Fair Work rules on compensation vs reinstatement

Following a finding that a worker was unfairly dismissed, the Fair Work Commission may order that they receive compensation or be reinstated by their employer. The FWC recently considered a worker who appealed his compensation in favour of a finding that he be reinstated. Although the FWC originally found the employer had lost “trust and confidence” in the worker, the Full Bench was not satisfied with the evidence to support this conclusion and reinstated the worker.

The worker was employed as a shift feeder at a potato processing plant in Tasmania. In November 2020, the company dismissed the worker due to allegations that he misappropriated a log sheet to state that he had completed a task when he had not.

At first instance, the FWC was not satisfied that the employee, who worked as part of a team, could be held solely responsible for the incomplete task and deemed his dismissal unfair.

Issue of reinstatement at first instance

In considering the appropriate remedy, the FWC initially found that the allegations were “likely to have an ongoing effect” that would damage the trust and confidence between the worker and his employer.

It also opined that if the employee were to be reinstated, the company would likely scrutinise his work closely, creating “low prospects of a healthy working relationship being re-established.”

The FWC found that $9,200 in compensation was the appropriate remedy.

Issue of reinstatement on appeal

The worker appealed the FWC’s decision to the Full Bench. He submitted that, of the six company witnesses who led evidence, not one demonstrated that the company had lost trust and confidence in him.

The Full Bench was not satisfied that the allegations provided a “sound and rational basis” to conclude that the company would lose trust and confidence in the worker if he were reinstated. It also considered several mitigating factors, including the nature of the worker’s role and his 24 years of service.

“Having regard to all the circumstances, our opinion is that a sufficient level of trust and confidence can be restored to make the relationship… viable and productive,” the Full Bench said.

The Full Bench overturned the FWC’s finding and ordered that the worker be reinstated.

Key takeaways

• Where an employee has been deemed unfairly dismissed, the FWC may order that they receive compensation or be reinstated
• In its consideration, the FWC will have regard to factors including whether the “trust and confidence” between the parties can be restored
• Where the FWC finds that the employment relationship could remain viable and productive, it may be more likely to find that reinstatement is an appropriate remedy