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Introduction

This decision is about whether a member and former employee of the Transport Workers Union of Australia for more than 14 years, was unfairly dismissed.

Background

The applicant found employment with the Union through her mother, who at the time was its Office Manager. From 14 March 2006, she worked primarily in the Union’s Industrial section until 26 March 2020, when she was dismissed on the grounds of redundancy.

The applicant disputes that the dismissal was a case of genuine redundancy. She is protected from unfair dismissal because her period of employment with the Union was longer than the minimum employment period and her annual remuneration of $90,675 plus superannuation and a mobile phone was less than the high-income threshold.

Was the dismissal a genuine redundancy?

On the one hand the applicant put that her duties were that of “Industrial Administrator”, preparing and filing applications to the Commission dealing with disputes, enterprise agreements, protected action ballots, right of entry notifications, permits and returns. Also assisting in drafting enterprise agreements, updating annual wage sheets for six or seven modern awards and advising members about rates of pay.

On the other hand, the union claimed that the applicant’s role had effectively been redundant for years, as her substantive role was that of assistance to a researcher who had resigned four years previously, which resulted in a large proportion of her duties ceasing or reduced.

The Commission found that it was not plausible that the applicant would have been retained for such a long period without meaningful work to perform.

COVID-19 brings industrial peace

In early March 2020, the Union’s National Committee of Management resolved to suspend an industrial campaign which had been planned since 2017 and was due to crystallise in 2020. The “2020 Fight Campaign” was aimed at improving industry rates and conditions by enterprise agreements with approximately 200 aviation and road transport employers. It relied on a range of enterprise agreements expiring at the same time in 2020.

The Commission:

“Nobody could have foreseen that this timing would coincide with a global pandemic, with serious economic consequences for both the aviation and transport industries. Social distancing measures and limits on movement made campaign logistics practically impossible. Instead, the Committee moved to delay the campaign until at least September 2021. It also resolved to defer enterprise agreement negotiations in favour of Memorandums of Understanding where appropriate”.

Less money coming in

These resolutions, together with the prospect of COVID-19 pandemic-related work and movement restrictions, gave the union cause to consider the likely effect of reduced labour demand on membership levels – and membership fees. He formed the view that drastic action was required to secure its financial position, including the redundancy of two positions.

Failure to consult under the Award

In a manner that could be described as “do as I say, not what I do” that union failed to consult.

A dismissal is not a genuine redundancy under the Act unless the employer has complied with relevant applicable modern award consultation obligations. In this case, the Clerks – Private Sector Award 2010.

The Commission finding:

“At its highest, the Union’s consultation process amounted to [the union secretary] asking [the applicant] if she had ‘anything to say’ after she had been told her position was redundant. It was not a fair question in the circumstances. [The applicant] had no advance warning of the meeting or its subject matter. She was not in a position to respond in any meaningful way. She was still absorbing the news that she had just lost her job after 14 years’ service and that it was to take effect immediately”.

The Commission finding that because the Union did not comply with its consultation obligations under the Award the dismissal was not a case of genuine redundancy.

Union should have known better

The Commission:

“As a key stakeholder in the development of modern awards, the Union’s failure to consult with [the applicant] about the redundancy cannot be the product of its size, ignorance or unsophistication. Both the Union and [the secretary] must be taken to be familiar with award consultation obligations and their purposes – including in providing an opportunity for meaningful consideration of alternatives and in promoting the dignity of those affected by decisions about which consultation is required. Indeed, these are matters that often lie at the heart of the Union’s work.

“Inexplicably, these purposes seem to have been completely put aside so far as [the applicant] was concerned”.

The union argued that consultation about redundancy would not have made any difference to the outcome. The Commission’s response: “And perhaps the redundancy of [the applicant’s] position was inevitable in the circumstances, but what was the haste in carrying it out?”

Should the union be held more accountable?

The applicant argued, given the union should be held to a higher standard in relation to award contraventions because of its special role in the advocacy and protection of industrial terms and conditions of employment. The Commission disagreed:

“I do not consider that the Union should be held to a higher standard than any other employer defending an unfair dismissal case. The law applies equally to all”.

Alleged intimidation of witnesses:

The applicant makes the following allegation:

“It has been stated to the Applicant by several employees of the respondent that remarks have been made to them that if they spoke to, or assisted the applicant in any capacity even if Orders were granted by the Commission to appear, that their employment with the TWU would be in jeopardy.”

The commission responding:

“These are serious allegations. I am not in a position to test their veracity. They are matters that should be referred to the Fair Work Ombudsman for investigation. As the allegations are both unsourced and untested, I have given them no weight in my assessment of the fairness or otherwise of [the applicant’s] dismissal”.

Conclusion

On balance, the Commission, was satisfied the applicant’s dismissal was harsh and unreasonable and unfair.

Remedy

The parties both agreed that reinstatement would be inappropriate.

The Commission determined that had the union followed the consultation requirements, the applicant would have been employed for a further five weeks, and so awarded $8718.75 plus superannuation.

Commentary

The Fair Work Commission is a tribunal and has no legal powers as such. Both the applicant’s allegations and the award breach would need to be prosecuted by the Fair Work Ombudsman.

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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”.

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Overview

This decision goes against the doctrine that if an employee continues to work for an employer under changed circumstances, then the affected employee has an “implied” acceptance to the changes…or does it? Each and every HR person should read this report as it is fundamental to the contract of employment.

Introduction

The Federal Court hearing an appeal from a decision of the magistrates’ court contemplates whether the reduction of an employee’s hours of work constitutes a bona fide redundancy. Each and every HR person should read this report as it is fundamental to the contract of employment.

Background

This was an appeal by the employer against a ruling of the magistrates’ court, where an employee’s union argued that the reduction to an employee’s hour of work was tantamount to redundancy for the purposes of the Fair Work Act 2009.

The union “won” this case and the employer appealed to the federal court and lost, again.

Not relevant, but to give context is the fact that the company was a cleaning business and the employee a cleaner.

The cleaner had been employed since 1 May 2014 as a full-time cleaner by the company.

Due to circumstances beyond the company’s control, the company decided to reduce the employee’s hours to from 38 hours a week to 20 hours a week, with a corresponding loss of earning of some 40 percent.

Whilst refusing to sign an amended contract of employment, the employee began working the reduced hours on 12 September 2017 because she considered she had no choice.

In the magistrates’ court, the magistrate upheld the Union’s claims, awarded the cleaner $5,194.98 in redundancy pay, with interest fixed at $502.56, and ordered the employer to pay the Union a civil penalty of $1,500.

The employer’s argument

The employer contended that the magistrate’s decision was based on an incorrect interpretation of the Act, arguing that the employee was not entitled to redundancy pay because the employment relationship continued after the termination of the contract and termination of a contract of employment at the employer’s initiative is not enough to generate an entitlement to redundancy.

The magistrate did not accept that there had been a variation of the full-time contract, her Honour found that the employer had repudiated [retracted] the contract and the employee accepted the repudiation.

The focus of the employer’s argument was on the distinction between the termination of the employment relationship and the employment contract. The employer submitted that the magistrate erred by relying on the fact that s 119 fails to refer expressly to the employment relationship as a reason for construing the phrase “employment is terminated” to include the employment contract.

The legal parameters

Subsection 119(1) of the Fair Work Act 2009 (Cth) (FW Act) provides that:

An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:

(a)          at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(b)          because of the insolvency or bankruptcy of the employer.

“Dismissed” is defined in s 386 of the Act. It relevantly provides that:

A person has been dismissed if:

(a)          the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b)          the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

However, a person has not been dismissed if:

(c)           the person was demoted in employment but:

(i)            the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii)           he or she remains employed with the employer that effected the demotion.

The common law

Citing a number of judgments, the judge in this matter quoted:

“[A] person’s employment cannot be divorced from the contract of employment which governs it. This is so even if the employment and the contract terminate at different times, for instance in circumstances where, although the employment has ended following a dismissal, the contract remains on foot because the employer’s repudiatory conduct has not been accepted: Visscher v Giudice (2009) 239 CLR 361.

Because the terms of a person’s employment are determined by the related contract of employment, to identify whether the employment of a person such as Mr Jovic has been terminated and replaced with another employment or continued according to amended terms depends on the contractual terms applicable to that employment.

The reasons for the employer’s actions are not relevant to this aspect of the analysis”.

What is redundancy?

Putting to one side the exception for the ordinary and customary turnover of labour, which is irrelevant in this case, para 119(1)(a) erects an entitlement to redundancy pay on the happening of two causally connected events:

  • One is the termination of the employee’s employment at the employer’s initiative.
  • The other is the termination of the employee’s employment because the employer no longer requires the job done by the employee to be done by anyone.

The Union argued that the phrase “employment is terminated” is not to be construed in isolation from the words around them. Drawing on Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [44] (Gummow, Hayne and Heydon JJ), it submitted that the entitlement to redundancy pay created by para 119(1)(a) depends on the job becoming redundant and not on the employee being surplus to the employer’s requirements.

Put simply, when looking at your workforce as a whole, you determine which jobs you need and those you do not (and, naturally, the opposite also applies). Of secondary determination is which people are surplus to requirements, and this is where it tricky, as it is not a as simple of saying “that person occupies the surplus position, then it is that person who must go.

But the entitlement to redundancy pay in this matter does not only depend on the job being surplus to the employer’s requirements. It also depends on the employment having been terminated on that account. Both questions must be answered in the employee’s favour before she is eligible for redundancy pay. As Judge Cameron put it in FL Press at [230]:

“the reason for the termination should not distract from the question of termination”. Where, as here, it was common ground that the job the employee was doing was redundant, the only question was whether the employee’s employment had been terminated”.

Ambiguity

The judge in this matter finding that the phrase “employment is terminated” is ambiguous. According to the judge:

“It could refer to the employment relationship, to the employment contract, to both, or to the termination of employment in the job which the employer no longer requires done. Thus, to discern its meaning it is necessary to consider a number of contextual matters, including the context in which it is used in the section”.

The employer relied on some of the meanings derived from the Macquarie Dictionary, but not others, which the judge picked up on, as those other meanings went to the union’s favour.

Employment not defined in the FWA

Not only is “employment” not defined in the FW Act, but neither is the phrase “employment is terminated”. The judge noting that:

“It appears four times in the Act: in subs 119(1), 123(1), 772(2), and 789(1). Paragraph 123(1)(b) excludes an employee whose employment is terminated because of serious misconduct from the right to receive notice of termination or payment in lieu. Paragraph “772(2)(b) carves out an exception to para 772(1)(f), which prohibits an employer from terminating an employee’s employment on the basis of ‘race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin’. That exception operates where ‘the person is a member of the staff of an institution that is conducted in accordance with the doctrines, tenets, beliefs or teachings of a particular religion or creed’ and the ‘employment is terminated’ in good faith and to avoid injury to the religious susceptibilities of adherents of that religion or creed. Paragraph 789(1)(b) excludes the requirements for notification and consultation in Pt 6-4 Div 3 of the FW Act in relation to such an employee. The phrase also appears in a note to s 768BM, which cross-references s 119”.

However, the judge concluded that none of these references assists in resolving the question of interpretation in this case. The phrase “termination of employment” appears more frequently but likewise nothing in those provisions is of assistance, stating:

“Importantly, I was not taken to any authorities on the meaning of ‘employment’ or ‘termination of employment’ in any of these provisions”.

The legislative history

The history of the legislative entitlement to redundancy pay begins with two decisions of the Australian Conciliation and Arbitration Commission (C&A Commission): Termination, Change and Redundancy Case (1984) 8 IR 34 (TCR No 1) and Termination, Change and Redundancy Case (1984) 9 IR 115 (TCR No 2) (the TCR case). The TCR case was a test case brought by the Australian Council of Trade Unions. As a result of the TCR case, federal (and later most state) awards were varied to include a standard set of redundancy provisions.

The object of this was “to give effect or give further effect to” the ILO Convention (No. 158) concerning Termination of Employment at the Initiative of the Employer, done at Geneva on 22 June 1982, and entered into force for Australia on 26 February 1994.

Further, in TCR No 1, the C&A Commission took the view that the payment of redundancy (or severance) pay was justifiable “as compensation for non-transferable credits and the inconvenience and hardship imposed on employees” (at 71). In doing so, the C&A Commission adopted two of three conclusions reached by the Committee of Inquiry into Technological Change in Australia 1980 (CITCA Committee) as to the elements of monetary compensation for retrenchment. They were set out at 72–73 of the decision:

  • compensation for non-transferable ‘credits’ that have been built up, such as: accrued benefits like sick leave and long service leave; loss of seniority; and loss of the employer’s contribution to pension or superannuation.
  • compensation for the inconvenience or hardship imposed and assistance to the retrenched employee to make the change, with aims such as: to act as temporary income maintenance while the retrenched employee searches for another job; and to allow for the possibility of retraining or relocation to take up a new job.

In TCR No 2, the Full Bench sat again to consider an amendment to the Metal Industry Award 1984 to reflect its decision and, after hearing further argument, determined (at 135) to include a provision in these terms in the amendment:

“An employer, in a particular redundancy case, may make application to the Commission to have the general severance pay prescription varied if he/she obtains acceptable alternative employment for an employee”.

The current legislation

The judge found it abundantly clear that the terms of s 119 derive from the relevant part of the standard clause developed by the C&A Commission for inclusion in federal awards. That clause distinguished between an employee who was transferred to lower paid duties by reason of redundancy and an employee whose employment was terminated for that reason:

#.1 Definition  

Redundancy occurs when an employer decides that the employer no longer wishes the job the employee has been doing to be done by anyone and this is not due to the ordinary and customary turnover of labour.

#.2 Transfer to lower paid duties  

Where an employee is transferred to lower paid duties by reason of redundancy the same period of notice must be given as the employee would have been entitled to if the employment had been terminated and the employer may at the employer’s option, make payment in lieu thereof of an amount equal to the difference between the former ordinary rate of pay and the new ordinary time rate for the number of weeks of notice still owing.

#.3 Severance pay  

#.3.1 In addition to the period of notice prescribed for ordinary termination in clause ? – Termination of employment, an employee whose employment is terminated by reason of redundancy must be paid, subject to further order of the Commission, the following amount of severance pay in respect of a continuous period of service:

The FW Act does not state that its intention was to codify established minimum terms and conditions of employment. Clause r.82 of the regulatory analysis incorporated in the Explanatory Memorandum to the Fair Work Bill 2008 (Cth) (FW Bill) states:

“The NES will provide for written notice of termination and redundancy pay. These are currently awards-based entitlements, which will be legislated to provide more comprehensive protection for employees and extend redundancy pay to award-free employees”.

Beyond this, there is no indication that the Parliament intended to extend the entitlement to redundancy pay, according to the judge.

So what about the legislative purpose of the FWA?

The object of the FW Act is described in s3 as follows:

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a)          providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and

(b)          ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

(c)           ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d)          assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e)          enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(f)           achieving productivity and fairness through an emphasis on enterprise‑level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and

(g)          acknowledging the special circumstances of small and medium‑sized businesses.

In Spotless at [37]–[41] Colvin J made the following observations about the legislative purpose of s119(1):

“37         First, the Act is to provide a safety net of minimum terms and conditions of employment that cannot be undermined.

“38         Second, the Act is not expressed as a reform that removes or reduces minimum terms and conditions of employment afforded by the law as it existed at the time of enactment. Nor is it expressed as a codification or improvement of existing minimum standards. Rather, its object is to ensure ‘fair, relevant and enforceable’ minimum terms and conditions. Save that there might be said to be unfairness to employees in a general sense if minimum standards were reduced by the Act (such as by confining the circumstances in which there may be an entitlement to redundancy pay), it is difficult to discern any specific object concerning the relativity between minimum standards as they existed before the Act was enacted and those expressed through the Standards. Nevertheless, it would appear to be unlikely that the Act would deploy established terminology in the field of industrial law concerning an established standard as to particular workplace conditions (such as redundancy pay) where it was intended to change the standard. A purpose of establishing minimum terms and conditions may be expected to be advanced by using existing terminology where such conditions were to be adopted by the Act.

“39         Third, the Act has detailed provisions that provide for compliance and enforcement and establishes a Fair Work Ombudsman and a Fair Work Commission with substantial powers to supervise compliance and ensure enforcement of the Standards. The rights and protections afforded by the Act do not depend upon the employee independently resorting to claims. The Act puts in place a substantial structure to support the making of claims. Nevertheless, the Fair Work Act confers statutory entitlements upon employees that cannot be undermined and to that extent is protective of the interests of employees. It would be contrary to this purpose if a particular condition was interpreted in a manner that, in effect, conferred power upon an employer by adopting a particular business practice to decide whether its employees would receive the benefit of a particular minimum entitlement (such as redundancy pay).

“40         Fourth, the Act has objects that include the promotion of productivity and economic growth and flexibility for business. An interpretation that inhibited the ability of a business to adopt employment practices that best suited the nature of its business activities would be inconsistent with this object.

“41         Fifth, the terms of Division 11 manifest an intention to provide a qualified right to redundancy pay. It is qualified by the presently contentious language in s 119(1)(a). It is also qualified by the exclusions expressed in s 121 (employees for less than 12 months and employees of small business and those the subject of a modern award with specific provisions). Importantly, it is further qualified because Division 11 does not apply to the employees described in s 123. They include employees ‘employed for a specified period of time, for a specified task, or for the duration of a specified season’, employees terminated for misconduct and casual employees.”

The employment relationship is “inherently” a contractual one

The employment relationship is “inherently” a contractual one. Consequently, there can be no employment relationship without a contract of employment. As McHugh and Gummow JJ observed in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 436:

“The evolution in the common law as to the relationship of employment has been seen as a classic illustration of the shift from status (that of master and servant) to that of contract (between employer and employee)”.

Nevertheless, there is a difference between the employment relationship and the contract of employment. A contract of employment can come into existence before the employment relationship is formed and an employer who withdraws an offer of employment after it has been accepted or an employee who resigns before the starting date can be liable for breach of contract. Furthermore, a contract of employment can include obligations, such as a restraint of trade covenant, which continue after the employment relationship has come to an end.

There is also a conceptual difference between the termination of an employment relationship and the discharge of a contract of employment.

The judge finding:

“The central flaw in [the employer’s] argument is that it proceeded on the false premise that the employment relationship survived the termination of the employment contract”.

Quoting from the 8th edition of Macken’s Law of Employment, the judge noted:

“The employer-employee relationship will also end when the contract of employment ends, if that relationship has not ended earlier. The possibility of the contract of employment existing after the employment relationship has ended seems established, although ordinarily it will be of ‘no real significance’”.

The judge adding the statement of principle is well-supported. In Byrne:

“It does not appear to have been doubted in this country that a wrongful dismissal terminates the employment relationship notwithstanding that the contract of employment may continue until the employee accepts the repudiation constituted by the wrongful dismissal and puts an end to the contract…”

In both Visscher (at [53]) and Byrne (at 427) reference was made to the statements of Latham CJ in Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 454 that “[a]n employer terminates the employment of a servant when he dismisses him …” and Dixon J in the same case at 469 that “[t]here is nothing in the general law preventing the wrongful dismissal of a servant operating to discharge him from service, notwithstanding that he declines to accept the dismissal as absolving him from further performance but keeps the contract open and remains ready and willing to serve”. In Visscher (at [54]) reference was also made to the statement by Latham CJ in Automatic Fire Sprinklers Pty Ltd v Watson at 451 that:

“[T]he wrongful dismissal determines the relationship of master and servant created by the contract, even though the servant may not have accepted his dismissal as entitling him to regard the contract as discharged”.

History of the Visscher case

Visscher began as a claim for reinstatement in the Australian Industrial Relations Commission. Mr Visscher commenced employment with the respondent shipping company (Teekay) in March 2000. He began as a casual employee but soon afterwards accepted an offer of permanent employment as a Third Mate. Within months he was promoted to Chief Officer but Teekay wrote to him declaring that it would no longer be bound by its legal obligations. Nevertheless, Mr Visscher continued in its employment working as a Chief Officer, although Teekay considered he had returned to his original position as Third Mate albeit that his duties and remuneration did not change. In the Full Court, held that Mr Visscher could not insist on performance of his contract, even if the contract itself remained on foot for limited purposes. His Honour went on to say at [50] that the fact that Mr Visscher remained in employment with Teekay and sailed as Chief Officer did not lead to a different conclusion. His Honour considered that Mr Visscher continued under a new contract, in his original position of permanent Third Mate.

In the High Court the majority said that Buchanan J had elided the concepts of termination of an employment relationship and the discharge of a contract of employment: Visscher at [53]. Their Honours explained that it does not follow from the fact that a wrongful dismissal is effective to bring the employment relationship to an end that the contract is thereby discharged. At [56] they said that the case did not involve dismissal with a consequent destruction of the employment relationship. It was accepted that the employment relationship continued after the repudiation. But Visscher was a very unusual case. As the majority observed at [57], it was a feature of the case that “the employment relationship continued with Mr Visscher undertaking the duties of a Chief Officer and being remunerated to the same extent”.

Visscher v the current case

Here, in contrast to Visscher, there was, in effect, a wrongful dismissal constituted by the employer’s repudiation of the employment contract, which brought the employment relationship to an end. The relationship in which the employee entered after she accepted the repudiation was a fundamentally different relationship from the relationship the parties previously enjoyed. She was no longer a full-time employee but a part-time employee, performing a fraction of the work she formerly undertook for a fraction of the remuneration she formerly received. The judge adding:

“Even if I am wrong in this respect, I do not accept that what happened to [the employee] was not a termination of her employment within the meaning of the FW Act”.

The judge then digging deeper into history:

“What occurred in the present case appears to have been within the contemplation of the Convention. Paragraph 22 of the 1995 General Survey of the International Labour Office entitled “Protection against Unjustified Dismissal”, to which the Full Court referred at 103–4 of its reasons, relevantly stated:

‘Certain changes introduced by the employer, in particular as concerns conditions of employment and which do not arise out of genuine operational requirements, might place the worker under pressure either to accept such changes or to give up his job or incur the risk of being sanctioned for having disregarded the employer’s instructions. It is therefore necessary to be able to verify whether a situation does not constitute a disguised dismissal or a real termination of the relationship instigated by the employer in the sense of the Convention, since otherwise the worker concerned would de facto or de jure be unduly deprived of the protection provided by the Convention’”.

What is termination of employment?

In Siagian, to which the Full Court in Mohazab referred, Wilcox CJ said that it was “preferable to the treat the words ‘termination of … employment’ in Div 3 of the Part VIA of the [IR Act] as including any act that brings to an end the employer-employee relationship, whether or not the act, or any acceptance of it, also brings to an end the contract of employment”.

Conclusion

The judge concluding:

“For all these reasons I am satisfied that [the employee’s] employment was terminated when [the employer] repudiated her contract of employment as a full-time cleaner. Since it is common ground that the reason for the termination was that [the employer] no longer required that job to be done by anyone, she was entitled to redundancy pay…[and] it follows that the appeal must be dismissed”.

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Introduction

You can read the full decision here.

A well-known, iconic retailer shut the doors on one store and sought to transfer an employee to another store some four kilometres away. The employee refused the offered position and sought redundancy pay in accordance with the award and NES. The retailer sought relief from payment of the redundancy pay.

This decision sets out the circumstances in which redundancy pay may not be paid.

Background

The employee was an assistant manager for the retailer. It was noted that she lived some distance from the retail premises that was to be closed. The offer of a same position was to a store four kilometres distant from where she currently worked – an eight-minute drive. Given that she already travelled some distance, the additional travel was deemed negligible.

The employee was provided with 90 days’ notice of the pending closure.

The employee’s views about the alternative position of Store Manager at the nearby store included a reluctance to work with a particular employee of that store whom she alleges engages in bullying behaviour and her lack of faith in the company’s future.

The employee would, if made redundant, be entitled to six week’s redundancy pay.

The company applied to the Fair Work Commission to have this redundancy pay reduced to nil.

The principles relating to the variation of redundancy pay

The Commissioner in this matter noting that the principles relating to the variation of redundancy pay for reason of an employer finding acceptable alternative employment are now well established, and have been summarised by Vice President Lawler in the following way:

In NUW v Tontine Fibres [2007] AIRCFB 1016 (Tontine) a Full Bench of the AIRC considered the meaning of the expression ‘acceptable alternative employment’ in a redundancy provision in an enterprise agreement. It was common for enterprise agreements to reflect award provisions and contain redundancy entitlements that could be reduced if the employer obtained acceptable alternative employment (or some variant of that expression). The Full Bench observed:

‘It is well established… that the concept of acceptable alternative employment is to be determined objectively. As noted by a Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd:

What constitutes ‘acceptable alternative employment’ is a matter to be determined…on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provision would be without practical effect.

Yet, the use of the qualification “acceptable” is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elements of such a standard including the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.”

The onus of establishing that the alternative employment in question is acceptable rests with the applicant employer. In order to establish whether the alternative employment obtained by the employer is acceptable it is necessary to have regard to such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters (including the location of the employment and travelling time)…” [My emphasis].

“Other employment does not cease to be “acceptable” merely because it is on terms that are less advantageous to that of the terminating position. Tontine makes it clear that there are matters of degree involved.”

In summary

In the same matter, the Commission summarised the principles regarding redundancy entitlements and the provisions of the Act for a reduction to redundancy pay as follows:

“Subsections 22(6) and (7) reinforce the notion that where there is a “transfer of employment” – a concept defined broadly in s.22(7) and present in this case –recognition of service with the outgoing employer by the incoming employer should disentitle the employee to the NES redundancy payment. That is consistent with the rational in the TCR No 1 Case and the Redundancy Case 2004 because where there is such recognition, there is no “loss of non-transferrable credits” of the sort that is one of the principal, if not primary, matters to which the redundancy entitlement in s.119 is directed.

In summary:

    • The purpose of the redundancy entitlement conferred by s.119 is primarily to compensate the employee for loss of non-transferrable credits, especially long service leave.
    • It is not the intention of s.119 to fully compensate the employee in all or even most cases. The specified amounts are manifestly inadequate for that purpose.
    • The redundancy entitlement in s.119 has no “income maintenance” purpose and is not intended to address the requirement to search for another job and/or to tide over an employee during a period of unemployment albeit that the it should be regarded as having a minor component referable to the inconvenience and hardship associated with redundancy.
    • To the extent that alternative employment is “obtained” by the outgoing employer, matters referred to Tontine (obvious including elements such as the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements) are relevant in assessing whether that employment is “acceptable” which is in turn relevant in assessing what, if any, reduction is appropriate. [Note that in Tontine, the alternative employment was with the same employer and there was no loss of continuity or non-transferrable credits. Nevertheless, the alternative employment, while assessed as “acceptable” still had material disadvantages that rendered it appropriate to award a portion of the entitlement.]
    • Where there is no continuity of employment or recognition of long service and other non-transferrable credits that were not paid out by the outgoing employer then the employer should be entitled to the majority of the s.119 entitlement. To the extent that the alternative employment is disadvantageous when compared to the previous employment that will also sound in lesser reduction than might otherwise have been the case”.

Commissioner agrees with the employer

In agreeing to reduce the redundancy payment to “nil”, the Commissioner did so because:

“I am satisfied on the materials before me that the alternative position offered to [the employee] was of a similar nature to that of her position at the [other] store. Further, I am satisfied that the terms and conditions of the role offered are the same as her previous role and her length of service and entitlements would transfer to the new position. It is also conceded by [the employee] that the employee at the [other] store with whom she did not wish to work has since resigned. A disadvantage of the alternative role is that it is a further 4 km for [the employee] to travel…The employer submits this amounts to only an additional 8 minute drive. In the context of the distance already travelled each day by [the employee] to get to and from work this is not an unreasonably distant new location. I have also considered but am not persuaded by [the employee’s] concerns about [the company’s] ongoing viability; to the extent that those concerns are reasonably held…such concerns are not exacerbated through a change in employment location”.

https://www.fwc.gov.au/documents/decisionssigned/html/2019fwc4818.htm

This is case where Commissioner Johns found that the redundancy was not genuine because (despite the respondent arguing otherwise) there was an opportunity for redeployment to a similar position within the organisation.

This decision amounted to many, many pages, but what I found intriguing was that Commissioner (in almost as lightbulb moment) stated using the phraseology “cutting to the chase” and that the “cat was out of the bag” and could see the “elephant in the room”. This describing that the employees needed to reflect the cultural or ethnic background of the constituents. That is, whilst not mentioned, they wanted someone of an Anglo/Celtic heritage.

Introduction

As the Commissioner in this matter put at the outset:

“If the termination was a case of genuine redundancy then [the] application for an unfair dismissal remedy must be dismissed. If the termination was not a case of genuine redundancy it becomes necessary to determine if termination of employment was unfair”.

Background

The respondent in this matter was a religious organisation, that undertook the process of becoming incorporated and also took the opportunity to look at its operating structure.

Resulting from the restructure, the team in which the applicant was one of eight employees:

  • 1 resigned,
  • 2 were reassigned to other Uniting entities,
  • 2 took redundancy packages,
  • 1 took up a new position in the restructure,
  • 2 (one of which was the Applicant) had their employment terminated.

The applicant applied for a role within the respondent’s organisation along with 13 others. The applicant was one of three shortlisted for the position, but ultimately unsuccessful in attaining that role.

At the hearing, the respondent made a number of points, one being:

“…there is no warrant in the statute or the case law for the proposition that an employer must assess whether a current employee could do the new role before going to market. Put in another way, there is no absolute obligation to exhaust all opportunities for people who are likely to be displaced in a restructure before an employer goes out to market”.

Also arguing that in Ulan Coal Mines Limited v A. Honeysett and Ors, “that goes closest to supporting such a proposition (although it is submitted it falls well short), is found at paragraph [34] as follows:

‘… where an employer decides that rather than fill a vacancy by redeploying an employee into a suitable job in its own enterprise, it will advertise the vacancy and require the employee to compete with other Applicants, it might subsequently be found that the resulting dismissal is not a case of genuine redundancy’.

“It is submitted that the passage goes no further than saying that if such a process is adopted it might be found that the dismissal was not a genuine redundancy; not that it will be found to be so”. And later in the same decision:

‘Of course the job must be suitable, in the sense that the employee should have the skills and competence required to perform it to the required standard either immediately or within a reasonable period of retraining’”.

Associated entities

As with all redundancy matters, the employer (if they have (eg) subsidiaries) have a legal obligation to look to those subsidiaries as a chance of redeploying the employee rather than simply making them redundant.

In this case, the organisation operates in Australia through its Synods, unincorporated associations, presbyteries and congregations.

But:

  • It is clear from this evidence that these other entities are not the employer, the “wider” Church is not part of the employer’s enterprise.
  • These entities are not corporations.
  • The entities are unincorporated associations, they are not a natural person, a body corporate (other than an exempt public authority), a partnership or a trust.

Consultation

As the applicant was not subject to an award or an agreement, there was no legal obligation to consult. However, the Commissioner did note that there was real and genuine consultation with the Applicant about the change program; her redundancy; and, termination.

Was the Applicant’s job no longer required to be performed?

To be satisfied the dismissal was a case of genuine redundancy, I must be satisfied that the [applicant’s role] was no longer required to be performed by anyone because of operational changes undertaken by the Respondent. The Respondent contended that this was the case.

The Commissioner finding on this point that the Respondent no longer required the Applicant’s job to be performed by anyone because of changes in its operational requirements.

Was redeployment reasonable in all the circumstances?

The Commissioner finding that the applicant’s role “was no longer required to be performed by anyone”, the redeployment options were required to be considered:

  • Whether there exists a job or a position or other work to which the employee can be redeployed;
  • The nature of any available position;
  • The qualifications required to perform the job;
  • The employee’s skills, qualifications and experience; and
  • The location of the job in relation to the employee’s residence and the remuneration (pay and entitlements) which is offered.

The Commissioner agreed with the respondent’s premise that there is no established requirement that an employer must conduct an internal process before “going out to market” or “spilling and filling” where the result is internal candidates compete against external candidates. There is no requirement, mandated by the Fair Work Act, that internal candidates be given preferential treatment. However, in “all the circumstances” of a particular matter, whether there was an internal process in advance of an external one is a relevant consideration in determining whether redeployment was reasonable.

Was there a job or a position or other work to which the employee could have been redeployed?

The Commissioner adduced that the restructure identified three positions which provided for the possibility of redeployment in terms of skillset, remuneration and location.

According to the evidence, the following is interesting:

“I have carefully considered the position description for each of the [roles]. Having done so, it is apparent to me that, for their own purposes, both the Applicant and the Respondent overstate their respective positions. It is not the case, as the Applicant contended, that the two roles are essentially the same. They are not. But also, neither are the positions substantially different as the Respondent urged the Commission to find. The truth lies somewhere in the middle. [my emphasis].

“I was indebted to [the respondent’s advocate] for “cutting to the chase”. Finally, the “cat was out of the bag”. Finally, we could see the “elephant in the room”. However, none of these concerns about cultural/theological issues affecting more conservative congregations were expressly put to the Applicant during the interview process. She was judged against a criterion that was unspoken or couched coyly. There was an inherit unfairness in that process.

“…An example that would be the congregation…who were largely Tongan, Fijian, Niuean and Cook Island members, many of whom would have had a very conservative understanding of theology, and [the applicant] and her engagement with that congregation was able to spend more time in biblical reflection with them and find ways of helping them explore language which was appropriate for their situation.

“That means that rather than presenting challenging or confronting ideas of how the church should be, she would begin with going back to basics about…Christian discipleship, about the understanding of Jesus Christ as a leader of mission and invite people to reflect on their own biblical framework”.

The Commissioner, now having formed the view that the interview process was rigged against the applicant concluded that the applicant should have been redeployed. This resulting in the redundancy not being genuine in nature.

Having dealt with the “jurisdictional issue” of redundancy, the Commission moved onto the validity of the dismissal. The Commissioner found that there was no valid reason and concluded that the dismissal was harsh, unjust and unreasonable, because:

  • The Respondent failed to give life to its own employment policies which provide that “Employers will take all reasonable steps to assist any employee whose position will no longer exist”;
  • The Respondent did not proactively assist the Applicant to find alternative employment;
  • The open merit selection committee process disadvantaged the Applicant in her ability to properly demonstrate her ability to undertake the [alternative role];
  • The age of the Applicant;
  • The very specialised nature of the work that she was undertaking with the Respondent that was not easily transferable outside the context of the [respondent];
  • The time of the year at which time the dismissal was affected which meant that it made it more difficult for the Applicant to obtain alternative employment in her previous career as a teacher.

The Commissioner adjourned the matter:

“Therefore, as a matter of procedural fairness, the parties should be provided with an opportunity to put on further evidence and materials in relation to relevant matters concerning remedy (if any)”.

 

https://www.fwc.gov.au/documents/decisionssigned/html/2019fwc5567.htm

I don’t know about you, but I cringe when I am to defend an employer who receives an unfair dismissal notification where the applicant has been made redundant.

There were a number of interesting aspects to this decision, including:

  • It clearly spells out the criteria for a genuine redundancy, including what the employer must provide by way of evidence; and
  • This being a “jurisdictional” issue – once decided – automatically turned into an unfair dismissal decision (ie both matters were dealt with is the same determinative conference);
  • Defining the meanings of Valid, Harsh, Unjust or Unreasonable;
  • The authorities used in this decision; and finally
  • The relevant section of the Fair Work Act.

The Deputy President (His Honour) finding that the this was not a case of genuine redundancy, but a poor performing employee frustrating his supervisor to the extent that he made him redundant.

Interesting kick-off point

The Deputy President that presided over this matter decided that it was appropriate to hold a determinative conference rather than a hearing. A determinative conference is a proceeding which is conducted in private, and results in a decision. In private means that members of the public are excluded. Persons who are necessary for the Commission to perform its functions are permitted to be present. This different from a hearing, where it is a public forum (ie anyone can wander in and have a look).

Background

The applicant was employed by the respondent 4 September 2017 until 8 January 2019 and was employed by the respondent to work in its office in the position of internal salesperson, but that his position expanded during his employment to include duties additional to internal sales. The applicant was paid annual remuneration of $80,000.00 per annum. His employment was not subject to a written contract.

In August 2018, the respondent hired a casual who, within two weeks, was appointed full-time ongoing employment. This person was trained up by the applicant in the applicant’s duties.

[Ed: This, put in the correct context, is not unusual. Well-run businesses always have other people able to undertake other people’s duties when you are on (for eg) leave).]

Communication

The applicant’s supervisor was concerned with the applicant’s performance and let him know through less-than-subtle emails and conversations. o say that the language used towards the applicant was very direct, pointed but overall unhelpful. To the applicant’s credit he did not respond in kind.

For example, the supervisor send to the applicant the following email:

RE: WARNING

“Name,

We are not making any money at present and I will need to cut back on staff soon.

At present I am not seeing any value you are adding to the company. You cost me a total of $130,000 per year out of my pocket.

There are so many tasks that you have been given the opportunity to carry out effectively including internal sales, stock control, scheduling, HR, etc. and I am getting feedback from everywhere (and most importantly the customers) that you are not performing to their expectation. Steel purchasing is one exception however this only takes max 2 days out of the month for someone to do.

Steel purchasing should be only be 10% of your total time and reducing to 5% soon and then handing over the simple tasks to a junior.

I am giving you an opportunity to turn this around but I cannot take too long as I must reduce total labour cost very soon.

Don’t think product costing and steel purchasing are a full time position. Up until you joined I did both these tasks and it took up 5% of my total work time and I am happy to take them back as they are extremely simple tasks for me to carry out.

You can call me anytime to discuss.

Regards…”

The applicant responding:

“Hi Name

Firstly I have been doing things as necessary to keep the wheels turning but have not communicated that to you.

I want you to know that I am on your side and will work closely with yourself and Ivo to align my efforts with whatever is required to make the business succeed. It is my intention to have a strong working relationship with you, one that is good for the business.

I’m adaptable, not perfect, always learning and endeavour to be dependable, trustworthy and honest. This can be demonstrated in part by my zero lost time, the additional 900 plus hours I have put in outside normal hours and the generation of records that are transparent to you. There is no way I would be putting in that extra time if it wasn’t constructive.

I am also pleased to have Ivo on board and the stability that will bring to the office.

Happy to discuss. My goal is to utilise my efforts to help the business to succeed.

Regards…”

The supervisor did not respond to this email.

Business not making money and over stocked

In late December 2018, the supervisor and the applicant had a discussion about the business being overstocked. During this Conversation, the supervisor said to the applicant:

“Because of f**king you, I have to go and find millions of dollars. It’s your fault. What have you got to say? If you don’t admit it and say how sorry you are, I’m going to fire you right now!”

The applicant apologised to Mr Fitch, who responded to his apology with words to the effect “You come in and work through the Christmas break in your own time and fix it”. The applicant then said “I haven’t (sic) any time off since I started” with the supervisor responding “Well you think about it because I’m going to think about firing you if you don’t”. The applicant did not work through the Christmas break as ordered by his supervisor. [Ed: the decision is unclear whether the applicant would have been paid for “coming in his own time].

The supervisor’s interactions with the applicant deteriorated to the level that in January during a telephone conversation with the applicant he said to the applicant: “You’re a f**king muddle head”. The applicant responded “I’m not trying to argue with you. I’m trying to find a solution”. The supervisor then hung up on him.

On 8 January 2019, another employee of the respondent told the applicant that his employment was terminated effective from that afternoon. The employee was acting on instructions from the supervisor, who had made the decision to dismiss the applicant. It was alleged that this employee said to the applicant: “[the supervisor] had it in for you and just wanted to get rid of you” and then handed the applicant his final payslip, which provided for two week’s pay in lieu of notice.

The applicant later received a Separation Certificate which described the applicant as an “Operations Manager” with the reason for separation as “Shortage of work”.

The employer no longer required the employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise

[Ed: His Honour’s commentary on this topic is very good.]

The Deputy President went on to determine whether the respondent no longer required the job of the applicant to be performed by anyone because of changes in the operational requirements of respondent’s’ enterprise. His Honour commenting that:

“A job involves ‘a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employer’s organisation, to a particular employee’. Where there has been a reorganisation or redistribution of duties, the question is whether the employee has ‘any duties left to discharge’. If there is no longer any function or duty to be performed by that person, their job becomes redundant.

“An employee’s job may still be genuinely made redundant when there are aspects of the employee’s duties still being performed by other employees. The test is whether the job previously performed by the employee has survived the restructure or downsizing, not whether the duties have survived in some form. For example, an employer may redistribute all the tasks done by a particular person between several other employees, resulting in the person’s job no longer existing. [My emphasis].

“The reference to “changes in the operational requirements of the employer’s enterprise…includes circumstances where an employer restructures its business to improve efficiency, productivity, sales, revenue or some other aspect of performance. The operational circumstances of a business which may give rise to a redundancy will reside in the direct knowledge of the employer. The evidentiary onus is on the employer to provide direct evidence about the nature of the employee’s job and why it is no longer required to be performed as a result of changes in the operational requirements of the employer’s enterprise. [My emphasis].

“If a dismissal is found to be a genuine redundancy within the meaning of the Act, issues such as unfair selection procedures for redundancy are not relevant, because they go to the merits of the claim that the applicant was dismissed harshly, unjustly or unreasonably.” [My emphasis].

The respondent’s Form F3 Employer Response Form stated that the reasons for the applicant’s dismissal were as follows:

  • The applicant was in charge of the coil purchasing. This function has largely diminished over the last 12 months to be something that takes 4 hours per month to complete; and
  • The applicant was in charge of sale price costing and this function is now largely diminished and standardised.

The supervisor later stated was a downturn in work, and that there was not enough work to sustain a fourth job in the office.

Did the respondent no longer require the applicant’s job to be performed by anyone because of changes in the operational requirements of the respondents’ enterprise?

  • The applicant trained the new employee in the period leading up to his dismissal
  • The supervisor stated that the applicant was no longer required to perform coil purchasing and costing duties at the time of his dismissal. However, performing these duties only took 10 percent of the applicant’s time at work. The respondent did not forward any evidence as to how the remaining 90 percent of the applicant’s duties were redistributed amongst the other employees. His Honour deciding that:

“I accept, however, that the respondent no longer required anybody to do the applicant’s job after his dismissal – as supported by the fact the respondent now has only three employees in the office and the supervisor”.

Despite this finding, His Honour was not satisfied that Fortis no longer required Mr Hill’s job to be performed by anyone because of changes in the operational requirements:

“Instead, I find on the balance of probabilities that the real reason for [the applicant’s] dismissal was due to the supervisor’s frustration with the applicant, including in relation to his performance and attitude to work”. [My emphasis].

In summary, His Honour found:

  • The downturn in business was not supported by financial records.
  • No other employee had been affected by the downturn (eg loss of job, reduced hours).
  • Evidence given by the applicant’s “replacement” was that the respondent busy until the end of October 2018 and there being a slowdown in sales from the end of October or November 2018 was contradictory to the supervisors assertion “We are not making any money at present”. In fact, according to this employee, February starting to show some sign of picking up and that since March has been good.
  • The applicant’s rude treatment by the supervisor was supported by contemporaneous notes that included the supervisor’s comments in quotation marks.
  • The supervisor was clearly frustrated with the applicant’s attitude and work.
  • There was no reason given to the applicant for his dismissal.
  • “The fact that [the other employee] was made a permanent employee shortly before [the applicant’s] dismissal, calls into doubt the validity of the contention that a downturn in business was the reason for [the applicant’s] dismissal.
  • The separation certificate had no tick in the box next to “Redundancy” under the heading “Reason for Separation”. Instead, the box next to “Shortage of Work” is ticked as the “Reason for Separation”.
  • In relation to with the respondent’s obligation to consult with an employee to be made redundant, His Honour stated that:

“For there to be a genuine redundancy within the meaning of s 389 of the Act, [the respondent] must have complied with any obligation in an applicable modern award or enterprise agreement to consult about the redundancy.” [My emphasis].

His Honour, in finding that there was no genuine redundancy, went on to examine the dismissal against the unfair dismissal provisions of the Fair Work Act, finding:

“On the basis of the evidence adduced in these proceedings, I am not satisfied that there was any sound, defensible or well-founded reason for [the applicant’s] dismissal related to his capacity or conduct. Accordingly, there was no valid reason for [the applicant’s] dismissal…”

The applicant was not provided any valid reason(s) for his dismissal and whether he was given an opportunity to respond to any reason(s) related to his conduct.

Where an employee protected from unfair dismissal is dismissed for the reason of unsatisfactory performance, it is relevant to consider whether the employer warned the employee about the unsatisfactory performance before the dismissal.

A warning should clearly identify:

  • The areas of deficiency in the employee’s performance;
  • Any assistance or training that might be provided;
  • The standards required. A mere exhortation to improve is not sufficient; and
  • A reasonable timeframe within which the employee is required to meet such standards.

And the warning should make it clear that the employee’s employment is at risk unless the performance issue identified is addressed.

His Honour adding:

“The basis upon which a dismissal may be found to be harsh, unjust or unreasonable, notwithstanding a finding that there was a valid reason for dismissal based upon conduct in breach of employer policy was explained by the Full Bench majority in B, C and D v Australian Postal Corporation T/A Australia Post in the following terms:

“Nevertheless, it remains a bedrock principle in unfair dismissal jurisprudence of the Commission that a dismissal may be “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason” for the dismissal.” That principle reflects the approach of the High Court in Victoria v Commonwealth and is a consequence of the reality that in any given case there may be “relevant matters” that do not bear upon whether there was a “valid reason” for the dismissal but do bear upon whether the dismissal was “harsh, unjust or unreasonable”.

His Honour then considered that the applicant:

  • Was employed by [the respondent] for one year, four months and four days prior to his dismissal. This is a relatively short period of time.
  • Did not receive any written warnings.
  • Is 57 years old.
  • Intended to work for another 12 years before retiring.
  • Had not obtained alternative employment or earnt income from any other source following his dismissal.

Concluding that:

The applicant’s dismissal was:

  • Unjust because, on the evidence before me, there was no valid reason for the dismissal;
  • Unreasonable because he was not accorded procedural fairness in the process leading to his dismissal; and
  • Harsh in its consequences for his personal situation, given his age and the fact that he has not been able to obtain alternative employment following his dismissal.

Compensation

In ruling out reinstatement, His Honour determined that the applicant would have lasted another three months with the respondent and award him compensation in the sum of $20,000 (less taxation as required by law).

Authorities mentioned in this decision (references to” harsh, unjust or unreasonable” and “valid reason”

Broadly speaking, circumstances bearing upon whether a dismissal for misconduct is harsh, unjust or unreasonable fall into three broad categories:

(1) The acts or omissions that constitute the alleged misconduct on which the employer relied (together with the employee’s disciplinary history and any warnings, if relied upon by the employer at the time of dismissal) but otherwise considered in isolation from the broader context in which those acts or omissions occurred.

(2) The broader context in the workplace in which those acts or omissions occurred. [This may include such matters as a history of toleration or condonation of the misconduct by the employer or inconsistent treatment of other employees guilty of the same misconduct.]

(3) The personal or private circumstances of the employee that bear upon the substantive fairness of the dismissal. [This includes, matters such as length of service, the absence of any disciplinary history and the harshness of the consequences of dismissal for the employee and his or her dependents.]

The determination of whether there was a “valid reason” proceeds by reference to the matters in category (1) and occurs before there is a consideration of what Northrop J described as “substantive fairness” from the perspective of the employee. Matters in categories (2) and (3) are then properly brought to account in the overall consideration of the whether the dismissal was “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason”.

***

In Bostik (Australia) Pty Ltd v Gorgevski (No 1) (1992) 41 IR 452 Sheppard and Heerey JJ observed (at p 460):

“Employers can promulgate polices and give directions to employees as they see fit, but they cannot exclude the possibility that instant dismissal of an individual employee for non-compliance may, in the particular circumstances of an individual case, be harsh, unjust and unreasonable.”

“Thus, a finding that an employee has failed to comply with policies and procedures does not mean that a dismissal is not harsh, unjust or unreasonable. The Commission has consistently applied the proposition that instant dismissal of an employee for non-compliance with his or her employer’s policies may, in the particular circumstances of an individual case, be harsh, unjust and unreasonable”.

***

In Crozier v Palazzo Corporation Pty Ltd, a Full Bench of the Australian Industrial Relations Commission dealing with a similar provision of the Workplace Relations Act 1996 (Cth) stated the following:

“As a matter of logic procedural fairness would require that an employee be notified of a valid reason for the termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”

The law

Fair Work Act

Genuine redundancy

[23] Section 389 of the Act defines genuine redundancy as follows:

389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.”

“Associated entity” has the meaning given by s 50AAA of the Corporations Act 2001 (Cth).