Adrian Forster v Hanson Precast Pty Ltd

[2010] FWA 5393

[2010] FWA 5393

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Adrian Forster
v
Hanson Precast Pty Ltd
(U2009/13091)

SENIOR DEPUTY PRESIDENT HARRISON SYDNEY, 23 JULY 2010

Application for unfair dismissal remedy - whether the dismissal was a case of genuine redundancy.

[1] This decision concerns an application made under s.394 of the Fair Work Act 2009 (the Act). It arises out of the termination Mr Forster’s employment with Hanson Precast Pty Ltd (Hanson or the Employer). Hanson objects to the application on the ground that the termination was a case of genuine redundancy as that term is defined in s.389 of the Act. The Applicant asserts, consistent with s.385 of the Act, that his dismissal was unfair and not a case of genuine redundancy.

[2] The Applicant was represented by Mr Crawford and Mr Murray, both from The Australian Workers’ Union (AWU). Hanson was represented by Mr Parsons and Ms Parker who are both employees of Hanson. The matter proceeded by way of a hearing before me with each party requesting that be the manner in which I should deal with the issues in contention.

[3] Evidence was given by the Applicant and Mr Murray, who is an AWU union organiser. For the Employer, evidence was given by Mr Parsons, Manager Hanson Precast, Mr Arciuli, Hollowcore Factory Manager and Mr Vavilov, Operations Manager, Mulgrave.

[4] Section 389 of the Act is in the following terms:

“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.”

[5] If the termination of the Applicant’s employment was a case of genuine redundancy then his s.394 application can proceed no further. This is the consideration I deal with in this decision. I now record my findings based on the evidence before me.

My findings on the evidence

[6] I should first note that at commencement of the hearing Mr Crawford indicated that the Applicant accepted there had been “financial considerations and economic issues” at Hanson such as to justify redundancies in October 2009. 1 However, the Applicant submits his job still existed and the Employer required it to be performed and, accordingly, the requirements of s.389(1)(a) are not established.

[7] In December 2004 and October 2005 Hanson acquired two businesses which produced preformed concrete products for the building and construction industries. It operates out of three locations, Lidcombe, Riverstone and Mulgrave. The Lidcombe and Riverstone operations produce wetcast panels and Mulgrave produces wetcast and hollowcore panels. Each location also produces specialised products.

[8] The Hanson Precast Pty Ltd (Mulgrave) AWU Union Collective Agreement 2008-2010 (the Agreement) applied to all production employees (of which the Applicant was one ) during the period relevant to this decision. I refer to its terms later.

[9] The Applicant had been a permanent employee of Hanson and working at Mulgrave since November 2000. For about one year prior to that he had worked there through placement by a labour hire company. He mainly worked in the hollowcore operations at Mulgrave.

[10] There was no evidence that there had ever been any performance management issues with the Applicant nor any warnings, counselling or disciplinary action taken against him.

[11] At the Mulgrave site there were two the union delegates, Mr Phil Cini and Mr Stuart Young. Mr Cini was the senior delegate. Although Mr Parsons spoke from time to time with Mr Murray, the union organiser with responsibility for the three Hanson sites, his usual practice was to deal with the delegates. It would then be a matter for them if they wanted the union organiser to participate or attend any sites.

[12] Hanson is reliant on commercial and industrial construction and infrastructure orders. There was a significant decrease in such orders in New South Wales in 2008. From around October of that year the Employer implemented actions to reduce its operational costs. This involved reducing overtime, encouraging staff to take leave and minimising the use of casual staff. It seems that forward orders improved for a short time at the beginning of 2009 but again quickly reduced.

[13] By mid 2009 the Employer decided that some redundancies were unavoidable. In June of that year nine employees were made redundant. They came from each of the three Hanson sites. The delegates and Mr Murray were aware of the business circumstances of Hanson at this time and involved in discussions concerning these redundancies. It appears they were not informed before a decision about the need for the nine redundancies was made. Mr Murray was informed of them in a telephone call from Mr Parsons. Mr Murray said he did not regard this call as consultation with him. Sometime after the June 2009 redundancies Mr Parsons and Mr Murray had a discussion. Mr Murray said that in future he would like to be consulted on redundancies should they arise again.

[14] By August 2009 the Mulgrave forward orders were reducing dramatically. There were 30 employees in the plant at this time. Mr Parsons met with the union delegates and the plant managers on 1 September and discussed the approach to be taken to reducing costs. It was agreed that all the employees should be informed about what was going to happen. The delegates informed Mr Murray about these developments.

[15] Mr Parsons invited Mr Murray to participate in a meeting that was to be held on 3 September. A meeting was held on that date and Mr Murray, the delegates and all the Mulgrave employees attended. Mr Forster said he attended this meeting. A four day week was to be introduced and there was discussion about how it could be implemented. Proposals were put by employees as well as suggestions from Mr Murray and the delegates. A number of options to deal with the downturn in business were also discussed at a meeting. It was agreed that a review would be conducted in a fortnight’s time.

[16] At no time during the June redundancies, before or after the above meeting, and up to the time of Mr Forster’s redundancy did anyone from either the union or Employer side suggest there should be a meeting of a consultative committee about these matters. At no time was there a request from anyone to establish such a committee nor any discussion about the relevance of any provisions of the Agreement dealing with consultative committees.

[17] On 16 September Mr Parsons conducted a fortnightly update with all employees including the union delegates and advised that no improvement had occurred and that a review would take place at the end of the month. Mr Forster attended this meeting. Mr Cini participated and it is unclear whether or not he reported the outcome of the meeting to Mr Murray.

[18] During September, Mr Parsons and other management considered what needed to be done to achieve a more efficient and productive structure that was appropriate for the then reduced customer demands and that may also meet future demands when work orders increased. It was decided a restructure of the business was necessary and that redundancies would be necessary. A review of the skills needed in the new work teams and the skills and attributes of the Mulgrave employees was conducted by two managers, Mr Arciuli and a Mr Camilleri. They used the same process as was used previously in June. They then consulted with Mr Vavilov and explained their assessments of employees and who had been identified for redundancy. In turn this was discussed with Mr Parsons. He took into account the fact some employees may well have taken a voluntary redundancy if offered but the bases of those chosen were the skill sets required for the ongoing business.

[19] Evidence was tendered by Hanson, which included statements of Mr Arciuli and Mr Vavilov, setting out details of the process undertaken to assess employees, the selection criteria used and the gradings given to employees including the Applicant. Thirteen employees in all were to be made redundant of which ten were production employees. Of those 10 three were employees from the hollowcore section (which included the Applicant) and the remaining seven were from wetcast.

[20] On Thursday 1 October Mr Parsons held a meeting with the union delegates and discussed the impact of the four day week. Mr Parsons said that no significant work had materialised and that redundancies were likely. Mr Parsons said he would be having a meeting with all of the employees the next day. Mr Cini informed Mr Murray about this meeting.

[21] On Friday 2 October there was a meeting with all the Mulgrave employees. Mr Forster attended this meeting as did the delegates. The Employer’s situation was discussed as was the impact of the four day working week. Employees were advised that there was a need for redundancies and the likely number of such redundancies. Mr Parsons did not say that any particular section of the plant would be closed. He answered questions and listened to comments from several employees. Mr Parsons indicated that the redundancies would be effective around 9 October. There was a request to bring the redundancies forward by at least a day so everyone would know their fate.

[22] Mr Parsons was at the Mulgrave site from Thursday 1 October until Thursday 8 October and walked around the plant to ensure people had an opportunity to ask him further questions and many did so.

[23] On 7 October Mr Murray attended at the Mulgrave site. Initially he had a meeting with the employees and then he met with Mr Parsons, Mr Arciuli and Mr Vavilov. He was told that a decision had been made for 10 production employees to be made redundant. He assumed the wetcast section was going to be closed down and two employees would be transferred to another site. He negotiated an agreement in relation to those employees that in the event it did not work out for them they would be allowed to take a redundancy package. Mr Murray then reported back to the employees at Mulgrave. He accepts that he had made an assumption that it would be the wetcast people within Mulgrave who would be made redundant. He had told employees that. The Employer representatives had not said that all the redundancies would come solely from the wetcast section.

[24] On 8 October Mr Forster was informed that he would be made redundant. This occurred in a meeting he had been asked to attend with the union delegate Mr Cini, Mr Parsons, Mr Arciuli and Mr Vavilov. On that same day Mr Murray received a call from Mr Cini advising him that Mr Forster had been made redundant. Mr Murray then rang Mr Parsons about Mr Forster being selected for redundancy. Mr Parsons told him he had been selected because the Employer wanted a multi skilled workforce at Mulgrave and Mr Forster was one of the less skilled employees.

[25] Prior to his redundancy Mr Forster was not aware that he had been graded for the purpose of identifying the employees to be made redundant. When he did become aware of the grading process he took issue with some of the scores he had received. He believed other factors may have informed the ratings given to him and he referred to a previous injury and the fact he had raised safety issues. Mr Murray criticised the rating process both generally and in particular in the way in which Mr Forster had been graded.

[26] In early October Mr Parsons sent out enquires to other Hanson construction materials businesses about any vacancies they may have. Copies of his emails were in evidence.

[27] There is no persuasive evidence that a shoulder injury incurred by Mr Forster in 2003 nor any absences from work due to that injury played any part in his selection for redundancy. In any event it seems clear that since 2006 Mr Forster has been performing full duties with no limitations upon his ability to do so. I am also not persuaded that the selection of Mr Forster for redundancy was informed in any way by a report he had made to Mr Arciuli in early 2008 about the speed at which a non-slewing crane was travelling. The Employer took up the concern expressed by Mr Forster and a fitting was installed onto the crane so that the speed was regulated.

The Agreement and further findings

[28] As I have earlier noted the Agreement was in operation at all times relevant to this decision. It applied to all production employees at the Mulgrave site. The Applicant was classified at skill level 4 in that Agreement.

[29] Clause 4 of the Agreement deals with the topics of scope, parties bound and duration. It provides that the Agreement “is to be read in conjunction with the provisions of the Cement and Concrete Products Award 2000 and Metal and Engineering Industry Award (NSW)”. It also provides that where there is any inconsistency between the Agreement and the two identified awards the Agreement “shall prevail to the extent of the inconsistency”.

[30] Clause 8 of the Agreement is titled “Consultative Committee Arrangements/ Conditions”. A summary of its key provisions is as follows:

- the name of the committee is to be the Hanson Precast Pty Ltd Mulgrave Consultative Committee (the clause 8 committee) and the common interest that it is “striving for” includes “agreed common goals for future survival and job security”. It is established to monitor results of the Agreement which provides flexible work practices, patterns and tasks which enhance Hanson’s operation;

- the committee is established for the purpose of discussing matters raised by employees or management which impact on employees or which contribute to improved operational efficiency and it will seek to reach agreement on matters and make recommendations to senior management who will take those views into account prior to making final decisions;

- the size of the committee will be determined by Hanson and its employees and persons will be appointed by either management or by the election of employee representatives respectively;

- the terms of office of a chairperson and secretary and their functions are referred to. The secretary is responsible for recording minutes and distribution of agendas. The committee is to meet at least once every two months unless it determines it shall meet more frequently;

- senior management, where practicable, are to respond to the committee’s recommendations prior to or at the next meeting of the committee.

[31] Clause 9 of the Agreement is titled “Redundancy Arrangements”. A summary of the key provisions are as follows:

- a definition of redundancy is provided;

- notice of retrenchment is to be given to affected employees in accordance with the period stipulated in the Cement and Concrete Products Award 2000; 2

- a scale of severance payments is set out which provides for entitlements to employees with up to 4 years service and thereafter an entitlement of two weeks for each completed year of service with a maximum capped at 40 weeks;

- no entitlement to redundancy payments applies where alternative employment is offered and refused or on an employee’s transfer to a related company.

[32] It appears that no clause 8 committee was established at Mulgrave. There was a safety committee that apparently met regularly and I accept that committee probably considered matters in addition to the safety issues employees and management wanted to raise.

[33] Mr Arciuli also referred to there being a consultative committee at Mulgrave but it was considered principally a safety committee and was made up of union delegates and occupational health and safety officers. The minutes of its meeting were referred to as minutes of the safety committee. No minutes were produced in evidence. That safety committee had been going for as long as there had been enterprise agreements at Mulgrave. The Agreement was the third or maybe the fourth enterprise agreement. There would have been meetings of this safety committee during the time when consideration was being given to restructuring and redundancies at Mulgrave.

Section 389 considerations

[34] Against the foregoing I turn to the s.389 considerations. The first is whether the Employer no longer required the Applicant’s job to be performed by anyone because of changes in the operational requirements of the Employer’s enterprise.

[35] The Applicant submits that his job is still required and is being performed albeit by other employees. The work in the hollowcore section of the plant where the Applicant had previously worked was still being performed. Although the Applicant accepted that the Employer was entitled to make employees in the wetcast area redundant they should not have transferred any employees to hollowcore jobs with hollowcore employees then being made redundant. In selecting Mr Forster it was also submitted that there were some degree of subjectivity in the way in which his assessments were made.

[36] The matters relied on by the Applicant do not mean there was no genuine redundancy. The fact that tasks and duties he had undertaken in the hollowcore section of the plant continued does not mean he cannot be made redundant in terms of s.389. The evidence establishes that the Employer required the full range of tasks and duties that made up the jobs of all Mulgrave Production employees to continue but that less employees were required to do them. These circumstances are similar to examples of genuine redundancies which would be envisaged by s.389 and are set out in the Explanatory Memorandum to the then Fair Work Bill 2009. I set out an extract from that memorandum:

“Clause 389 – Meaning of genuine redundancy

1546. This clause sets out what will and will not constitute a genuine redundancy. If a dismissal is a genuine redundancy it will not be an unfair dismissal.

1547. Paragraph 389(1)(a) provides that a person‘s dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer‘s enterprise. Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.

1548. 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 or duty 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.

1549. It is intended that a dismissal will be a case of genuine redundancy even if the changes in the employer‘s operational requirements relate only to a part of the employer‘s enterprise, as this will still constitute a change to the employer‘s enterprise.”

[37] The approach I have taken to the application of s.389(1)(a) of the Act to the facts in this case is consistent with the Full Bench decision in Ulan Coal Mines Limited and Howarth and others. 3 In this respect I rely on the comments made by the Full Bench at paragraphs 16 to 20.

[38] It is also clear that the selection process whereby it was determined which jobs and, as a consequence, which employees were to be redundant is not relevant to the considerations in s.389(1)(a). If the reasons an employee is made redundant include a prohibited reason, as defined in Part 3-1 of the Act, relief may there be sought. This too is made clear in the following extract from the Explanatory Memorandum:

“1553. Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy. However, if the reason a person is selected for redundancy is one of the prohibited reasons covered by the general protections in Part 3-1 then the person will be able to bring an action under that Part in relation to the dismissal.”

[39] I now turn to s.389(1)(b) and the requirement for the Employer to have complied with any award or agreement obligation to consult about the redundancy.

[40] Three instruments were referred to in the parties submissions in respect to this consideration. They are the Agreement, a federal pre-reform award being the Cement and Concrete Products Award 2000 4 (the federal Cement Award) and the Metal Engineering and Associated Industries (State) Award (NSW), a notional agreement preserving State awards (NAPSA)5 (the Metal Industry Award).

[41] I should here note that s.389(1)(b) needs to be read together with item 36 of Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009. That item relevantly provides that the reference in s.389(1)(b) to a modern award is taken to include a reference to an award-based transitional instrument and the reference to an enterprise agreement included a reference to an agreement-based transitional instrument. The types of transitional instruments that are encompassed within these two classifications are referred to in item 2. For the purposes of this decision these instruments include a pre-reform award such as the federal Cement Award, a NAPSA such as the Metal Industry Award and a collective agreement such as the Agreement.

[42] The Applicant submitted that Hanson had not complied with its consultation obligations in the Agreement. It says that Hanson confuses consultation with informing employees. It rejects Hanson’s attempt to paint the safety committee as being the clause 8 committee required to be established by the Agreement; it was not. It was incumbent upon Hanson to establish a specific consultative committee in accordance with the Agreement. I accept part of this submission of the Applicant insofar as it says the safety committee is not the clause 8 committee. However, that does not take the considerations required by s.389(1)(b) very far. What I need to be persuaded about was that clause 8 should be described, in terms of s.389(1)(b), as an obligation upon Hanson to consult about the Applicant’s redundancy. In my opinion the role, powers and functions of a clause 8 committee had one been established, would not have been likely to be the source of such obligations upon Hanson to consult about redundancies generally nor the Applicant’s in particular.

[43] It seems that neither party to the Agreement considered clause 8 of the Agreement until after the termination of Mr Forster’s employment. What its role may have been and the scope of matters it may have considered remains unknown. What recommendations it may have made to Hanson management and whether they would have been adopted is also unknown. I am not persuaded that clause 8 of the Agreement is, on even the most generous interpretation, an obligation on Hanson to consult about the Applicant’s redundancy.

[44] Next I refer to the federal Cement Award. It is to be recalled that this award is referred to in clause 4 of the Agreement. The relevance of it however can be dealt with briefly. It does not have any consultation provisions that could be said to relate to redundancies generally or to the circumstances of the Applicant’s redundancy in particular.

[45] I next turn to provisions of the Metal Industry Award referred to by the Applicant. It was clause 4.4 of that award and clause 4.4.3 in particular upon which the Applicant placed most reliance. Clause 4.4.3 of the Metal Industry Award is in terms that were reasonably commonplace in federal and state awards having its genesis in Redundancy Test Cases. Its terms are very similar to the terms of the clause considered by the Full Bench in Ulan Coal. 6

[46] The Applicant submits that the obligation to consult with the union required Mr Murray to become involved and it was not adequate to consult with the delegates and rely on them involving Mr Murray. Additionally the Applicant submits that the Employer had not consulted with the employees who were directly affected by the redundancies. In relying on these factors as being relevant to s.389(1)(b) the Applicant gained support from the decision of Commissioner Raffaelli in Howarth and others and Ulan Coal Mines Limited. 7 I indicated to the parties in the hearing that I was aware that decision had been appealed. Neither party made any comment about that nor sought at any later time to file any further submissions when the Full Bench decision in Ulan Coal was published in May 2010.8 Probably little turns on this. As a single member of this tribunal it is appropriate I apply the approach to be taken to s.389 as discussed in that Full Bench decision.

[47] Hanson submits that even though the provisions of the Metal Industry Award are called up in the Agreement that award did not ever apply to Mr Forster. The relevant award that applied to him was the federal Cement Award. The Applicant disagreed and said he did some work that would have been the sort of work covered by the Metal Industries Award. I am unable to conclusively resolve this contest. I have inadequate evidence and submissions before me to do so.

[48] These issues of how to properly interpret clause 4 of the Agreement highlight the unsatisfactory consequence of adopting the drafting technique reflected in this clause. If parties insist on using this drafting technique they should attempt to make it clear which specific provisions apply, whether they apply to all classifications or only a subset of them. It is unlikely the parties here intended that all of the provisions of the federal Cement Award and all of the provisions of the Metal Industry Award (subject to a small number of exceptions about prohibited content) would apply to all of the employees covered by the Agreement. The uncertainties that would be likely to arise if this construction was adopted are manifold and not resolved by the simplistic reference to the Agreement prevailing in the event of inconsistency.

[49] For the purpose of this decision however, I have considered the Applicant’s submission that it was intended that Hanson would be obliged to observe the provisions of clause 4.4.3 of the Metal Industry Award in relation to the redundancy of the Applicant. I do so despite my prima facie view he was not an employee covered by that NAPSA and was an employee covered by an industry specific federal award which unarguably would have applied to his employment had the Agreement not been in operation.

[50] I am of the opinion the Employer has complied with clause 4.4.3 of the Metal Industry Award. I adopt, in this respect, the approach taken in Ulan Coal to the consultation clause there considered. 9 Assuming Hanson was obliged in respect to Mr Forster’s redundancy to comply with clause 4.4.3 of the Metal Industry Award, it did so.

[51] I next refer to the provisions of s.389(2) of the Act. I have decided it would not have been reasonable, in all the circumstances, to have redeployed the Applicant either within the three Hanson operations nor any associated entity. This consideration was not relied upon by the Applicant and not seriously put in issue. I accept the evidence of Mr Parsons about the actions he took to identify other available positions. He was not challenged about this in cross examination.

[52] For the above reasons I consider that the dismissal of the Applicant was a case of genuine redundancy and I dismiss his s.394 application.

SENIOR DEPUTY PRESIDENT

Appearances:

S. Crawford with P. Murray of The Australian Workers’ Union for the Applicant.

C. Parsons with L. Parker for Hanson Precast Pty Ltd.

 1   PN28

 2   AP772057CRV

 3 (2010] FWAFB 344

 4   AP772057CRV

 5   AN120334

 6 (2010) FWAFB 3488 at para 22

 7   [2010] FWA 167

 8   [2010] FWAFB 3488

 9   [2010] FWAFB at paras 26-32

Printed by authority of the Commonwealth Government Printer

<Price code E, PR999534>