Alicia English v Tee Ink Pty Ltd T/A Charlie Holiday
[2023] FWC 2328
•12 SEPTEMBER 2023
| [2023] FWC 2328 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Alicia English
v
Tee Ink Pty Ltd T/A Charlie Holiday
(U2023/6008)
| DEPUTY PRESIDENT SAUNDERS | NEWCASTLE, 12 SEPTEMBER 2023 |
Application for an unfair dismissal remedy – jurisdictional objections – Small Business Fair Dismissal Code and genuine redundancy – failure to comply with consultation obligations – dismissal unfair – compensation ordered.
Ms English was employed by Tee Ink Pty Ltd (Tee Ink) from 22 March 2021 until her dismissal on 29 June 2023. Save for an admitted failure to consult, Tee Ink contends that Ms English’s dismissal was a genuine redundancy within the meaning of s 389 of the Fair Work Act 2009 (Cth) (Act). Tee Ink also contends that it complied with the Small Business Fair Dismissal Code in relation to Ms English’s dismissal. Ms English denies those assertions and contends that her dismissal was harsh, unjust and unreasonable.
Ms English gave evidence at the hearing, as did Ms Sinead Finn, Tee Ink’s Head of Design and Marketing, Ms Bailee Carter, Tee Ink’s former Marketing Manager, and Ms Emily Williamson, Tee Ink’s former Ecommerce Coordinator and Customer Care. Tee Ink adduced evidence from Ms Gabrielle Bate, General Manager, and Mr Greg Smith, Chief Financial Officer.
Initial matters to be considered
Section 396 of the Act sets out four matters which I am required to decide before I consider the merits of Ms English’s unfair dismissal application.
There is no dispute between the parties and I am satisfied on the evidence that:
(a)the application was made within the period required in s 394(2) of the Act; and
(b)Ms English is a person protected from unfair dismissal.
As to the third initial matter which I am required to consider, Tee Ink contends that Ms English’s dismissal was consistent with the Small Business Fair Dismissal Code. Ms English opposes this contention.
As to the fourth initial matter which I am required to consider, there is a dispute between the parties regarding whether Ms English’s dismissal was a genuine redundancy. I will address this issue first.
Genuine redundancy
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).
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 (s 389(1)(a))
General principles
It is necessary to determine whether Tee Ink no longer required the job of Ms English to be performed by anyone because of changes in the operational requirements of Tee Ink’s enterprise.[1]
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”.[2] Where there has been a reorganisation or redistribution of duties, the question is whether the employee has “any duties left to discharge”.[3] If there is no longer any function or duty to be performed by that person, their job becomes redundant.[4] For example, an employer may redistribute all the tasks done by a particular person between several other employees or outsource the tasks to a third party, resulting in the person’s job no longer existing.
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.[5] 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.[6]
The reference to “changes in the operational requirements of the employer’s enterprise” in s 389(1)(a) of the Act 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.
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.[7]
Relevant facts
On 22 March 2021, Ms English commenced employment with Tee Ink in the role of Womenswear Designer. Ms English reported to Ms Sinead Finn, Tee Ink’s Head of Design and Marketing.
In October 2022, Ms Finn told Ms English and other employees of Tee Ink that she was pregnant and would be taking maternity leave from March 2023 for at least 12 months. Ms Finn told Ms English that she had been training her to step into Ms Finn’s role while she was on maternity leave and she would inform the founder of Tee Ink, Mr Pete de Gail, that she should be the one to cover her role.
Mr de Gail sent a calendar invite to Ms English for her to attend a meeting on 6 December 2022 to chat about “Sinead’s maternity leave”. During the meeting on 6 December 2022, Mr de Gail told Ms English that he would like to offer her Ms Finn’s role while she was on maternity leave. Ms English responded in a positive manner. Prior to this discussion and before Ms English was told that Ms Finn was pregnant, Ms English had negotiated with Mr de Gail for an increase in her pay to $100,000 per annum, to apply from July 2023, in her role as Womenswear Designer. During the meeting on 6 December 2022, Mr de Gail said to Ms English, “You’ll still get your pay rise to $100,000 in July 2023.” Ms English said that she expected a higher salary in order to step up, with more responsibility, into the position of Head of Design. Mr de Gail said he would get back to Ms English about her request for a higher pay rise.
Ms English suggested that Ms Jayden Morgan be employed to fill her role of Womenswear Designer.
On 13 December 2022, Ms English attended an interview of Ms Morgan with Ms Finn and Mr de Gail. Ms Finn explained to Ms Morgan that Ms English would be stepping into her role while she was on maternity leave and the business needed someone to cover Ms English’s role while Ms Finn was on maternity leave. Mr de Gail explained that he hoped the business would grow and Ms Morgan would be able to be kept on in a permanent position when Ms Finn returned from maternity leave.
In January 2023, Ms Morgan commenced employment with Tee Ink in the position of Women’s Designer. Ms Morgan’s contract described her position as being “for a minimum of 12 months as a maternity leave cover”.[8] Ms Morgan’s salary was $65,000. The position description for Ms Morgan’s role of Women’s Designer erroneously referred to her position as “Online/Ecommerce Manager”. The position description also stated that a “salary review will be carried out within 12 months”.[9]
In a weekly staff meeting, Mr de Gail informed staff that, while Ms Finn was on maternity leave, Ms English would be covering her role and Ms Morgan would be covering Ms English’s role.
In February 2023, Ms Gabrielle Bate commenced employment with Tee Ink in the position of General Manager. She then became involved in discussions with Ms English about her salary and position.
Mr de Gail proposed that Ms English attend a meeting on 28 February 2023 for the purpose of “locking in [her] maternity contract/salary”.[10] Ms English attended that meeting, as did Mr de Gail and Ms Bate. Ms English was told that Tee Ink could not afford more than $100,000 for Ms Finn’s role but they were happy to bring Ms English’s pre-planned pay rise forward from July to March 2023. After negotiations over the following days, Ms English agreed with Tee Ink that she would be allowed to work remotely one week every two months in her new role.
On 3 March 2023, Mr Greg Smith emailed a new contract of employment to Ms English, who asked for an amendment to be made to the contract so that it referred to her right to work from home one week every two months. The contract was revised in accordance with Ms English’s request. The contract was then sent to Ms English on 6 March, and Ms English returned it the same day, having signed every page of it. The Contract included the following relevant provisions:
“1. Position
1.1 You will be employed on the basis set out in Schedule 1 of this Agreement or such other position determined by the Company from time to time. During your employment the Company may transfer you to a new position which is:
i) at the same or greater Remuneration; and
ii) within your skill and competence, or other position agreed by the Company and you.
1.2 Your employment under this Agreement will commence on the date set out in Schedule 1 ("Commencement Date") and will continue until terminated in accordance with the terms of this Agreement.
1.3 You will be initially based at the Company's location as set out in schedule 1 but may be required to work at any other location as determined by the Company.
1.4 You will report to the person advised to you by the Company.
1.5 If your position, duties, location or reporting responsibilities with the Company change for any reason, then the conditions of employment in this Agreement will continue to apply to your employment unless expressly varied in writing.
2. Probation
2.1. You will be initially employed on a probationary basis for the period specified in Schedule 1 from the Commencement Date (“the Probationary Period"). During the Probationary Period either party may terminate the employment by giving two weeks’ notice, or by the Company paying two week’s remuneration in lieu or notice. On or before the expiry date of the Probation Period, the Company will assess your suitability for the continuation of your employment and either confirm your employment status or advise that your employment will terminate at the conclusion of the Probation Period. The Company may at its absolute discretion extend the Probationary Period if it deems this necessary.
3. Remuneration
3.1. The Company will pay you in accordance with Schedule 1 subject to, and in consideration of, performing your duties under this Agreement.
3.2. Your Base Salary may be reviewed from time to time in accordance with Company policy/practice but it will not necessarily be increased.
3.3. Your annual Base Salary/Hourly rate detailed in Schedule 1 (as amended from time to time) will be paid to you as an annual salary for the purpose of any applicable Award in full satisfaction of the minimum wages, allowances, overtime, and penalty rates and annual leave loading provisions under the award. This is referred to as your annualised salary.
…7. Your duties
7.1. Your duties are:
i) Those set out in the Position Description in Schedule 2. The duties set out in Schedule 2 are not intended to be exhaustive, but are indicative, of the duties to be performed in the position;
ii) Any other duties nominated or otherwise assigned to you by the Company from time to time.7.2. You must comply with all lawful directions from the Company, and your nominated manager, in the performance of your duties.
7.3. You must carry out your duties to the best of your ability, act in the best interests of the Company, and use your best endeavours to promote and extend the Company’s business and to protect the Company’s interests and reputation.
7.4. You must perform your duties as set down by the Company in a manner that does not endanger your own health and safety (or that of others).
…
26. Entire Agreement
26.1. To the extent permitted by law, this Agreement embodies the entire understanding of the parties and constitutes the entire terms agreed upon between you and the Company, and supersedes any prior Agreement or understanding (whether or not in writing) between you and the Company.
…SCHEDULE 1
| Details | Description | |
| Initial position | Position title: | Women’s Designer |
| Type of Employment | Full/Part time/Casual | Full Time |
| Location | You will be based at: | Gold Coast Office |
| Probationary period | 3 months | |
| Remuneration | Salary | $70,000.00 pa |
| Superannuation: | Currently 9.5% | |
| Company Motor Vehicle | NA | |
| Commencement date | The terms and conditions of this important agreement will be effective from 22/03/2021 | |
| Award Classification | Not applicable | |
| Days/Hours per week | 5 days per week, 8 hours per day = 40 Hours per Week. Office hours are 8.30am to 5.00pm with a half hour for lunch but you may be required to work longer hours from time to time dependant on workload. These times are only an indication. Payroll is paid fortnightly | |
| Restraint Period | Not applicable | |
| Restraint Area | Not applicable | |
SCHEDULE 2
1. Title: Women’s Designer
2. Expectations:
| Duties and Responsibilities | |
| 1. | Participate in seasonal concept meetings and be involved in the generation of new design ideas. |
| 2. | Development of tech packs and specs |
| 3. | Sketch and swatch, mood boards |
| 4. | Sample Management |
| 5. | Play a key role in sample fittings |
| 6. | Communicate with suppliers and international factories to assist with the production process |
| 7. | Fabric sourcing and possible factory visits to China |
| 8. | Illustrator CAD Flat drawings to support tech packs |
| 9. | Review and approve strike offs and lab dips |
| 10. | Work with the Senior Designer to present the full range to Senior Management for approval and sign off |
| 11. | Ensure Design Room is organised including fabrics, design boards and general design room workspace |
| 12. | Track seasonal design progress to ensure timely execution of design calendar workings to always ensure on-time delivery of collections |
| 13. | Assist the Senior Designer on seasonal photoshoots and pricing exercises |
| 14. | Ensure you meet the professional dress and presentation standards of Tee Ink Pty Ltd |
| 15. | Participate in the company’s review and appraisal programs |
| 16. | Participate in training and professional development programs as determined in consultation with your Manager |
| 17. | Comply with regular meeting schedules and communication standards |
On 11 March 2023, Ms Finn commenced her maternity leave. Ms Finn understood that Ms English would return to her role of Womenswear Designer after Ms Finn returned from maternity leave, although Ms Finn accepts that she was not told that would be the case.
After 11 March 2023, all emails that would ordinarily have been sent to Ms Finn were redirected to Ms English.
On 13 March 2023, Ms English commenced in the role of Head of Design. Ms English says that she worked in Ms Finn’s role in the period from 13 March 2023 to 29 June 2023.
From the commencement of Ms Finn’s maternity leave on 13 March 2023, the marketing team which had formerly reported to Ms Finn began reporting to Ms Bate in her role as General Manager. Mr de Gail made the decision to make this change. Ms Bate believes that Mr de Gail probably would have made the same decision if Ms Finn had not gone on maternity leave. I am satisfied on the balance of probabilities that Mr de Gail would have made such a decision, given the breadth of Ms Bate’s role as the new General Manager in the business.
I accept Ms English’s evidence that she undertook Ms Finn’s duties and responsibilities, save for managing the three-person marketing team and managing Tee Ink’s Queensland office, from 13 March 2023 until 29 June 2023, including undertaking some marketing related activities. I do not accept that during this period Ms Morgan undertook any of the duties or responsibilities of the role of Head of Design. Ms Morgan was too junior to undertake such duties or responsibilities. Instead, I am satisfied that Ms Morgan, in her role of Women’s Designer, assisted Ms English in the design aspects of her work. Further, up until 29 June 2023, Ms Morgan did not undertake two aspects of the Womenswear Designer role previously performed by Ms English, namely cost negotiation and product tracking, because she had not yet been trained in those duties and responsibilities.
On 23 June 2023, Mr de Gail sent out an email to staff to inform them that he would be conducting individual staff reviews with all staff members. Ms Bate informed Ms English that she had nothing to worry about because the reviews were “just our annual reviews”.
On 29 June 2023, Ms English attended a meeting with Mr de Gail and Ms Bate. At the meeting, Mr de Gail said, “This is a really hard decision”. Ms Bate then said, “Your role is being made redundant.” Ms English asked whether she would be offered to “go back to my Womenswear Designer position?” Ms Bate explained that they had thought about it, but they believed that Ms Morgan could handle the workload because they were commercialising the designs more, which could be done by a more junior staff member. Ms English was told that her position was made redundant with immediate effect. She then received her letter of termination. It relevantly stated:
“Dear Alicia
Termination of your employment by reason of redundancy
The purpose of this letter is to confirm the outcome of a recent review by Tee Ink Pty Ltd (the employer) of its operational requirements, and what this means for you.
As a result of the worldwide economic downturn, the position of Head of Design is no longer needed. Regrettably this means your employment will terminate. This decision is not a reflection on your performance.
The employer has made attempts to find you an alternative position within the enterprise and any associated entities but we have not been able to find a suitable position. Tee Ink Pty Ltd is classified as a small business by Fair Work Australia and is not required to pay redundancy. A small business is one that employs fewer than 15 employees.
Your employment will end immediately. Based on your length of service, your notice period is 4 weeks. In lieu of receiving that notice, you will be paid the sum of $7,692.30.”
Tee Ink did not inform Ms English or Ms Finn that its plan, after Ms Finn returned to work following her maternity leave, was for Ms English to continue working in her role of Head of Design and for Ms Finn to return to her role of Head of Design and Marketing. However, I accept the evidence given by Ms Bate and Mr Smith that Mr de Gail discussed with each of them, in early 2023, that that was his plan and it would allow one of the Heads of Design to focus on Tee Ink’s BARE by Charlie Holiday brand while the other Head of Design and Marketing focused on the Charlie Holiday brand. At the time of those discussions in early 2023, the financial outlook for the Tee Ink business was much rosier than it was in June 2023. Mr de Gail also explained to Mr Smith and Ms Bate that he would keep Ms Morgan on in the role of Women’s Designer after Ms Finn returned from maternity leave if the business was travelling well enough at that time to do so.
Ms Finn gave evidence that she did not think there was a need to have a second person in a Head of Design role after she returned from maternity leave because she had been able to carry out the Head of Design duties and responsibilities for both brands, BARE and Charlie Holiday, at all times before she went on maternity leave and she could see that the business was not performing as well in March 2023 as it had in the past. I accept that Ms Finn held this belief and it was a reasonable belief for her to hold. However, I also accept the evidence given on behalf of Tee Ink that it hoped its business would be performing well by the time Ms Finn returned from maternity leave and, in those circumstances, it would be useful to have one Head of Design focused on one brand and the other Head of Design focused on the other brand.
Ms Bate gave evidence that although Tee Ink had the right under Ms English’s contract of employment move her from the position of Head of Design back into the position of Womenswear Designer, it did not have any intention of doing so. I accept this evidence. It is supported by the evidence of Mr Smith insofar as he discussed with Mr de Gail his intentions concerning the ongoing positions of Ms English and Ms Finn after Ms Finn’s return from work following her period of maternity leave.
After the termination of Ms English’s employment, her duties and responsibilities in her role of Head of Design were shared between Ms Morgan and Ms Bate. Part of the reason this was able to be achieved was because Tee Ink had decided to reduce two brands down to one, with the result that only one junior person was required in the design team, supervised and assisted by Ms Bate. Ms Morgan was given a pay increase of $10,000 per year in recognition of the additional responsibility she would be given following the decision to make Ms English’s position redundant. Tee Ink also gave a pay increase to an employee in the position of Production Manager. At the same time, Tee Ink made the positions of Head of Design and Ecommerce Coordinator and Customer Care redundant.
In the period from 1 January 2023 to 30 June 2023, Tee Ink’s sales were 39% lower than they were in the period from 1 January 2022 to 30 June 2022. Due to the rapid decrease in sales Tee Ink needed to cut its overhead expenses, of which salaries were a major part.
Summary of Ms English’s submissions re operational requirements and position no longer required
Ms English contends that her substantive position was that of Womenswear Designer, not Head of Design. Ms English submits that she was temporarily fulfilling a maternity cover contract for Ms Finn and, on Ms Finn’s return from maternity leave, she would return to her substantive position of Womenswear Designer. In support of these contentions, Ms English relies on the communications to Tee Ink staff to the effect that she would be fulfilling Ms Finn’s role while she was on maternity leave and Ms Morgan would temporarily fulfil Ms English’s role during the same period of time. Ms English contends that it is nonsensical for Tee Ink to create two Head of Design roles in a small business of 11 employees. She also contends that it is nonsensical that Tee Ink would be recruiting a maternity cover contract with Ms Morgan for an employee, Ms English, who was not pregnant.
Ms English submits that her contract of employment for the position of Head of Design contained an error in that it did not specify the role was a maternity cover position for Ms Finn.
Because she did not hold the substantive position of Head of Design, Ms English contends that when the position of Head of Design was made redundant, it was not a redundancy of her position, but was instead Ms Finn’s position that was made redundant.
In the alternative, Ms English contends that if it is found that she did hold the position of Head of Design, then her dismissal was not a genuine redundancy because:
(a)Tee Ink has not produced any documentary evidence of its alleged restructure;
(b)Tee Ink has not produced any documentary evidence of the alleged financial hardship that Mr Smith claims it suffered;
(c)despite Mr Smith and Ms Bate claiming that Tee Ink needed to cut salaries, it issued a remuneration increase to Ms Morgan and employed other employees at the same time;
(d)Tee Ink failed to comply with the consultation provisions in the Textile, Clothing, Footwear and Associated Industries Award 2020; and
(e)Tee Ink has not produced any documentary evidence of its consideration of redeployment opportunities for Ms English.
Consideration re operational requirements and position no longer required
I am satisfied on the evidence before the Commission that Ms English’s substantive position was that of Head of Design. Ms English read and signed a contract pursuant to which she was appointed to the role of Head of Design on an ongoing basis. Her employment in that role was subject to a three-month probationary period. Tee Ink had a right under the contract to change Ms English’s position to another position at the same or greater remuneration, within Ms English’s skill and competence. However, I accept Ms Bate’s evidence that Tee Ink did not have any intention to use its right under that clause to change Ms English’s position back to that of Womenswear Designer when Ms Finn returned to work after her maternity leave. True it is that Tee Ink did not tell Ms English or Ms Finn of their plan to have two Heads of Design, each one looking after a particular brand, after Ms Finn’s return to work from maternity leave. However, Tee Ink’s founder, Mr de Gail, discussed his plans in that regard with each of Ms Bate and Mr Smith in early 2023. I also accept that it would be unusual to have two Heads of Design in a small business of 11 employees. The unusual nature of this proposed arrangement led to me ask many questions of Tee Ink’s witnesses at the hearing. I was persuaded by the evidence given by Ms Bate and Mr Smith that it was the genuine intention of Tee Ink to continue employing Ms English in the role of Head of Design after Ms Finn finished her maternity leave and returned to work in her role of Head of Design and Marketing. At the time that plan was put in place in early 2023, Tee Ink was optimistic that its business would grow and two Heads of Design could be accommodated, together with an ongoing role for Ms Morgan as Women’s Designer. Although Ms English undertook all the duties and responsibilities of Ms Finn’s role, save for managing a three-person marketing team and managing Tee Ink’s Queensland office, in the period from 13 March 2023 to 29 June 2023, I am satisfied that they were also the duties and responsibilities of Ms English’s role of Head of Design. Had Tee Ink’s plan come to fruition, those duties and responsibilities would have been shared between Ms English and Ms Finn after Ms Finn’s return from maternity leave, on the assumption that the business would have grown by that time and each Head of Design would be responsible for one of the two brands sold by Tee Ink.
The role taken by up Ms Morgan in early 2023 was “for a minimum of 12 months as a maternity leave cover”.[11] I am satisfied that this arrangement is consistent with Tee Ink’s plan to have two Heads of Design after Ms Finn returned from maternity leave, together with an additional design resource in the form of Ms Morgan as Women’s Designer, if the business was going well enough to justify such an extension of this role.
Tee Ink’s optimism that its business would grow did not come to pass. In the first six months of 2023, Tee Ink’s sales decreased by 39% from the same period in the previous year. I accept Mr Smith’s evidence that this meant Tee Ink had to cut overhead expenses, of which salaries are a major part. In the result, a decision was made to remove two roles: Head of Design and Ecommerce Coordinator and Customer Care. In addition, instead of producing both the BARE and Charlie Holiday brands, Tee Ink decided to cut the BARE brand and only produce the Charlie Holiday brand going forward. This meant that Ms English’s duties and responsibilities in her role as Head of Design could be undertaken, at least in the short term, by Ms Morgan and Ms Bate. It follows that I accept that Tee Ink no longer required Ms English’s job of Head of Design to be performed by anyone because of changes in the operational requirements of Tee Ink’s enterprise.
The fact that Tee Ink gave pay increases to Ms Morgan and one other employee at the time it made two positions redundant does not persuade me that the redundancies were not genuine. The cost savings achieved by Tee Ink by reason of making two positions redundant far outweighed these pay increases.
I do not accept the contention that Tee Ink employed a new employee to effectively replace Ms Williamson in the Ecommerce Coordinator and Customer Care position.[12] Mr Smith gave evidence that “neither Alicia [English’s] role as Head of Design or Emily [Williamson’s] role as Ecommerce Coordinator and Customer Care has been replaced and there is no intention to do so as their redundancies were for the purpose of lowering the Respondent’s operating Costs.”[13] I accept this evidence. It is supported by the contemporaneous documents produced by Tee Ink in response to an order for the production of documents issued at my initiative.[14] The current organisational structure for Tee Ink shows that its headcount has reduced from 15 down to 9 and Ms Lily Banard is employed by Tee Ink in the role of Wholesale, Logistics & Ecom Manager. Ms Bate also gave oral evidence, which I accept, that Tee Ink’s Inventory and Planning Manager, Mr Lachlan Maude, left and he was replaced in May 2023 with Ms Lily Banard.
As to the argument about a lack of documentation supporting Tee Ink’s contentions, Tee Ink produced to the Commission, in answer to an order for the production of documents, a number of organisational charts and cost savings schedules which support its need to restructure its business in order to save costs. Ms Bate prepared these organisational charts and cost savings schedules in the period from shortly after her commencement of employment with Tee Ink until about mid-2023. The organisational charts consistently refer to Ms English’s role as “Senior Designer”. Ms Bate explained in her evidence that she had previously worked in organisations in which the Head of Design role was referred to as “Senior Designer” and she had used the same terminology in the organisational charts she prepared for Tee Ink. I accept Ms Bate’s evidence in this regard. I consider it to be a plausible and innocent mistake.
For the reasons set out above, I am satisfied on the balance of probabilities that the real reason for Ms English’s dismissal was the redundancy of her role as Head of Design and that Tee Ink no longer required Ms English’s role of Head of Design to be performed by anyone because of changes in the operational requirements of Tee Ink’s enterprise.
Compliance with any consultation obligation in a modern award or enterprise agreement that applied to the employment (s 389(1)(b))
For there to be a genuine redundancy within the meaning of s 389 of the Act, Tee Ink must have complied with any obligation in a modern award or enterprise agreement to consult about the redundancy.
There is no dispute between the parties, and I accept on the evidence, that Ms English was covered by the Textile, Clothing, Footwear and Associated Industries Award 2020 (Textile and Clothing Award) during her employment with Tee Ink. Clause 38 of the Textile and Clothing Award governs consultation. It provides:
“38. Consultation about major workplace change
38.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:
(a)give notice of the changes to all employees who may be affected by them and their representatives (if any); and
(b) discuss with affected employees and their representatives (if any):
(i)the introduction of the changes; and
(ii)their likely effect on employees; and
(iii)measures to avoid or reduce the adverse effects of the changes on employees; and
(c)commence discussions as soon as practicable after a definite decision has been made.
38.2 For the purposes of the discussion under clause 38.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:
(a)their nature; and
(b)their expected effect on employees; and
(c)any other matters likely to affect employees.
38.3 Clause 38.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.
38.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 38.1(b).
38.5 In clause 38 significant effects, on employees, includes any of the following:
(a)termination of employment; or
(b)major changes in the composition, operation or size of the employer’s workforce or in the skills required; or
(c)loss of, or reduction in, job or promotion opportunities; or
(d)loss of, or reduction in, job tenure; or
(e)alteration of hours of work; or
(f)the need for employees to be retrained or transferred to other work or locations; or
(g)job restructuring.
38.6 Where this award makes provision for alteration of any of the matters defined at clause 38.5, such alteration is taken not to have significant effect.”
Nor is there any dispute that Tee Ink did not consult with Ms English before dismissing her. Tee Ink was not aware that Ms English was covered by an award. The first communication between Tee Ink and Ms English in relation to her dismissal was on the day she was dismissed: 29 June 2023. It follows that Tee Ink did not comply with its obligations under clause 38 of the Textile and Clothing Award to consult with Ms English about her redundancy.
Was it reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer (s 389(2))
For the purposes of section 389(2) of the Act, the Commission must consider whether there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. There must be an appropriate evidentiary basis for such a finding.[15] The word “redeployed” in section 389(2) of the Act should be given its ordinary and natural meaning, which is to “transfer to another job, task or function”.[16]
If an employer wishes to rely on the “genuine redundancy” exclusion in section 389 of the Act, then it would ordinarily be expected to adduce evidence, on the question of redeployment, as to whether there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. Such evidence would usually include the steps taken by the employer to identify other jobs, positions or work which could be performed by the dismissed employee.[17]
Whether it would have been reasonable in all the circumstances for the person to be redeployed, directs attention to the circumstances which pertained when the person was dismissed.[18] However, the circumstances leading up to the time the employee was dismissed may, in particular cases (such as where there has been a redeployment period for an employee prior to their dismissal), be relevant to a determination of whether it would have been reasonable in all the circumstances for the employee to have been redeployed.[19]
In determining whether redeployment would have been reasonable a number of matters may be relevant, including:
(a)whether there exists a job or position or other work to which the employee can be redeployed;[20]
(b)the nature of any available position;[21]
(c)qualifications required to perform the job;[22]
(d)the employee’s skills, qualifications and experience. The employee should have the skills and competence required to perform the role to the required standard either immediately or within a reasonable period of retraining;[23] and
(e)the location of the job in relation to the employee’s residence and the remuneration which is offered.[24]
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.[25]
It is important, however, to appreciate that, because there is a requirement to assess the reasonableness of redeployment “in all the circumstances”, it is not possible to establish binding or decision rules concerning the application of section 389(2) of the Act in all cases; the circumstances of each particular case must be considered.[26]
Ms English contends that she could have been redeployed to the role of Womenswear Designer and she would have been open to accepting a lower salary in order to take that position if there were no other options available.
There is no suggestion in the evidence that Tee Ink had any associated entities at the time it made Ms English’s position of Head of Design redundant. I am satisfied on the evidence that Tee Ink did not have any positions available in its enterprise at the time of the restructure. I do not consider that it would have been reasonable for Tee Ink to redeploy Ms English to the position of Women’s Designer or Womenswear Designer in circumstances where (a) that position was not available at the time – Ms Morgan was continuing to work in the position, (b) Tee Ink only needed a junior employee with the skills and experience of Ms Morgan to work in that role, as was reflected in the much lower salary paid to Ms Morgan in that role, and (c) Ms English had negotiated and accepted a new contract for her ongoing role as Head of Design, without any right for her to be transferred back to the position of Womenswear Designer or Women’s Designer in particular circumstances.
For the reasons given, it would not have been reasonable in all the circumstances for Ms English to have been redeployed within Tee Ink’s enterprise.
Conclusion on genuine redundancy
Tee Ink did not comply with its consultation obligations under clause 38 of the Textile and Clothing Award. For this reason alone, Tee Ink’s dismissal of Ms English was not a case of genuine redundancy within the meaning of s 389 of the Act.
Small Business Fair Dismissal Code
The Small Business Fair Dismissal Code does not capture economic dismissals, including redundancy situations.[27] Accordingly, Ms English’s dismissal was not consistent with the Small Business Fair Dismissal Code.
Harsh, Unjust or Unreasonable
Because Ms English’s dismissal was not a genuine redundancy within the meaning of s 389 of the Act, I must take into account, in determining whether the dismissal was harsh, unjust or unreasonable, the matters set out in s 387 of the Act.
Section 387(a) – valid reason related to capacity or conduct
If an employee has been dismissed because of changes to the operational requirements of their employer’s enterprise, the reason for the dismissal will not be related to the employee’s capacity or conduct. It follows that, in those circumstances, there will not be a valid reason for the dismissal related to the employee’s capacity or conduct, and s 387(a) should be regarded as a neutral matter with respect to the question of whether the dismissal was harsh, unjust or unreasonable.[28]
However, if the employee was dismissed because of changes to the operational requirements of their employer’s enterprise and it was not reasonable in all the circumstances for the employer to redeploy him or her, they are matters which should be considered under s 387(h) of the Act and are telling against a conclusion that the dismissal was harsh, unjust or unreasonable.[29]
For the reasons set out above, I am satisfied that Ms English was dismissed because of changes to the operational requirements of Tee Ink’s enterprise. Accordingly, s 387(a) is a neutral factor in this case.
Section 387(b) – notification of reason
Section 387(b) relates to notification of “that reason”, being a reason related to the person’s capacity or conduct.[30]
Because the reason for the termination of Ms English’s employment was the redundancy of her job and such a reason is not related to her capacity or conduct, s 387(b) is a neutral factor in relation to the question of whether Ms English’s dismissal was harsh, unjust or unreasonable.[31]
Section 387(c) – opportunity to respond
Section 387(c) is also predicated on there being a reason for dismissal related to the capacity or conduct of the employee.[32]
It follows that s 387(c) is a neutral factor in relation to the question of whether Ms English’s dismissal was harsh, unjust or unreasonable.[33]
Section 387(d) – support person
Tee Ink did not unreasonably refuse to allow Ms English to have a support person present to assist at any discussions relating to her dismissal. Accordingly, s 387(d) is a neutral factor in relation to the question of whether Ms English’s dismissal was harsh, unjust or unreasonable.[34]
Section 387(e) – warning about unsatisfactory performance
Ms English’s dismissal did not relate to any unsatisfactory performance by her. It follows that s 387(e) is also a neutral factor in relation to the question of whether Ms English’s dismissal was harsh, unjust or unreasonable.[35]
Section 387(f)&(g) – size of enterprise and dedicated human resource management specialists
Tee Ink is a small employer. It did not have any dedicated human resource management specialists or expertise in its enterprise at the time it decided to terminate Ms English’s employment on the grounds of redundancy. I am satisfied that these matters had an impact on the procedures followed in effecting Ms English’s dismissal. So much is apparent from the lack of knowledge on the part of any managerial employee of Tee Ink that Ms English was covered by an award which imposed consultation obligations on Tee Ink. In all the circumstances, I consider that these factors (s 387(f) & (g)) weigh slightly in favour of Tee Ink’s argument that its dismissal of Ms English was not harsh, unjust or unreasonable.
Section 387(h) – other relevant matters
There were sound, defensible and well-founded reasons for Ms English’s dismissal, namely Tee Ink no longer required her job to be performed by anyone because of changes to the operational requirements of Tee Ink’s enterprise. Further, as I have concluded above, there were no reasonable redeployment opportunities available for Ms English. These matters weigh against a conclusion that the dismissal was harsh, unjust or unreasonable.[36] Tee Ink’s material failure to comply with its consultation obligations under the Textile and Clothing Award is also a relevant matter which should be considered pursuant to s 387(h) of the Act.[37] However, a failure to consult does not necessarily mean a dismissal was harsh, unjust or unreasonable.[38] The weight to be given to a failure to consult depends primarily on the degree to which, if any, the absence of proper consultation led to any unfairness in practice.[39]
My view is that a proper consultation period which complied with the requirements of the Textile and Clothing Award would have lasted a period of two weeks. I am persuaded that two weeks is the amount of time which would have been required to give Ms English a proper opportunity to consider the restructure and its impact on her position, including information in writing from Tee Ink in relation to those matters, ask questions about the restructure, have proper discussions with Ms Bate, Mr Smith and Mr de Gail about her appointment to the position of Head of Design and whether it was intended to be a permanent appointment to that role, explain that she had recently signed a new lease on a property and had financial commitments to meet, and suggest that she would be willing to take a pay cut if it meant being put back into the position of Womenswear Designer and retaining her employment with Tee Ink. Had Tee Ink complied with its consultation obligations and consulted with Ms English for a period of two weeks, I am satisfied on the balance of probabilities that Ms English’s employment would have been terminated at the end of the two-week period on the ground of redundancy. I do not consider it likely, for the reasons explained in paragraph [57] above, that Tee Ink would have displaced Ms Morgan from her role and redeployed Ms English to the role of Womenswear Designer or Women’s Designer.
Like the situation in cases such as Maswan[40] and Smith v Alice Car Centre Pty Ltd[41], I am satisfied in the particular circumstances of this case that if consultation in accordance with the requirements of the Agreement had occurred, “it would have made no difference to the ultimate outcome”,[42] save that Ms English would have remained employed by Tee Ink for a further period of two weeks. Although I have concluded no different outcome would have resulted had proper consultation been undertaken, Tee Ink’s abject failure to properly consult with Ms English gives weight to her argument that her dismissal was unreasonable.
Of further relevance is the fact that Ms English was not afforded procedural fairness in the process leading up to her dismissal. She was not informed of the real nature of the meeting she was asked to attend on 29 June 2023. In addition, she was not given a meaningful or proper opportunity to comment on the reason for her dismissal before the decision was made to terminate her employment on the ground of redundancy.
Conclusion – harsh, unjust and/or unreasonable dismissal
After considering each of the matters specified in s 387 of the Act, my evaluative assessment is that Tee Ink’s dismissal of Ms English was harsh and unreasonable. Although Tee Ink had a valid reason to make Ms English’s position redundant, Tee Ink’s unreasonable and extensive failure to comply with its consultation obligations in relation to Ms English meant that she had no real opportunity to consider and form a view on her possible redundancy and present those views and suggestions to Tee Ink prior to being dismissed. In the result, Ms English was dismissed in circumstances where I am satisfied on the balance of probabilities that compliance with Tee Ink’s consultation obligations would have resulted in Ms English working for a further two weeks. Although I have found, on the balance of probabilities, that Ms English’s employment would have come to an end at the conclusion of the consultation process, she has missed out on two weeks’ pay (during the consultation process) and the opportunity to engage in meaningful dialogue with Tee Ink in an attempt to persuade management of a different outcome. She was also denied procedural fairness in the process leading to her unexpected dismissal on 29 June 2023.
Remedy
Having found that Ms English was protected from unfair dismissal, and that her dismissal was harsh and unreasonable, it is necessary to consider what, if any, remedy should be granted to her. Ms English did not seek the remedy of reinstatement. In any event, I am satisfied that reinstatement would be inappropriate in all the circumstances because Tee Ink has suffered a downturn in its business and does not have positions available for Ms English.
Section 390(3)(b) of the Act provides the Commission may only issue an order for compensation if it is appropriate in all the circumstances. A compensation remedy is designed to compensate an unfairly dismissed employee in lieu of reinstatement for losses reasonably attributable to the unfair dismissal within the bounds of the statutory cap on compensation that is to be applied.[43]
Having regard to all the circumstances of the case, including the fact that Ms English has suffered financial loss as a result of her unfair dismissal, I consider that an order for payment of compensation to her is appropriate.
It is necessary therefore for me to assess the amount of compensation that should be ordered to be paid to Ms English. In assessing compensation, I am required by s 392(2) of the Act to take into account all the circumstances of the case including the specific matters identified in paragraphs (a) to (g) of this subsection.
I will use the established methodology for assessing compensation in unfair dismissal cases which was set out in Sprigg v Paul Licensed Festival Supermarket[44] and applied and elaborated upon in the context of the current Act by Full Benches of the Commission in a number of cases.[45] The approach to calculating compensation in accordance with these authorities is as follows:
Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).
Step 2: Deduct monies earned since termination.
Step 3: Discount the remaining amount for contingencies.
Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.
Step 5: Apply the legislative cap on compensation.
Remuneration Ms English would have received, or would have been likely to receive, if she had not been dismissed (s 392(2)(c))
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.[46]
I am satisfied on the balance of probabilities that if Ms English had not been dismissed on the grounds of redundancy on 29 June 2023, her employment would have terminated at the conclusion of a proper consultation process, which would have lasted a period of two weeks. That is, Ms English would have been made redundant on 13 July 2023. My reasons for making this finding are set out above.
Ms English was paid an annual salary of $100,000 plus superannuation. Hence, I am satisfied that if Ms English had remained employed from 30 June 2023 until 13 July 2023 (inclusive) she would have received $3,846.15 plus $423.08 in statutory superannuation.
Remuneration earned (s 392(2)(e)) and income reasonably likely to be earned (s 392(2)(f))
In the period from 30 June 2023 until 13 July 2023 (inclusive), Ms English did not receive or earn any remuneration.
Thus, my view is that $3,846.15 plus $423.08 in statutory superannuation is the gross amount of remuneration Ms English would likely have earned had she not been dismissed by Tee Ink and instead continued to be employed until the conclusion of a further two-week period commencing on 30 June 2023 and concluding on 13 July 2023. This calculation is intended to put Ms English in the position she would have been in but for the termination of her employment.[47]
Viability (s 392(2)(a))
No submission was made on behalf of Tee Ink that any particular amount of compensation would affect the viability of Tee Ink’s enterprise.
My view is that no adjustment is required on this account.
Length of service (s 392(2)(b))
My view is that Ms English’s period of service with Tee Ink (about 2.25 years) does not justify any adjustment to the amount of compensation.
Mitigation efforts (s 392(2)(d))
The evidence establishes that Ms English has made reasonable efforts to obtain alternative employment following her dismissal on 29 June 2023. She has made a number of direct applications for jobs and has recruiters seeking employment opportunities for her. In the past four weeks, Ms English has undertaken some freelance work while she continues to look for full time employment.
In all the circumstances, my view is that Ms English acted reasonably to mitigate the loss suffered by her because of the dismissal and I do not consider it appropriate to reduce the compensation on this account.
Any other relevant matter (s 392(2)(g))
It is necessary to consider whether to discount the remaining amount ($3,846.15 plus $423.08 in statutory superannuation) for “contingencies”. This step is a means of taking into account the possibility that the occurrence of contingencies to which Ms English was subject might have brought about some change in earning capacity or earnings.[48] Positive considerations which might have resulted in advancement and increased earnings are also taken into account.
The discount for contingencies should only be applied in respect to an “anticipated period of employment” that is not actually known, that is a period that is prospective to the date of the decision.[49]
Because I am looking in this matter at an anticipated period of employment which has already passed (30 June 2023 to 13 July 2023), there is no uncertainty about Ms English’s earnings, capacity or any other matters during that period of time. In all the circumstances, my view is that it is not appropriate to discount or increase the figure of $3,846.15 plus $423.08 in statutory superannuation for contingencies.
Save for the matters referred to in this decision, my view is that there are no other matters which I consider relevant to the task of determining an amount for the purposes of an order under s 392(1) of the Act.
I have considered the impact of taxation, but my view is that I prefer to determine compensation as a gross amount and leave taxation for determination.
Misconduct (s 392(3))
Ms English did not commit any misconduct, so my view is that this has no relevance to the assessment of compensation.
Shock, distress or humiliation, or other analogous hurt (s 392(4))
I note that in accordance with s 392(4) of the Act, the amount of compensation calculated does not include a component for shock, humiliation or distress.
Compensation cap (s 392(5)-(6))
The amount of $3,846.15 plus $423.08 in statutory superannuation is less than half the amount of the high income threshold immediately before the dismissal. It is also less than the total amount of remuneration to which Ms English was entitled in her employment with Tee Ink during the 26 weeks immediately before her dismissal. In those circumstances, my view is that there is no basis to reduce the amount of $3,846.15 plus $423.08 in statutory superannuation by reason of s 392(5) of the Act.
Instalments (s 393)
No application has been made to date by Tee Ink for any amount of compensation awarded to be paid in the form of instalments.
Conclusion on compensation
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 $3,846.15 plus $423.08 in statutory superannuation.[50]
For the reasons I have given, my view is that a remedy of compensation in the sum of $3,846.15 (less taxation as required by law) plus superannuation at the statutory rate of 11% ($423.08) in favour of Ms English is appropriate in the circumstances of this case. An order will be made to that effect [PR766114].
DEPUTY PRESIDENT
Appearances:
Ms A. English, appearing on behalf of herself
Ms P. Costigan, solicitor, appearing on behalf of Tee Ink Pty Ltd
Hearing details:
2023.
Newcastle
4 September (videoconference).
[1] Section 389(1)(a) of the Act
[2] Jones v Department of Energy and Minerals (1995) 60 IR 304 (Jones) at 308 per Ryan J; applied in Ulan Coal Mines Limited v Howarth [2010] FWAFB 3488; (2010) 196 IR 32 (Ulan Coal 1) at [17]
[3] Ibid
[4] Ibid
[5] Dibb v Commissioner of Taxation (2004) 136 FCR 388 at 404-5
[6] Kekeris v A. Hartrodt Australia Pty Ltd[2010] FWA 674 at [27] per Hamberger SDP
[7] Johnston v Blue Circle Southern Cement Pty Ltd (2010) 202 IR 121 at [48]
[8] Court Book at p 145
[9] Court Book at p 147
[10] Court Book at p 73
[11] Court Book at p 145
[12] Court Book at p 162 [17(b)]
[13] Court Book at p 115 [15]
[14] Exhibit A5 (final page)
[15] Technical and Further Education Commission T/A TAFE NSW v Pykett[2014] FWCFB 714; (2014) 240 IR 130 (TAFE ) at [36]
[16] Ibid at [25]
[17] Ibid at [36]-[37]; Teterin & Ors v Resource Pacific Pty Limited t/a Ravensworth Underground Mine[2014] FWCFB 4125; (2014) 244 IR 252 (Teterin) at [28]-[29]
[18] TAFE at [24] & [35]; Ulan Coal Mines Ltd v Honeysett[2010] FWAFB 7578; (2010) 199 IR 363 (Ulan Coal 2) at [28]
[19] Bhalla v Welltech Total Water Management[2014] FWC 7565 at [55]
[20] Ulan Coal2 at [28]
[21] Ibid at [28]
[22] Ibid at [28]
[23] Ibid at [28] & [34]
[24] Ibid at [28]
[25] Ibid at [34]
[26] Teterin at [35]
[27] Groszek v Toyvision International Pty Ltd[2015] FWC 697 at [37]; Harrison v Queensland University of Technology[2010] FWA 8789 at [6]; Nalevansky v Thought Equity Motion Inc. [2010] FWA 3707; Iannello v Motor Solutions Australia Pty Ltd[2010] FWA 3125
[28] UES (Int’l) Pty Ltd v Harvey[2012] FWAFB 5241 (UES) at [42]; Ventyx Pty Ltd v Murray[2014] FWCFB 2143 (Ventyx) at [142]
[29] UES at [33] & [47]
[30] UES at [43]; Ventyx at [143]
[31] UES at [43]; Ventyx at [143]
[32] UES at [43]; Ventyx at [144]
[33] UES at [43]; Ventyx at [144]
[34] UES at [44]
[35] UES at [45]; Ventyx at [146]
[36] UES at [33] & [47]; Ventyx at [149]-[150]
[37] UES at [48]
[38] UES at [49]; Maswan v Escada Textilvertrieb[2011] FWA 4239 (Maswan) at [39]; Ventyx at [151]-[162]
[39] Gomes v OE & DR Pope Pty Ltd[2014] FWC 8342 at [59] per Hampton C
[40] Maswan at [39]
[41] Ltd [2013] FWC 9093 (Alice Car Centre) at [53]
[42] Alice Car Centre at [53]
[43] Kable v Bozelle, Michael Keith T/A Matilda Greenbank [2015] FWCFB 3512 at [17]
[44] (1998) 88 IR 21
[45] Tabro Meat Pty Ltd v Heffernan [2011] FWAFB 1080; Read v Golden Square Child Care Centre [2013] FWCFB 762; Bowden v Ottrey Homes Cobram [2013] FWCFB 431
[46] Double N Equipment Hire Pty Ltd v Humphries[2016] FWCFB 7206 at [16]-[17]
[47] Bowden at [24], citing Ellawala v Australian Postal Corporation Print S5109 at [35]
[48] Ellawala v Australian Postal Corporation Print S5109 at [36]
[49] Enhance Systems Pty Ltd v Cox PR910779 at [39]
[50] Smith v Moore Paragon Australia Ltd (2004) 130 IR 446 at [32]
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