Factors Fair Work takes into account for unfair dismissal compensation

24 December 2019 

An employee is able to make a claim for a dismissal they deem their dismissal to be harsh, unfair or unreasonable per section 387 of the Fair Work Act 2009 (Cth).

Criteria

So what factors does the Fair Work Commission take into account for compensation? Below are the factors from section 392 of the Fair Work Act 2009 (Cth).

  • effect of the order on the viability of the employer’s enterprise; 
  • length of the person’s service with the employer
  • the remuneration the person would have received if they had not been dismissed 
  • efforts the person has made to mitigate their loss because of the dismissal
  • amount of any income reasonably likely to be earned by the person between the time of making the order for compensation and the actual compensation 
  • ​any other matter Fair Work considers relevant 

Factors that reduce compensation 

Misconduct

Importantly, misconduct will reduce the compensation amount. That is, if Fair Work is satisfied that the person’s misconduct contributed to the employer’s decision to dismiss the person. 

Shock, distress etc disregarded 

Fair Work will not consider shock, distress or humiliation or other hurt caused to the person by the dismissal. 

Compensation cap

The amount ordered by Fair  Work must not exceed the lesser of: 

  • the higher income threshold immediately before dismissal 
  • the amount that is received by the person or to which the person was entitled (whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal. 

Instalments permitted 

Fair Work may permit the employer concerned to pay the amount required in instalments specified in the order. 

Do you have questions or comments about compensation for an unfair dismissal? Be sure to leave them below. 


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Vivian Michael
 

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to deliver the best quality business legal services to entrepreneurs launching an Australian business, wherever they are in the globe.

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