Australia: Child care costs payable as compensation for unfair dismissal
Employment and Safety Update

Summary

Fair Work Australia (FWA) may take in to account, among other things, 'any matter that FWA considers relevant' when determining an amount for payment of compensation for unfair dismissal. In Wong v Nytro Pty Ltd trading as Nitro Gym [2012] FWA 1927, FWA accepted that additional child care costs incurred by the applicant in looking for and taking up new employment could be taken into account when determining appropriate compensation.

Facts

The employee was dismissed from her part time job and originally told that she was redundant. FWA found that the dismissal was not a 'genuine redundancy' because there had been no consultation in accordance with the relevant award. Alleged misconduct and performance issues were later raised by the employer. FWA found that the employer did not tell the employee that she was terminated for misconduct and had failed to give the employee an opportunity to respond to any reason for dismissal related to capacity or performance. In the circumstances, FWA found that the dismissal was harsh, unjust and unreasonable.

As to remedy, FWA determined that reinstatement was impractical and so was required to determine appropriate compensation. During the proceedings, the employee led evidence to show that she had incurred additional child care costs while looking for and taking up new employment. FWA accepted and was prepared to take into account when determining compensation additional child care costs equal to the applicant's period of unemployment as 'a cost incurred directly as a result of the termination of employment'.

This decision represents the first known occasion that child care costs have been taken into account when determining unfair dismissal compensation orders.

Key lessons for employers

Employers should always have a valid reason for dismissal and ensure procedural fairness by giving an employee the opportunity to respond to any conduct or performance issues before taking the decision to terminate employment. There are potentially a wide range of costs – including and in addition to childcare costs - that may be incurred by a former employee as a result of termination of employment. Where termination is found to have been the result of unfair dismissal, such costs may be awarded against the employer.

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This report does not comprise legal advice and neither Gadens Lawyers nor the authors accept any responsibility for it.