General protections: how to calculate compensation Part 1

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How to assess compensation for general protections’ contraventions
s.545(2)(b) of the Act provides that the Court may make “an order awarding compensation for loss that a person has suffered because of the contravention”. There must, therefore, be “an appropriate causal connection between the contravention and the loss claimed”: see Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333; (2011) 193 FCR 526 at 592.
In Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia – Western Australian Branch (1995) 63 IR 1, Lee J considered a predecessor of s.545(2)(b) of the Act (s.170EE of the Industrial Relations Act 1988 (Cth)). His honour said (at [9]) that:
o “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.”
Economic Compensation
Although the award of compensation under s.545(2)(b) of the Act is a statutory entitlement, the usual approach to the calculation of economic compensation under s.545(2)(b) of the Act is, so far as a monetary amount can achieve, to place the employee in the position he or she would have been in, if the employer had not contravened the Act. This reflects the settled principles identified in Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60, regarding damages for actions in tort or contract. In simple terms, in circumstances where an employee has been terminated, this involves, having regard to the totality of the evidence, an assessment of how long the employee would have remained in that employment and the determination of the value of the likely income stream, followed by the application of the discount for contingencies and vicissitudes. The discounted income stream is then reduced by the employee’s mitigated loss (his or her actual earnings since the dismissal). The Court may consider whether the employee has taken appropriate steps to mitigate his or her loss. However, it is for the employer to establish the facts going to the employee’s alleged failure to mitigate his or her loss: Harding v Harding [1928] NSWStRp 103; (1928) 29 SR (NSW) 96 at 106; Tasman Capital v Sinclair Pty Ltd [2008] NSWCA 248; 75 NSWLR 1 at [55]- [72]; and Bagnall v National Tobacco Corporation of Australia Ltd [1934] NSWStRp 30; (1934) 34 SR (NSW) 421 at 430.
As there must be a causal connection between the contravention and the loss suffered, it is appropriate to set out the contraventions found by the Court in the Liability Judgment. These are contained in the declarations made as follows:
a. In deciding to terminate the Applicant’s employment, the First Respondent contravened s.340 of the Fair Work Act 2009 (Cth) (the Act) by injuring the Applicant in her employment, for the reason that, or for reasons which included as a substantial and operative reason that, the Applicant was entitled to personal leave under the Act.
b. In deciding to terminate the Applicant’s employment, the First Respondent contravened s.340 of the Act, by altering her position to her prejudice, for the reason that, or for reasons which included as a substantial and operative reason that, the Applicant was entitled to the benefit of the Accident Compensation Act 1985 (Vic).
c. Pursuant to s.550 of the Act, the Second Respondent is taken to have contravened the Act as set out in Declarations (1) and (2).
The Applicant’s claims for economic compensation in her Outline of Applicant’s Submissions on Remedy filed on 2 May 2016 follow the approach set out at [5] above, save to say that, because she asserts the amount of tax she will pay on any lump-sum compensation awarded may be higher than the marginal tax rate she would have paid had that money been earned as wages on a periodic basis, she argues a fairer methodology is to calculate the net losses and then “gross up” to cancel out this effect: Martin v Tasmania Development and Resources [1999] FCA 593; (1999) 89 IR 98 and Patterson v Middle Harbour Yacht Club (1996) 64 FCR 405.[1]

Collison v Brighton Road Enterprises Pty Ltd T/A The Grosvenor Hotel & Anor (No.2) (2016) FCCA 1798 per Jones J