A recent case handed down by the Federal Circuit Court has
important take-outs for anyone involved in employing or dismissing
staff – including managers, owners and HR teams.
Two business owners were ordered to pay, between them, $174,000
in compensation and $61,000 in penalties for unfairly dismissing a
Here are five lessons from the case:
Individual employees can be liable for
penalties: Legislation allows for penalties against a
person who is involved in a contravention of the
Fair Work Act. The Court said that "to establish the
contravention it is only necessary to show that the Respondents
knowingly participated in the activity which constituted the
contraventions." If you are involved in an unlawful
dismissal of a staff member and you are prosecuted by the Fair Work
Ombudsman, you will be at risk of being personally liable for civil
penalties. In this case, the individuals involved were fined $8,000
Size of the business has little impact on
penalties: The Court can take into account the size of the
business when awarding penalties. However, in this case, the fact
that the business was small (with two owners and two employees) had
little bearing on the penalties and compensation compared to the
nature of the contraventions and the lack of remorse from the
The victim" is entitled to the penalties:
Under the Fair Work Regime, the person disadvantaged by the
contravention receives the amount from the penalty amounts
personally. In other regulatory regimes, penalties end up as
The Court can award compensation for unfair
dismissal: In this case, the Court took into account loss
of future income, medical expenses, and distress, hurt and
humiliation when calculating compensation.
"Forced" resignation can amount to unfair
dismissal: On finding out about the employee's
pregnancy, her employers reduced her pay and increased her hours.
The applicant resigned. The Fair Work Act contemplates the
situation where an employee is "forced" to resign because
of the employer's conduct. This concept is often termed
"constructive dismissal". The Court found that this
situation amounted to such a forced resignation and that the
employee was unfairly dismissed.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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