Colin Hilton v Ludowici Sealing Solutions

[2014] FWC 5691

[2014] FWC 5691

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Colin Hilton
v
Ludowici Sealing Solutions
(U2014/417)

COMMISSIONER BLAIR BRISBANE, 22 AUGUST 2014

Application for relief from unfair dismissal.

Introduction

[1] This determination relates to an application made by Colin Hilton (the Applicant) pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act) for an unfair dismissal remedy on the grounds that the termination of his employment from Ludowici Sealing Solutions (the Respondent) was harsh, unjust and or unreasonable. The Respondent in this matter has raised a jurisdictional objection (the jurisdictional objection) to the application alleging that the dismissal was a case of genuine redundancy. This decision relates to the jurisdictional objection only.

[2] The matter was conciliated before a Fair Work Commission (the Commission) Conciliator on Wednesday, 2 April 2014 but the matter did not settle.

[3] Directions were set for the filing of submissions and evidence in relation to the jurisdictional objection and the substantive application. The Applicant was directed to file material in relation to the substantive application on Monday, 19 May 2014. The Respondent was directed to file material in relation to the jurisdictional objection on 19 May 2014. The Respondent was directed to file material in opposition to the substantive application on Monday, 10 June 2014. The Applicant was directed to file material in opposition to the jurisdictional matters on 10 June 2014. Material was filed by both parties.

[4] The Respondent sought to rely upon material filed with the Commission on Friday, 1 August 2014, which included an outline of submissions and the witness statements of Jason King, Carl Dunford and Grant O’Callaghan. The Respondent also relied on material contained in the F3 - Employer’s Response (There is more detailed information about splitting the Applicant’s role in F3 than in R’s submissions dated 1 August). The Applicant sought to rely upon material filed with the Commission on 6 May 2014, including an outline of the Applicant’s submissions, and attachments “A” to “F”.

[5] The matter was listed for a jurisdictional and substantive conference or hearing on Tuesday, 19 August 2014. Having considered the material filed by the parties and the submissions made during the conference I considered it appropriate to enter into a hearing. The Commission is in a position to make a determination on the jurisdictional objection and the substantive application

[6] It is noted that while I will not refer to all of the evidence and submissions in this matter I have considered all of such in making my determination.

Background

[7] The Applicant commenced employment with the Respondent on 24 May 2012 as an Injection Moulding Technician. In July 2013, the Applicant was promoted to the role of Technical Sales Officer.

[8] The Applicant was made redundant from his position of Technical Sales Officer on 30 January 2014.

Relevant Provisions of the Legislation

[9] The substantive application has been made pursuant to s.394 of the Act. Section 394 provides as follows:

“394 Application for unfair dismissal remedy

(1) A person who has been dismissed may apply to the FWC for an order under Division 4 granting a remedy.

Note 1: Division 4 sets out when the FWC may order a remedy for unfair dismissal.

Note 2: For application fees, see section 395.

Note 3: Part 6 1 may prevent an application being made under this Part in relation to a dismissal if an application or complaint has been made in relation to the dismissal other than under this Part.

(2) The application must be made:

(a) within 21 days after the dismissal took effect; or

(b) within such further period as the FWC allows under subsection (3).”

[10] It is not in dispute that the application was filed within the time prescribed by s.394(2)(a).

[11] Section 382 of the Act provides as follows:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

[12] Section 389 provides the for the meaning of genuine redundancy:

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.

[13] The relevant consideration in relation to the jurisdictional objection is s.385(d).

Summary of the Respondent’s Submissions and Evidence

[14] The Respondent raised the jurisdictional objection that the dismissal was a case of genuine redundancy in the F3 - Employer Response, dated 27 March 2014. The Respondent submitted in the outline of submissions dated 1 August 2014, that the Respondent no longer required the Applicant’s job to be performed by anyone because of an extensive operational reorganisation in January 2014.

F3 - Employer’s Response

[15] In the F3, the Respondent stated that in 2012, a small satellite branch was established in Pinkenba to service a key hydraulics customer called HMG, a highly technical and sophisticated customer that requires custom engineering solutions.

[16] The Respondent stated in the F3 that in January 2014, the Respondent determined that the Pinkenba Branch overheads, which included rent and three salaries, were not sustainable on the revenue received from HMG and that the number of employee roles needed to be rationalised. Further, the technical needs of the whole company were not met because the national technical manager, Mr Carl Dunford, spent too much time servicing one customer.

[17] The Respondent provided a list of the employees at the Pinkenba Branch with their associated salaries and roles at paragraph 3. The Respondent provided a list of the Applicant’s responsibilities at paragraph 4 as follows:

“1. Work order entry / closing

2. Respondent to part requests via email

3. Invoice out HMG Orders - pronto

4. Send emails for material requests

5. Receive purchase order - pronto

6. Raise purchase order - pronto

7. File paperwork

8. Send Daily CNC sheet to production - email

9. Deliver parts to HMG

10. Raise transfer orders - pronto

11. EFT/sales to accounts payable

12. Technical -associated responsibilities

13. Spec seal kits for HMG where possible - lack of knowledge to spec full kit for HMG passed on to Carl to finish

14. Provide technical advice at the sales counter - where able to - lack of knowledge meant passed on to Carl to finish”

[18] The Respondent stated that the Applicant’s job was split between 3 employees. Mr Oscar Soriano resumed the administrative and production elements of the Applicant’s HMG role. Mr Kiran Lai, based at Brendale, shared the administrative and production work with Mr Soriano. Mr Grant O’Callaghan was hired in January 2014 to work at the Pinkenba Branch to provide custom technical solutions to HMG, as he possessed the requisite specialised hydraulics experience and could perform items 12-13 of the Applicant’s job responsibilities.

[19] Mr Dunford was to be relocated to Company headquarters to resume technical advice to the company nationwide. The Respondent stated that Mr Dunford was spending greater than 50% of his time on HMG, and that the lack of technical support for the rest of the business was a major problem.

Submissions dated 1 August 2014

[20] The Respondent submitted in the outline of submissions dated 1 August 2014 that no one in the organisation is currently performing the Applicant’s role, and that the role has been divided into a number of parts and is being performed by a number of different employees.

[21] The Respondent submitted that it was not possible to redeploy the Applicant in another role due to the size of the Respondent, the Applicant’ range of experience and the small number of employees in Queensland.

[22] In response to the Applicant’s submission that Mr Grant O’Callaghan is performing the Applicant’s role, the Respondent’s submitted that Mr O’Callaghan is currently employed at the Brendale Branch as a Warehouse Supervisor, and does not perform the Applicant’s role and has never performed the Applicant’s role.

[23] In response to the Applicant’s submission that the Applicant could have been transferred between State branches, the Respondent submitted that it was unrealistic as they were a small, locally focussed company.

[24] The Respondent submitted that the Applicant was not employed under a Modern Award or an Enterprise Agreement, and therefore there was no obligation to consult the Applicant.

[25] Mr Jason King gave evidence in his witness statement, dated 1 August 2014, that that Mr Carl Dunford trained the Applicant to do front counter sales and administration as part of the Technical Sales Officer role. Mr King gave evidence that the Applicant’s role involved liaising with production co-ordinators and working at the front sales counter at a higher technical level.

[26] Mr King stated that Mr Grant O’Callaghan was appointed as Branch Supervisor, although Mr King does not state which branch or on what date.

[27] Mr King stated that he spoke to the Applicant at the time of the redundancy regarding the production team’s requirements for an Injection Moulder and that the Applicant made it clear to Mr King that he had no interest in returning to Brendale as an Injection Moulder. Mr King stated that this was the only role the Applicant was qualified to do and he declined, and another employee was offered the role.

[28] Mr Carl Dunford gave evidence in his witness statement, dated 1 August 2014, that after the Applicant’s role was made redundant, the work the Applicant performed was split between Mr Dunford and Mr Grant O’Callaghan. Mr Dunford stated that Mr O’Callaghan’s role was to assist HMG hardchromes and bring in business from other sources. Mr Dunford stated that Mr O’Callaghan left his position as Branch Manager at Pinkenba after 3 weeks for a less challenging role as Warehouse Manager. Mr Dunford stated he works alone as the national technical manager, performing the entirety of the work for HMG Hardchrome. And also performing the functions of the Applicant.

[29] Mr Grant O’Callaghan gave evidence in his witness statement, dated 1 August 2014, that he was employed as the Pinkenba warehouse supervisor and branch manager in mid-January 2014. Mr O’Callaghan stated that his role included:

(a) Stock control of inventory parts and manufacturing of raw materials;

(b) Oversee and manage CNC operators work and provide all QA over production;

(c) Operate CNC as needed;

(d) Address queries at sales counter to allow Carl Dunford to manage technical needs for the whole company, rather than just the Pinkenba customers including Hardchrome;

(e) Advise of customer technical issues; and

(f) Spec new seal kits from technical drawings and from old seals.

[30] Mr O’Callaghan stated that he was brought into the role for his knowledge in both standard and custom made seals and experience working in cylinder/major component rebuild. Mr O’Callaghan stated that he has 15 years experience in the industry and from what Mr O’Callaghan understood about the Applicant’s experience; Mr O’Callaghan did not believe that the Applicant would be able to perform the Branch Supervisor role.

[31] The Respondent submitted that the Applicant was not covered by a Modern Award or Enterprise Agreement.

Summary of the Applicant’s Submissions and Evidence

[32] The Applicant submitted that the role of Technical Sales Officer is the equal role as that of a Sales Co-ordinator but with extra responsibilities. The Applicant submitted that his main duty was to manage Hardchrome accounts and that this role was taken on by Mr O’Callaghan.

[33] The Applicant referred to attachment “D”, which he submitted stated that Mr O’Callaghan was employed at Pinkenba Branch in the Applicant’s technical role.

[34] Attachment “D”, an email from Darryl Barber to all staff dated 5 February 2014 relevantly states,

“Grant O’Callaghan has joined us as Branch Supervisor at Pinkenba. Grant will take greater responsibility for managing the HMG account, allowing Carl Dunford to allocate his time to building business for the Pinkenba branch (in conjunction with Grant), as well as performing his technical management role. The position of Technical Officer at Pinkenba, held by Colin Hilton, has been made redundant.”

[35] The Applicant submitted that an offer of voluntary redundancy should have been offered to the other employees of the Respondent, which did not occur.

[36] The Applicant submitted that the factors which determined which positions were to be made redundant should have been determined by objective criteria and should have been made known to the Applicant as part of a consultation process required under Modern Awards. The Applicant does not refer to an applicable Modern Award or industrial instrument requiring consultation.

[37] The Applicant submitted that the Respondent should have referred to the skills, experience, training and performance of the employees, and considered period of service.

[38] In response to paragraph 4.1 of the Respondent’s F3 - Employer’s Response, in which the Respondent states that the Applicant did not have the technical and design skills required to service the key customer, the Applicant submitted that his resume (attachment “E”) detailed 30 years experience in precision technical roles.

[39] The Applicant submitted that the Ludowici Restructure Plan (attachment “F”), highlighted that the decision to employ Mr O’Callaghan into the Applicant’s role had been made at 2 January 2014. The Restructure Plan stated at Paragraph 6.1(c)(ii):

“Grant [insert last name] to work Pinkenba to service Hardchrome.”

[40] The Applicant submitted that the fact that the Restructure Plan stated that the Applicant was highlighted to become an officer in charge of manufacturing and warehousing (at paragraph 7.1(b)) demonstrated that the Applicant was held in high regard and that his work conduct was satisfactory, and also that the Respondent considered the Applicant to have the technical and managerial experience to be a success in the role.

[41] The Applicant submitted that although the document was only a plan, the majority of the restructure has been implemented and the Applicant submitted that the Plan raised the question of why the decision was turned around from promotion to redundancy in under a month. The Applicant submitted that the Plan highlights that there was at least one suitable alternative position available within the company.

[42] The Restructure Plan also states that Carl Dunford would be made redundant - this didn’t actually happen due to the Respondent’s client threatening to withdraw their business if Mr Dunford was made redundant.

Consideration

s.389(1)(a) - No longer required to be done

[43] When a person’s job is no longer required to be performed by anyone is not an absolute consideration. The Explanatory Memorandum to the Fair Work Bill relevantly provides:

“Clause 389 – Meaning of genuine redundancy

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

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

1548. The following are possible examples of a change in the operational requirements of an enterprise:

● a machine is now available to do the job performed by the employee;

● the employer’s business is experiencing a downturn and therefore the employer only needs three people to do a particular task or duty instead of five; or

● the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.

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

1550. Paragraph 389(1)(b) provides that it will not be case of genuine redundancy if an employer does not comply with any relevant obligation in a modern award or enterprise agreement to consult about the redundancy. This does not impose an absolute obligation on an employer to consult about the redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.

1551.Subclause 389(2) provides that a dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or within the enterprise of an associated entity of the employer (as defined in clause 12).

1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for redeployment or there may be no positions available for which the employee has suitable qualifications or experience.

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

[44] The Respondent has submitted that the Applicant’s role was divided between three employees. Mr Dunford has said, however, that he performs most of the role that the Applicant performed as well as his own duties. It was submitted that a restructure was necessary in order to lower overheads at the Pinkenba plant. It is clear that Mr Grant O’Callaghan was employed at the Pinkenba plant after the Applicant was made redundant. The Applicant submits that Mr O’Callaghan was employed in his position. The Respondent submitted that Mr O’Callaghan was employed as a Branch Manager and was to perform the responsibilities of the Applicant that required Mr Dunford’s assistance, which would free Mr Dunford up for relocation to the Pinkenba site and the performance of his duties to the company as a whole.

[45] The Respondent’s evidence was that the Applicant’s administrative tasks were split between two other employees, one at each of the Pinkenma and Brendale sites.

s.389(1)(b) - Consultation

[46] The obligation to consult is not an absolute obligation to consult. The Full Bench in Ulan Coal Mine Limited v Henry Jon Howarth and others said:

“We do not consider, in the particular circumstances of the present matter and having regard to the obligation under sub-clause 23.1 of the Agreement, that a further round of discussions was required to be held by the Company with the employees to be dismissed, either separately or as a group. This does not mean that such separate discussions might not be worthwhile and appropriate e.g. as part of the consideration of measures to mitigate the adverse affects of terminations or to ensure that opportunities for other employment and assistance are properly examined. However they are not part of the discussions envisaged and required under sub-clause 23.1 of the Agreement and that is the test in these particular circumstances. In different circumstances this will of course vary according to the terms of particular awards and agreements.” 1

[47] The obligation to consult is to be discharged in accordance with the obligations in the provision of industrial instruments but in this instance it is not critical to the finding of whether or not it is a genuine redundancy.

s.389(2) - Redeployment

[48] In Ulan Coal Mines Limited v Honeysett and other 2 the Full Bench said:

“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 role, 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.”  3

[49] Further the Full Bench said:

“It is an essential part of the concept of redeployment under s.389(2) that a redundant employee be placed into another job in the employer’s enterprise as an alternative to termination of employment. Of course the job must be suitable, in the sense that the employee should have the skills and competence required to perform it to the required standard either immediately or with a reasonable period of retraining. Other considerations may be relevant such as the location of the job and the remuneration attaching to it. 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. This is because it would have been reasonable to redeploy the employee into the vacancy. In such a case the exception in s.385(d) would not apply and the dismissed employee would have the opportunity to have their application for a remedy heard...” 4

[50] The nature of the qualifications and experience held by the Applicant are important to determining the issue of redeployment.

[51] There is evidence from Mr King, who states that he spoke to the Applicant about a position an injection moulder at Brendale, which the Applicant refused. Mr King did state, however, that he had no authority to make such an offer.

Conclusion

[52] Where the Respondent raises a jurisdictional objection in a matter, the onus is on the Respondent to satisfy the Tribunal of their case. 5 As the Respondent has all the information relating to their objection, they need to lead evidence which demonstrates their case on the balance of probabilities.6

[53] The dispute between the parties relates to:

1. s.389(1)(a) - was the job no longer required;

2. s.389(1)(b) - have the consultation obligations been complied with;

3. s.389(2) - reasonable to redeploy.

[54] I have considered the case authorities and made my findings in the matter. On the material currently before me I find that the Applicant’s termination was a case of genuine redundancy. Although Mr Dunford was the person to be made redundant (refer to paragraph [42]) Mr Hilton was ultimately made redundant. In any case an employee was to be made redundant due to a restructure at the Company, that the Applicant accepts has occurred.

The Applicant was not unfairly dismissed. The application must be dismissed. I Order accordingly.

 1   [2010] FWAFB 3488 at [31].

 2   [2010] FWAFB 7578.

 3 Ibid at [28].

 4 Ibid at [30].

 5   Crema and Others v Abigroup Contractors[2012] FWA 5322, Commissioner Cribb, at [81].

 6  See for example Govinda Prasad Dhungel v The Baking Company Australia Pty Ltd[2012] FWA 4717, Deputy President Sams; Eva v Victorian Radio Network Pty Ltd [2007] AIRC 814, Commissioner Eames.

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