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When is Reinstatement an Appropriate Remedy?
A recent Fair Work Commission (“FWC”) decision found that reinstatement was an appropriate remedy notwithstanding the labour hire company’s contention that it lacked contractual power to reinstate the applicant to his former position with its client.
Facts of the case
The applicant was employed by Chelgrave Contracting Australia (“Chelgrave”) as a maintenance fitter providing services to Carlton United Breweries (“CUB”). On 21 April 2020 there was an incident where the applicant breached safety rules by failing to isolate a palletising machine. An investigation was conducted and recommended that he be issued with a final written warning. Instead, Chelgrave summarily dismissed the applicant for his failure to comply with CUB’s Lifesaver Rules, OHS requirements and for his willful disregard for a lawful direction. The applicant claimed he had been unfairly dismissed and sought reinstatement.
The FWC found that the employee’s dismissal was harsh, unjust and unreasonable. It found that his actions did not constitute serious misconduct. The decision to dismiss took into account performance and conduct matters which had not been put to the applicant. The FWC found that the decision to dismiss did not adequately take into account the contributing factors, such as the fact that the applicant should not have been left on his own to manage a machine which he was not adequately trained on. In addition, the applicant was not afforded an opportunity to provide a response to Chelgrave’s proposal to dismiss and was merely informed by phone and then email that he had been dismissed with immediate effect.
Reinstatement an appropriate remedy
Chelgrave argued that it would be inappropriate to reinstate the applicant because:
- the necessary trust and confidence had been lost;
- there was a history of poor work performance;
- it lacked the contractual power to compel its client to reinstate; and
- the applicant would not have difficulty finding work as he has had many previous employers.
The FWC was unpersuaded by these arguments. The contract between Chelgrave and its client was not put in evidence and so a contractual obligation could not be inferred. Further, the FWC did not agree that there had been a mutual loss of trust and confidence which would make reinstatement inappropriate. The FWC exercised its discretion to reduce back pay by 15% taking into account the applicant’s conduct which led to his dismissal.
Lee v Superior Wood
In contrast, in the matter of Lee v Superior Wood Pty Ltd, the Full Bench of the FWC found that reinstatement was not an appropriate remedy. The employee had been unfairly dismissed for refusing to comply with the attendance policy at Superior Wood Pty Ltd (“Superior Wood”) when it introduced fingerprint scanners to sign on and off for work at one of their sites. It was found, in an earlier decision, that Superior Wood could not lawfully direct the employee to undergo fingerprint scanning. The employee was awarded the maximum compensation payment. He appealed this decision on the basis that reinstatement was an appropriate remedy. He argued that prior to his dismissal, his employment record was unblemished.
However, the Full Bench was not satisfied that a workable employment relationship could be re-established. Throughout the proceedings the employee made “unsupported allegations of theft, coercion and illegal behaviour” on the part of Superior Wood and its Managing Director. This lack of trust was further evidenced by the employee’s refusal to accept an unconditional without prejudice payment of $25,000 made by Superior Wood in response to the employee’s earlier submissions about his loss of income. The conclusion reached was that a relationship of trust and confidence could not be restored.
- The FWC must determine if reinstatement is appropriate before considering any other remedy in the case of an unfair dismissal.
- It is not until the FWC is satisfied that reinstatement is inappropriate that compensation can be considered.
- It is important that managers give clear evidence on the breakdown of the trust relationship during unfair dismissal proceedings in order to reduce the risk of an order of reinstatement.
Please read the full decision here.
Update: Although not a party to the original decision, the host was granted permission to appeal and in doing so put a copy of the labour hire contract into evidence. The contract established the right of the host to require the labour hire company to remove the worker, and the obligation on the labour hire company to do so. With the benefit of the contract, the Full Bench of the Commission quashed the order for reinstatement to the host’s site. See our updated blog here.
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