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A “reprehensible” response to reinstate an employee and restore lost pay

26 May 2020

#Workplace Relations & Safety

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A “reprehensible” response to reinstate an employee and restore lost pay

In the recent decision of Puszka v Ryan Wilks Pty Ltd T/A Ryan Wilks [2020] FWC 1067 that was delivered on 28 February 2020 (2020 Decision), the Fair Work Commission (Commission) found that the respondent employer, Ryan Wilks Pty Ltd (Ryan Wilks), failed to comply with an earlier order of the Commission to pay lost pay to the applicant, Trudi Puszka (Applicant).

Nine months earlier, in a decision issued on 7 March 2019, the Commission decided Puszka v Ryan Wilks Pty Ltd T/A Ryan Wilks [2019] FWC 1132 (Original Decision). In the Original Decision, the Applicant succeeded in obtaining the remedy of reinstatement of her unfair dismissal from her employment with Ryan Wilks, resulting in the following three orders:

  • Order 1 required Ryan Wilks to reinstate the Applicant by reappointing her to the position in which she was employed immediately before her dismissal
  • Order 2 provided for the Applicant to maintain continuity of employment
  • Order 3 required Ryan Wilks to pay the Applicant an amount of remuneration lost, or likely to be lost because of the dismissal, as restoration of lost pay.

After the Original Decision

What happened after the Original Decision was issued on 28 March 2019 is instructive and has been described by the Commission as “difficult and protracted”. 

After the orders were issued in the Original Decision, Ryan Wilks lodged an appeal against the Original Decision in which, among other things, a stay of the Original Decision was sought (Appeal). The request was refused and the Appeal subsequently dismissed.

On 25 June 2019, the Applicant lodged a request for assistance with the Fair Work Ombudsman (FWO), in which she alleged that Ryan Wilks had not complied with the order to restore lost pay.

On 5 July 2019, Ryan Wilks issued the Applicant with a letter directing her to attend work at the Silverwater premises. Prior to her dismissal, the Applicant’s work location was at the Sydney Opera House. The Applicant alleged that the decision to move her to Silverwater was punitive, and constituted adverse action. On 10 July 2019, the Applicant filed a General protections application (Form F8) to the Commission.

On 16 July 2019, during conciliation proceedings in the Commission, the Applicant’s general protections application was resolved on the basis that the parties entered into a Deed of Release and the Applicant resigned from employment with Ryan Wilks. The Deed of Release carved out the Applicant’s claim for “back pay”, specifically permitting the Applicant to maintain the claim, which at that time was a matter being pursued by the FWO. 

On 16 August 2019, the FWO sent correspondence to Ryan Wilks in which it advised that following its investigation, it had found that Ryan Wilks had contravened sections 4 and 5 of the Fair Work Act 2009 (Act) and stated that Ryan Wilks was required to comply with the order to restore lost pay. 

On 3 September 2019, lawyers acting on behalf of Ryan Wilks responded to the FWO’s findings that it had contravened the Commission’s order, and disputed the contraventions finding. The FWO did not take any further action in relation to the matter.

On or about 26 November 2019, the Applicant was paid $3,314.00 in back pay. However, the Applicant disagreed with the calculation that arrived at this figure. On 1 December 2019, the Applicant filed a Form F1 with the Commission in which she requested that her unfair dismissal application be reopened. 

Commission’s findings

The Commission was very critical of the conduct of Ryan Wilks, describing it as “reprehensible”.

Before considering the issue of back pay, the Commission noted that after the stay was refused, Ryan Wilks did not reinstate the Applicant, but instead, initially told her not to return to the workplace at all, and then subsequently, once the Appeal had been dismissed, directed her to return to a different workplace (without any acceptable justification for such redirection). The Commission found that this conduct by Ryan Wilks constituted a failure to comply with the order to reinstate the Applicant.

In relation to back pay, being the only issue for determination by the Commission in the 2020 Decision, the Commission noted that “… the protracted failure of Ryan Wilks to make any payment towards a conditional, partial, or preliminary satisfaction of the Order to restore lost pay represents conduct that, to use a popular contemporary phrase, is wage theft[1].”

The Commission noted that an order to restore lost pay is governed by the provisions of subsections 391 (3) and (4) of the Act which are in the following terms:

391 Remedy – reinstatement etc.

Order to restore lost pay

(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.

(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:

  • the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for reinstatement
  • the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.

The Commission found that it is clear from the terms of subsections 391 (3) and (4) of the Act that an order to restore lost pay is confined to provide an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal[2]. Consequently, the amount of an order to restore lost pay must represent actual, identified remuneration that was lost because of the dismissal, or remuneration that would be considered to be likely to have been lost because of the dismissal. Therefore, the amount could either be the identified actual loss or an amount not actually identified as a loss, but considered likely to represent the amount of the loss.

In deciding what amount (if any) ought to be awarded to restore lost pay, the Commission was not prepared to adopt either of the parties’ respective methods for calculation, nor the amounts proposed by the parties (being, $3,314 by Ryan Wilks and $24,372 or $24,965 by the Applicant). In particular, the Commission rejected the deductions made by Ryan Wilks in respect to amounts received by the Applicant in the form of Newstart allowances and income protection insurance payments. Further, the Commission rejected the Applicant’s proposition that the calculation should include an adjustment for a three per cent increase on the Consumer Price Index. The Commission determined that the amount to be paid to the Applicant in accordance with Order 3, should be $17,758.00 (gross). This amount was ordered to be paid in addition to all other amounts that the Applicant had received from Ryan Wilks, including the $3,314.00 that was paid to the Applicant in November 2019.

Implications for employers

If an employer is ordered to reinstate an employee who has been dismissed (and the order is not disturbed through a stay or an appeal), it is important that the employer complies with the order as soon as practicable after the order is made. In doing so, the employer should reinstate the employee to the precise position the employee held pre-dismissal, including at the same location. 

Also, if the employer is ordered to restore an employee’s lost pay following their dismissal, the employer should assesses the loss having regard to the statutory considerations prescribed in subsections 391(3) and (4) of the Act. In that assessment, the amount is not to represent or include anything other than lost remuneration, either specifically identified or otherwise considered to be likely to be lost. That is, the employer’s payment is to be limited to providing the employee with only restoration of lost remuneration associated with their dismissal, and any claim by an employee to include in the assessment amounts in recognition of damages, costs, or other economic or personal impacts arising from the unfair dismissal should not be entertained as forming part of the assessment.

Author: Jackie Hamilton

[1] [22]
[2] [26]

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

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