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When compensation is not enough

In a decision of some significance, the Full Bench of the Fair Work Commission has clarified the appellate standard to be applied in an appeal on the question of reinstatement in unfair dismissal proceedings.

In Wally Moszko v Simplot Australia Pty Ltd [2021] FWCFB 6046, a three-member Full Bench heard an appeal from a decision of Commissioner Harper-Greenwell, quashed the decision to only award compensation and ordered reinstatement and backpay.

While reinstatement is nominally the principal remedy in unfair dismissal proceedings under the Fair Work Act 2009 (Cth) (the Act), in the first three quarters of FY20-21, of the 170 applications granted (applicant successful), reinstatement was awarded in 12 cases.1 It is much more common for an award of compensation to be made.

In this case, Mr Moszko, the applicant, was employed as a shift feeder by Simplot at a potato processing plant in Tasmania. He was an AMWU delegate and a work, health and safety representative.

After working for Simplot for nearly 24 years, Mr Moszko was dismissed on 20 November 2020, on the basis of five allegations in respect of his conduct, none of which were substantiated at first instance. His dismissal was found to be harsh, unjust and unreasonable and Simplot was ordered to pay compensation in the sum of $9199.01 plus superannuation.

Section 390(1) of the Act confers on the commission a broad discretion to order a person’s reinstatement when someone is unfairly dismissed, though that exercise of discretion is subject to subsection (3). That subsection provides that a person must not order the payment of compensation unless the commission is “satisfied that reinstatement of the person is inappropriate”.

Mr Moszko, in appealing the decision to award compensation rather than to reinstate, appealed the decision on two grounds. First, that the assessment the commission must make under s390(3) is, properly, an evaluative judgement in that it is a binary choice and that the “correctness standard” applies on appeal rather than it being a discretionary decision, subject to the House v The King2 test. The second ground was put in the alternative, and was essentially that in exercising a discretionary decision, the commissioner engaged in House v The King-type error.

Gageler J in Minister for Immigration and Border Protection v SZVFW,3 expressed the distinction between the standards, as:

“The line is not drawn by reference to whether the primary judge’s process of reasoning to reach a conclusion can be characterised as evaluative or is on a topic on which judicial minds might reasonably differ. The line is drawn by reference to whether the legal criterion applied or purportedly applied by the primary judge to reach the conclusion demands a unique outcome, in which case the correctness standard applies, or tolerates a range of outcomes, in which case the House v The King standard applies. The resultant line is not bright; but it is tolerably clear and workable.”

That is, the “correctness standard” requires that a decision-maker substitute its own conclusion where it disagrees with the primary judge, unlike the “discretionary standard” where the decision-maker is allowed some latitude as to the choice of decision to be made.

Having observed that the question required consideration of the statutory context, the Full Bench concluded that a statutory provision which asks whether the commission is “satisfied” of the relevant matter can accurately be described as conferring a very wide discretion.

That the sub-section does not stipulate what considerations must (or may) be taken into account in reaching the state of satisfaction, was also indicative that Parliament intended to accord some latitude to a member hearing the matter at first instance to decide whether or not they are “satisfied” that reinstatement is “inappropriate”. The outcome of that question does not demand a unique outcome but rather, the provision contemplates a range of legally permissible outcomes.

In this way, the Full Bench considered that the features of the sub-section were similar to, for example, whether the commission is satisfied or otherwise as to whether an enterprise agreement has been genuinely agreed to by employees (s186(2)(a) of the Act) or a group of employees is fairly chosen (s237(2) of the Act).

In concluding that whether or not the commission reaches the necessary state of satisfaction that “reinstatement of the person is inappropriate” within the meaning of s390(3) of the Act is a broad discretionary decision, the Full Bench held that appealable error must be assessed in accordance with the test in House v The King.

While Mr Moszko was unsuccessful on the first ground of the appeal, he ultimately prevailed. The Full Bench concluded that the commissioner had engaged in appealable error in the exercise of her discretion by having regard to irrelevant considerations in respect of the “unresolved” circumstances in which a certain task was not performed and, otherwise, that simply Mr Moszko would face further, as yet unsubstantiated allegations on his return to work, the mere fact of these could not form a sound or rational basis to underpin or contribute to a finding that Simplot had lost trust and confidence in him.

Where the ultimate object of an applicant in unfair dismissal proceedings is often reinstatement and the respondent, the converse, following this decision, parties to appeals on the issue will be on all fours as to the test to be applied by the commission.

This article appears courtesy of the Queensland Law Society Occupational Discipline Law Committee. Patrick Turner is a Senior Associate at Maurice Blackburn Lawyers and a member of the committee.

Footnotes
1 Fair Work Commission, Unfair Dismissal Reports, Jul-Sep 2020, Oct-Dec 2020 and Jan-March 2021.
2 (1936) 55 CLR 499.
3 [2018] HCA 30.

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