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Contributory misconduct reductions in unfair dismissal remedies.


When an attempt to conciliate an unfair-dismissal claim fails, arbitration may be called upon to determine whether the dismissal was fair or unfair. In the event that the dismissal is deemed unfair, Australia's federal industrial tribunal can reduce the amount of compensation ordered for the worker if their conduct contributed to the dismissal. This article offers original insights about the application of contributory-misconduct provisions to unfair-dismissal remedies by Australia's federal industrial tribunal. A content analysis was performed on arbitration decisions concerning misconduct-related dismissals made between July 2000 and June 2010 that awarded a remedy to the worker. It was found that reductions to remedies were more highly associated with situations where employees engaged in production deviance, had longer service histories, and apologised for their behaviour. Within the 33 decisions that recorded a reduction to the remedy, three typical remedy discounts were identified: reduced back pay, no back pay, or part reductions to compensation. It is concluded that in broad terms, the reductions may provide some sense of restorative justice to the organisation in finalising an unfair-dismissal dispute. However, these reductions may have less meaning to individual victims where the worker's misconduct involved acts of inter-personal deviance.

1. Introduction

Much of the academic review of unfair dismissal in Australia during the past decade has contended with the ongoing and significant reforms to the coverage and implications of dismissal protections under the federal industrial legislation (Forsyth 2012, Stewart 2012, O'Neill and O'Neill 2010, McCallum 2008, Chapman 2006). While the global literature on arbitral decision-making over dismissal claims is quite extensive, scholars have only more recently started to investigate and describe the influences at play during the settlement of unfair-dismissal claims within the Australian context (Freyens 2010, Southey and Fry 2010, Southey and Innes 2010, Mourell and Cameron 2009, Chelliah and D'Netto 2006). However, the primary interest in this article relates to those unfairly dismissed workers affected by the legislative provision that allows the tribunal member to reduce the amount of compensation when determining a remedy.

Contributory-misconduct provisions currently exist within the Fair Work Act 2009, under Part 3-2, Division 4, Section 392. This article draws attention to the application in practice of this discreet and under-explored aspect of the legislation. The case history of unfair-dismissal arbitrations determined by Australia's federal industrial tribunal is peppered with decisions where the tribunal--in making an order for a remedy--incorporated some form of negative consequence for the unfairly dismissed worker. The contributory misconduct provision within Australia's federial industrial legisation serves as a reprimand to a worker for their role in the dismissal, despite that the dismissal itself was deemed to have been unfair.

The first section of this article identifies the jurisdictional boundaries of the current Fair Work Act 2009 for remedying an unfair dismissal. After which the discussion considers how since the introduction of unfair-dismissal provisions in The Workplace Relations Act 1996 members of the tribunal have used sections of previous industrial legislation to discount remedies. This is followed by an analysis of misconduct-related arbitration decisions that favoured the worker, yet also recorded a discount to the worker's remedy. By identifying potential influencing characteristics on arbital decision-making from the literature, a content-analysis methodology is used to identify the presence of these potential variables in the relevant arbitration decisions. In order to come to some understanding as to why some workers incurred a discounted remedy while others did not, the logical comparison group in the analysis consists of employees who succeeded in their claims without incurring reduced remedies. Finally, as the present legislation does not directly stipulate the form that the reductions should take, this article seeks to describe the nature of the discounts imposed on the remedies.

2. Unfair Dismissal Remedies and Contributory Misconduct in Australia's Federal Legislation

Australia's unfair-dismissal provisions are contained in Part 3-2 of The Fair Work Act 2009. In the event that the federal tribunal--at present the Fair Work Commission (FWC)--determines that an employee's dismissal is unfair, Section 390 of the Act empowers the member of the FWC to order a remedy. Section 391, subsection (1) permits an order for reinstatement, which involves reappointing the dismissed worker to the position they held immediately prior to their dismissal. If this is not possible, the dismissed worker may be re-employed in another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal. An order can also be made to maintain the employee's continuity of service under subsection (2), and (or) to restore lost pay under subsection (3).

Alternatively, Section 392, subsection (1), allows an order for compensation in lieu of reinstatement. Based on the 'fair go all round' principle, subsection (2) requires the tribunal member to take into account the effect of the order on the viability of the employer's business before making an order for financial compensation. This subsection also requires the member to take into account the employee's length of service and the remuneration they would have received had no dismissal occurred, less the amount of any remuneration earned by the employee from other work since dismissal. Subsection (4) states that the compensation 'must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person's dismissal'. And, under subsection (5), compensation is capped at half the amount of the high-income threshold. The present income threshold for making a claim is $129,300 (FWCa 2014), which caps compensation at $64,650. However, of central interest to this article is the remedy provision under subsection (3), which empowers members of the FWC to reduce the amount of compensation in the case of misconduct. Specifically, Section 392 subsection (3), states:

Misconduct reduces amount

   (3) If the FWC is satisfied that misconduct of a person contributed
   to the employer's decision to dismiss the person, the FWC must
   reduce the amount it would otherwise order under subsection (1) by
   an appropriate amount on account of the misconduct.

This clause first appeared in legislation through the 2006 Work Choices amendments to The Workplace Relations Act 1996, under Part 12, Division 4, Section 654 (Chapman 2009). However, the legislation was not always so direct and specific about reducing compensation in recognition of the employee's misconduct. While under the operation of The Workplace Relations Act 1996, tribunal members relied upon Section 170CH(4) of the 1996 Act to penalise workers for contributory misconduct. This Section empowered the Australian Industrial Relations Commission (AIRC) to make any order appropriate to cause the employer to pay the employee an amount in respect of remuneration lost by the employee because of the termination.

The Full Bench of the AIRC reinforced this interpretation in Kenley and JB Hi Fi (2000 in S7235, paragraph [36]) by stating:

   In summary we think that the discretion conferred by s.170CH(4) is
   general in nature and it is to be exercised having regard to the
   context in which it appears and the scheme of The Workplace
   Relations Act 1996 as a whole. In deciding whether or not it is
   appropriate to make an order in respect of lost remuneration we
   think that the Commission may properly take into account all of the
   circumstances of the case, including the conduct of the Applicant
   which led to the termination of employment in question.

Tribunal members also relied upon the 'fair go all round' requirements under Division 4, Section 635(2) of the 1996 legislation to administer penalties. For instance, Commissioner Mansfield in Balica and Toyota (2004 in PR945518, p. 10) was of the opinion that:

   Toyota must receive a fair go', along with Balica in any order I
   make. My order requires Balica to be reinstated but with an
   effective penalty of around $10,000 loss of remuneration. He is
   required to provide an apology and an undertaking to his workmates
   and the company regarding good behaviour in the future. He needs to
   also understand that Toyota may also issue a final warning
   regarding his behaviour on 22 September, 2003. Balica will suffer a
   significant penalty but will be re-employed by Toyota and
   potentially enjoy higher levels of remuneration and a better
   quality of life than he otherwise would. Overall I believe this
   outcome provides a fair go all round' to the Parties.

The analysis of arbitration decisions favouring workers presented later in this article reveals that in most cases, tribunal members do not discount the worker's compensation for contributory misconduct. When contributory misconduct penalties are applied, it is with the view to make employees aware that despite 'winning' their unfair-dismissal claim, they too must bear some accountability for the situation. Commissioner Smith captures this attitude in Curiso and SPC Ardmona (2006 in PR974216, p. 2) by stating:

   I am not persuaded to grant an order causing the employer to pay
   the full amount of remuneration lost. I think it is appropriate to
   make an order which has regard to the conduct of Mr Cursio. He is
   not blameless and should not be seen to be so (emphasis added).

The gravity of the misconduct is not an apparent factor in the decision to discount a remedy. Logically, contributory-misconduct discounts should be associated with misconduct deemed less than serious. Serious misconduct is considered 'both wilful or deliberate behaviour by an employee (that is inconsistent with the continuation of the contract of employment) and conduct that causes serious and imminent risk to the health or safety of a person or the reputation, viability or profitability of the employer's business'. (FWC 2014b, p. 7). This suggests that serious misconduct should equate to a valid reason for dismissal. Dismissing an employee for less serious misconduct better places the employee in a position for a remedy order. For example a claim determined by Commissioner Cloghan in Khokhar and Bytecraft Systems (2010 in FWA3913, p. 16) records:

   I have reached the conclusion that, although the Applicant did not
   engage in conduct which could be described as misconduct in
   accordance with s.392(3) of the Act, however, his lack of attention
   to his brother's notification regarding the prayer ceremony and
   lethargy to letting the Employer know of his impending absence, are
   matters which I should not disregard when considering the amount of
   compensation (emphasis added).

Meanwhile, other federal commissioners reduced remedies to recognise the employer's prerogative to discipline a worker for inappropriate behaviour, albeit the employer overindulged this prerogative. To this end, Senior Deputy President Duncan in Scott and Centrelink (2001 in PR907822, p. 34) states:

   As for compensation, I determine, cognisant of the fact that Mr
   Scott was to a certain extent a contributor to his own misfortune,
   it is not appropriate to order total lost remuneration be paid. The
   order that will issue will provide for Mr Scott to be reimbursed
   for all salary lost as a result of the termination less monies
   earned during the period prior to the reinstatement and further
   less the sum of $1500. This reflects my view that while management
   was misguided and over-reacted it nevertheless was exercising
   authority which it was entitled to exercise (emphasis added).

Therefore, it appears that the ordering of a discount to a remedy can provide the tribunal with a way to 'tone-down' an overzealous disciplinary action by an employer. For example in Gardner and Grocon Constructors Pty Ltd (2003 in PR935754) a construction firm dismissed a scaffolder for engaging in intimidating and threatening behaviours towards management during meetings. Vice President Ross determined that the employer had a valid reason for the termination, but the dismissal was unjust due to a procedural flaw and harsh due to the worker's age. The remedy ordered the worker's re-employment without continuity of service. Furthermore, Vice President Ross delayed the re-employment date for six weeks. This delay was 'intended to have the effect of imposing a penalty of six week's suspension without pay' (Vice President Ross 2003 in PR935754, p. 24).

Furthermore, when a commissioner discounts a remedy, the extremity of the discount can be to the extent that a worker can win their claim but not receive any form of remedy. In Van Leeuwen and Optus Administration Pty Limited (2002 in PR925130), a web administrator in a telecommunications industry with two years of service was dismissed for editing prices and giving unauthorised credits to friends. The worker argued that the people receiving the credit were not 'friends' as defined by the company's policy, and that the price editing was 'stupid and a mistake'. The tribunal found that the termination was harsh, because the dismissal was disproportionate to the gravity of the Applicant's misconduct. However, as the Applicant's position was soon to be made redundant, Commissioner Cargill did not order reinstatement. Neither did Commissioner Cargill find it appropriate to make an order for payment in lieu of reinstatement, stating 'this is a very serious and unusual step, however, it is one which I believe is correct and appropriate in the particular circumstances'(2002 in PR925130, p. 17). The commissioner's decision to deny compensation in lieu of reinstatement effectively neutralised any form of remedy.

The previous case reflects an extraordinary decision that, in essence, penalised the unfairly dismissed worker because he did not physically benefit from a remedy. Yet, what might be a more typical reduction for contributory misconduct? Further, what are the circumstances in which the tribunal is more likely to apply a reduction for contributory misconduct? In order to shed further light on these questions, we next consider the factors associated with those cases that incurred a reduction and the nature of the reductions.

3. The Literature on Characteristics at Play in Unfair Dismissal Arbitration Decisions

The existing literature suggests potential factors that may be contributing to decisions involving reduced remedies. First, a major factor that we might expect to influence whether or not to discount the remedy amount is the type of misconduct committed by the employee. The Robinson and Bennett typology provides a reliable measure of workplace deviant behaviours (Bennett and Robinson 2000, Stewart et al. 2009, Robinson and Bennett 1995). It is possible to assign any form of misbehaviour that might occur in the workplace to any of the four categories in the typology: production, property, personal, and political deviance.

Production deviance targets the organisation and threatens its profitability and (or) viability through acts such as tardiness, unnecessary absenteeism, working slowly, and wasting resources. Property deviance also targets the organisation and covers acts such as sabotaging equipment and stealing from the firm. Personal aggression targets individuals within the organisation and is defined by acts such as harassment, physical and (or) verbal abuse, or stealing from co-workers. Political deviance also targets individual workers and it relates to acts such as gossiping, showing favouritism, and scapegoating. Studies have tended to examine one or several specific acts of misconduct on arbitration decisions, such as drunkenness in Eylon et al. (2000) and Nelson and Kim (2008), and physical aggression in Gely and Chandler (2008). However, the deviance typology allows the full range of misbehaviours to be categorised and considered.

In hand with the type of misconduct committed is the severity of the act. Severity is believed to be an important control measure when analysing arbitral decision-making (Mesch 1995, Scott and Shadoan 1989, Dalton et al. 1997). In addition, little insight appears in the literature as to the explanations for misbehaviour provided by the employees at arbitration. The typology by Southey (2010) categorises the explanations provided by employees at arbitration into workplace-related and personal-related decisions. This typology offers a classification scheme that can incorporate the full range of employee explanations for their misconduct in the workplace. Workplace-related reasons include references to work aspects such as job changes, faulty equipment, poor employer policy, accepted employer practice, or unreasonable performance expectations. Personal-inside reasons are cognitive and intrinsic in nature, such as feeling frustrated, ignoring the rules, or experiencing fight or flight reactions. The typology also refers to explanations that are personal-outside in nature. These are tangibly grounded explanations, such as health issues, family commitments, financial pressures, or the effects of mood-altering substances.

A factor related to the employee's explanation is whether the worker had little control or a lot of control over the circumstances in which the conduct occurred. This factor is theoretically grounded in attribution theory. Researchers in attribution theory have found that situations beyond the control of the individual lessen judgements of responsibility on that individual (Bemmels 1991b, Heider 1958, Eberly et al. 2011, Judge and Martocchio 1996, Klass et al. 2006). Meanwhile, people tend to judge behaviours more severely when the individual possessed a higher degree of control over the situation.

An apology by the worker or a demonstration of remorse or regret may restore a sense of respect between parties and potentially mitigate the severity of a punishment (Brownlee 2010, Friedman 2006). Some view the apology as an impression-management tactic used to soften the arbitrator's decision (Eylon et al. 2000). Studies have also identified that the likelihood of a dismissal being upheld increased for employees with shorter service periods and (or) if the workers had a tarnished disciplinary record (Bemmels 1991b, Klass et al. 2006, Harcourt and Harcourt 2000, Simpson and Martocchio 1997, Bemmels 1988b). These features provide insights about the health of the workers' relationship with their employer, which may potentially influence the decision on whether or not to reduce the remedy amount.

The worker's gender is worth including as a factor, on the basis that gender differentials in employment arbitration a re extensively documented in the literature, with studies reporting mixed results (Southey and Innes 2010, Knight and Latreille 2001, Bingham and Mesch 2000, Bemmels 1988c; 1988b; 1988a, Wagar and Grant 1996, Oswald and VanMatre 1990, Saridakis et al. 2006, Bigoness and DuBose 1985, Rollings-Magnusson 2004, Gely and Chandler 2008, Malin and Biernat 2008).

Occupations reflect differences among people in terms of their skills, power, status, conditions, and resources (Gecas and Seff 1989, MacKinnon and Langford 1994). The misbehaviours in which workers engage may be reflecting that different jobs expose workers to different types of situations. Further, different jobs may afford different levels of access to support and resources during and after dismissal, which may bear some influence on the deliberations at arbitration. These might be reasons why less sympathy towards lower-skilled workers at the arbitration table was identified in studies by Bemmels (1988a), Caudill and Oswald (1992), and Block and Stieber (1987).

The use of an external advocacy provider by either the worker or employer may influence the arbitrator, as unions, consultants, and legal representatives can offer their clients a formal voice that may improve the client's potential to succeed. Skilled advocates can concisely communicate the facts to an arbitrator (Crow and Logan 1994) and they may utilise every tactic for winning a case to achieve better outcomes for the client (Jones 1961, Latreille and Knight 2005). On the other hand, workers who represented their own case (litigant-in-person) may be intimidated by their employer's presence (Mourell and Cameron 2009).

Human resource (HR) experts employed within firms are typically responsible for advising on and (or) administering a dismissal with justice and due process. However, the business size is likely to predicate whether such an expert is available. Smaller firms are unlikely to employ a HR expert to develop the more methodical or formalised HR processes of larger firms (Mazzarol 2003, Kotey and Slade 2005, Southey 2007). Neither do small businesses have the administrative resources compared to larger firms, hindering small-business managers from remaining unbiased in their process and decision to dismiss a worker (Earnshaw et al. 2000).These may be potential factors influencing the arbitrator's decision to order a discounted remedy.

4. Methodology

Using the factors identified in the previous section, a content analysis of the arbitration decisions assists us to consider whether those factors may be at play in reduced-remedy decisions. Arbitration decisions were obtained from the FWC website for the period 2000-2001 and 2009-2010. This 10-year time-span contained decisions made by the federal tribunal under its operations, initially as the AIRC, and subsequently Fair Work Australia (FWA). Figure 1 displays that for this period, 565 substantive arbitration decisions citing employee misconduct for the dismissal were isolated from approximately 1700 arbitration decisions that were viewed. Within these substantive decisions, 254 were determined in the worker's favour, from which 33 decisions were isolated that recorded a reduction to the remedy awarded to the worker for their role in the dismissal. After reviewing each of the 254 decisions, it is possible that these 33 decisions account for the majority, perhaps all, of the decisions that applied a reduction.

Figure 1 indicates that a further group of applicants also faced negative consequences at arbitration. Identified in Figure 1 as 'decisions in the employer's favour', are the 311 workers who were unsuccessful with their unfair-dismissal claim. The nature of an unsuccessful application means that the applicant does not receive a remedy. As such, workers from this group were excluded from the analysis, as the negative consequence of not winning a claim differs (both technically and physically) from the reductions for contributory misconduct faced by the 33 employees in the successful with 'remedy-reduced' category.

The 254 decisions in the worker's favour were harvested for information relevant to the variables of interest. In accordance with recommended content-analysis protocols, including coder training and pilot testing of the coding protocol, two independent coders gathered quantifiable data from the decisions using coding procedures prepared by the primary investigator (Lacy and Riffe 1996, Lombard et al. 2002, Burla et al. 2008, Krippendorff 2004). Checks for consistency between the coders were conducted on a random sample of 110 decisions by calculating Kappa values for the variables reflecting nominal values. Each of these variables showed strong agreement between the coders, with each factor recording Kappa values as follows: predominant misconduct (0.91), explanation by worker (0.85), apology (0.94), disciplinary record (0.92), worked since dismissal (0.97), worker's gender (1), occupation (0.95), worker's advocacy (0.89), employer's advocacy (0.89), HR expertise (0.87), and business size (0.85). Statistically significant (p = 0.000) intra-class correlation coefficients were calculated for the scale-data variables, with the results again reflecting strong agreement between the coders as follows: severity of the misconduct (0.83), factors within worker's control (0.93), factors beyond worker's control (0.79), and service period (0.97).

5. Results

The limited number of misconduct-related decisions recording a reduction to the remedy mostly restricted the analysis to examining the descriptive statistics. However, as this study appears to be the first of this nature, one can venture to suggest that these descriptive statistics will provide original insights about the application of contributory misconduct in unfair-dismissal remedy orders.

Based on the number of decisions identified on the FWC website for the 10-year period, it appears that around 13 per cent, or close to one in every eight decisions favouring workers recorded some form of reduction to the remedy. Table 1 presents the findings of the content analysis in relation to each of the characteristics discussed in the previous section.

There are several notable points of difference between the two profiles of decisions displayed in Table 1. First, production deviance features as the predominant misconduct in 61 per cent of the discounted-remedy cases, compared to only 45 per cent of non-discounted-remedy cases. There is a heavier reliance on personal reasons as the explanation provided by the worker in discounted-remedy decisions (64 per cent), compared to the explanations provided in non-discounted decisions (57 per cent). Based on a significant t-test, workers who had their remedies discounted have statistically significant higher scores in relation to misconduct that occurred due to factors in the worker's control (5.7 [+ or -] 1.2 scale points), compared to the scores of the workers with unaffected remedies (5.0 [+ or -] 1.9 scale points), t = 1.9304, df = 252, p = 0.054. At the same time, the f-test for misconduct that occurred due to factors not in the worker's control reveals that the workers with discounted remedies have statistically significant lower scores (2.6 [+ or -] 1.2 scale points), compared to the scores of workers with unaffected remedies (3.3 [+ or -] 1.8 scale points), t = 2.0277, df = 252, p = 0.043.

An apology from the worker occurred in 42 per cent of the decisions reporting a reduced remedy for contributory misconduct. for the worker, this compares unfavourably when taking into account that just 17 per cent of the decisions recorded an unaffected remedy when the worker apologised. Workers who received discounted remedies also had a service period averaging 4.7 years longer than those workers who did not have their remedies discounted. Fifty-five per cent of the workers who received discounted remedies worked in an occupation related to operating, driving, or labouring. This occupational group is the most highly represented in both profiles. However, unfavourably for the workers in these occupations, they achieved just 44 per cent representation in the decisions that awarded a remedy free of contributory-misconduct reductions.

Employers were more likely to use self-representation for their advocacy in decisions that recorded reduced remedies (21 percent). For employers, this compares favourably to the chance of the worker receiving a non-discounted remedy. Only 12 per cent of the decisions recorded unaffected remedies when the employer conducted its own advocacy. Further, the presence of HR expertise within the employers' operations varies strongly between the two profiles. Ninety-one per cent of the decisions recorded a discount for contributory misconduct where the business employed an HR expert. For employers, this compares favourably when taking into account that just 69 per cent of the non-discounted-remedy decisions involved cases where the business employed HR experts.

The severity of the misconduct appears not to be a point of difference between the two profiles, with the severity scores returning a statistically insignificant f-test (t = 1.533, df= 252, p = 0.1). The remaining factors in Table 1 show only limited differences between the two profiles. The workers' disciplinary record and whether they mitigated their losses appear to have limited association with discounts to the remedy. At the same time, the statistics relevant to the workers' gender, the type of advocate used by workers, and the size of the business do not indicate that an association exists between them and either discounted or non-discounted remedies.

The nature of the penalties

A further examination of the 33 cases recording a reduced remedy revealed that the nature of the discount could be generally categorised into three types: a reduction from back-pay entitlements, a denial of back pay for lost wages, and a reduction from the amount of compensation ordered in lieu of reinstatement. Perhaps the most lenient of these discounts occurs when the tribunal reinstates a worker to their job, or a job of equivalent status, and awards back pay but from which an amount is deducted as a penalty. In practice, reductions varied from three weeks pay in Theoctistou and Austaron Surfaces (2010 in FWA1695) up to 10 thousand dollars in Balica and Toyota Motor Corporation (2004 in PR945518). A variation to the back pay option occurred in Bumford and Rio Tinto Aluminium (Bell Bay) Limited (2007 in PR980322) when the worker was ordered to be re-employed with full back pay, but with a demotion to a lower position.

A tougher yet less frequently applied discount occurs through reinstating workers to their jobs without awarding back pay, which occurred in Lonergan and Qantas (2007 in PR979820). As an other example, in Wake and Queensland Rail (2006 in PR973936), the worker was discounted 12 weeks worth of back pay. In this decision, the Commissioner reinstated the employee without the restitution for three months worth of lost wages, to allow the tribunal 'to more effectively match the "punishment" with the "crime" (Commissioner Bacon 2006 in PR973936, p. 20). However, it is worth noting that in this case an appeal by Queensland Rail saw the commissioner's decision to reinstate the worker overturned (2006 in PR974391).

In some cases, the commissioner may include additional requirements to the remedy order as a condition to the worker's return to work. For instance the requirement to place a warning on the worker's personnel file formed part of the remedy in Class and North Goonyella Coal Mines Ltd (2002 in PR919388). Meanwhile, in Gardner and Grocon Constructors, the worker's reinstatement was conditional on him attending an anger-management course at his own expense (2003 in PR935754).

The third and most frequently applied discount to a remedy occurs to workers awarded financial compensation in lieu of reinstatement. For these workers, the tribunal discounts an amount of money from the compensation order. The actual amount may be specified in terms of a number of weeks pay, for instance, six weeks equivalence in pay was deducted in Delaney and Parramatta Leagues Club (2010 in FWA 1164). Alternatively, the reduction may be stipulated as a nominated amount, for example $5000 was ordered in Boyd and Murray Goulburn Co-Operative (2007 in PR978846). Finally, the tribunal may stipulate the amount to be reduced as a percentage of lost pay that the worker might have suffered. The percentages ranged from 10 percent in Davidson and Griffiths Muir's Pty Ltd (2010 in FWA4342) up to 60 per cent in Kennedy and Nestle Australia which, incidentally, equated to an amount above $16,000 (2010 in FWA2414). In the Nestle case, Senior Deputy President Richards indicated that 'a discount of this magnitude reflects the significant contributing measure of causality for which the Applicant is responsible in relation to the circumstances that befell him'(2010 in FWA2414, p. 30).

6. Discussion

Reduced remedies remind workers that they helped to create the situation that resulted in the employer believing that they had the right to exercise their prerogative to dismiss the worker. Discounts to their remedies could be considered a cautionary penalty, well-timed for workers who may be about to re-enter their former workplace. Reductions to remedies appear to be associated with circumstances in which the employing organisation suffered the brunt of the misconduct in terms of production deviance. In addition, a reduction or discount is more likely in cases where the worker relied on explaining their behaviour based on their personal circumstances, rather than implicating weaknesses in working arrangements provided by the employer. Ultimately, the reductions appear to be associated more so with situations where the worker had control over the circumstances.

The internal and external ascriptions of attribution theory would support these findings, and the lesson for those dealing with misbehaviour in the workplace is to look carefully at the worker's explanation. Management must be alert to situations where the worker invokes, as a reason or contributor to their behaviour, matters that management either influences or are that are within managerial control. In such circumstances, management must proceed with extreme caution before dismissing a worker. Besides the miscarriage of justice suffered by the employee if they are dismissed, it is likely any potential unfair-dismissal claim will see management carrying some or all culpability for the misconduct. Whereas, if a worker draws solely upon personally controllable explanations--as appears to be more the case in discounted-remedy cases--management may see some recognition of their managerial prerogative to discipline a worker in the remedy order.

One must keep in mind that these employees have actually won their unfair dismissal claim. As part of their defence, employees who demonstrate remorse or articulate an apology may be signalling that they are open to making reparation to their employer. As it was detected that apologetic workers are associated with having their remedies reduced, perhaps these employees are simultaneously rendering their personal culpability in the dismissal. The employee's defence may benefit by expressing an apology that is candid yet genuine, rather than an apology that might emit imploring tones.

Workers with longer service periods showed an association with discounted remedies. This is an interesting finding, as longer service periods could indicate employee loyalty, and the legislation itself requires tribunal members to consider service periods in their deliberations. Consequently, the tribunal may be more likely to deem a dismissal as harsh and overturn it when the employee has a lengthy service period. What appears to be occurring is that the advantage that longer service periods might be providing to workers in winning a claim is being counterbalanced by them receiving discounted settlements.

Two identifying features a bout the employer were associated with reduced remedies. First are those employers that engaged an HR expert in the firm. Second are those employers that self-re presented their defence at the arbitration table--as opposed to hiring an external advocate to present their defence to the tribunal. It is possible that these two features are interlinked, because businesses with HR experts might also rely on these same experts to defend the employer's actions at arbitration. The finding that workers were fined for contributory misconduct (in 91 percent of the decisions with discounted remedies) when an in-house HR expert was employed by the business may be a function of the type of case before the tribunal. These cases, due to HR-practitioner involvement in the workplace, may be more likely to contain some evidence that the employer had attempted to provide appropriate HR policies and procedures in relation to employee codes of conduct, workplace investigations, and (or) discipline and dismissal.

7. Conclusion

This article examined the landscape of contributory-misconduct discounts to remedies administered under Australia's federal industrial legislation. The case history during the 10-year period under examination suggests that the levying of a reduced remedy to individual workers is sporadic. However, it is apparent that members of the federal industrial tribunal have found it a useful mechanism to enable them to adjust the remedies to remind workers, when necessary, that their behaviour was inappropriate.

The application of a reduced remedy that involves reinstating a worker, yet reducing an amount from their back pay or denying back pay completely, has the effect of the tribunal administering a period of suspension without pay--a disciplinary step more severe than a final warning, but less severe than dismissal. Perhaps employers and unions could take note that there are circumstances where the option of suspension without pay would be a better alternative disciplinary action to dismissal.

Reductions to remedies appear to have occurred more frequently in decisions that dealt with acts associated with production deviance. Production deviance ultimately threatens the employer's viability and (or) profitability. Correspondingly, the reductions imposed by the commissioners may provide a measure of restorative justice by providing some financial relief to the employing organisation. The organisation is essentially required to pay less in compensation or back pay for lost wages. It makes sense that the types of discounts administered are best suited to the collective nature of production deviance that targets the organisation as a whole. Moreover, reductions to remedies were less frequently associated with acts of misconduct that victimised individuals within the organisation through personally deviant acts such as physical assault, harassment, or malicious gossip.

The finding that the employing organisation benefits from the restitution gained by reducing the amount of a remedy order exposes a gap in legislative design. That is, the consequences for contributory misconduct are unlikely to equate to some sense of restorative justice for individual workers harmed or victimised by misconduct. The tribunal currently determines individual unfair dismissal claims lodged by individual workers. Will the future see a tribunal that has the further jurisdiction to provide orders protecting, perhaps even compensating, individual workplace victims associated with misconduct? Is such a function one that Australians would want the tribunal to perform?

Such questions are not so far-fetched, particularly as the FWC, since January 2014, has the authority to hear workplace-bullying allegations. Presently, the FWC cannot award compensation or issue penalties under its new anti-bullying powers (FWC 2014c, p. 3). However, it can go so far as to issue a binding order for an employee or group of employees to cease bullying behaviour in the workplace. Moreover, the FWC warns that courts can impose substantial penalties on parties who fail to com ply with such orders (FWC 2014c, p. 3). The FWC's first order to stop bullying, issued by Senior Deputy President Drake, contains a numbered list of expected behaviours in which the relevant parties are to engage while in the workplace (PR548852 in 2014). This maiden stop-bullying order signals a further evolution of Australia's federal industrial tribunal moving towards being a regulator serving the needs of individual employees to restore some sense of order in not just the unequal power-relationship with their employer, but also with their co-workers.


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The Fair Work Act 2009 (Commonwealth of Australia).

The Workplace Relations Act 1996 (Commonwealth of Australia).

The Workplace Relations Act 1996 (Work Choices) Ad of 2005 (Commonwealth of Australia).

Kim Southey, School of Management and Enterprise, University of Southern Queensland

Table 1: Profile of Misconduct-related, Unfair-dismissal Arbitration
Decisions Favourable to the Worker, Determined by the Federal
Industrial Tribunal (July 2000 to June 2010)

Decision Characteristic             Reduction         Reduction NOT
                                    applied to the    applied to the
                                    remedy            remedy

                                    (n = 33           (n = 221
                                    decisions)        decisions)

Predominant type of misconduct
  production deviance               61                45
  property deviance                 12                18
  personal deviance                 27                30
  political deviance                0                 7

Severity of the misconduct
  assigned by coder on a 5-point    3.09              3.4
  (1 = low to 5 = extremely         SD 0.91           SD 1.11

Explanation provided by the
    worker (%)
  workplace-related reasons         12                12
  personal reasons                  64                57
  combined reasons                  24                31

Misconduct due to factors within
    the worker's control
  assigned by coder on a 7-point    5.7               5.02
  (1 = not-at-all to                SD 1.24           SD 1.96
    7 = entirely)

Misconduct due to factors beyond
    the worker's control
  assigned by coder on a 7 point    2.64              3.28
  (1 = not-at-all to                SD 1.27           SD 1.76
    7 = entirely)

Workers who apologised for          42                17
  behaviour (%)

Service period (average)            12.5 yrs          7.8 yrs

Disciplinary record (%)
  unblemished                       49                46
  previous offences                 36                32
  not identifiable                  15                22

Workers who obtained work since     45                48
  dismissal (%)

Worker's gender (%)
  male                              85                81
  female                            15                19

Worker's occupation (%)
  manager/professional              12                13
  technician/trade                  6                 9
  community/personal service        6                 16
  clerical/admin/sales              21                18
  operator/driver/labourer          55                44

Worker's advocacy during
    arbitration (%)
  self-represented                  12                10
  union representation              30                27
  independent lawyer                43                41
  not identifiable                  15                22

Employer's advocacy during
    arbitration (%)
  self-represented                  21                12
  association/industry              12                11
  independent lawyer                49                53
  not identifiable                  18                24

HR expertise of the employer (%)
  HR expert not employed by the     6                 25
  HR expert employed by the firm    91                69
    not identifiable                3                 6

Business size (%)
  up to 19 workers                  9                 10
  20 to 199 workers                 9                 11
  200 workers plus                  76                67
  not identifiable                  6                 12
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Title Annotation:Contributed Article
Author:Southey, Kim
Publication:Australian Bulletin of Labour
Article Type:Report
Date:Mar 1, 2014
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