Botiki v WorkPac Mining Pty Ltd

[2021] FWC 508

[2021] FWC 508

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Botiki and Ors
v
WorkPac Mining Pty Ltd
(U2020/8709) (U2020/8710) (U2020/8711) (U2020/8712) (U2020/8714)

COMMISSIONER RIORDAN SYDNEY, 8 MARCH 2021

Application for an unfair dismissal remedy.

[1] On 24 June 2020, the Construction, Forestry, Maritime, Mining, and Energy Union (the CFMMEU) filed 6 unfair dismissal applications (the Applications) on behalf of their members Mr Peni Botiki, Mr Francisco Valdivia, Mr Craig Kedwell, Mr Nathan Calder and Mr Wayne Powell (the Applicants).

[2] Prior to their termination, The Applicants were employed by WorkPac Mining Pty Ltd (the Respondent). The Respondent is a large labour hire company, ie, they source and provide experienced and/or competent employees to companies, usually to supplement their existing workforce.

[3] The Applicants were working on a development contract for PIMS mining (PIMS) (the Development Contract) at the Appin Coal Mine (the Mine) operated by Illawarra Coal Holdings Pty Ltd (South 32). The Applicants were made redundant on 9 or 10 June 2020 due to the downturn in the coal industry as a result of the COVID-19 pandemic.

[4] At or around the same time as the Applicants were being made redundant, South 32 signed a contract (the Supplementary Labour Contract) with the Respondent to employ 90 experienced coalminers to work at the Mine.

[5] The Applicants argued that the Respondent has not complied with sections 389(1)(a), 389(1)(b), and 389(2) of the Fair Work Act 2009 (Cth) (the Act), on the basis that the Respondent still required the work to be performed, the Respondent did not consult properly with the Applicants, nor did the Respondent take reasonable steps to redeploy the Applicants.

[6] Pursuant to section 596 of the Act, the Respondent was granted leave to be represented throughout the proceedings by Mr Dan Williams, Partner of MinterEllison. The Applicants were represented throughout the proceedings by Mr Adam Walkaden of the CFMMEU.

[7] The parties have advised me that there is no Full Bench authority in relation to the application of section 389 of the Act to a labour hire company.

BACKGROUND

[8] In late April 2020, South 32 advised PIMS that there was a likelihood that they would need to cut 23 employees from its workforce on the Development Contract. PIMS advised the Respondent of the possible redundancy scenario in late April 2020. Relevantly, the Respondent did not pass on this information to their employees. PIMS advised the Respondent of the final decision to return 23 of the Respondent’s employees in late May 2020. PIMs notified the employees of the Respondent, under its control, of this decision at site meetings between 20 May and 23 May 2020. Due to COVID-19 restrictions, no representative from the Respondent could attend these meetings because South 32 would not allow them onto the Mine.

[9] On 28 May 2020, PIMS advised the Respondent of the 23 individuals that it no longer required. The Respondent made contact with the affected employees by telephone on June 1 and 2, 2020.

[10] At the same time, the Respondent was recruiting ninety experienced Mineworkers and Deputies for South 32 at the Mine. Four of the five Applicants were put forward by the Respondent to South 32 as part of the recruitment process. Mr Botiki was not put forward because he did not have the required experience in the mining industry, having started in August 2019. An employee with insufficient experience is colloquially known in the mining industry as a ‘cleanskin’.

[11] Relevantly, none of the four employees were redeployed into any of the roles at South 32 in the first round of recruitment.

STATUTORY PROVISIONS

[12] Section 389 of the Act states:

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.

BRIEF OUTLINE OF SUBMISSIONS AND EVIDENCE

[13] Mr James Mikutowski was the Respondent’s sole witness. Mr Mikutowski provided three witness statements in the proceeding. The Applicants each provided two witness statements in the proceeding. At the request of the Commission, Mr Andrew Itzstein, General Manager of the PIMS Group and Mrs Donna Morrissy, South 32’s Contracts Manager, gave evidence.

[14] Mr Mikutowski and Ms Morrissy gave conflicting evidence regarding the role that South 32 played in recruiting for the Supplementary Labour Contract. It was Mr Mikutowski’s evidence that the Respondent provided South 32 a list of potential employees. Mr Mikutowski stated that South 32 determined which of these aspirates would be hired by the Respondent and subsequently assigned to work on the Supplementary Labour Contract. Ms Morrissy contradicted Mr Mikutowski:

“we provide a number, and we will say that we need X number of people in different areas on certain rosters.  And then they must provide us with the numbers against that.  So, we might say that we need 20 people in mine services, including X number of deputies and trades, and then they would source the right skill set to fill those numbers.”0F 1

Mr Mikutowski was recalled to address the inconsistency between his evidence and Ms Morrissy’s evidence. I put the following to Mr Mikutowski:

“You would have seen or you would have been briefed, I'm sure, by Mr Williams that Ms Morrissy basically said that South32 were never provided with names.  They were just after numbers in relation to each classification.  What do you say about that?”1F 2

Mr Mikutowski responded:

“I - yes, I dispute that.  We definitely submitted names.  I can't comment on why Ms Morrissy would suggest otherwise.  I don't know why but, yes, I definitely disagree with that statement.”2F 3

[15] The Respondent raised a jurisdictional objection to the Applications, claiming that the redundancies were genuine. Also, based on the provisions of their contract with PIMS, they had no say in the number of redundancies or the identity of the employees who were sent back from PIMS.

[16] Further, the Respondent admitted that although they were not physically able to attend the meetings at the Mine due to the COVID-19 restrictions placed around entry to the Mine by South 32, the Respondent contacted every affected employee by telephone (for approximately 2 to 10 minutes each) and spoke to them about the decision to make them redundant and possible redeployment opportunities.

[17] Also, the Respondent stated that it is not a coal mine operator. It is in the business of providing labour to a variety of industries. As a result, it doesn’t have positions, “in house”, for typical blue collar, coal mine employees because they employ receptionists, recruiters, etc and other typical white-collar classifications. As a result, once the decision was made by PIMS that it no longer required the same number of the Respondent’s employees, it was a logical conclusion that the roles were no longer required to be performed by anyone.

[18] Relevantly, Clause 22 of the Workpac Coal Mining Agreement 2019 (the Agreement) states:

This clause applies if the Company:

(a) has made a definite decision to introduce a major change to production, program, organisation, structure or technology in relation to its enterprise that is likely to have a significant effect on the employees; or

(b) proposes to introduce change to the regular roster or ordinary hours of work of employees.

Major change

22.l For a major change referred to in clause 22 (a):

(a) the Company must notify the relevant employees of the decision to introduce the major change; and

(b) clauses 22.2- 22.7 to apply.

22.2 The relevant CMWs may appoint a representative for the purposes of the procedures in this clause. If:

(a) a relevant CMW appoints, or relevant CMWs appoint, a representative for the purposes of consultation and

(b) the CMW or CMWs advise the Company of the identity of the representative; then the Company must recognise the representative.

22.3 As soon as practicable after making its decision, the Company must:

22.3. 1 discuss with the relevant CMWs:

(a) the introduction of the change; and

(b) the effect the change is likely to have on the CMWs; and

(c) measures the Company is taking to avert or mitigate the adverse effect of the change on the CMWs: and

22.3.2 For the purposes of the discussion - provide, in writing, to the relevant CMWs:

(a) all relevant information about the change including the nature of the change proposed; and

(b)information about the expected effects of the change on the CMWs; and

(c) any other matters likely to affect the CMWs.

22.4 However, the Company is not required to disclose confidential or commercially sensitive information to the relevant CMWs.

22.5 The Company must give prompt and genuine consideration to matters raised about the major change by the relevant CMWs.

22.6 If a term in this Agreement provides for a major change to production, program, organisation, structure or technology in relation to the enterprise of the Company, the requirements set out in clauses 22.1 (a), 22.2 and 22.3 of this clause are taken not to apply.

22.7 In this term, a major change is likely to have a significant effect on CMWs if it results in:

22.7.1 the termination of the employment of CMWs; or

22.7.2 major change to the composition, operation or size of the Company' s workforce or to the skills required of CMWs; or

22.7.3 the elimination or diminution of job opportunities (including opportunities for promotion or tenure); or

22.7.4 the alteration of hours of work; or

22.7.5 the need to implement or alter shift work arrangements; or

22.7.6 the need to retrain CMWs; or

22.7.7 the need to relocate CMWs to another workplace; or

22.7 .8 the restructuring of jobs.

22.7.9 Change to regular roster or ordinary hours of work

22.7.10 For a change referred to in clause 22.1 (b):

a) The Company must notify the relevant CMWs of the proposed change; and

b) clauses 22.8 to 22.11 apply.

22.8 The relevant CMWs may appoint a representative for the purposes of the procedures in this term.

If:

(a) a relevant CMW appoints, or relevant CMWs appoint, a representative for the purposes of consultation; and

(b) the CMW or CMWs advise the Company of the identity of the representative; then the Company must recognise the representative.

22.8.1 As soon as practicable after proposing to introduce the change, the Company must:

(a) discuss with the relevant CMWs the introduction of the change; and

(b) for the purposes of the discussion - provide to the relevant CMWs:

i) all relevant information about the change, including the nature of the change; and

ii) information about what the Company reasonably believes will be the effects of the change on the CMWs; and

iii) information about other matters that the Company reasonably believes are likely to affect the CMWs; and

iv) invite the relevant CMWs to give their views about the impact of the change (including any impact in relation to their family or caring responsibilities).

(c) However, the Company is not required to disclose confidential or commercially sensitive information to the relevant CMWs.

(d)The Company must give prompt and genuine consideration to matters raised about the change by the relevant CMWs.

(e) In this clause the relevant CMWs means the CMWs who may be affected by the change referred to in sub clause 22.7.

(my emphasis)

[19] The Respondent argued that the obligation to “consult” in the clause was not triggered because:

“(a) there was no relevant decision by WorkPac to introduce a 'major change to production, program, organisation, structure or technology in relation to its enterprise';

(b) the 'major change to production' was a decision of WorkPac's client, PIMS, or South32 itself. WorkPac played no role in the decision of South32 or PIMS in relation to the production levels required.”0F3F 4

[20] Further, based on the Applicants’ Notice of Offer, the Respondent was no longer able to deploy the Applicants with PIMS once PIMS no longer required their services.

[21] The Respondent submitted that, the decision to terminate the Applicants was not a result of any changes to the operation or management of the Respondent. The Respondent continued its business as a labour hire provider.

[22] Further, the Respondent submitted that the forced redundancy of 23 employees, out of a workforce totalling 9,300 is not a major change. In HSU v Healthscope Operations Pty Ltd [2020] FCCA 1045. It was held:

“In the current case, it cannot be said that the forced redundancy of 12, out of a total of 2884 employees, covered by the Agreement statewide, can be considered to be a “major change”. While no doubt a major change and distressing to the employees themselves, that is not the test. As noted by Jessup J in PKCT at [187]:

In the present case, it is enough to reiterate 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.

The Court does not consider it appropriate to consider the size of the change as being restricted to the Newcastle Private Hospital alone.”1F4F 5

[23] The Respondent referred me to the decision in CEPU v Jemena Asset Management Pty Ltd[2016] FWC 6494, where it was held:

“[36] Not every change which may have a deleterious effect on employees of the Respondent, or on the conditions or benefits derived from employment fall within the ambit of clause 4.3. The change must be a major change and the change must be “in” one or more of the areas identified. In my view, the change identified, namely a decision by the Respondent to enforce an existing policy which previously was not enforced or at least not strictly enforced, is not a change in anyone or more of the areas identified in clause 4.3.2 of the Agreement.”5F 6

[24] The Respondent also submitted, that if there was an obligation to consult, they satisfied the obligation by the telephone discussion conducted by Mr Mikutowski and the correspondence that was sent to the employees.

[25] In relation to the issue of reasonable redeployment, the Respondent submitted that it was not reasonable for any of the Applicants to be redeployed within the Respondent’s enterprise or that of an associated entity. The Respondent also submitted that, in Ulan Coal Mines Limited v Honeysett and others[2010] FWAFB 7578, the Full Bench determined that redeployment had to be reasonable at the time of the dismissal:

“[28] Thirdly, the question posed by s.389(2), whether redeployment would have been reasonable, is to be applied at the time of the dismissal. If an employee dismissed for redundancy obtains employment within an associated entity of the employer some time after the termination, that fact may be relevant in deciding whether redeployment would have been reasonable. But it is not determinative. The question remains whether redeployment within the employer’s enterprise or the enterprise of an associated entity would have been reasonable at the time of dismissal. In answering that question a number of matters are capable of being relevant. They include the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job in relation to the employee’s residence and the remuneration which is offered.”6F 7

[26] The Respondent submitted that the Supplementary Labour Contract was signed in mid May 2020. The Applicants were not notified of their pending termination until 1 June 2020. The Respondent argued that their first wave of aspirants to the Supplementary Labour Contract had already been processed by the time the Applicants had been made redundant. Further, the Applicants, apart from Mr Botiki, were all put forward in the second wave for South 32s approval.

[27] The Respondent submitted:

“I accept that some of these concepts are a little challenging, but this matter has to be determined in the context of the specific employment and the specific part of the industry or role in the industry that my client, WorkPac, had.  In those circumstances, the primary submission is that redeployment doesn't apply at all because my client doesn't have coal miners in its enterprise.  Secondly, there was no redeployment opportunity reasonably available to it, either at Appin or with anybody else, in part because WorkPac itself does not have the unilateral right to place people.  That just simply seems to be our position.”7F 8

(my emphasis)

[28] The Respondent submitted that common sense dictates that it is financially beneficial for the Respondent to have the Applicants placed with an employer, thereby generating income for the Respondent. As a result, the Respondent has continued to try and identify alternative roles for the Applicants, including with South 32 where two of the Applicants are now engaged.

[29] The Respondent submitted that its’ employees are not second-class citizens simply because they work for a labour hire company. Both the Applicant and the Respondent referred me to the decision of Asbury DP in Kim Star v WorkPac Pty Ltd T/A WorkPac Group(Kim Star)[2018] FWC 4991:

“[99] However, the contractual relationship between a labour hire company and a host employer cannot be used to defeat the rights of a dismissed employee seeking a remedy for unfair dismissal. Labour hire companies cannot use such contractual relationships to abrogate their responsibilities to treat employees fairly. If actions and the consequences for an employee would be found to be unfair if carried out by the labour hire company directly, they do not automatically cease to be unfair because they are carried out by a third party to the employment relationship. If the Commission considers that a dismissal is unfair in all of the circumstances, it can be no defence that the employer was complying with the directions of another entity in effecting the dismissal”8F 9

[30] The Respondent submitted that Parliament purposively excluded consideration of the reasons a person is selected for redundancy when the Commission is determining whether a redundancy is genuine. Further, the Respondent submitted that there were no redeployment opportunities available to the Applicant because the Respondent did not have the power to choose who would be employed by the Respondent and assigned to South 32.

“I've been in a few matters where there has been contest about selection processes, my experience is that it's rarely an edifying process to inquire as to whether one employee should have been selected when, if that person wasn't selected, inevitably another would have and that's the reason why Parliament has decided that selection for redundancy is excluded from consideration at the stage of deciding whether redundancies were genuine.

They were not reasonably available to WorkPac and so, Commissioner, ultimately what's revealed is that the redundancies were genuine and the proceedings don't have jurisdiction. I don't want to stray unnecessarily into the issues of fairness because, of course, I've made it clear that our submission is that we don't think it is relevant but I do want to close with a couple of observations about that. We at WorkPac can accept that the cascading model of labour engagement, which was a circumstance at the Appin mine, can give the appearance of creating unfairness because normal processes of interaction, consultation, selection and the like between employers and employees in redundancy situations, and in my experience sometimes in performance and conduct situations, are not available in the way that the Fair Work Act would contemplate in relation to a direct employment situation.”2F9F 10

[31] The Applicants submitted that their terminations were not cases of genuine redundancy within the meaning of section 389 of the Act on the basis that each of the three elements of section 389 must be satisfied to jurisdictionally bar the Applications.

[32] The Applicants submitted that the test in section 389(1)(a) of the Act is not whether the duties or tasks were still being performed but whether the ‘job’ was still required. In Mackay Taxi Holdings Ltd T/A Mackay Whitsunday Taxis v Ms Kaye Wilson [2014] FWCFB 1043 a Full Bench of the Commission held:

“[37] Whether the original duties or tasks continue to be required to be performed is not necessarily relevant: it is the operationally-driven changes to the position that need to be made out.

[38] We think this point was made sufficiently clear by the Full Bench in Ulan Coal Mines Limited v Howarth and Others. 

[39] In that decision, the Full Bench endorsed the proposition that it does not matter if discrete duties or tasks survive the operational change or restructure and continue to be performed. The question to be determined, in actuality, is whether the former position itself survives:

[15] These were the circumstances in which it was necessary to consider the meaning and application of the relevant statutory provisions and, in particular, the expression “the person’s employer no longer required the person’s job to be performed by anyone” in s.389(1)(a) of the Act. These words have long been used and applied in industrial tribunals and courts as a practical definition of redundancy (see e.g. R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Cooperative Limited (1977) 16 SASR 6; Termination, Change and Redundancy Cases (1984) 8 IR 34 and (1984) 9 IR 115; Short v F.W. Hercus Pty Limited (1993) 40 FCR 511). They have also been adopted in the National Employment Standards provided under the Act in dealing with entitlements to redundancy payments (see s.119).

[16] The Explanatory Memorandum to the Fair Work Bill 2008 provides examples as to when a dismissal will be a case of genuine redundancy:

“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.”

[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.”

[18] In Kekeris v A. Hartrodt Australia Pty Ltd[2010] FWA 674 Hamberger SDP considered whether a dismissal resulting from the restructure of a supervisory team was a case of genuine redundancy. As a result of the restructure, four supervisory team leader positions were replaced by three team leader positions. The Senior Deputy President said:

“When one looks at the specific duties performed by the applicant prior to her termination they have much in common with those of two of the new positions in the new structure. The test is not however whether the duties survive. Paragraph 1548 of the explanatory memorandum makes clear that it can still be a ‘genuine redundancy’ where the duties of a previous job persist but are redistributed to other positions. The test is whether the job previously performed by the applicant still exists.” (at par [27])

[19] In the present case, the Commissioner appears not to have drawn an appropriate distinction in his reasoning between the “jobs” of the mineworkers who were retrenched and the functions performed by those mineworkers or take proper account of the nature of the restructure at the mine which led to an overall reduction in the size of the non-trades mineworker workforce. The Company restructured its operations in various ways including by outsourcing certain specialised, ancillary and other work and increasing the proportion of trade-qualified mineworkers and outbye crews. As a result, it was identified that there were 14 non-trades mineworker positions which were surplus to the Company’s requirements. The mineworkers whose employment was to be terminated were determined according to the seniority principle as provided in the Agreement. This did not mean that the functions or duties previously performed by the retrenched mineworkers were no longer required to be performed. It also did not mean that the positions of some of these mineworkers (e.g. in underground crews) did not continue, although those positions might after the restructure be filled by more senior non-trades mineworkers transferred from other parts of the operations or by trade-qualified mineworkers. However fewer non-trades mineworker jobs were required overall at the mine as a result of the operational changes introduced and, for this reason, the jobs of the 14 mineworkers selected for retrenchment could be said to no longer exist.

[20] These circumstances readily fit within the ordinary meaning and customary usage of the expression in s.389(1)(a) of the Act where a job is no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.

[40] In the case before the Full Bench cited above, the employer had restructured its operations by increasing the number of trade qualified mineworkers, but this did not mean the duties of the functions and duties performed previously by the retrenched mineworkers were no longer required to be performed. Those positions continued to be performed by more senior mineworkers, in some instances. The case, however, is distinguishable from the current circumstances in so far as there was also a reduction in the number of employees.

[41] Further, the examples provided by the Explanatory Memorandum, referred to above, are not exhaustive, but they are demonstrative of the kinds of changes in operational circumstances that can affect enterprises. Such changes may, as here, alter or extend the range of duties that comprise a job and the qualification mix required as a consequence. Equally, the duties that comprise a job may be redistributed and continue to be performed by others (and the job disappear). Or else the job itself and the body of duties associated with it may disappear altogether (with a downturn, an efficiency drive, a contractual change, a change in business focus, or a technological development etc).”3F10F 11

(my emphasis)

[33] In relation to Mr Calder’s Notice of Offer, the Applicants highlighted the Client Site Position, which said:

“Initially you will be employed in the role of Experienced Operator on a full-time basis and may subsequently be employed in other comparable roles as determined by WorkPac”.4F11F 12

[34] The remainder of the Applicants’ Notice of Offer described the Appin Development Contract as the “Assignment”. I note again that PIMS were undertaking the Development Contact at Appin.

[35] The Applicants highlighted the unusual situation where the Respondent made 23 employees redundant at or around the same time as they were recruiting 90 employees to work at the same mine.

[36] The Applicants claimed that such a scenario demonstrated that section 389(1)(a) of the Act has not been satisfied.

[37] The Applicants submitted that the Respondent’s claim that it was not required to consult with its employees about their pending redundancy is absurd.

“The excuses offered by the Respondent for failing to consult with the Applicants – the size of jobs cuts compared to the overall size of the Respondent’s workforce and that the decision was made by the client with the Respondent being effectively a bystander with no control over the decisions made in respect of its own employees - cannot be accepted. Given the nature of the Respondent’s business, if accepted, it would – more often than not - excuse the Respondent from consulting before making redundancies. It would also deprive clause 22 of the Agreement of any real meaning. Such a construction of clause 22 of the Agreement cannot be accepted.”5F12F 13

[38] The Applicants also argued that a brief telephone conversation and the sending of a pro forma letter does not satisfy the consultation obligation of the Agreement, on the basis that the Respondent was the employer and it made the decision to terminate its 23 employees.

[39] The Applicants submitted that, if the Respondent was not required to consult with its employees, as suggested by the Respondent, when there were employees being made redundant or being forced to change their shift arrangements, then the Respondent will never be required to consult its employees. If this was true, then labour hire employees would have less industrial rights then permanent employees.

[40] In relation to section 389 (2) of the Act, the Applicants submitted that it is the Respondent who bears the onus to prove that it has complied with the Act and referred the Commission to the Full Bench decision in Technical and Further Education Commission T/A TAFE NSW v L. Pykett (Pykett)[2014] FWCFB 714, where it was held:

“[36] … For the purposes of s.389(2) the Commission must find, on the balance of probabilities, that 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 also be an appropriate evidentiary basis for such a finding. Such an interpretation is consistent with the ordinary and natural meaning of the words in the subsection; the Explanatory Memorandum and Full Bench authority. We acknowledge that the facts relevant to such a finding will usually be peculiarly within the knowledge of the employer respondent, not the dismissed employee. If an employer wishes to rely on the ‘genuine redundancy’ exclusion then it would ordinarily be expected to adduce evidence as to the following matters:

(i) that the employer no longer required the dismissed employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;

(ii) whether there was any obligation in an applicable modern award or enterprise agreement to consult about the redundancy and whether the employer complied with that obligation; and

(iii) 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 employer.

[37] The evidence in relation to (iii) would usually include canvassing the steps taken by the employer to identify other work which could be performed by the dismissed employee.”13F 14

(my emphasis)

[41] The Applicants argued that the Respondent’s business is labour hire – claiming that is what it does. As a result, where the Commission applies the test in s 389(2), the test is whether it was reasonable to redeploy the Applicants to another role in the Respondent’s business, of the which there were 90 new vacancies at the time of the terminations.

[42] In relation to the Respondent’s lack of control over its employees, the Applicants submitted:

“Our submission is you have got to take the good with the bad. The respondent, we said this in our third outline, has presumably enjoyed considerable commercial success from being, quote, "the middle man." It has put - its business model is premised upon putting some distance between the client and its employees. That is its business (indistinct). That is something that the respondent has gone into with its eyes wide open, and that lack of control is something that if it puts the respondent in conflict with its obligations as an employer under the Act to consult, and where reasonable redeployment rather than make redundant, it must bear the legal consequences of. That is a relatively straightforward argument. If you are to find otherwise, the commission would really be suggesting that labour hire employees are second-class citizens. That labour hire employees do not have a right to be consulted, do not have a right to be redeployed. Given the number of labour hire employees, which is a point made by Asbury DP in the Kim Star matter, that are now found across the economy and in the job market, that would be depriving a large number of Australian workers of valuable industrial rights to be consulted prior to being terminated and being given an opportunity to be redeployed prior to being terminated.

…

That lack of control which has been ventilated through this case is no defence to a lack of consultation and a failure to redeploy.6F14F 15

Consideration

[43] This is quite obviously a very complex matter which goes to the very heart of the employment relationship and the corresponding obligations associated with the labour hire industry. I have taken into account all of the submissions of the parties and the evidence of the witnesses.

Determination

Section 389(1)(a) of the Act

[44] I am satisfied that the Applicants were employed to perform work on the Development Contract with PIMS. From an earlier matter that I determined ([2019] FWC 8163), I know that it was the intention of PIMS to offer employment to the Respondent’s employees on a full time and permanent basis. According to Mr Itzstein, the timing of the pandemic and the decision of South 32 to reduce the hours of operation at the Mine was unfortunate in relation to this process. I am also aware from this earlier matter that South 32 knew that the overwhelming majority of the personnel working on the Development Contact were employees of the Respondent.

[45] I accept that the work on the Development Contract and the work performed under the Supplementary Labour Contract were similar in relation to location, skills required and competencies. However, I do not accept that they are the same job. The Respondent’s employees working on the Supplementary Labour Contract are not performing work associated with the Development Contact.

[46] As a result, I am satisfied and find that the Respondent has complied with section 389 (1)(a) of the Act.
Section 389(1)(b) of the Act

[47] The COVID-19 pandemic has changed the way that the majority of Australians have had to work. Enterprise and work locations have had to adopt new practices to comply with the orders and requirements of the relevant health authorities. Employees have played a vital role in keeping essential industries operational by adopting to these new requirements. I accept the evidence of Mr Mikutowski that, under normal circumstances, he would have been present at the Mine at the toolbox meeting where the Applicants were advised by PIMS that there were to be 23 redundances except for South 32 locking out all visitors to the Mine due to COVID-19.

[48] However, I do not accept that the brief telephone conversation or the pro forma letter that was sent to the Applicants satisfies the Respondent’s consultation obligations under the Agreement. At the very least, a virtual meeting of the 23 employees should have been conducted. Alternatives to the 23 redundancies may have been proposed or canvassed. I am aware that at a different mine on the South Coast of NSW, all contractor employees have gone part time to “share the burden” amongst all employees rather than have a few carry the entire ramifications of the downturn due to COVID-19.

[49] I am also of the view that the Respondent should have advised its employees of the possibility of upcoming redundancies in late April 2020 when they were first advised of this distinct possibility by PIMS. At this point in time the Respondent must have been in negotiations with South 32 in relation to the Supplementary Labour Contact. There were clearly opportunities for the excess employees of the Respondent working on the Development Contract to transfer to the Supplementary Labour Contact.

[50] Clause 22.7.1 and 22.7.2 of the Agreement clearly identify that a major change for an employee is identified as one that results in the termination of their employment or the size of the workforce.

[51] I do not accept the arguments that the Respondent did not have an obligation to consult with the Applicants in relation to their pending redundancy. Having found that the Applicants’ “job” was associated with their allocation to the PIMs Development Contract at Appin, the making of 25 employees redundant out of a workforce of 85 (some 31%) is quite clearly a major change which requires consultation under the Agreement.

[52] Having been involved in thousands of enterprise agreement bargaining meetings in my previous role, I have never heard of an employer or an employee who has suggested that the loss of an employee’s job is not a major change that enlivens the consultation obligations of an enterprise agreement. Precedent which may suggest otherwise, in my view, is clearly wrong and in this case, irrelevant. The consultation provisions of the Agreement are specific and concise.

[53] In Wang v Specialty Fashion Group Ltd(Wang) [2011] FWA 6872 Vice President Watson, was confronted with a circumstance comparable to the one at hand. Relevantly, in Wang both the decision to effect redundancies and the identity of the employees to be made redundant were determined prior to any discussion with the workforce. In fact, the only communication with the workforce were the discussions in which the effected employees were informed of their redundancy. With respect to whether the employer complied with section 389(1)(b) of the Act, Vice President Watson found:

“[28] In this case a definite decision to make 21 redundancies in the Design and Production department was made on or about 1 June. Representatives of management then met amongst themselves to select the employees to be made redundant. They then planned an announcement to the workforce and made the announcement on 23 June. On that day they individually notified each of the redundant employees that they were redundant effective that day.

[29] SFG contends that the “one on one” discussion with the employees were an opportunity for employees to raise selection issues and are properly viewed as an adequate consultation process. I reject that submission. The employees were told of the decisions without any invitation for matters relevant to the decision to be raised so that they could be considered by SFG. There was no indication of an opportunity for input or the SFG’s open mind on issues such as selection, redeployment, payments and alternatives to redundancy.

[30] It may be that consultation was unlikely to alter the situation, but that is not the question I need to consider. The definition of genuine redundancy only applies if SFG has complied with its consultation obligations. On the evidence before me I am unable to conclude that it has.”15F 16

[54] In this matter, the Respondent communicated with the Applicants regarding the redundancies on two occasions. Firstly, when the Respondent called each of the Applicants and notified them of their redundancies. Secondly, when the redundancies were confirmed via a letter sent to the Applicants. On neither occasion were the Applicants given an opportunity to provide meaningful input on issues such as selection, redeployment, payments and alternatives to redundancy. It is well accepted that section 389(1)(b) of the Act requires an employer to meaningfully consult with their employees regarding a proposed redundancy.16F 17 As was found in Wang, I find that the Respondent has not complied with section 389(1)(b) of the Act.

[55] I find that the Respondent has not complied with its consultation obligations under the Agreement.

Section 389(2) of the Act

[56] I acknowledge the contested and conflicting evidence between Mr Mikutowski and Ms Morrissy. Whilst South 32 and the Respondent should have in place a well-defined and understood process for the recruitment of workers, I do not believe it is necessarily relevant to determine in favour of either witnesses’ understanding of what transpired in relation to the Applicants. Neither witness was actually involved in the recruitment of the 90 employees for the Supplementary Labour Contract.

[57] Exhibit 17 is a redacted copy of the contract between the Respondent and South 32 for the Supplementary Labour Contract. I can find no provision in this contract which gives South 32 any right, unfetted or otherwise, to not accept any employee who possesses the necessary skills, competences and qualifications, provided by the Respondent to satisfy the contract.

[58] I accept the submission of the Applicants that the Respondent is in the business of labour hire. It only provides labour to clients, not a specific set of skills, functions and tasks like an electrical contractor. I find that the Respondent is a contractor of labour. That is its enterprise.

[59] The test for the Respondent in relation to section 389(2) of the Act was whether it was reasonable for the Applicant to be redeployed within its enterprise at the time of their termination.

[60] As stated earlier, whether South 32 was receiving names or numbers from the Respondent is not relevant. The Respondent should have advised South 32 that there were 4 employees that it was legally obligated to place into the Supplementary Labour Contract. It should have had these 4 employees “on boarded” before submitting any other names. It is beyond the realm of credibility that an experienced industrial participant like South 32 would not have understood the requirements of the Respondent to comply with the Act. However, the Respondent appears to have just grouped the 4 employees in with the other employment seeking aspirants in sending a list to South 32. In real terms, the Applicants were forced to compete for a role, when section 389(2) does not require such competition. There can be no argument that these employees were competent to perform underground coal work because they were all experienced mineworkers who had been performing underground coal work at the Mine for the last 10 months, without complaint or discipline, in the Development Contract for PIMS.

[61] It is not in dispute that Mr Botiki did not have the necessary qualifications or experience to be considered for the Supplementary Labour Contract.

[62] I find that it was reasonable for the Applicants, except for Mr Botiki, to have been redeployed into the Supplementary Labour Contract. The Applicants had the skills and competencies to perform the work, they had been working at the Mine for at least the last 10 months and the rate of pay would have been similar if not the same (which was also regulated by an enterprise agreement with the CFMMEU).

[63] As a result, I find that the Respondent has not satisfied section 389(2) of the Act.

[64] Having found that the Respondent has not consulted with any of the Applicants in accordance with the consultation provisions of the Agreement and not redeployed 4 of the Applicants at the time of their termination into the Supplementary Labour Contract, I find that the Applicants’ dismissals were not cases of genuine redundancy.

[65] Having found that the Applicants’ termination were not cases of genuine redundancy, I now briefly turn to the question of whether the Applicants have been unfairly dismissed.

Statutory Previsions

[66] The relevant sections of the Act relating to an unfair dismissal application are: -

381 Object of this Part

(1) The object of this Part is:

(a) to establish a framework for dealing with unfair dismissal that balances:

(i) the needs of business (including small business); and

(ii) the needs of employees; and

(b) to establish procedures for dealing with unfair dismissal that:

(i) are quick, flexible and informal; and

(ii) address the needs of employers and employees; and

(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a "fair go all round" is accorded to both the employer and employee concerned.

Note: The expression "fair go all round" was used by Sheldon J in in re Loty and Holloway v Australian Workers' Union [1971] AR (NSW) 95.

382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

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.

Consideration

[67] When considering whether a termination of an employee was harsh, unjust or unreasonable, the oft-quoted joint judgement of McHugh and Gummow JJ in Byrne v Australian Airlines (Byrne) [1995] HCA 24 is of significance:

“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.” 17F 18

[68] In analysing Byrne, a Full Bench of the Australian Industrial Relations Commission in Australian Meat Holdings Pty Ltd v McLauchlan held:

“The above extract is authority for the proposition that a termination of employment may be:

•  unjust, because the employee was not guilty of the misconduct on which the employer acted;

•  unreasonable, because it was decided on inferences which could not reasonably have been drawn from the material before the employer; and/or

•  harsh, because of its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct.”   18F 19

Section 387(a) Valid Reason

[69] The meaning of the phrase “valid reasons” has been universally drawn from the judgement of Northrop J in Selvachandran v Peteron Plastics Pty Ltd (Selvachandran) [1995] IRCA 333:

“In broad terms, the right is limited to cases where the employer is able to satisfy the Court of a valid reason or valid reasons for terminating the employment connected with the employee’s capacity or performance or based on the operational requirements of the employer. …

Section 170DE(1) refers to “a valid reason, or valid reasons”, but the Act does not give a meaning to those phrases or the adjective “valid”. A reference to dictionaries shows that the word “valid” has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is: “2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.” In the Macquarie Dictionary the relevant meaning is “sound, just, or well founded; a valid reason”.

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 reason 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, commonsense way to ensure that” the employer and employee are each treated fairly…”19F 20

(my emphasis)

[70] In Rode v Burwood Mitsubishi (Burwood Mitsubishi )a Full Bench of the AIRC held:

“[19] We agree with the appellant's submission that in order to constitute a valid reason within the meaning of s.170CG(3)(a) the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.”20F 21

(my emphasis)

[71] I have found that the Applicants’ dismissals were not a case of genuine redundancy. The Respondent did not offer an alternative reason for the dismissals related to the Applicants’ capacity or conduct. Following the obiter in Selvachandran and Burwood Mitsubishi, I find that the Respondent did not have a valid reason to terminate the Applicants.

Section 387 (b) Notified of Reason

[72] The Applicants were notified of the reason for dismissal at the time of their termination, ie, there positions were being made redundant. As the Applicants' dismissals were not related to the Applicants' capacity or conduct this criterion is a neutral consideration.

Section 387 (c) Opportunity to Respond

[73] As the Applicants were not terminated for a reason related to their capacity or conduct this criterion is a neutral consideration.

Section 387 (d) Unreasonable Refusal of Support Person

[74] The Respondent did not unreasonable refuse the Applicants a support person. This criterion is a neutral consideration

Section 387 (e) Warned about Unsatisfactory Performance before the dismissal

[75] The Applicants were not terminated for unsatisfactory performance. This criterion is a neutral consideration

Section 387 (f) and (g) Size of Employer and access to Dedicated Human Resource Management

[76] The Respondent is a large enterprise with access to Human Resource professionals. The Respondent acknowledged that it would have been more appropriate for the Applicants to be told about their redundancy in person. However, due to the extraordinary situation brought about by the COVID-19 pandemic, they were precluded from doing so. Given the circumstances, the Respondent cannot be overly criticised for the way in which they effected the terminations. This criterion is a neutral consideration.

Section 387 (h) Any Other Matters

[77] I have taken into account that the Respondent did not consult with the Applicants in accordance clause 22 of the Agreement and that the Respondent did not redeploy Mr Valdivia, Mr Kedwell, Mr Calder and Mr Powell in accordance with section 389(2) of the Act.

Conclusion

[78] The Respondent is in the business of hiring out skilled labour. It is a labour contractor. When the Respondent assigns an employee to a client, the client is not the legal employer of the worker, the legal employer of the worker is the Respondent.

[79] The Respondent was of the view that the employment relationship with the Applicants basically concluded when PIMS decided that they had no further work for the Applicants. This was not the case. The Respondent does not gain an exemption from section 389(2) of the Act simply because it is a labour hire company. If that was the case, then every employer in Australia would outsource its workforce to a labour hire company in order to avoid its obligations under the Act.

[80] Therefore, when PIMS sent back the 23 employees from the Mine, those 23 employees, were still employed by the Respondent. The Respondent was then required to deal with the on-going employment status of the employees. Redeployment was an option, but not in the manner conducted by the Respondent. These employees were entitled to be placed into the Supplementary Labour Contract, free from competition from any other aspirant. The Respondent failed to honour their statutory obligation to these employees in accordance with section 389(2) of the Act.

[81] Following the obiter in Kim Star, the Respondent is not exempt from the provisions of section 389 of the Act. To allow the Respondent to sustain an argument that there was no need for an appropriate standard of consultation or for redeployment, based on the fact that the Respondent is a labour hire company, would be creating a second-class standard of employee under the Act.

[82] It is plainly obvious that both South 32 and the Respondent should have been aware of the potential redeployment of the Applicants into the Supplementary Labour Contract. The Respondent knew in late April that there was every likelihood that PIMS would be reducing its workforce due to a decision by South 32. At the same time the Respondent was in negotiation to supply labour to South 32 for the Supplementary Labour Contract. It is difficult to believe that an experienced industrial participant such as the Respondent would not have been aware of its statutory obligations or, at the very least, the opportunity to place the Applicants with South 32 through the Supplementary Labour Contract.

[83] Having found that the Respondent did not have a valid reason to terminate the Applicants on the basis that the Applicants were not genuinely redundant, common-sense dictates that the Applicants termination must be harsh and unfair.

[84] I find that the dismissal of Mr Botiki was harsh and unjust because there was no valid reason for his dismissal and he was not consulted in accordance with clause 22 of the Agreement.

[85] I find that the dismissal of Mr Valdivia was harsh and unjust because there was no valid reason for his dismissal, he was not consulted in accordance with clause 22 of the Agreement and he was not redeployed at the time of his dismissal within the Respondent’s enterprise in accordance with section 389(2) of the Act.

[86] I find that the dismissal of Mr Kedwell was harsh and unjust because there was no valid reason for his dismissal, he was not consulted in accordance with clause 22 of the Agreement and he was not redeployed at the time of his dismissal within the Respondent’s enterprise in accordance with section 389(2) of the Act.

[87] I find that the dismissal of Mr Calder was harsh and unjust because there was no valid reason for his dismissal, he was not consulted in accordance with clause 22 of the Agreement and he was not redeployed at the time of his dismissal within the Respondent’s enterprise in accordance with section 389(2) of the Act.

[88] I find that the dismissal of Mr Powell was harsh and unjust because there was no valid reason for his dismissal, he was not consulted in accordance with clause 22 of the Agreement and he was not redeployed at the time of his dismissal within the Respondent’s enterprise in accordance with section 389(2) of the Act.

Remedy

[89] The parties have asked for the opportunity to consult and provide further submissions in relation to an appropriate remedy.

[90] Unless a party exercises its right and appeals this decision, the matter will be relisted for Conference on 30 March 2021.

[91] I so Order.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<PR726598>

 1 Transcript of proceedings 3 December 2020 [88].

 2 Transcript of proceedings 3 December 2020 [149].

 3 Transcript of proceedings 3 December 2020 [149].

 4   Respondent’s Outline of Submissions dated 31 August 2020 [5.3].

 5   HSU v Healthscope Operations Pty Ltd [2020] FCCA 1045 [26].

 6   CEPU v Jemena Asset Management Pty Ltd[2016] FWC 6494 [36].

 7   Ulan Coal Mines Limited v Honeysett and others[2010] FWAFB 7578 [28].

 8 Transcript of proceedings 12 October 2020 [220].

 9   Kim Star v WorkPac Pty Ltd T/A WorkPac Group(Kim Star)[2018] FWC 4991 [99].

 10   Transcript of proceedings 3 December 2020 [207] – [220].

 11   Mackay Taxi Holdings Ltd T/A Mackay Whitsunday Taxis v Ms Kaye Wilson[2014] FWCFB 1043 [37]-[41].

 12   Witness Statement of Nathan Calder Annexure 1.

 13 Applicants’ Outline of Submission dated 21 September 2020 [23].

 14   Technical and Further Education Commission T/A TAFE NSW v L. Pykett (Pykett)[2014] FWCFB 714 [36] – [37].

 15   Transcript of proceedings 12 October 2020 [306] – [307].

 16   Wang v Specialty Fashion Group Ltd[2011] FWA 6872 [28]-[30]

 17   Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Vodafone Network Pty Ltd PR911257 [25]; Construction, Forestry, Mining and Energy Union v Newcastle Wallsend Coal Company Print R0234 [78]–[80].

 18   Byrne vAustralian Airlines [1995] HCA 24 [128].

 19   Australian Meat Holdings Pty Ltd v McLauchlan Dec 648/98 S Print Q1625.

 20   Selvachandran v Peteron Plastics Pty Ltd [1995] IRCA 333, 373.

 21   Rode v Burwood Mitsubishi Print R4471 [19].