Unfair dismissal payout: How much can you receive?

Receiving an unfair dismissal payout is the ideal result when your employer treats you unfairly. However, you might be unsure if it is worth pursuing a payout. Also important is the motivation for lodging a claim. It could be about money, reputational damage, principal, revenge, or unpaid commissions. This article is about money and where your unfair dismissal claim fits into the Fair Work system.

This article is a must-read if you are considering an unfair dismissal claim. We explain how much you can expect with an unfair dismissal payout. We outline clearly the eligibility criteria for making a claim with the Fair Work Commission (FWC). And we dispel a few myths related to the costs and processes involved.

Check out other cases, read below then you will have a great understanding of what your payout should be.We have numerous cases listed under What is my unfair dismissal claim worth.

When is a dismissal deemed unfair?

Before we discuss how much you could potentially receive in an unfair dismissal payout, it is imperative to understand the criteria that the FWC uses to determine if your dismissal was unfair.

An unfair dismissal is where an employee’s dismissal was:

• Harsh, unjust, or unreasonable, and
• Was not a case of genuine redundancy, and
• If the employee was employed by a small business, was not consistent with the Small Business Fair Dismissal Code.  

In order to receive an unfair dismissal payout, the above must be true for the employee. To determine if a dismissal was harsh, unjust, or unreasonable, the FWC considers a number of criteria. This includes whether there was a valid reason for the dismissal related to the employee’s capacity or conduct. Also, if the employee was notified of that reason and given a chance to respond to it. These are just a few of the criteria, which you can view on the FWC website.

Am I eligible to make an unfair dismissal claim?

In order to potentially receive an unfair dismissal payout, you must first be eligible to make a claim. This means satisfying the following criteria:

• At the time of your dismissal, you had completed at least the minimum employment period with the employer. This is six months or if you worked for a small business (less than 15 employees), 12 months.
  
• Earn less than the high-income threshold, which at the time of writing is $162,000. This figure however changes annually. You can see the latest threshold figure on the FWC website.
  
• If you are a casual employee, you worked on a regular and systemic basis (i.e. you had a recurring roster) before your dismissal. Also, you had a good reason to believe that this pattern of work would continue.

How much does it cost to make an unfair dismissal claim?

There is a widespread misconception that legal action is always expensive. This can be true when doing so through the court system. However, action through the FWC is far more affordable.

If you engage a lawyer or a paid agent (like us at A Whole New Approach), it is not the same as doing so for a legal matter that will be heard in court. Your representation can offer a no-win, no-fee arrangement, which clears you from incurring any costs if your case is unsuccessful. There is a fee you must pay the FWC when you apply to make an unfair dismissal claim. For 2022-23, the fee is $77.80, however, this changes annually every 1 July. You can view the latest fee amount on the FWC website.

It’s important to note that you must also lodge your application within 21 days of your dismissal.

Can I represent myself at the FWC?

You are permitted to represent yourself if your case ends up being heard by the FWC. However, it is strongly advised that you don’t do this. The intricacies of the law mean that most applicants aren’t equipped to successfully argue their case.

It can also be intimidating to represent yourself. It is especially not advisable if your case brings up certain emotions that may cloud your judgment during a hearing. Representing yourself is the most effective way to ensure you won’t receive an unfair dismissal payout.

If you check the Fair Work website, the most successful claims, and the highest payouts are for represented employees. Many employees think they understand their case and argument. This is until the employer turns up with numerous witnesses, telling a host of lies and made-up stories. What do you do? The Fair Work Commission must rule on the evidence before it, not take a stab at the truth or feel sorry for you.

What happens in an unfair dismissal conciliation?

Mediating a conciliation between you and your employer is the first step Fair Work will take to help resolve your unfair dismissal case. It is organized as soon as your unfair dismissal application is received and generally takes place between two to five weeks later. According to the FWC, 75 percent of unfair dismissal cases are resolved with conciliation. Conciliation is voluntary and if you choose not to participate in it, your application will proceed as normal. It is conducted by an independent conciliator who leads the discussion to determine the facts of your case and who may be right or wrong.

The aim of a conciliation conference is for the employee and employer to reach a settlement. This is a written legal contract (referred to as a Deed of Release) that the two parties must sign. The settlement could be whatever the parties agree to. This could range from an apology, reinstatement of the employee’s job, or an unfair dismissal payout.

A conciliation conference generally lasts for 90 minutes, however, in some cases can last for a day or longer. The conference and its outcomes of it are completely private. If you choose not to participate in conciliation or a settlement isn’t reached during conciliation, your case will proceed to a formal hearing with the FWC.

FWC hearings: What happens when you win your unfair dismissal case?

If the Fair Work Commission finds that you were subjected to unfair dismissal, there are generally two outcomes. The Fair Work Commission may order your employer to reinstate your employment. This means you will either get your old job back or be appointed to another job similar in terms and conditions. This outcome may also include continuity of service and pay or benefits lost while dismissed.

The second outcome is for the FWC to order your employer to pay you an unfair dismissal payout. This payout compensates any financial loss you suffered due to being dismissed. For instance, the wages you lost during your absence from work. An unfair dismissal payout does not include compensation for the shock, distress, hurt, or humiliation you suffered due to your dismissal.

It must be noted that an employer is only ordered to provide a payout if reinstatement is not possible. For instance, if the business is no longer operating or the employee can’t work because of illness or injury. Also, if the employer-employee relationship has broken down and therefore they can not work together. Or if it is likely that the employer will dismiss the employee again.

How much is an unfair dismissal payout?

According to the latest figures from the FWC, the median unfair dismissal payout is $8,704. The maximum amount of compensation that you can receive is the lower of the two following amounts:

• Half of your annual wage OR
• The compensation cap. In 2022, this is currently $79,250, however, this amount changes annually. You can view the latest compensation cap figure on the FWC website.

There are however two scenarios in which an employee may have their unfair dismissal payout reduced. This includes if they did not experience any financial loss due to the dismissal. Or if the FWC deems that they deserve a lower payout due to bad behaviour. In other words, what did you do to contribute to your dismissal? Also, the employee’s length of service plays a role in Fair work thinking as to the award of compensation. Generally, the better payouts are to employees with 5 years or more service.

How is the payout calculated?

The Fair Work Commission uses what it calls the Sprigg formula to calculate the amount of an unfair dismissal payout. This formula was established during the 1998 unfair dismissal case Sprigg v Paul’s Licensed Festival Supermarket. The Sprigg formula was part of the legislation that preceded the introduction of the Fair Work Act in 2009. The approach that must be taken when using the Sprigg formula was outlined during the 2013 case Bowden v Ottrey Homes Cobram and District Retirement Villages. Since that case, this approach has been part of the Fair Work Act.

The Sprigg formula requires fair work to take several steps in order to calculate an unfair dismissal payout. This includes estimating the amount of pay the employee would have received if they had not been dismissed. It also involves deducting any pay the employee has earned since their dismissal. You can view the full list of steps outlined by the Sprigg formula on the FWC website.

In what situation would you receive the maximum unfair dismissal payout?

It is up to the discretion of the Fair Work Commission whether to award a maximum unfair dismissal payout. That is, a payout equivalent to half your annual wage or the compensation cap. Factors that can influence the Fair Work Commission include the length of the employee’s service. If they had an unblemished record. And whether they were responsible for any serious misconduct.

It must be noted, however, that very rarely does the Fair Work Commission decide to award the maximum unfair dismissal payout. But it does happen.

Mushroom picker awarded maximum unfair dismissal payout

One unfair dismissal case where the employee was awarded the maximum unfair dismissal payout is Helen Robertson v Imperial Mushrooms Pty Ltd [2021]. The case involved mushroom picker Helen Robertson, who had been working for Imperial Mushrooms for just under 15 years. Ms. Robertson was one of 200 pickers who plied her trade at a mushroom farm located in Western Sydney. And as revealed during her unfair dismissal hearing, she was being paid $19.49 per hour – 35 cents below her award rate.

Up until February 2020, Ms. Robertson had a flawless working record at Imperial Mushrooms. But that month, she was verbally warned by her supervisor for failing to follow company policy and procedure. And over the next few months, she received multiple warnings and counseling. This was due to arguing with her supervisor, not packing mushrooms properly, and not properly advising her of her absence from work.

Employee causes a contamination scare by losing a knife

As a mushroom picker, Ms. Robertson used a harvesting knife. And at the end of each shift, she had to wash and return the knife by hanging it on a wall hanger. But not long after her shift ended on 16 August 2020, a supervisor noticed that her knife wasn’t on the wall hanger.

After being confronted about the missing knife, Ms. Robertson said that it could be in the tub used for washing. But the duo failed to find the knife there or anywhere else. Because the missing knife was a contamination risk, Imperial Mushrooms had to check all the mushrooms that Ms. Robertson had picked that day. This took around three hours, and after not finding the knife among any mushrooms, they were cleared for dispatch to retailers.  

Employee is stood down and then dismissed

Two days later, Ms. Robertson turned up for her shift. She was told that her knife had been found and thereafter picked mushrooms for most of the day. That was until she was called into a meeting where she was questioned about the circumstances surrounding the missing knife. At the end of the meeting, Ms. Robertson was told that she was stood down from her employment. Then a few days later, she was summarily sacked for serious misconduct. Ms. Robertson’s dismissal letter stated that by losing the knife, she had:

• Caused serious and imminent risk to the health and safety of a person.
• Caused serious and imminent risk to the reputation, viability, or profitability of Imperial Mushrooms.
• Failed to comply with lawful and reasonable instruction. 

Ms. Robertson subsequently made an unfair dismissal claim with the Fair Work Commission.

The employee makes her case with the Fair Work Commission

At her unfair dismissal hearing, Ms. Robertson was represented by an officer of The Australian Workers’ Union, Mr. T Craven. The argument that he pursued was that Imperial Mushrooms didn’t have a valid reason to dismiss Ms. Robertson. This was because of misplacing the knife:

• Wasn’t serious misconduct, but little more than a trivial mistake. Mr. Craven argued that labeling the mistake as serious misconduct was a gross mischaracterization by Imperial Mushrooms.
  
• Didn’t meet the definition of serious misconduct outlined in the Fair Work Act 2009. That is, it wasn’t wilful or deliberate behaviour that was inconsistent with Ms. Robertson’s employment contract.
  
• Wasn’t a life or death matter, as Imperial Mushrooms made it seem. This was because the company had clear guidelines in place to check if the missing knife had contaminated any product.
  
• Didn’t lead Imperial Mushrooms to consider any other forms of discipline for Ms. Robertson. Mr. Craven argued that misplacing the knife simply required a chat with Ms. Robertson, not a summary dismissal.

Mr. Craven also outlined that Imperial Mushrooms had denied Ms. Robertson procedural fairness. He said that she wasn’t provided the chance to provide a response to the reasons for her dismissal. And that she was denied the right to have a support person present during the meeting when she was told of her dismissal. Mr. Craven also explained that Ms. Robertson had initially desired reinstatement when making her unfair dismissal claim. But she had since changed her intention to seek an unfair dismissal payout.

Fair Work Commission Dismantles Imperial Mushrooms’ Claims

Considering the facts of the case, the Fair Work Commission found fault with several of Imperial Mushroom’s claims. This included Ms. Robertson’s misplacing the knife:

• Wasn’t wilful or deliberate. But rather, unintentional and negligent.
  
• Didn’t cause any serious and imminent risk of harm to anyone. Nor any risk to the reputation, viability, or profitability of Imperial Mushrooms.
  
• Wasn’t handled according to Imperial Mushroom’s standard procedure. This prohibits pickers from leaving their workplace until their knife is found with the help of their supervisor. The Fair Work Commission found that Imperial Mushrooms had placed all the blame on Ms. Robertson, rather than their own failure to follow established procedures.

Wasn’t a valid reason

Based on these findings, the Fair Work Commission ruled that there wasn’t a valid reason for Ms. Robertson’s dismissal. It also found that:

• Ms. Robertson’s “long, unblemished” work record “contrasted strangely” with the disciplinary measures she started receiving in 2020. The Fair Work Commission said that it appeared the recent disciplinary warnings were connected to her workplace injury. It was observed that her bad back appeared to cause resentment for Ms. Robertson’s supervisors.  
  
• Imperial Mushrooms adopted a “severely flawed” process to decide if Ms. Robertson should be dismissed. The company didn’t provide her with the opportunity to respond to the reasons for her dismissal. It noted that a meeting held to hear her side of the story involved giving her a pre-written dismissal letter. Effectively, Imperial Mushroom had decided to dismiss her before hearing her response.
  
• Ms. Robertson wasn’t provided the right to have a support person present during the aforementioned meeting.
  
• Imperial Mushrooms gave “little or no consideration” of alternative forms of discipline to her instant dismissal.
  
• Ms. Robertson’s dismissal was a “grossly disproportionate” response to losing the knife.
• Based on all these reasons, the Fair Work Commission ruled that not only did Imperial Mushrooms lack a valid reason to dismiss Ms. Robertson. But it had also conducted an “entirely unjust and unreasonable process” to deal with her misconduct. The Fair Work Commission, therefore, ruled that Ms. Robertson’s dismissal had been harsh, unjust, and unreasonable.

Fair Work Commission orders maximum unfair dismissal payout

In deciding to award Ms. Robertson the maximum unfair dismissal payout, the Fair Work Commission considered a range of factors. This included:

• Based on the evidence provided, an order of compensation would not affect the viability of Imperial Mushrooms.
  
• Ms. Robertson’s almost 15 years of service.
• Ms. Robertson’s unblemished record for much of her time at Imperial Mushrooms. Based on this, the Fair Work Commission estimated that her employment would have continued for another five years.
  
• That the total remuneration Ms. Robertson received via alternative employment and may have been reasonably likely to earn since her dismissal, was calculated to be $0.
  
• That Ms. Robertson’s misconduct was found to be unintentional and negligent. The Fair Work Commission, therefore, decided not to reduce the compensation awarded to her.

By using the Sprigg Formula, the Fair Work Commission calculated that Ms. Robertson would have been paid $192,400.00 if she had continued in her role for another five years. However, this figure exceeded the unfair dismissal payout compensation cap. Therefore, Imperial Mushrooms was ordered to pay her $19,200. This figure was the maximum unfair dismissal payout possible, given that it was equivalent to half of Ms. Robertson’s annual salary.

What if my employer refuses to honour my unfair dismissal payout?

Believe it or not, some employers refuse to pay employees termination payout. That is, even after being ordered by the Fair Work Commission to do so. If an employer refuses, the Fair Work Commission can sue through the courts to compel payment. As a result, the employer will also have to pay a steep fine. These fines can be levied against the company and individuals within the company.

Employer fined $138,000 for refusing to provide unfair dismissal payout

This is what happened to WCH Services, a trolley-collecting company based in Victoria’s Latrobe Valley. If you enjoy hearing about shameless employers getting their comeuppance, this is definitely a feel-good story you don’t want to skip. In 2015, WCH Services employees filed unfair dismissal claims against the company. And in 2016, a third made an unfair dismissal claim with the Fair Work Commission.

The interesting thing about these dismissal claims is that WCH Services chose not to participate in the Fair Work Commission hearings. And perhaps this was to their detriment because all three unfair dismissal claims were successful. The Fair Work Commission ordered WCH Services to pay all three employees. For the two dismissed in 2015, unfair dismissal payouts were $17,392 and $4,446. While for the employee dismissed in 2016, the company was ordered to pay $962.

“I would rather go to Goal than give him one more cent:” WCH Services refuses to honour unfair dismissal payouts

As time went on, however, it became clear to the three employees that WCH Services just wasn’t going to comply with the Fair Work Commission’s orders. So, all three contacted the Fair Work Ombudsman, which took WCH Services to court for breaching the Fair Work Act 2009.

At different intervals, the Fair Work Ombudsman launched three separate legal actions in the Federal Circuit Court of Australia. In one of the cases – Fair Work Ombudsman V WCH Services Pty Ltd & Anor [2018] FCAA1877 – a very interesting response from the owner of WCH Services was revealed. After a solicitor for the Fair Work Commission asked if the owner had received the letters sent to him regarding his failure to honour the payout, he provided this response: “Yes, I have but I don’t enjoy reading. I shouldn’t be expected to read all that when I can’t read well and can’t use computers.”

And in one of the other cases – Fair Work Ombudsman V WCH Services Pty Ltd & Anor [2018] FCCA 1876 – another laughable response from the owner was revealed. When a Fair Work Commission inspector contacted him regarding the payout, he said he “would rather go to Goal than give [the employee] one more cent.”

Federal Circuit Court throws the book at employer

Clearly, this employer was completely unapologetic about providing the three employees with their termination payouts. And he was foolishly prepared to incur the wrath of the Fair Work Commission and the legal system. And incur their wrath he did. Circuit Court Judge Norah Hartnett found the actions of WCH Services and its owner to be deliberate and that they had demonstrated “no contrition.” She said that the penalty for failing to comply with Fair Work Commission orders needed to deter other employers from doing the same thing.

Judge Hartnett, therefore, took a very hard line with WCH Services and its owner. She fined the company $113,400. And she fined the owner $22,680. The judge also ordered WCH Services to pay the Fair Work Ombudsman’s $12,491 in legal costs. Combined with the unfair dismissal payouts owing, this mistreatment of three employees collectively set back WCH Services and its owner a whopping $181,560.

Unfair dismissals took a huge toll on employees

The huge penalties handed down by the court were fully justified given the employees’ testimony. Judge Hartnett concluded that WCH Services’ refusal to honor the unfair dismissal payouts caused “financial and emotional hardship” for the three employees. It was revealed during the trial that one of the employees couldn’t find another job for seven months after his unfair dismissal. Another said he had to relocate to Queensland due to financial strain. And the other employee said he hadn’t found employment in the two years since his unfair dismissal.

Given the shameless disregard WCH Services had for its obligations, Fair Work Ombudsman Natalie James made sure to send a message to other employers. She commented that it was “completely unacceptable” to not honor an unfair dismissal payout. She also said that the massive fines send a clear message to other employers. Namely, that “serious consequences apply” for refusing to honor unfair dismissal payouts. And for not complying with the Fair Work Commission’s orders.

Fair Work Ombudsman James also warned any employer thinking about refusing to honor an unfair dismissal payout. She said that they “should be aware that the Fair Work Ombudsman will take action.” And she said that the Fair Work Ombudsman “will do everything within its power” to ensure WCH Services and its owner will honor the fines, payouts, and legal costs they have been ordered to pay.

Conclusion

We at A Whole New Approach are experts in handling unfair dismissal claims. In the last two decades, we have handled over 16,000 claims in every Australian state. We have a deep understanding of the processes involved and how to make your claim a success. We are not lawyers, but one of the nations leading workplace advisors and commentators.

It is important to understand that you must file your claim within 21 days of being dismissed. So if you feel you were mistreated by your employer, call us today at 1800 333 666 for a free and confidential conversation. We can help you understand if you are eligible to make an unfair dismissal claim and streamline the process for you. All Fair work matters including, redundancy, sick leave, questions and answers, adverse action claims, call us

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