General protections: compensation

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In a very rare decision to award compensation  for a breach of the general protections, in this case adverse action for exercising a workplace right, the Federal Circuit Court has just done that, and in doing so His Honour has set out the applicable principles for the assessment of compensation for both economic and non-economic loss.

Here are some passages from the judge’s decision which do just that.

“Remedies

  1. Under s.545(1) of the Act, this Court may make any order it considers appropriate if it is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision. The orders the Court may make include an order under s.545(2)(b) of the FW Act “awarding compensation for loss that a person has suffered because of the contravention” of a civil remedy provision. The table contained in s.539 of the FW Act identifies in item 11 s.340 as a civil remedy provision. Accordingly, Ms Pacheco-Hernandez is entitled to an order for compensation under s.545(1) of the FW Act for all loss she has suffered because of Lagardère’s contravention of s.340 of the FW Act.

Principles

  1. The approach that should be taken in assessing compensation has been stated in a number of cases. In Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd Barker J said:[52]

In accordance with usual principle, an order awarding compensation must be assessed on the basis that an applicant establishes loss that a person has suffered because of the contravention and that this requires an appropriate causal connection between the contravention and the loss claimed.

[52] [2011] FCA 333; (2011) 193 FCR 526 at [423]

  1. In Aitken v Construction, Mining, Energy, Timberyards, Sawmills & Woodworkers Union of Australia, speaking of s.179EE of the Industrial Relations Act 1988 (Cth) (which is equivalent to s.545 of the FW Act), Lee J said:[53]

In assessing the compensation that is appropriate the Court will have regard to what is reasonable in the circumstances and will look at what would have been likely to occur had the Act not been contravened . . . The Court will consider the detriment occasioned to the employee by the employer’s contravention of the Act, and the extent to which it is reasonable to compensate the employee for such consequences.

[53] (1995) 63 IR 1 at page 9

  1. One head of loss for which compensation may be ordered under s.545(2)(b) of the FW Act is economic loss. In Turnbull v Symantec (Australia) Pty Ltd, I said:[54]

To determine whether an applicant has suffered economic loss because of a contravention of a civil remedy provision, the Court must compare two positions. Where it is not alleged that an applicant failed to mitigate his or her loss, one of those positions is actual, and the other is hypothetical. The actual position is the financial position in which the applicant finds himself or herself at the date compensation is fixed or at some earlier appropriate date. The second, and hypothetical, position is the financial position in which the applicant would have found himself or herself at the relevant time had the employer not contravened a civil remedy position. If, after these two positions are identified, the applicant’s actual financial position is less favourable than the hypothetical financial position, compensation will be fixed in an amount that reflects the difference between the two positions. That is, compensation will be fixed in such amount as will put the employee in, or substantially in, the position he or she would have been, had the employer not contravened a civil remedy provision.

There will usually be little or no difficulty in determining an applicant’s actual financial position. That will be a matter of history, most of the traces of which will be captured in documents. It is another matter to determine the hypothetical position. Here, judgments must be made, often on the basis of incomplete evidence. That will usually give rise to a range of plausible hypothetical financial positions against which to compare the applicant’s actual financial position and, hence, a range of amounts that it may be reasonable to assess as compensation. Nevertheless, an applicant bears the onus of adducing evidence from which the Court can rationally infer a relevant hypothetical position.

[54] [2013] FCCA 1771 at [87] and [88]

  1. In addition to economic loss, an order for compensation may be made under s.545(2)(b) of the FW Act where a person has suffered distress, hurt and humiliation as a result of the contravention of a civil remedy provision.[55]

[55] Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333(Barker J)

Compensation – economic loss

  1. Ms Pacheco-Hernandez ceased her employment with Lagardère on 14 April 2017.[56] In evidence given under cross-examination, Ms Pacheco-Hernandez said she did not immediately look for new work because she “wasn’t mentally in the space to do it”.[57] She could not recall when she commenced to look for work, but was “months after”,[58] but she commenced a new job at the end of January 2018. Ms Pacheco-Hernandez annexed job search applications to her first affidavit which, in cross-examination, she accepted show she was reasonably active in pursuing other employment from April to around July 2017.[59] Ms Pacheco-Hernandez also accepted in cross-examination that she had looked for alternative employment before Lagardère terminated her employment.[60] There was a suggestion in her evidence that she decreased the intensity of her search for employment around October 2017,[61] but Mr Marshall did not submit that Ms Pacheco-Hernandez did not make reasonable efforts to seek new employment. Mr Marshall did submit, however, that given the fractious relationship between Ms Pacheco-Hernandez and other employees of Lagardère, and that Ms Pacheco-Hernandez had looked for alternative employment while employed by Lagardère, the probabilities were that Ms Pacheco-Hernandez would not have remained employed with Lagardère for any substantial period after 14 April 2017 had Lagardère not dismissed her.

[56] T64.40

[57] T65.15

[58] T65.15

[59] T67.20

[60] T65.45 – T66.5: “I was applying since the first day that – even before, I think, that – before they decide to terminate me, because I knew that things wasn’t going well and I wasn’t trusting that my position was secure.”

[61] T67.45

  1. I am not satisfied that Ms Pacheco-Hernandez would have remained employed by Lagardère until the end of January 2018 had Lagardère not terminated her employment in contravention of s.340 of the FW Act. I find Ms Pacheco-Hernandez became unhappy with her employment with Lagardère soon after she commenced working there. That is demonstrated by the email Ms Pacheco-Hernandez sent on 20 December 2016, only some six weeks after she commenced her employment, where she expressed wide ranging criticisms of her colleagues and management. Ms Pacheco-Hernandez remained unhappy, as is shown by the later emails she sent, and her looking for other employment before Lagardère terminated her employment. On the other hand, those responsible for managing Ms Pacheco-Hernandez, and in particular, Ms Toncian, were also unhappy with Ms Pacheco-Hernandez as an employee. That is evident in the emails Ms Toncian sent to Ms Colliver. Although I have found in the circumstances of this case that Lagardère terminated Ms Pacheco-Hernandez in contravention of s.340 of the FW Act, that does not mean it would have been out of the power of Lagardère to have lawfully terminated Ms Pacheco-Hernandez’s employment after 10 April 2017.
  2. In her form 2 Ms Pacheco-Hernandez claims she had initiated a workers compensation claim on 28 April 2017 “for psychological injury I have suffered, as a result of the stressful traumatic events I experienced at Amuse store”. She also claimed that she has been diagnosed with an adjustment disorder with mixed anxiety and depressed mood and, for that reason, she has not been mentally and emotionally fit to return to work. Ms Pacheco-Hernandez has adduced evidence of medical expenses,[62] and a care plan that refers to Ms Pacheco-Hernandez suffering from anxiety, depression and back spasms.[63] There is nothing in this evidence that suggests the cause or causes of Ms Pacheco-Hernandez’s conditions. In particular, there is nothing to suggest that the circumstance in which her employment was terminated is a cause of her medical conditions. In those circumstances, even if because of her medical conditions Ms Pacheco-Hernandez was unable to obtain employment, that is not a matter that can be attributed to Lagardère’s contravention of s.340 of the FW Act.

[62] Affidavit of E M Pacheco-Hernandez 05.05.2018

[63] Affidavit of E M Pacheco-Hernandez 29.05.2018

  1. I find that the employment relationship between Ms Pacheco-Hernandez and Lagardère would not have remained in place for any significant period after 10 April 2017 had Lagardère not terminated Ms Pacheco-Hernandez on 10 April 2017 in contravention of s.340 of the FW Act. In particular, I find it is unlikely the employment relationship would have survived the probation review of Ms Pacheco-Hernandez that was provided for by the Lagardère Probation Review Policy and which was due to take place on or around 6 May 2017, six months after Ms Pacheco-Hernandez commenced her employment. In all the circumstances, I find it would be fair to assess the economic loss Ms Pacheco-Hernandez suffered as a consequence of Lagardère’s contravention of s.340 of the FW Act on the assumption that, had Lagardère not contravened s.340 of the FW Act, Ms Pacheco-Hernandez would have remained employed by Lagardère for a further eight weeks after 14 April 2017, namely, until Friday 9 June 2017. On that assumption, and given that Ms Pacheco-Hernandez’s salary was $50,000 per annum, and was entitled to a 9.5% superannuation contribution ($4,750), I assess Ms Pacheco-Hernandez’s loss to be $7,671 for lost wages, [64] and $729, being the superannuation contribution that would have been paid on  the $7,671.

[64] ($50,000  52) x 8 = $7,692

  1. Ms Pacheco-Hernandez also claims $2,083, being the amount of two weeks of annual leave she would have accrued had she remained employed with Lagardère for a further six months. I have found that Ms Pacheco-Hernandez would not have remained employed by Lagardère beyond 9 June 2017. That means that had she remained employed by Lagardère until 9 June 2017 she would have accrued three days annual leave, which translates into $592.[65]

[65] Ms Pechanco-Hernandez was entitled to four weeks annual leave. That means she accrued one week’s annual leave for every 13 weeks of service. That is, she would have been entitled to accrued leave equal to one week’s wages ($961.50) every 13 weeks. Given that I have found Ms Pacheco-Hernandez would have worked a further 8 weeks, she would have been entitled to accrued leave of 8/13 of $961.50, namely, $592.

Compensation – non-economic loss

  1. Ms Pacheco-Hernandez claims $2,000 for “financial loss due to medical expenses” relating to “psychological treatment, physio therapist and medical consultations”.[66] She also claims $21,000 “for general psychological damage-trauma cause by been [sic] bullied, harassed, unfairly dismissed and suffering”. I have already referred to Ms Pacheco-Hernandez having adduced evidence of medical expenses,[67] and a care plan that refers to Ms Pacheco-Hernandez suffering from anxiety, depression and back spasms.[68] As I have also noted, however, there is nothing in this evidence that suggests that the circumstance in which her employment with Lagardère was terminated is a cause of her medical conditions. For those reasons, Ms Pacheco-Hernandez is not entitled to any compensation in relation to her medical conditions.

[66] Annexure to Amended Claim filed on 10 October 2017

[67] Affidavit of E M Pacheco-Hernandez 05.05.2018

[68] Affidavit of E M Pacheco-Hernandez 29.05.2018

Other relief

  1. Ms Pacheco-Hernandez claims an order that Lagardère “must not list or provide a negative record of reference . . . against the applicant”. I do not propose to make any such order because it does not relate to Lagardère’s contravention of s.340 of the FW Act.
  2. Although not claimed by Ms Pacheco-Hernandez, given she is an unrepresented litigant, it would be appropriate that I also make an order under s.547 of the FW Act that interest be included in the amount I propose that Lagardère pay.

Conclusion and Disposition

  1. I have concluded that Lagardère contravened s.340 of the FW Act and that Ms Pacheco-Hernandez has suffered economic loss, that loss being the loss of eight weeks of wages ($7,671), lost accrued annual leave on those eight weeks of wages ($592), and superannuation contributions on the eight weeks wages ($729). I propose that interest be calculated on those amounts from 10 June 2017 to 17 December 2018, being the day on which I propose to pronounce my orders, by applying to these amounts the rates prescribed by the Interest on Judgements Practice Note (GPN-INT)issued by the Federal Court of Australia. That practice note provides for an interest rate of 6% above the cash rate last published by the Reserve Bank of Australia. The cash rate for the period 10 June 2017 to 17 December 2018 has been 1.5%. The rate of interest I will apply, therefore, is 7.5%. On that rate, interest on $8,263 (being the sum of sum of $7,671 and $592) for the period 10 June 2017 to 17 December 2018 is $619.73; and interest on the superannuation of $729 is $83.11.
  2. I therefore propose to:
  1. a)           declare that Lagardère has contravened s.340 of the FW Act by dismissing Ms Pacheco-Hernandez from her employment because she exercised her ability to make a complaint in relation to her employment;
  2. b)           declare that Ms Pacheco-Hernandez is entitled to an order under s.545(2)(b)of the FW Act that Lagardère pay Ms Pacheco-Hernandez compensation in the amount of $8,263 (being the sum of 8 weeks of lost wages ($7,692) and lost accrued annual leave on those 8 weeks of wages ($592);
  3. c)           declare that Ms Pacheco-Hernandez is entitled to an order under s.545(1)of the FW Act that Lagardère pay $729 to the superannuation fund to which Lagardère had made superannuation contributions for the benefit of Ms Pacheco-Hernandez during the period she was employed by Lagardère;
  4. d)           declare that Ms Pacheco-Hernandez is entitled under s.547 of the FW Act that interest be added on the sums referred to in (b) and (c) at the rate of 6.5% per annum from 10 June 2017 to 17 December 2018;
  5. e)           order that Lagardère pay to Ms Pacheco-Hernandez $9,205.32 (being the sum of $8,263 and interest of $942.32 on that sum); and
  6. f)           order that Lagardère contribute $812.11  (being the sum of $729 and interest of $83.11 on that sum) superannuation fund to which Lagardère had made superannuation contributions for the benefit of Ms Pacheco-Hernandez during the period she was employed by Lagardère.
  7. At the time I pronounce these orders I will set the matter down for a directions hearing in relation to the question of penalty.”

PACHECO-HERNANDEZ v DUTY FREE STORES GOLD COAST PTY LTD [2018] FCCA 3734 delivered17 December 2018 per Manousaridis J