, compensation of this type was sometimes (though not commonly) awarded: see eg Coms 21 Ltd v Liu (AIRC, S3571, 25 February 2000).

295Where the employee has been on leave during this period without pay, or without full pay, the amount is calculated by reference to what they would ordinarily have received if they had not been on leave: FW Regs 2009 reg 3.06.

296(1998) 88 IR 21. Cf Smith v Moore Paragon Australia Ltd (2004) 130 IR 446, cautioning that while the Sprigg guidelines should generally be followed, their outcome might need to be reassessed in any case where they produced an amount that, in the particular circumstances, was either clearly excessive or clearly inadequate. See further Donaghey 2006: 250–7.

297See eg Wright v Cheadle Hume Pty Ltd [2010] FWA 675; Davidson v Griffiths Muir’s Pty Ltd [2010] FWA 4342; Westblade v Harvey & Dunn Pty Ltd [2010] FWA 4961.

298Perrin v Des Taylor Pty Ltd (1995) 58 IR 254 at 258; May v Lilyvale Hotel Pty Ltd (1995) 68 IR 112 at 117–18; PrintLinx Pty Ltd v Hughes (AIRC, PR910359, 17 October 2001).

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impact: notably those whose age and particular skills (or lack thereof) make it difficult to find another source of income.299

[19.78] The cap on compensation was originally introduced to meet the same concerns about big-money claims that prompted the introduction of the ‘salary cap’ on eligibility to bring claims.300 But while there may well be good reasons for highly paid managers and professional employees to be left to negotiate appropriate contractual arrangements to protect them in the event of termination, it is far from clear why this should also mean artificially limiting compensation payments for lower paid workers or even middle management. It should also be noted that the cap may affect employers in a quite arbitrary way. Many provide wages in lieu of notice and/or ex gratia payments on termination. Although these may be taken into account in assessing an applicant’s loss, they will not prevent the applicant receiving the maximum award where that loss exceeds six months’ remuneration. So by making the payment (often out of consideration for the employee, or as a gesture of good will, or simply in an attempt to reduce the chances of an unfair dismissal claim), the employer may effectively be worse off: had they not made the payment, they would still only be liable to pay a maximum of six months’ remuneration. On the other hand, anecdotal evidence suggests that some employers deliberately withhold statutory payments at the point of termination with a view to including such amounts in any sum payable as part of a settlement of a subsequent unfair dismissal claim. Withholding entitlements in this way is, or course, unlawful, but the practice does appear to be quite common in some industries.

(g) Costs Orders

[19.79] The general rule in unfair dismissal cases, as with other FWA proceedings, is that the losing party will not be ordered to pay the winner’s costs (s 611(1)). But s 611(2) does permit a party to apply for costs where the other party has acted vexatiously or without reasonable cause, or has pursued a matter where it should have been apparent that there was no reasonable prospect of success. This can be invoked by a respondent employer against an applicant.301 But costs orders can also be made against an employer who has acted unreasonably in defending a claim.302 In practice, any assessment as to the merits of a case given by FWA during or after a conciliation conference is likely to be crucial. If a party persists with a claim or defence after a clear indication they should withdraw or settle, they increase the prospects of a successful claim against them for costs. In certain circumstances, a costs order may be made not just against a party, but against their representative (s 401) – for example, where they advise their 299See eg Bostik (Australia) Pty Ltd v Gorgevski (1992) 36 FCR 20, where in the absence of a cap

$195,000 was awarded to a 54-year-old worker. 300See [19.39]. 301See eg Wodonga Rural City Council v Lewis (2005) 142 IR 188. 302See eg Hi Security Fencing Systems Pty Ltd v Forsyth (2007) 166 IR 413.


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client to institute or defend proceedings without reasonable prospects of success.303 Any application for a costs order must be made within 14 days after the matter in question has either been determined by FWA or discontinued (s 402). A party may also, at an earlier stage in proceedings, seek an order that another party pay a security bond to show that they can meet any costs order that might subsequently be made against them.304

19.5 Unlawful Termination under the Fair Work Act

[19.80] Under the WR Act, as mentioned earlier in the chapter, applicants had the option of lodging a complaint of unlawful termination with the AIRC, either as well as or instead of an unfair dismissal claim. Such a claim could be made by any employee, regardless of whether they were working for a federal system employer. Part 6-4 of the FW Act retains provisions dealing with unlawful termination that also on their face apply to all employees. Crucially, however, s 723 provides that a person may not apply for relief against an unlawful termination if they are entitled to challenge that dismissal under the ‘general protections’ in Part 3-1 that were outlined in Chapter 17. The reasons for termination prohibited under Part 6-4 would also be unlawful under those provisions. In practice, therefore, it is only applicants who fall outside the constitutional coverage of Part 3-1 – principally non-national system employees – who are now able to bring unlawful termination applications.305

[19.81] The central provision in Part 6-4 is s 772, which largely replicates s 659 of the post-Work Choices WR Act. Subsection (1) prohibits termination of employment for any of the following reasons:

(a) temporary absence from work because of illness or injury of a kind prescribed by the regulations;306

(b) trade union membership or participation in trade union activities outside working hours or, with the employer’s consent, during working hours;

(c) non-membership of a trade union; (d) seeking office as, or acting or having acted in the capacity of, a

representative of employees; (e) the filing of a complaint, or the participation in proceedings, against an

employer involving alleged violation of laws or regulations or recourse to competent administrative authorities;307

303See eg Dircks v JimRoy Pty Ltd (2009) 186 IR 242 . 304Fair Work Australia Rules 2009 cl 16, as authorised by s 404 of the FW Act. As to the

principles that govern whether such an order should be made, see eg Clack v Collins (No 1) [2010] FCA 513.

305This is a limitation that is easily overlooked: see eg Maher v Mulgowie Fresh Pty Ltd [2010] FCA 439, where an unlawful termination application by a national system employee got all the way through FWA before being picked up in the court proceedings; and see also Trudgett v Training Aids Australia Pty Ltd [2010] FWA 2235.

306See FW Regs 2009 reg 6.04, which is to broadly the same effect as reg 3.01: see [17.92]. 307As to the meaning of ‘recourse’ and ‘competent administrative authority’, see eg CSR

Viridian Ltd v Claveria (2008) 171 FCR 554.

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(f) race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin;308

(g) absence from work during maternity leave or other parental leave;309 (h) temporary absence from work for the purpose of engaging in a

voluntary emergency management activity, where the absence is reasonable having regard to all the circumstances.

A termination will be unlawful where just one of the reasons for dismissal is listed in s 772(1). Furthermore, in any proceedings s 783 places the burden on the employer to prove that an employee was not dismissed for a proscribed reason.310 Section 772 is a civil remedy provision, meaning that court proceedings may be instituted under Part 4-1 to enforce it.311 The remedies that the Federal Court or Federal Magistrates Court may grant under s 545 include reinstatement,312 or an amount of compensation. Unlike the position under the WR Act, there is no cap on a compensation award.313 The court may also impose a penalty under s 546.314 However, no unlawful termination court application can generally be made until FWA has first sought to resolve the dispute by private conference, and certified that its efforts have been unsuccessful (s 779). FWA is empowered in such proceedings to make costs orders against lawyers or paid agents (ss 780–782), on the same basis as described above for unfair dismissal claims.

19.6 Remedies for Public Sector Workers

[19.82] Public sector workers may challenge the fairness of any attempt to dismiss them in a variety of ways. The principal avenue of redress is usually provided by statutory arrangements which permit an appeal to an internal body, and/or to an industrial tribunal, such as the Industrial Relations Commission in New South Wales.315 It may also be possible to seek judicial review of either the original decision to dismiss, or an appeal tribunal’s ruling on that decision. The outcome may be an injunction to restrain any effect being given to the dismissal.316 Or the applicant may ask that the decision be treated as invalid and seek damages for what is in effect

308This is subject to s 772(2), which allows an employer to dismiss a worker because they

cannot meet the ‘inherent requirements’ of a position, or (in the case of a religious institution) to avoid injury to religious susceptibilities. These defences are the same as those found in s 351(2)(b) and (c): see [17.37].

309This reason is taken to exist where an employer abolishes the position of an employee who is absent on parental leave, and their absence is one of the reasons for doing so (s 772(3)).

310See eg CFMEU v C E Marshall & Sons Pty Ltd (2007) 160 IR 223. 311See Chapter 16.2. 312See eg Laz v Downer Group Ltd (2000) 108 IR 244. 313Cf Vickery v Assetta [2004] EOC ¶93-330. 314See eg Stevenson v Murdoch Community Services Inc [2010] FCA 648. 315The NSW Industrial Relations Commission took over this function from the former

Government and Related Employees Appeal Tribunal in July 2010: see Industrial Relations Amendment (Public Sector Appeals) Act 2010 (NSW).

316See eg Paras v Public Service Body Head of the Department of Infrastructure (2006) 152 IR 75.


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a wrongful dismissal.317 However, such review is only available on administrative law grounds such as jurisdictional error, denial of natural justice, abuse of discretion, and so on.318 It must also be established for this purpose that the employment is of a ‘public’ character – or, where the employment is governed by federal law, that the decision to dismiss was made ‘under an enactment’ within the meaning of s 3(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth). While Australian workers have not had the same difficulty as their British counterparts in this respect,319 some problems have been encountered where a person is employed under terms drawn from a statute and consensually incorporated into the contract of employment. It has been held in this situation that the terms have ‘contractual’ force only and that judicial review is thus unavailable.320 A further problem for Australian workers is that the very presence of comprehensive statutory appeal processes may be a reason for a court to exercise its discretion not to review decisions taken within the framework of those processes.321

[19.83] A further option that may be available to federal or State public sector employees is to pursue an action under the unfair dismissal provisions in the FW Act or equivalent State legislation. It is a matter of interpretation in each case as to whether they are eligible to lodge such a claim.322 In some instances the comprehensive nature of the statutory framework regulating the particular employment may be considered to override any ‘general’ legislation on unfair dismissal.323 Even where this is not so, the mere availability of a statutory right of ‘appeal or review’ may have the effect in some jurisdictions of excluding any unfair dismissal claim.324 In other instances, as under the ‘multiple actions’ provisions in the FW Act,325 workers may effectively have a choice between invoking whatever special procedures are available and instituting an unfair dismissal claim: though once the election is made in favour of one procedure, it is generally no longer possible to pursue the other.

317See eg Jarratt v Commissioner of Police (NSW) (2005) 224 CLR 44. 318See eg Piperitis v Transport Appeal Board (1990) 41 IR 325; R v Commissioner of Police; Ex parte

Ross (1991) 42 IR 206; Sydney Ferries v Morton [2010] NSWCA 156. See generally Aronson et al 2009.

319See Smith G 1987: 158–69. 320See eg Australian Film Commission v Mabey (1985) 6 FCR 107; Australian National University v

Burns (1982) 43 ALR 25; and see also Whitehead v Griffith University [2003] 1 Qd R 220. Cf Chittick v Ackland (1984) 53 ALR 143.

321See eg Beck v Thornett (1984) 6 ALN N209. See Smith G 1987: 169–73. 322See eg Re McIntyre; Ex parte Stannard (2004) 140 FCR 249; Re AIRC and Arends; Ex parte

Commonwealth (2005) 145 FCR 277. 323See eg North West County Council v Dunn (1971) 126 CLR 247; Ferdinands v Commissioner for

Public Employment (2006) 225 CLR 130. As to the latter decision, see Nguyen 2007. 324See eg Industrial Relations Act 1979 (WA) s 23(3)(d). 325See [19.53]–[19.54].

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19.7 Other Remedies for Unfair Termination

[19.84] There are other laws, besides those already described in this chapter, that may be used to raise specific problems of unfairness in relation to dismissal. Many of these have already been discussed in Chapter 17, including:

• measures prohibiting discrimination on the ground of gender, race and other criteria; the general protections in Part 3-1 of the FW Act; statutes prohibiting the victimisation of whistleblowers; and legislation (especially in New South Wales) allowing relief to be

sought against unfairness in the terms or operation of a contract.

Other provisions worth noting in this connection include protection against dismissal or other forms of victimisation for employees who assist in the administration of occupational health and safety standards or who complain of breaches of OHS legislation.326 Similar protection exists for employees who claim or are entitled to claim workers compensation for a work-related injury or illness.327 Although most of the relevant provisions are found in State or Territory laws, they can arguably apply to national system employers and employees, on the basis that they deal with the ‘non-excluded’ matters of occupational health and safety or workers compensation (FW Act s 27(1)(c),(2)).328 The position is even clearer in relation to provisions that constrain an employer’s right to terminate the employment of an apprentice or trainee for the duration of their training arrangement. Prior approval of a designated authority or tribunal is generally required, with the trainee or apprentice entitled to complain to the tribunal if the employer does not act in accordance with the statutory process.329 It is specifically provided that the FW Act is not intended to override State or Territory laws that deal with the termination of a training

326Occupational Health and Safety Act 1991 (Cth) s 76; Occupational Health and Safety Act 2000

(NSW) s 23; Industrial Relations Act 1996 (NSW) s 210(1)(j); Occupational Health and Safety Act 2004 (Vic) ss 76–78; Workplace Health and Safety Act 1995 (Qld) s 174; Occupational Health, Safety and Welfare Act 1986 (SA) s 56; Occupational Safety and Health Act 1984 (WA) s 56; Workplace Health and Safety Act 1995 (Tas) s 18; Work Safety Act 2008 (ACT) s 43; Workplace Health and Safety Act 2007 (NT) s 93. See further the discussion of the Model WHS Bill at [15.105]–[15.110]. See also Johnstone 2004a: 558–62.

327Workers Compensation Act 1987 (NSW) Pt 8; Accident Compensation Act 1985 (Vic) ss 242AA–242AF; Workers’ Compensation and Rehabilitation Act 2003 (Qld) ss 232B, 232D; Workers Rehabilitation and Compensation Act 1986 (SA) s 58C; Workers’ Compensation and Injury Management Act 1981 (WA) s 84AA; Workers Rehabilitation and Compensation Act 1988 (Tas) s 143L; Workers’ Compensation Act 1951 (ACT) s 105. These provisions vary in terms of the extent to which they restrict the employer’s power to dismiss (or in some instances to refuse re-employment to) an injured worker. See generally Purse 1998; Guthrie 2002b.

328See [5.36]. 329Apprenticeship and Traineeship Act 2001 (NSW) s 15(1)(f), Pt 4; Education and Training Reform

Act 2006 (Vic) s 5.5.17; Industrial Relations Act 1999 (Qld) ss 138A, 139; Training and Skills Development Act 2008 (SA) s 51; Vocational Education and Training Act 1996 (WA) s 60G; Vocational Education and Training Act 1994 (Tas) ss 42, 68; Northern Territory Employment and Training Act 1999 (NT) ss 57–59, 70.


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contract, or of any employment contract associated with a training contract (FW Act s 27(1)(b); FW Regs 2009 reg 1.13(a)–(aa)).

[19.85] Finally, where an enterprise agreement regulates the termination of employment in some way, it may be possible to use the dispute resolution procedure in the agreement to raise issues concerning the treatment of particular workers. Depending on the scope of the dispute resolution provision,330 it may be possible to seek reinstatement or even compensation for a dismissed employee.331 However, in the case of an enterprise agreement made under the FW Act, this is subject to the limitations imposed by s 194(c) and (d) of that Act.332 A term will be unlawful to the extent that it purports to confer protection against unfair dismissal on a worker who has not completed the minimum employment period required under Part 3-2 of the Act. Nor, conversely, may it seek to exclude that Part or modify it to the detriment of any person. There may also be situations where the way in which an employer handles a dismissal breaches certain procedural obligations laid down in an agreement. For example, in Van Efferen v CMA Corp Ltd333 a worker successfully argued that his employer had failed to follow a grievance process in his AWA in determining to dismiss him. He was awarded damages of nearly $275,000, on the basis that if the procedure had been followed he would have remained in his job until the completion of the project on which he was working. As noted in an earlier chapter, it may also be possible in this type of case for an employee, or a union or inspector acting on their behalf, to seek an injunction under s 545(2) restraining an employer from implementing a dismissal in breach of the consultation or grievance procedures laid down in an enterprise agreement.334

330Cf de Jonge v Australian Broadcasting Corp [2010] FWAFB 4869, where the applicant failed to

establish any jurisdiction for her claim. 331See eg NTEU v University of Wollongong (AIRC, PR945759, 15 February 2004). 332See [12.57], [18.40]. 333(2009) 183 IR 319. 334See [16.36]. As noted there, however, such an injunction may not be sought in respect of a

transitional (ie, pre-Fair Work) agreement: TPCA Act Sch 16 item 17(a).

19.1 wrongful termination by...

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