A B v Company Z
[2024] FWC 1565
•17 JUNE 2024
| [2024] FWC 1565 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
A B
v
Company Z
(U2023/10354)
| COMMISSIONER HUNT | BRISBANE, 17 JUNE 2024 |
Application for an unfair dismissal remedy - jurisdictional objection of genuine redundancy – failure to consult as Respondent did not hold discussions in accordance with the terms of a modern award – Small Business Fair Dismissal Code not complied with on account of dismissal due to redundancy – dismissal not unfair having regard to s.387 of the Act – application dismissed.
On 22 October 2023, Ms AB made an application to the Fair Work Commission (the Commission) under s.394 of the Fair Work Act 2009 (the Act) alleging that she had been dismissed from her employment with Company Z (the Respondent) and that her dismissal was harsh, unjust and unreasonable.
The Respondent filed a Form F3 Employer Response on 9 November 2023, in which it objected to the application on the jurisdictional grounds that the dismissal was a case of genuine redundancy.
As a result, I issued directions for the filing of evidence and submissions, and the matter was listed for hearing by video using Microsoft Teams on 30 January 2024. Ms AB appeared and represented herself. The Respondent was granted permission to be represented by Ms Sally McCutcheon of Wilson Ryan Grose Lawyers, instructed by the Director of the Respondent, Mr XY.
The following people gave evidence and were cross-examined:
· Ms AB;
· Mr XY; and
· Mr VW, Electrician.
This matter is subject to the Confidentiality Order issued by me on 12 February 2024 in PR771159. The Confidentiality Order anonymises the identity of the Applicant, the Respondent and its witnesses. I made the Confidentiality Order having regard to the criminal matters before the Magistrates’ Court in respect of Ms AB and out of respect for the minor children of Ms AB and Mr XY.
Background
Ms AB and Mr XY were in a de facto relationship and have young children. The parties are in a family and criminal law dispute regarding their separation in early 2023.
Up until 7 June 2021, Ms AB was the Respondent’s sole shareholder, holding the shares as a trustee for the family trust of which she was the sole trustee, appointer and primary beneficiary. For asset protection reasons, Mr XY was appointed as the sole Director and Secretary of the Respondent.
Ms AB officially commenced employment with the Respondent on 26 August 2021, where she undertook accounting and administrative tasks. Her responsibilities predominantly entailed the following:
· general financial oversight of the business;
· administering payroll; and
· administering accounts payable and receivable.
The Respondent confirmed that the Clerks – Private Sector Award 2020 (the Award) covered Ms AB in her role.
Ms AB was informed of her dismissal on 4 October 2023 and was issued with a termination letter the same day.
Relevant Legislation
Section 394 of the Act provides:
“394 Application for unfair dismissal remedy
(1) A person who has been dismissed may apply to the FWC for an order under Division 4 granting a remedy.
Note 1: Division 4 sets out when the FWC may order a remedy for unfair dismissal.
Note 2: For application fees, see section 395.
Note 3: Part 6 1 may prevent an application being made under this Part in relation to a dismissal if an application or complaint has been made in relation to the dismissal other than under this Part.
(2) The application must be made:
(a) within 21 days after the dismissal took effect; or
(b) within such further period as the FWC allows under subsection (3).
(3) The FWC may allow a further period for the application to be made by a person under subsection (1) if the FWC is satisfied that there are exceptional circumstances, taking into account:
(a) the reason for the delay; and
(b) whether the person first became aware of the dismissal after it had taken effect; and
(c) any action taken by the person to dispute the dismissal; and
(d) prejudice to the employer (including prejudice caused by the delay); and
(e) the merits of the application; and
(f) fairness as between the person and other persons in a similar position.”
Further, ss.385 and 387 provides as follows:
“385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.”
Section 389 of the Act provides 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.”
If the Commission determines that the dismissal was a case of genuine redundancy, the jurisdictional objection will be upheld, and the application will be dismissed.
If the Commission determines that the dismissal was not a case of genuine redundancy, it will be necessary to determine if the dismissal was consistent with the Small Business Fair Dismissal Code pursuant to s.388 of the Act. It is uncontested that the Respondent employed only four employees at the time of Ms AB’s dismissal, making it a small business employing less than 15 employees.
Evidence of Mr XY
Mr XY is the sole Director of the Respondent.
On 1 April 2021, the Respondent purchased the company in which the Respondent currently trades in.
The Respondent does not have any associated entities.
Mr XY is a qualified electrician and sheet metal fabricator. He is actively involved in the Respondent’s functions, including the installation and servicing of cooling systems, electrical services and sheet metal fabrication.
Ms AB is Mr XY’s former de facto partner. She was employed by the Respondent from 26 August 2021 until 4 October 2023. She held an administrative role pursuant to the Award. Mr XY noted that there was no written employment agreement, however, her responsibilities included payroll, following up with debtors and paying accounts on behalf of the business. Ms AB worked from home during her employment.
The Respondent employed two other full-time employees; one in administration and the other is a qualified electrician in the field, working with Mr XY. The administration employee was a transferring employee when the Respondent acquired the business in 2021 and has been working there since January 2014. The electrician, Mr VW, has been employed since October 2021.
In February 2023, Ms AB and Mr XY separated. Mr XY explained the separation was difficult, and communicating effectively has been challenging. He and Ms AB have young children together, including some who are home schooled by Ms AB, and younger children who do not attend daycare.
Mr XY stated that there were issues with Ms AB not paying the accounts for the business when they were due. This led to wholesalers deciding to close their accounts with the Respondent on account of payments not being paid. Mr XY explained that it was embarrassing for him and staff to try and purchase items for work and be told their account had been closed.
Mr XY shared screenshots of text messages exchanged between himself and Ms AB on 14 July 2023 in which he told Ms AB that he would take over responsibility for paying the bills for the business as she had not been reliable in paying them.
Mr XY also held concerns that Ms AB was not paying employees on the same day of the week, which he did not consider to be acceptable.
Mr XY noted that the business is a very small one, and he needed to be able to communicate effectively with all staff. Given the hostility and lack of trust between himself and Ms AB, it became very difficult to discuss work-related issues.
From approximately July 2023, Mr XY considered that Ms AB was performing very little work for the Respondent, whilst being paid $73,000.00 per year. The Respondent had been running at a loss for some time. A number of changes made by Mr XY to reduce costs included reducing the quantity of stock held on hand and ordering parts only when required and reducing freight costs by changing suppliers.
It became apparent to Mr XY that the Respondent could not justify the cost of two full-time administration employees and the Respondent was functioning effectively with little input from Ms AB. On 4 September 2023, he sent an email to Ms AB letting her know that he was considering making her position redundant and asked for her feedback in relation to that proposal. The email is extracted below:
“Dear [Ms AB],
Re: Your employment
As you are aware, the business is currently operating at a loss and is still building its client base. I am looking at ways to reduce our operational costs to ensure the business remains viable as it grows.
One option I am considering is to make the administration and accounting position redundant. The effect of this will be that your position will no longer exist. The tasks that you currently perform would be distributed between other staff. I have not identified any alternative roles that could be offered to you because we have no vacancies and are looking to reduce costs wherever possible.
The purpose of this letter is to seek your feedback regarding the proposed action.
I will take onboard your feedback and then make a final decision. As soon as the final decision is made I will advise you.
Can you please provide any feedback to me via email by 18/09/2023.
If you have any questions or queries please do not hesitate to contact me.
Yours faithfully,
[Mr XY]
Director”
Ms AB responded by email the same day, reproduced below:
“Dear [Mr XY],
I hope this email finds you well. I’m writing in response to your email and also reiterating previous other correspondence regarding my position at [Company Z]. Once again, I would like to express my strong interest in resuming my duties in my role as Administration and Accounting. As of late my role has diminished to the point where I’ve been absolutely stripped and am no longer allowed to fulfil my duties in which I’ve done for the last couple of years. As you would have noticed with my role diminished that the company has suffered, and with a track record of success and a vested interest as a shareholder, I am enthusiastic about the opportunity to contribute to the company’s growth and prosperity once again.
Having previously held the Administration and Accounting position at [Company Z] for the last couple of years, I am proud of the work I accomplished during my time. Notably, I am pleased to mention that I never received any complaints regarding my performance. My dedication to maintaining efficient operations and accurate financial records allowed me to excel in this role.
As a shareholder, my commitment to the success of [Company Z] extends beyond that of a regular employee. I am genuinely invested in the company’s achievements and am eager to see it thrive. This commitment, coupled with my familiarity with the company’s operations, uniquely positions me to contribute in making it a success once again.
I am aligned with the company’s values, vision, and mission, and I am excited to explore how I can leverage my previous experiences to drive positive outcomes. I believe that my skills and dedication can have a meaningful impact on the team and contribute to the company’s growth trajectory.
I kindly request the opportunity to discuss the potential of my return, including details about role expectations, and any updates that have occurred since the diminishment of my duties in the role. I am open to a flexible transition plan that ensures a seamless reintegration into the team.
Thank you for considering my proposal to resume my duties in the role as Administration and Accounting. I look forward to the possibility of recommencing my duties and contributing to its continued success. Please let me know your availability for a conversation, and I would be glad to arrange a suitable time.
Warm regards
Regards
[Ms AB]”
On 11 September 2023, Ms AB was arrested for allegedly placing Apple AirTag GPS trackers in Mr XY’s work ute and personal vehicle, and for allegedly assaulting Mr XY and his father.
On 12 September 2023, bail conditions were imposed on Ms AB which prevented her from communicating with Mr XY, other than in relation to their children, and prevented her from approaching within 50 metres of the workplace or Mr XY.
The bail conditions, admitted into evidence, make it clear that the date of offence of the alleged assaults was 27 June 2023, and the date of offence of the alleged unlawful stalking/intimidation was the period between 1 August 2023 and 4 September 2023. Ms AB was ordered to appear at the Magistrates’ Court in early October 2023, later adjourned.
Mr XY stated that the communication between himself and Ms AB was already strained as a result of the breakdown of their personal relationship and the ongoing family law dispute between them. The bail conditions imposed on Ms AB made any communication in relation to work matters impossible.
On 4 October 2023, Mr XY sent the following email to Ms AB, informing her of the Respondent’s decision to make her role redundant and the termination of her employment:
“Dear [Ms AB],
Re: Your employment
I confirm that in response to financial pressures and the need to streamline our operational costs, I am implementing changes to our administration and accounting team. As a consequence of those changes, I have made the decision to make your position redundant, effective immediately. Unfortunately, this means your employment with [Company Z] will be terminated.
I will pay to you 262.1964 hours of your outstanding annual leave.
Thank you for your contribution to the business.
Yours sincerely,
[Mr XY]
Director”
Ms AB’s position has not been replaced. Mr XY is now performing the payroll duties for himself and two other employees. He stated that it doesn’t take very long. Mr XY also pays the accounts for the business. The other administrative employee has taken on the task of chasing up debts and ensuring the Respondent is paid by customers.
The Respondent had been advertising for field workers or trade assistants for some time, including at the time that Ms AB’s employment was terminated. Mr XY explained that ideally, he wanted to employ a qualified electrician and/or a sheet metal fabricator. If he couldn’t find anyone qualified, he was prepared to take on an unskilled person who was willing to start an apprenticeship with him.
Mr XY stated that the available role required working in the field. Ms AB was not suited for the role because:
· She is not trade qualified. Due to this, Ms AB would be required to work closely with Mr XY and be supervised by him. This would not be possible due to Ms AB’s bail conditions, but even if circumstances changed, he did not consider their ability to communicate following the breakdown of their personal relationship would be sufficient to work closely together in that way. In his view, it was not reasonable or in the best interests of the business or the other staff for Ms AB to be working in close proximity to him; and
· As referred to above, at the time Mr XY was making the decision, Ms AB was homeschooling some of their children and has all of the young children with her during the week. Ms AB had been working from home at times that suited her, and it would not be possible if employed as a field worker or apprentice.
In Mr XY’s view, the Respondent does not require further administrative assistance and no other suitable roles were available to offer to Ms AB.
Mr XY stated that he was no longer looking to take on another tradesperson due to the Respondent’s lack of funds. At this stage he is not planning to revisit the idea in the next financial year.
Evidence of Ms AB
Ms AB stated that she completed Year 12 but did not hold any other academic, trade or professional qualifications. She did work as a trade’s assistant at an electrical company for approximately three years, commencing in 2013.
Ms AB confirmed that the Respondent owns and operates an air conditioning installation and repair and sheet metal fabrication business which was purchased on 1 April 2021. She commenced working for the Respondent immediately but was not ‘put on the books’ or paid any remuneration or superannuation by the Respondent until 26 August 2021.
Her duties involved undertaking accounting administrative tasks, including general financial oversight of the business, administrating payroll, attending to supplier payments and chasing debtors.
Ms AB noted that she was dismissed from her employment on 4 October 2023. Her salary was $69,160 per annum plus superannuation.
Prior to her dismissal, Ms AB said she had never received any formal or informal warnings in relation to her capacity or conduct as an employee of the Respondent.
In relation to the Respondent business background, Ms AB stated the following:
· Mr XY purchased the Respondent business on 1 April 2021;
· From incorporation until 7 June 2021, Ms AB was the Respondent’s sole shareholder in her capacity as trustee for the family trust between her and Mr XY. For asset protection reasons, Mr XY was the Respondent’s sole director and secretary;
· The trust was constituted under a deed of settlement dated 12 July 2019. Under the terms of the trust deed, Ms AB was the sole trustee, sole appointer and sole primary beneficiary of the trust;
· On or about 7 June 2021, Ms AB attended a meeting with Mr XY and the Respondent’s accountant. During the course of that meeting, Ms AB was informed by the accountant that the existing structure of the trust was ‘dodgy’ and ought to be rectified by causing Mr XY to be appointed as a joint trustee and appointed as a second primary beneficiary;
· At the time of Ms AB’s dismissal, the Respondent had a total of four staff members including herself and Mr XY. The other two staff members were an administration employee and Mr VW who was a qualified electrician working in the field.
Ms AB considered that the relationship breakdown between the parties is the root cause of Mr XY’s resentment towards her and the true motivating consideration for the termination of her employment with the Respondent. She considered that the dismissal has been ‘dressed up’ to look like a redundancy.
At the time of the dismissal, Ms AB had sole custody of the young children and they were being supported by her wage. She considered that Mr XY took the separation badly and that Mr XY was unable to separate the issues arising from their former domestic relationship and their ongoing business relationship.
Ms AB noted that she is subject to bail conditions which relevantly prohibits her from approaching within 50 metres of the Respondent’s place of business and from contacting or attempting to contact or asking someone else other than a lawyer to contact Mr XY except in certain specified circumstances. The relevant bail conditions were altered by the relevant Court to allow Ms AB to participate in these proceedings and cross-examine Mr XY.
Ms AB stated that she had disagreements with Mr XY about his use of the Respondent’s funds to cover personal expenses, to which she has an interest as a shareholder of the Respondent. She considered that Mr XY resented her financial oversight over the Respondent’s business and her questioning of whether expenses were legitimate or not.
Ms AB considered that Mr XY’s assertion that the Respondent was operating at a loss was untrue and was intended as merely a self-serving statement to justify characterising her dismissal as a redundancy. Whilst employed, Ms AB had complete access to the Respondent’s financial records. Other than some ad hoc efforts to look for cheaper freight options, Mr XY did not engage in any cost-cutting exercises. She was of the view that the Respondent achieved a net profit of approximately $40,000 as at 30 June 2022.
She does not believe that the Respondent was operating at a loss as of 4 September 2023. Ms AB detailed a list of expenses which she considered were personal expenses and not the Respondent’s operating expenses.
Ms AB noted that Mr XY appeared to have recently been driving a new vehicle. She does not consider the Respondent would have been able to afford the purchase of a new vehicle if it had been operating a trading loss as claimed by Mr XY in September 2023.
With respect to the reduced work being undertaken by Ms AB leading up to the letter she received on 4 September 2023, she stated that she was always ready, willing and able to perform work for the Respondent, however had been directed by Mr XY not to perform certain duties because he wished to perform them himself.
With respect to redeployment opportunities, Ms AB considered that she should have been offered the trades assistant or apprentice role. She noted that neither of these vacancies were drawn to her attention in the letter issued to her on 4 September 2023.
Ms AB contended that if she had been informed of the relevant vacancies, she would have:
· highlighted her suitability for and willingness to except either of the available positions, noting that she required some flexibility with the working days and hours she would be required to work;
· noted that she has a good working relationship with all of the Respondents staff members, except Mr XY;
· noted that she could have worked under the supervision of Mr VW rather than Mr XY; and
· noted that it might have been possible for her to seek a variation of her bail conditions to enable her to work directly under Mr XY’s own supervision, if necessary, particularly if he was prepared to support any such application.
In relation to a lack of consultation, Ms AB considered it was inadequate, and merely an exchange of correspondence between her and Mr XY. She noted that in her response she specifically requested an opportunity to discuss her potential return to full duties. This was met with the termination notice.
Following receipt of Mr XY’s evidence, Ms AB filed a supplementary witness statement. Ms AB’s evidence went largely to her suggestion that the Respondent was profitable in the months of July, August and September 2023, and there was an insufficient reason to dismiss her on account of the Respondent’s financial record.
Where the Respondent had submitted that Ms AB had not attempted to properly mitigate her loss, Ms AB noted that the homeschooling of her eldest children had been in place for approximately one year prior to when she was dismissed, and she did not have any plans to uproot her and her children in order to look for alternative work.
Evidence given during the Hearing
In evidence given during the Hearing, Ms AB agreed that the work being performed by her from mid-2023 was at reduced hours. She agrees that the duties she had been performing have been distributed between Mr XY and the administration employee since her dismissal.
Ms AB stated that now she shares custody of the children with Mr XY, she is able to work in a night-time retail role two-three times per fortnight. She can only work when she is not caring for her children, including home-schooling.
Evidence of Mr XY in reply
In response to Ms AB’s assertion that the Respondent was profitable, Mr XY provided a copy of the profit and loss statement for the Respondent for the year ending 30 June 2023 showing a net loss of approximately $92,000.
Mr XY provided a copy of the profit and loss statements for July, August and September 2023 noting that the income each month varies markedly, making it difficult to budget for the operational expenses.
Mr XY stated that in early July 2023, the sheet metal worker employed by the Respondent resigned to go and work for a mine employer. Shortly afterwards, the trades assistant also resigned in order to move to Townsville. The trades assistant worked for all of August 2023, did not work in September 2023 and then returned to work for the first two weeks in October 2023 before finishing up.
The loss of the sheet metal worker and trades assistant meant that the Respondent’s capacity to take on work was reduced. There was a reduction in the volume of administrative work as a result of losing two staff members, but more significantly was the impact on the earning capacity of the business.
It was in this context that Mr XY was considering what further cost saving measures might be applied to assist in ensuring the financial viability of the business and one option was to consider making Ms AB’s role redundant.
Mr XY denied using the Respondent’s money to fund personal expenses. He noted that his parents provided a $35,000 loan to the business in 2021, and now whenever his parents request the Respondent pay for an item, the Respondent does so, and the amount is reduced from the loan payable.
Mr XY denied that the redundancy and subsequent termination of Ms AB’s employment was motivated by ulterior motives or was because of concerns with Ms AB’s work performance. He did, however, have concerns with respect to her performance, which he had attempted to address with her, but he did not rely on these concerns as a reason for the dismissal.
Mr XY denied that he did not adequately consult with Ms AB prior to making a final decision in relation to making her position redundant. He noted that she had replied to his 4 September 2023 email that same day. He noted that she did not respond to any radio advertisements seeking trade electricians or sheet metal workers. Further, he considered that due to the bail conditions in place, he was not able to hold discussions with her.
Mr XY disputed that Ms AB could have been redeployed as a trade assistant or apprentice under the supervision of Mr VW, who is employed by the Respondent as an electrician. There are only two trade qualified staff working in the business, Mr VW and himself, and they work closely together. He estimated that they spend around half of their time working together on the same job. It would not be possible for Ms AB to be working with Mr VW and not also be required to engage with him.
Furthermore, some of the work the business performs is done at the premises of the Respondent in the workshop. Mr XY estimated that Mr VW would spend approximately 10 hours per week working at the Respondent’s premises. Ms AB’s bail conditions prevent her from attending the workplace at all.
Mr XY noted that Ms AB’s evidence is that she has maintained a good working relationship with the two-remaining staff of the Respondent aside from him. This is disputed, and reliance is placed on the evidence given by Mr VW in these proceedings.
Evidence given during the Hearing
In evidence given during the Hearing, Mr XY stated that the Respondent had paid an arrangement in place for radio advertisements to play from October 2022 until September 2023. In August 2023 he cancelled the advertisements and was given September 2023 advertisements at no charge.
Evidence of Mr VW
Mr VW is a qualified electrician and has worked for the Respondent since October 2021.
He has known both Ms AB and Mr XY since 2014. He had not read Ms AB’s statement but had been informed that she was giving evidence that instead of being made redundant, she could have become an apprentice, and he could have supervised her.
Mr VW stated that if he had been asked to take on Ms AB as an apprentice, he would not have agreed. During 2023, he discovered a tracker in Mr XY’s work vehicle. It was regularly driven by Mr XY but he was driving it one day and received a notification on his mobile phone that there was an Apple Air Tag nearby. He reported this to Mr XY, and understood it was reported to the Police. He has been made aware that Ms AB has been charged with stalking Mr XY, and despite the matter not having yet been determined by the Court, this makes him reluctant to work with her.
He is aware of the relationship breakdown between Mr XY and Ms AB, and he stated that this would make him very uncomfortable to supervise Ms AB while reporting to Mr XY.
He has also been made aware of an order not permitting Ms AB to come to the workplace or near Mr XY. He did not understand how Ms AB working as an apprentice could be satisfied as he spends about 25% of his time working at the workshop where Ms AB was prohibited to attend. He also spends approximately 50% to 60% of his time working on jobs with Mr XY.
Consideration
I turn now to a consideration of the criteria set out in s.389 of the Act. For Ms AB’s dismissal to be a case of genuine redundancy, the Respondent must meet each of the criteria set out in s.389 of the Act.
s.389(1)(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
The test to be considered where there has been a reorganisation or redistribution of duties is whether the employee has any duties left to discharge.[1]
Where there is no longer any function or duty to be performed by an employee, his or her position becomes redundant even where aspects of that employee’s duties are still being performed by other employees.[2]
The decision in Kekeris v A. Hartrodt Australia Pty Ltd T/A a.hartrodt[3] considered this point and established the test of whether the previous job has survived the restructure or downsizing, rather than a question as to whether the duties have survived in some form. The Full Bench in Ulan Coal Mines Limited v Howarth and others[4] considered and applied the decision of Ryan J in Jones v Department of Energy and Minerals,[5] and said:
“[17] It is noted that the reference in the statutory expression is to a person’s ‘job’ no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals (1995) 60 IR 304 a job involves ‘a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees’ organisation, to a particular employee’ (at p. 308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational 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. In these circumstances, it was said that:
‘What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, 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… (at p.308)’
This does not mean that if any aspect of the employee’s duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation(2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the ‘job’ of that employee no longer exists.”
Ms AB largely addresses her application as to whether it was appropriate or necessary for Mr XY to have made her position redundant, or whether there was an imperative financial reason to do so. That is not the test before the Commission. The Commission is not tasked with determining if the decision made by the Respondent was a sensible one or a financially prudent one.
On the evidence before the Commission, Mr XY determined that the duties that Ms AB had been performing could be performed by himself with some assistance of the administration employee. That constitutes a change in the operational requirements of the business and resulted in the Respondent determining that it no longer required Ms AB’s job to be performed by anyone.
The criterion in s.389(1)(a) of the Act is satisfied.
s.389(1)(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
The obligation on an employer to consult about redundancy only arises when a modern award or enterprise agreement applies to an employee and that modern award or enterprise agreement contains requirements to consult about redundancy.
It is not disputed that Ms AB’s employment was covered by the Award.
Whether the cessation of an employee from a small group of employees constitutes significant effects on employees for the purposes of clause 38 of the Award, including major change, and therefore an obligation to consult in accordance with the provisions of the Award must be determined.
In Port Kembla Coal Terminal Ltd v CFMEU (Port Kembla),[6] Jessup J observed that “the forced redundancy of three employees out of a workforce of about 98 did not of itself constitute a major change within the meaning of cl 7.1.”[7] However, as White J noted in Port Kembla, a simple comparison between the number of employees to be dismissed and the number of employees in the workforce overall is not conclusive of whether there are major changes.[8] Much depends upon the circumstances of a case.
Paragraph 1548 of the Fair Work Bill 2008 (Cth) Explanatory Memorandum to the Act sets out as follows:
“The following are possible examples of a change in the operational requirements of an enterprise: a machine is now available to do the job performed by the employee; the employer’s business is experiencing a downturn and therefore the employer only needs three people to do a particular task instead of five; or the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.”
The consultation clause within the Award requires that there be discussion, and this did not occur, despite Ms AB requesting in her correspondence on 4 September 2023 that there be discussions regarding her role and the proposed redundancy.
It is noted that approximately one week later, Ms AB was arrested and bail conditions prevented her from having any contact with Mr XY, other than in respect of their children. This did not prevent Mr XY holding discussions with Ms AB in the period 5 September 2023 up until when she was arrested and the bail conditions put in place. A request to discuss cannot be ignored.
Because of the Respondent’s failure to hold any discussion with Ms AB, specifically when she requested discussions be held, I am not satisfied that the Respondent complied with its obligation within the Award covering Ms AB’s employment to consult about the redundancy. I note that the Respondent did comply with clause 38.2 of the Award by giving in writing to Ms AB information about the proposed redundancy.
s.389(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.
Whether redeployment of an employee is considered reasonable will depend on the circumstances that exist at the time of the dismissal.[9]
In Hallam v Sodexo Remotes Site Australia Pty Ltd,[10] a Full Bench of the Commission stated the following:
“…Subsection 389(2) states that 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. Subsection 389(2) places no obligation on an employer to redeploy, or to do everything possible to achieve a redeployment outcome. The exception is applied at the time of dismissal. It operates so that a dismissal that would otherwise be a case of genuine redundancy under subsection 389(1) will not be so if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or with an enterprise of an associated entity of the employer.”
As the Full Bench observed in TAFE NSW v Pykett,[11] to show that it would have been reasonable for the Respondent to redeploy Ms AB, it is not necessary to identify a particular job or position in which Ms AB could have been redeployed. However, the Commission must be satisfied on the balance of probabilities, and based on the evidence, that there was a “job or a position or other work” to which it would have been reasonable to redeploy Ms AB.
Ms AB has submitted that she could have been considered for redeployment into the role of an apprentice, being supervised by Mr VW. I am satisfied that there was a relevant role available in September 2023 and early October 2023.
I conclude that it would not have been suitable for Ms AB to be redeployed into the role of apprentice, primarily because of the bail restrictions in place. Ms AB was prevented from working with Mr XY. On the evidence before the Commission, which I accept, any supervision of Ms AB would have involved, to a significant degree, working in the vicinity of Mr XY.
Further, Ms AB has submitted in reply evidence that she had no intention of altering the home-schooling arrangements for her school-aged children, and other children under school age are cared for at home by her. It would not have been possible for her to continue the arrangement she has chosen and work in the field for the Respondent.
On the evidence before the Commission, I am satisfied that it would not have been reasonable in all the circumstances for Ms AB to have been redeployed within the Respondent’s business. There are no associated entities.
Conclusion on the issue of genuine redundancy
The jurisdictional objection that the dismissal was a case of genuine redundancy requires two affirmative elements and one negatory element which must be satisfied, so as to establish whether a dismissal was or was not a case of genuine redundancy.
For all the reasons set out above, I am not satisfied that Ms AB’s dismissal was a case of genuine redundancy because:
1. While the Respondent no longer required Ms AB’s job to be performed by anyone because of changes in the operational requirements of its enterprise; and
2. It would not have been reasonable in all the circumstances for Ms AB to be redeployed within the Respondent’s enterprise and there is no associated entity;
the Respondent did not comply with all of its obligations to consult with Ms AB pursuant to the Award she was covered by.
Accordingly, the jurisdictional objection of genuine redundancy is dismissed.
Small Business Fair Dismissal Code
Section 388 of the Act provides:
“388 The Small Business Fair Dismissal Code
(1)The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.
(2)A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:
(3)
(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and
(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.”
It was not in dispute, and I find, that the Respondent is a small business employer within the meaning of s.23 of the Act. It is necessary to determine whether the Respondent is able to rely on the provisions of the Small Business Fair Dismissal Code (the Code) as an alternative basis for contending that Ms AB was not unfairly dismissed, and it is therefore necessary to consider whether Ms AB’s dismissal was consistent with the Code. The Code provides as follows:
“Small Business Fair Dismissal Code
Commencement
The Small Business Fair Dismissal Code comes into operation on 1 July 2009.
Summary Dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other Dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
Procedural Matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”
The effect of s.385(d) of the Act is that when a dismissal is consistent with the Code, it is not an unfair dismissal, and the application must then be dismissed. If the dismissal is not consistent with the Code, the Commission must then consider whether the dismissal is unfair on the basis of the general criteria in s.387 of the Act. The Code deals with “summary dismissal” on the ground of serious misconduct and “other dismissal” on the basis of the employee’s conduct or capacity to do the job.
In the decision of Groszek v Toyvision International Pty Ltd[2015] FWC 697, Deputy President Asbury (as she was then) summarised the difficulties of the application of the Code where the employer dismissed an employee in a redundancy-type scenario:
“[34] In circumstances where a small business employer dismisses an employee on the basis of the employee’s conduct or capacity, the small business employer must give the employee a reason why he or she is at risk of dismissal, and that reason must be a valid reason based on the employee’s conduct or capacity to do the job.
[35] The terms of the Small Business Fair Dismissal Code make it clear that to effect a dismissal that is consistent with the Code, the small business employer must nominate the reason for the dismissal in advance of the dismissal and give that reason to the employee. The employee must be warned verbally or preferably in writing, that he or she is at risk of being dismissed if there is no improvement, and be given an opportunity to respond to the warning and rectify the problem.
[36] In short, the small business employer seeking to establish consistency with Code is stuck with the reason given to the employee. Validity and the other procedural requirements are assessed in the context of the reason given by the employer. The employer cannot rely on a reason not given to the employee at the point the dismissal is put in train. This can be contrasted with the provisions in s. 387(a) where the employer can rely on facts in existence at the time of the dismissal to establish a valid reason, notwithstanding that that reason was not the reason given to the employee at the time the dismissal was effected.
[37] In Iannello v Motor Solutions Australia Pty Ltd, Vice President Watson held that the Small Business Fair Dismissal Code does not deal with termination on the ground of redundancy. In the present case, the reason given for Ms Grozsek’s dismissal was that her position was no longer required. The dismissal letter refers to reduced sales but does not indicate that this reduction is because of Ms Grozsek’s conduct or capacity to do the job. There is also a reference to higher freight costs as a reason for ceasing operations in Queensland.
[38] Toyvision has not lead any evidence of specific compliance with the Code; there is no evidence that Toyvision was aware that the Code existed at the time of the dismissal. The evidence given on behalf of Toyvision about compliance with the Code is also essentially the same evidence the Company relies upon to establish that the dismissal was a case of genuine redundancy. The Respondent’s evidence is that they held several discussions with the Applicant over an extended period about the level of sales being achieved in Queensland. On the one hand the Respondent relies upon these discussions as consultation with Ms Groszek in relation to impending redundancy of her position, and on the other, as evidence of discussions in relation to unsatisfactory performance.
[39] On balance I am not satisfied that the reason for Ms Grozsek’s dismissal related to her conduct or capacity and accordingly, the Small Business Fair Dismissal Code does not apply to the dismissal. I dismiss the objection of Toyvision to Ms Grozsek’s dismissal on this ground and turn to consideration of whether the dismissal was unfair by reference to the criteria in s. 387 of the Act.”
In Hall v The Whole Box ‘n Dice Pty Ltd[2018] FWC 3521, Commissioner Cambridge stated the following:
“[30] As can be seen from the text of the Code, it endeavours to codify particular dismissal circumstances involving an employee’s conduct or capacity to perform the job for which they are engaged. The Code is silent in respect to circumstances involving a dismissal which was made because of the employer’s financial circumstances and which was not connected with the employee’s conduct, capacity, or performance of their work.
[31] In this instance, there was no suggestion that the dismissal of the applicant was connected with any unsatisfactory conduct, capacity or performance of his work. The dismissal of the applicant was made entirely because of the financial circumstances of the business operation of the employer, and the identification of a redistribution of the work that the applicant performed.
[32] Consequently, although the respondent employer is a small business employer as defined in the Act, the Code has no particular relevant operation in regards to the circumstances of the dismissal of the applicant. However, in a general sense, the procedural requirements that can be identified in various parts of the text of the Code, reflect a broad requirement to provide employees with a process that ensures that any dismissal includes reasonable consultation, and an opportunity for discussion prior to finalisation and implementation of the dismissal.”
In the matter before me, the Respondent did not dismiss Ms AB for reasons of serious misconduct or unsatisfactory conduct, capacity or performance of her work. The dismissal was to reduce the costs of labour within a very small business, and for Mr XY to perform more administration work that had been performed by Ms AB.
Given the reason for the dismissal has no application relevant to the Code, I cannot find that the dismissal was consistent with the Code.
Was the dismissal harsh, unjust or unreasonable?
A dismissal may be unfair, when examining if it is ‘harsh, unjust or unreasonable’ by having regard to the following reasoning of McHugh and Gummow JJ in Byrne v Australian Airlines Ltd:[12]
“It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”
I am duty-bound to consider each of the criteria set out in s.387 of the Act in determining this matter.[13]
s.387(a) - whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)
When considering whether there is a valid reason for termination, the decision of North J in Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373 provides guidance as to what the Commission must consider:
“In its context in s.170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, common-sense way to ensure that the employer and employee are treated fairly.”
However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.[14]
I am satisfied that the Respondent no longer required Ms AB’s job to be performed by anyone because of changes in the operational requirements of the enterprise. The reason for Ms AB’s dismissal was not related to her capacity or conduct.[15] I am not satisfied that the Respondent ‘dressed up’ the dismissal as a redundancy on account of the relationship breakdown. As such, this is a neutral factor with respect to whether Ms AB’s dismissal was harsh, unjust or unreasonable.
s.387(b) - Whether the person was notified of that reason
Ms AB was notified in the letter dated 4 September 2023 that the Respondent was considering making her position redundant. Her feedback was sought. It was later communicated to her on 4 October 2023 that the reason for the dismissal was her role being made redundant.
s.387(c) - Whether there was an opportunity to respond to any reason related to the capacity or conduct of the person
This criterion deals with procedural fairness in respect of a reason for dismissal related to an employee’s capacity or conduct. Again, taking the Respondent’s reason for the dismissal was redundancy, this is a neutral factor.
s.387(d) - Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to the dismissal
Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, an employer should not unreasonably refuse that person being present.
There is no positive obligation on an employer to offer an employee the opportunity to have a support person. The Explanatory Memorandum, Fair Work Bill 2008 (Cth) at [1542] states the following:
“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.”
In the circumstances, I find that the Respondent did not unreasonably refuse to allow Ms AB to have a support person present when she was informed of the dismissal.
s.387(e) - Was there a warning of unsatisfactory work performance before dismissal
Ms AB’s dismissal did not relate to unsatisfactory performance. This is a neutral factor.
s.387(f) - Whether the respondent’s size impacted on the procedures followed and s.387(g) - Whether the absence of a dedicated human resource management specialist impacted on the procedures followed
The Respondent is a very small business. The Respondent did not have any internal human resource management expertise. I consider that the size of the business and its lack of internal expertise impacted on the procedures followed.
s.387(h) – Other matters
I am satisfied that the Respondent had a valid reason to dismiss Ms AB having regard to its operational requirements. It is not required to demonstrate to Ms AB’s satisfaction that she ought to have continued to be employed because in some months, income may have exceeded expenditure. As a Director of the Respondent, Mr XY has an obligation to ensure the business is solvent. He decided in early October 2023 to remove Ms AB’s role and remove a substantial cost from the business. On Ms AB’s evidence, she had not been working many hours in any event.
The valid reason in respect of the Respondent’s operational requirements weighs in favour of a finding that the dismissal was not harsh, unjust or unreasonable.
If further discussions could have occurred to determine if Ms AB could work reduced hours or consider being employed as an apprentice, on the evidence before me, I consider that it would have been reasonably and lawfully refused.
Determining that Ms AB would not have been redeployed, even if further discussions had been held, weighs in favour of a finding that the dismissal was not harsh, unjust or unreasonable.
The bail conditions in place at the time of the dismissal, preventing Ms AB from having contact with Mr XY, other than in respect of care for their children, when considering if Ms AB could have performed work other than the role in which she was employed, weighs in favour of a finding that the dismissal was not harsh, unjust or unreasonable.
The consultation period was a lengthy one. Whilst the Respondent did not hold further discussions with Ms AB, in my view in breach of the Award, I consider this failure was mitigated by the lengthy period between the notification of potential redundancy and the final decision on 4 October 2023 to make her position redundant. Ms AB was paid approximately $6,000 in this period and it seems, not required to perform any duties, or very minimal duties.
The fact that the dismissal was conducted in breach of the consultation provisions of the Award weighs in favour of a finding that the dismissal was harsh, unjust or unreasonable.
Conclusion
As previously stipulated, to establish whether a dismissal was a case of genuine redundancy, it requires two affirmative elements and one negatory element to be satisfied.
I have determined that the second affirmative element was not satisfied in this case. Specifically, the Respondent has not complied with an obligation in the Award that applied to Ms AB’s employment to have discussions about her redundancy. Therefore, the dismissal did not satisfy the meaning of genuine redundancy as contained within s.389(1)(b) of the Act. Consequently, the jurisdictional objection has been determined and rejected.
Further, I have found that given the Respondent did not dismiss Ms AB for reasons of serious misconduct or unsatisfactory conduct, capacity or performance of her work, the dismissal has no application relevant to the Code, and I cannot find that the dismissal was consistent with the Code
It is then necessary to turn to the substantive merits of the application. Having appropriate regard for the various factors contained within s.387 of the Act, I determine as follows.
I have determined that the dismissal was not related to Ms AB’s capacity or conduct and the s.387(a) consideration is a neutral one.
Relevant to the consideration at s.387(b), I am satisfied that Ms AB was informed of the reason for the dismissal.
Relevant to the consideration at s.387(c), the criterion allowing Ms AB to respond relates to capacity or conduct which is not a consideration in this matter.
Relevant to the consideration at s.387(d), there was no unreasonable refusal by the Respondent to allow Ms AB a support person because a meeting was not held.
Relevant to the consideration at s.387(e), the reason for the dismissal was redundancy, not performance.
Relevant to the considerations at s.387(f) and (g), I consider that the size of the business and its lack of internal expertise impacted on the procedures followed.
Relevant to the consideration at s.387(h), I am satisfied that the Respondent had a valid reason to dismiss Ms AB having regard to its operational requirements. I am satisfied that Ms AB could not be redeployed. If discussions had occurred, I consider that the outcome would have been the same; Ms AB’s employment would have ended due to redundancy. The consultation period was lengthy noting that discussions did not occur as required by the Award.
I determine that Ms AB’s dismissal was not harsh, unjust or unreasonable. Accordingly, I find that the dismissal was not unfair. The application is dismissed.
COMMISSIONER
Appearances:
Ms AB on her own behalf
S McCutcheon of Wilson Ryan Grose Lawyers, with permission, with Mr XY of the Respondent
Hearing details:
Brisbane.
Video by Microsoft Teams.
2024.
30 January.
[1] Jones v Department of Energy and Minerals [1995] IRCA 292 (16 June 1995), [(1995) 60 IR 304 at p.308 (Ryan J)]; cited with approval in Ulan Coal Mines Limited v Howarth and others [2010] FWAFB 3488 (Boulton J, Drake SDP, McKenna C, 10 May 2010) at para. 17, [(2010) 196 IR 32].
[2] Ibid.
[3] [2010] FWA 674.
[4] [2010] FWAFB 3488
[5] (1995) 60 IR 304.
[6] [2016] FCAFC 99
[7] Ibid at [186]. See also Australian Nursing and Midwifery Federation v Bupa Aged Care Australia Pty Ltd [2017] FCA 1246at [22]-[31]
[8] Ibid at [499].
[9] Ulan Coal Mines Limited v Honeysett (2010) 199 IR 363 at [28].
[10] [2017] FWCFB 6847 at [20].
[11] [2014] FWCFB 714, (2014) 240 IR 130 at [36].
[12] (1995) 185 CLR 410, [465].
[13] Sayer v Melsteel[2011] FWAFB 7498 at [20].
[14] Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681, 685.
[15] UES (Int’L) Pty Ltd v Harvey[2012] FWAFB 5241 at [42].
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