He v Lewin [2004] FCAFC 161: how long the job would have lasted, in unfair dismissal compensation

Why is He v Lewin relevant to workplace disputes in Australia?

He v Lewin is cited for the step in an unfair dismissal compensation assessment that asks what the employee would have earned if the dismissal had not happened. As quoted by the Fair Work Commission in [2026] FWC 3599, a majority of the Full Court of the Federal Court said the Commission “must address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means.”

In the decisions OnNotice has reported, the Commission relies on the case in unfair dismissal matters to fix the period the employment would probably have lasted, and so the remuneration lost.

How the Commission and the courts use it

Type of matter	What the decision said	What it means
Unfair dismissal (s.394) [2026] FWC 3599	“the Commission must address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means.” (the Full Court majority, quoted by the Commission)	The Commission quoted the Full Court majority as the test for the remuneration step and then examined whether a strained working relationship would have ended the employment anyway.
Unfair dismissal (s.394) [2026] FWC 3629	“I do not consider the employment would have lasted more than an additional six weeks if she had not been dismissed on 7 August 2025.” (the Commission)	The Commission cited the case at [58] in finding the employment would have lasted only six more weeks, and calculated lost remuneration over that period.
Unfair dismissal (s.394) [2026] FWC 3478	“Over a period of 26 weeks that equates to a gross amount of $ 49,107.50, exclusive of superannuation.” (the Commission)	The Commission cited the case at [58] after finding the employment would likely have continued for at least 26 weeks, and multiplied the gross weekly wage over that period.
Unfair dismissal (s.394) [2026] FWC 3487	“Accordingly, a 25% downward adjustment to the compensation otherwise calculated above is appropriate” (the Commission)	The Commission cited the case at [58] in its compensation assessment, then reduced the figure by 25% for mitigation, a separate step it supported with other authority.

Key principles and takeaways

• As quoted in [2026] FWC 3599, the Full Court majority held that the Commission must ask whether, without the actual termination, the employment would have continued or been ended at some time by another means.
• The same quotation states that the Commission must make a finding of fact about the likelihood of a further termination before it can assess the remuneration lost; [2026] FWC 3478, [2026] FWC 3629 and [2026] FWC 3487 each cite paragraph [58] for this step.
• The finding turns on the evidence in each matter: in [2026] FWC 3478 the Commission found the employment would likely have continued for at least 26 weeks, while in [2026] FWC 3629 it found no more than six further weeks.
• In the decisions OnNotice has reported, the case governs the remuneration estimate only: the onus on the applicant to show reasonable steps to mitigate loss is drawn from other authority, Biviano v Suji Kim Collection, and is assessed as a separate step.

What the Court decided

A research engineer’s summary dismissal was found harsh, unjust and unreasonable. The Australian Industrial Relations Commission compensated him with three months’ pay, $13,000, measured by what reasonable notice would have been. In He v Lewin [2004] FCAFC 161, Gray and Mansfield JJ of the Federal Court held that this was not the question s 170CH(2)(c) of the Workplace Relations Act 1996 (Cth) asked.

That provision directed the Commission to the pay the employee would have received, or would have been likely to receive, had the employment continued. Their Honours held at [54] that this is a matter the Commission “is obliged to take into account”, along with the other matters in s 170CH(2). Their Honours held at [58] that in doing so “the Commission is required to give its attention to an actual state of facts”.

A stalemate over a second prototype

The facts come from Commissioner Lewin’s findings, summarised by Gray and Mansfield JJ at [18] to [25]. On that summary, Mr He was “a highly qualified engineer” who had studied at a Chinese university and held a postgraduate qualification from an Australian one. He had worked for AMS Polycraft until July 1997, when his employment effectively moved across to Envelopments.

His role was research and development engineer. He developed a prototype paper-folding machine, intended to form part of a process for producing continuous stationery. A further prototype was required to fix shortcomings in the machine’s speed and function.

In 1998 he was dissatisfied with his pay. His salary was $35,000 a year, the same figure he had started on at AMS Polycraft in 1994. After a meeting with a director, his salary rose to $52,000 a year. The director expected him to work on the second prototype in return. Mr He understood his salary would rise again, to $70,000 a year, from 1 January 1999. The director’s position was that there would be a review, with any increase depending on his performance on the second prototype. No review took place.

The relationship between Mr He and the company’s chief executive deteriorated. After a meeting on 6 July 2000, Mr He understood he need not work on the new machine. The Commissioner found that a “language game” followed over whether directions related to “the new machine” or “the existing machine”. In December 2001 and January 2002 the directors devised a means of testing his willingness to work on the new machine and he was given warnings. Envelopments dismissed him summarily on 29 January 2002, alleging serious and wilful misconduct in the form of a refusal to follow a lawful and reasonable direction.

Harsh, unjust and unreasonable, but reasonable on notice

Commissioner Lewin found there was a valid reason for the termination, but it was not the misconduct alleged. As Gray and Mansfield JJ summarised it at [27], the reason was that the employment relationship had become “completely and utterly dysfunctional and was beyond repair”, with responsibility shared by Mr He, the board and the chief executive. The Commissioner found all the warnings “highly problematic”: one had been withdrawn, and the rest were either inappropriate or misconceived.

His ultimate finding was that the termination was harsh, unjust and unreasonable “because the dispute about what was or was not within Mr He’s responsibility was genuinely in dispute”. He added: “In light of the situation, in my view, the termination would have been reasonable if it had been with notice.”

Gray and Mansfield JJ recorded that he found reinstatement “completely inappropriate”. He found that “The remuneration Mr He would have received but for the summary termination of his employment in my view is equivalent to a period of reasonable notice.” Applying the common law principles in Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567, he fixed reasonable notice at three months and ordered Envelopments to pay $13,000.

Mr He sought leave to appeal, asking for a further $13,000. The Full Bench, Senior Deputy President Polites, Deputy President Hamilton and Commissioner Larkin, refused leave to appeal on 23 December 2002. It held the Commissioner was entitled to apply Quinn. Mr He then applied to the High Court for writs of mandamus and certiorari “or constitutional relief”. Hayne J remitted the proceeding to the Federal Court.

• 29 Jan 2002 Mr He summarily dismissed.
• 1 May 2002 Senior Deputy President Williams certifies conciliation unsuccessful.
• 14 Aug 2002 Commissioner Lewin orders $13,000 in lieu of reinstatement.
• 23 Dec 2002 Full Bench refuses leave to appeal.
• 21 Feb 2003 Date of notice of motion in the High Court.
• 28 Mar 2003 Hayne J remits the proceeding to the Federal Court.
• 20 Nov 2003 Hearing before Gray, Whitlam and Mansfield JJ.
• 21 Jun 2004 Judgment and orders.

The safety and superannuation complaints could not found the claim

Mr He argued the Commission failed to consider the legality of his dismissal. He relied on s 170CK(2)(e), alleging he was dismissed over two issues, one concerning a crane and workplace safety and the other underpaid superannuation. He alleged he had been made to lift paper rolls weighing 200 kilograms or more with a hoist of 125 kilogram capacity.

Gray and Mansfield JJ held at [43] that the Commission had no jurisdiction to arbitrate that ground. His application was not made on it. The conciliation certificate covered only the harsh, unjust or unreasonable ground and an alleged contravention of s 170CM, the failure to give adequate notice. A s 170CK ground, had it been certified and pursued, would have had to proceed in a court.

At [44] their Honours said s 170CK(2)(e) “is directed to the making of complaints to outside authorities”, and “would not be established by the making of complaints directly to the employer alone”. On the evidence before the Court, his complaints appeared to have gone only to management. The Court noted suggestions of a Victorian Workcover Authority prohibition notice dated 1 November 2002 and a superannuation payout in August 2002, both well after the termination. At [46] their Honours said the issues were not entirely irrelevant: had he been dismissed for refusing illegal instructions or complaining about breaches of the law, they could have borne on whether the termination was harsh, unjust or unreasonable, particularly whether there was a valid reason. To the extent they were raised, the Commissioner took them into account, and he had already found the termination harsh, unjust or unreasonable, so it was “futile” to seek the same finding on other grounds.

At [47] they held the Commission had no jurisdiction to enforce s 54(d) of the Occupational Health and Safety Act 1985 (Vic) directly. Nor did s 97 of the Workplace Relations Act require the Commission to take that Act into account. Section 97 sits in Pt VI, which governs arbitration of industrial disputes, while Div 3 of Pt VIA contains “their own code” for terminations.

Mr He also alleged the hearing transcripts had been tampered with. In one instance the transcript recorded the crane’s capacity as 525 kg instead of 125kg. Gray and Mansfield JJ held at [50] to [52] that this and the other alleged errors were inconsequential and had no bearing on the outcome. Whitlam J said at [70] that, for the reasons given by Gray and Mansfield JJ, the s 170CK(2)(e) allegation and any transcript errors could not establish jurisdictional error.

On the valid reason itself, Gray and Mansfield JJ quoted at [15] Gray J’s reasons in Miller v University of New South Wales [2003] FCAFC 180: “What is sought is not the existence of a legal entitlement to terminate the employment, but the existence of a reason for the exercise of that right that is related to the factual situation.”

The statute asks what would actually have happened

Gray and Mansfield JJ explained that Quinn applies the common law principle of reasonable notice. In wrongful dismissal claims, that principle is used because of a rule derived from Addis v Gramophone Co [1909] AC 488, which caps damages at the pay the employee would have earned over a proper notice period. At [57] they said:

“It is an artificial rule, not applied to any other form of contract. It assumes that, if an employee had not been dismissed summarily or on inadequate notice, the employee would have been dismissed on proper notice, at the same time, in any event.”

At [58] they held: “The rule in Addis does not find its way into s 170CH(2)(c).” An employer whose summary dismissal failed would not necessarily have gone on to dismiss on notice. They gave the example of an employee dismissed summarily “for some offence of which he or she turns out to be entirely innocent”. The Commission must ask whether, if the actual termination had not occurred, “the employment would have been likely to continue, or would have been terminated at some time by another means”. It has to make a factual finding on how likely a further termination was.

At [59] they found Commissioner Lewin made no such finding. Envelopments “might have tried a different strategy”. The directors might have tried harder to resolve the conflict, or even dismissed the chief executive instead. “Of course, all of this is speculation,” their Honours said. The Commissioner had instead made the assumption underlying the Addis rule, and without an antecedent finding on another dismissal, his finding “cannot be sustained”.

At [61] they held that his failure to consider the matter in s 170CH(2)(c) affected the exercise of his power and so amounted to a jurisdictional error (an error going to the limits of a decision-maker’s power), citing Craig v State of South Australia (1995) 184 CLR 163 at 179 and Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 at [82].

Whitlam J found an error by a different route

Whitlam J said at [71] that Mr He “has tripped over a good point”. At [72] he said the hypothesis in s 170CH(2)(c) is “if the employee’s employment had not been terminated”, not “if the employee’s employment had been terminated on reasonable notice”. In asking what reasonable notice was, he considered, the Commission made an error of law.

He parted company with Gray and Mansfield JJ at [73]. He did not agree that the Commission must address their question in each case. In his view the statute assumes the employee kept working until the arbitration, and the notional remuneration is to be worked out over that period. The phrase “would have been likely to receive” covers pay calculated less predictably, such as by commission or piece rates. At [74] he said the Commission is not obliged under s 170CH(2)(c) to consider the likelihood of a later termination. A destroyed factory or vanished energy supplies might make such a possibility relevant under the “circumstances of the case”, but “because of the case made by an employer”.

Pay $13,000, or the matter returns to the Commission

During argument the Court asked whether Envelopments would prefer to pay a further $13,000 rather than have the matter remitted. Gray and Mansfield JJ said at [62] that this would bring the total to the limit in s 170CH(8) and (9), the total remuneration for the six months before termination, on an annual salary of $52,000. Counsel for Envelopments indicated his client would prefer to pay. At [64] their Honours said Mr He would then have received all he claimed and all he could have claimed, and that on remittal there was no doubt he would try to keep pursuing the legality and transcript issues.

The orders made on 21 June 2004 were those proposed by Gray and Mansfield JJ. The application for an order nisi (a provisional order that the respondents show cause why the writs should not issue) was granted, to make clear, as their Honours said at [66], that the orders were intended to dispose finally of the issues. Order 2 provided that if, within 21 days, Envelopments paid or tendered $13,000 to Mr He (less any amount it had to remit to the Australian Taxation Office) and produced evidence of it to the District Registrar, the orders sought would be refused. Order 3 provided that otherwise the orders of Commissioner Lewin and the Full Bench would be removed into the Court and quashed, and Commissioner Lewin directed to hear and determine the application again in accordance with the reasons.

Whitlam J declined to join in those orders. He said at [76] they “have a ring of common sense to them”, but no agreement between the parties existed. “The Court does not have any power to make an order under s 170CH of the Act,” he said, and relief should not be withheld “because one party is willing to tender an amount that the Court cannot order to be paid”. He noted that Mr He still sought reinstatement, and that the caps in s 170CH(8) and (9) do not apply to an order under s 170CH(4)(b). At [75] he would have quashed Commissioner Lewin’s decision and issued a writ of mandamus (an order compelling the decision-maker to decide according to law), seeing no purpose in quashing the Full Bench decision.

On costs, Gray and Mansfield JJ held at [67] that s 347 of the Workplace Relations Act meant no order could be made, because the proceeding arose under that Act even though framed as an application under s 75(v) of the Constitution. Whitlam J agreed that costs could not be ordered.

Source: [2004] FCAFC 161

General information only. OnNotice reports developments in Australian industrial relations, human resources and workplace law. This article is for education purposes only and is not intended to form professional advice. Always confirm against the primary source and seek specific advice relating to your circumstances.