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Introduction

This decision relates to an unfair dismissal application, resulting from an employee being retrenched as a direct result of COVID-19 business shutdowns. However…

The employer failed to consult in accordance with the award provisions, failed to consider redeployment options where the employer had hired two new employees (albeit in different roles: the applicant being in leasing operations, the new roles being in sales), and the resulting dismissal being carried out by email.

Background

  • The respondent operated a number of entities relating to vehicle leasing.
  • The applicant was responsible for the retention of existing novated lease customers.
  • At the time of the applicant’s dismissal there were 3 leasing consultants, the applicant and a sales support officer.
  • The applicant was one of three redundancies made due to shutdowns ordered by Government in response to the COVID-19 pandemic, resulting in its business “dried up overnight”.
  • The daily sales figures declined with a 50% reduction in settlements in new business and a 30% reduction in retention.
  • The respondent attempted to find alternative roles in which to redeploy any employee impacted by the downturn. Stating:

“…it became quickly apparent that all aspects of our businesses were being impacted and that there was no opportunity to find an alternative role as we were needing to cut costs through other redundancies wherever we could. We are a labour heavy business with 70% of our expenses being labour costs. We sped up the pre-planned process improvement and efficiency measures to continue to operate without having to shut our doors or cancel services to our clients”.

  • Other measures taken by the respondent were to place staff with large leave balances on annual leave, and senior managers volunteering to take pay cuts for a period of time. Also, staff who have left have not been replaced and other employees had taken on additional duties.

The Commissioner’s view on the redundancy process

The respondent recruited two new sales staff during this time. Roles that may or may not have been suitable for the applicant to be offered alternatively to redundancy.

The Commissioner emphasising that:

“I should observe that the decision of [the respondent] to have the sales retention function performed and absorbed into the existing work of the sales consultants does not mean that the role performed by [the applicant] was still required to be done. [The respondent] had clearly decided that the tasks associated with [the applicant’s] role should be broken up and spread amongst other employees. The decision [the respondent] took was that the agglomeration of these tasks into a single role was no longer required.

“In Jones v Department of Energy and Minerals Justice Ryan held that:

‘…His Honour’s description was cast in terms of a “job” in the sense of a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employer’s organization, to a particular employee. However, it is within the employer’s prerogative to rearrange the organizational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly created positions. It is inappropriate now to attempt an exhaustive description of the methods by which a reorganization of that kind may be achieved. One illustration of it occurs when the duties of a single, full-time, employee are redistributed to several part-time employees. What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organization, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant…’

“I am satisfied that [the respondent] no longer required the role performed by [the applicant] to be performed by anyone because of changes in the operational requirements of the business. The requirements of s.389(1)(a) of the FW Act are therefore met”.

So far, so good…but no consultation

The applicant’s employment was covered by the Clerks – Private Sector Award. As with most awards, it contains an expressed obligation on an employee to consult with its employees in matters of major change. Redundancy is considered major change. The purpose being that such consultation may elicit other outcomes.

The respondent failed to consult with the applicant on his redundancy, instead electing to call him at home and confirming the dismissal by follow-up letter.

This failure to communicate meant that the redundancy process was flawed, with the Commissioner finding that it was not a case of genuine redundancy.

Was the dismissal unfair?

Having discarded the jurisdictional objections relating to redundancy, the Commissioner moved on to the nature of dismissal. The Commissioner:

“I have taken into account that [the respondent] ceased trading during the first (or subsequent) set of restrictions operating in Melbourne. In fact [the respondent] has not only employed [has] taken on [two other] sales consultant[s] since that first shutdown. Whilst the circumstances at the end of March 2020 did look bleak for [the respondent]business clearly picked up.

“I do accept that, at the time [the applicant’s] employment was terminated the nature of the operation of JobKeeper was not known. It had been announced the previous week. However, [the applicant] is right, the purpose of JobKeeper was to ensure employees and their employer maintained a relationship, to minimise job loss and minimise redundancies. Whilst [the respondent] may not have understood its operation on 8 April 2020 neither did many other employers who managed to maintain employees until such time as the JobKeeper payments came through.

“For all of these reasons I am satisfied that the dismissal of [the applicant] was harsh and unjust”.

Remedy

This is where I cannot fathom the logic of this matter, as the applicant does not seek reinstatement, but compensation. The Commissioner has allowed this in that the Commissioner has requested that the parties provide further submissions on this outstanding issue.

The applicant would have received payment in lieu of notice and the appropriate redundancy payments under the NES Past decisions would indicate that the failing to communicate is of small consequence and would be maybe one or two weeks’ pay. However, the Jobkeeper payment may be considered in the context that the applicant would have enjoyed continued employment, so the real outcome would be dependent on whether the applicant has found other employment, therefore the amount would be limited to the period of unemployment (less, presumably, the redundancy payment – and maybe the payment in lieu of notice).

Conclusion

This case was “lost” on the basis of a technicality (this is a known factor) and I am unsure on what hangs on the respondent failing to support the applicant via a Jobkeeper payment.

And does this mean there may be a new reason for the finding of an unfair dismissal: “failure to provide Jobkeeper assistance”?

Similar case

My assumptions are in accordance with another recent decision of a similar nature, that is lack of consultation as required by the Clerks – Private Sector Award, where the FWC considered appropriate compensation due to the failure to consult:

“Like all calculations of damages or compensation, there is an element of speculation in determining an employee’s anticipated period of employment because the task involves an assessment of what would have been likely to happen in the future had the employee not been dismissed.

“I am satisfied on the balance of probabilities that if [the applicant] had not been dismissed on the grounds of redundancy on 22 April 2020, which was the conclusion of her notice period, she would have been given four weeks’ notice of termination on the grounds of redundancy on 20 April 2020, such that her employment would have terminated at the conclusion of the four week notice period on 18 May 2020. My reasons for making this finding are as follows.

“First, for the reasons stated above, I am satisfied that if [the respondent] had complied with its consultation obligations [the applicant] would have remained working for [the respondent] after 25 March 2020. In particular, I am satisfied that a proper consultation process would have resulted in [the applicant] having her days of week reduced from three days a week to two days a week, as happened with other administrative staff. In addition, consistent with the experience of other administrative staff employed by [the respondent], once the JobKeeper package was announced in late March 2020, I am satisfied on the balance of probabilities that from early April 2020 [the applicant] would have had her days of work increased back to three days per week and she would have received payment of $1,500 per fortnight, equivalent to the JobKeeper allowance, which was more than her usual gross remuneration of $1,152.18 per fortnight (for three days work a week).

“Secondly, prior to the impact of COVID-19, [the respondent] had made a decision to close its Taree office on 30 June 2020. As a consequence of the impact of COVID-19 on [the respondent’s] business, it made a decision to close its Taree office at an earlier time…

“In the period from the commencement of the JobKeeper scheme on 1 April 2020 until the termination of her employment on 22 April 2020, [the applicant] would have received a payment of $1,500 per fortnight (equivalent to the JobKeeper allowance) had she remained working for [the repsodnet]. In addition, during the period from 23 April 2020 until the alternative termination dated of 18 May 2020, [the applicant] would have received a payment of $1,500 per fortnight (equivalent to the JobKeeper allowance). The period from 1 April 2020 until 18 May 2020 is 6 weeks and 5 days. Accordingly, $5,032.50 (6.71 weeks x $750/week = $5,032.50) is the remuneration that [the applicant] would have received, or would have been likely to receive, if she had not been dismissed.

“In my view, the application of the Sprigg formula does not, in this case, yield an amount that is clearly excessive or clearly inadequate. Accordingly, my view is that there is no basis for me to reassess the assumptions made in reaching the amount of $3,189.01”.