It may be Arnie’s favourite catchphrase, but “I’ll be back” are the words no employer wants to hear when effecting a termination of employment.

This article considers the role of reinstatement in the Australian workplace relations system and highlights that an employer’s fear that a reinstatement order will be made is not how most matters are resolved. It uses recent case examples to explore what factors are taken into account by the Fair Work Commission (the “FWC”) in ordering reinstatement, and canvasses strategies that an employer might adopt when confronted with a reinstatement order to deal with its consequences at an organisational level.

Primary Remedy or an Uncommon Remedy?

Reinstatement is the “primary remedy” under the unfair dismissal jurisdiction of the Fair Work Act 2009 (Cth) (the “FW Act”). This means that if the FWC finds that an employee has been unfairly dismissed, it must order reinstatement of that employee unless it is satisfied that reinstatement is inappropriate in the circumstances.¹

In the previous edition of Strateg-Eyes, we flagged that the Productivity Commission has recommended that reinstatement be removed as the primary remedy of the unfair dismissal jurisdiction (while stopping short of calling for the remedy to be abandoned completely). In support of its view, the Productivity Commission noted that:

• reinstatement is often impractical given that “the trust that is central to a harmonious and productive employment relationship is irremediably destroyed at the end of most unfair dismissal cases”;
• parties often elect compensation during mediation in any event; and
• reinstatement is an uncommon remedy in practice.²

Although no changes have yet been made to implement the Productivity Commission’s recommendations, employers who may be concerned about reinstatement can take some comfort in the last of the Productivity Commission’s observations. In its 2014-15 Annual Report, the FWC noted that of 188 dismissals found to be unfair at arbitration, reinstatement (in addition to compensation in some cases) was ordered in only 27 cases (or just over 14 per cent).³

Avoiding reinstatement: what the FWC will consider

The FW Act does not specify what factors the FWC must take into account when considering whether reinstatement is appropriate in the circumstances of a particular dismissal. While the appropriateness of reinstatement will therefore be determined on a case by case basis, a number of recent cases highlight some of the factors that may be considered.

Is loss of trust and confidence enough?

Often, employers will argue against reinstatement on the basis that the circumstances leading to the termination have resulted in the employer losing the necessary trust and confidence in the employee to maintain his or her employment.

While it is recognised that a degree of trust and confidence is required in an employment relationship, in one recent case, it was held that a loss of trust and confidence will not always be the sole (or even a necessary) criteria in determining whether or not to order reinstatement because “in most cases the employment relationship is capable of withstanding some friction and doubts”.⁴

A loss of trust and confidence will only be enough to prevent reinstatement if its effect is to make the employment relationship unproductive and unviable.⁵

Maintaining a culture of compliance

Employers have had more success in demonstrating that reinstatement is inappropriate by establishing that it would undermine the policies and disciplinary procedures relied on to terminate an employee’s employment.

In one recent case, the FWC found that the “application of the relevant policy and the maintenance of appropriate discipline” within the organisation were important, and that the applicant had “not shown any real appreciation of [how] her conduct” (which included acting aggressively toward suspected shop lifters) may have breached those policies. In these circumstances the FWC concluded that reinstatement was not the appropriate remedy.⁶

Post-termination conduct

With the proliferation of social media, the post- termination conduct of employees is becoming increasingly visible to a broad audience. In one recent case, while the employee’s dismissal was determined to be fair (due to his dishonesty during a workplace investigation), it was held that reinstatement would not have been possible even if the opposite conclusion had been reached because of derogatory Facebook posts he shared about his former employer.

The New South Wales Industrial Relations Commission held that it would be unreasonable to reinstate an employee who had “publicly characterised his employer as ‘bastard’ and ‘criminal with stars’”, particularly given the posts were not “put up in the heat of distress about a dismissal and taken down again, but posts put up publicly two months after the termination and left there”.⁷

Dealing with the reality of reinstatement

While the statistics demonstrate that reinstatement is not necessarily a common remedy for unfair dismissal, a case from March this year demonstrates a number of factors which may lead the FWC to exercise its power to order it.

The case involved a Centrelink officer who posted comments on social media describing his clients as “spastics” and “whingeing junkies”, criticising the government and allegedly bringing the Department of Community Services into disrepute.

While the FWC found the posts meant there was a valid reason for the employee’s dismissal, it found the dismissal harsh because of mitigating factors, including the length (twenty years) and quality of the employee’s service, and that the dismissal was disproportionate “having regard to all the circumstances of [the] conduct, including that it bore no relationship to his actual work performance, caused no actual detriment to the Department, was situational in nature and engaged in impulsively rather than with deliberation, and consisted of a small number of widely interspersed comments over a period of years”.⁸ Further, it was held that there was no real risk that the misconduct would be repeated, and that the employee understood that his conduct was inappropriate.⁹

Cases like this reinforce the understandable concerns that management and human resources personnel may have about the workability of the employment relationship following reinstatement. In this respect, organisations should keep in mind the following strategies that can provide a framework to help deal with reinstated workers.

• Acknowledge difficulty: potential difficulties associated with reinstatement should be acknowledged both internally, and between management and the reinstated employee (if appropriate) with the intent of developing an open and productive dialogue.
• Communicate effectively with line managers: communication is key to tracking the pulse of the working relationship between a reinstated employee and his or her colleagues and line managers.
• Consider mediation: particularly if the working relationship seems problematic or unproductive, or if the reinstated employee is required to work with personnel who played a role in his or her dismissal.
• Act in good faith: managers must not be perceived as “out to get” a reinstated employee, who will have all the usual rights and protections of any other employee.
• Reinstated employees are not a protected species: just as significantly, employers should maintain the confidence to deal with reinstated employees as they would the rest of their employees. Further or repeated misconduct or poor performance need not be tolerated and should be dealt with in accordance with usual policy.
• Consider the big picture: organisations in which an employee has been reinstated should take the opportunity to review the procedures that led to that employee’s unfair dismissal in the first instance, and make improvements where necessary.

1. Fair Work Act 2009 (Cth), s 390 (“FW Act”).

2. Productivity Commission, Productivity Commission Inquiry Report Volume 2 (30 November 2015), 595-6.

3. Fair Work Commission, Annual Report 2014-15 (13 October 2015), 76.

4. Nguyen v Vietnamese Community in Australia [2014] FWCFB 7198, [27] (“Nguyen”).

5. Nguyen, [28].

6. Smith v Coles Supermarkets Australia Pty Ltd [2015] FWC 5446, [136].

7. Marroun v State Transit Authority [2016] NSWIRComm 1003, [107]-[108].

8. Daniel Starr v Department of Human Services [2016] FWC 1460, [93] (“Starr”).

9. Starr, [97].