Daniel Schiavello v Decon Industries Pty Ltd
[2021] FWC 3380
•10 JUNE 2021
| [2021] FWC 3380 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Daniel Schiavello
v
Decon Industries Pty Ltd
(U2021/1872)
DEPUTY PRESIDENT CLANCY | MELBOURNE, 10 JUNE 2021 |
Application for unfair dismissal remedy – whether termination a genuine redundancy – obligation to consult – failure to consult – termination not however harsh unjust or unreasonable – application dismissed.
[1] On 5 March 2021, Mr Daniel Schiavello made an application to the Fair Work Commission for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act). The Respondent to Mr Schiavello’s unfair dismissal application is Decon Industries Pty Ltd (Decon Industries).
[2] On 7 April 2021, I issued a Decision 1 (the April Decision) granting Mr Schiavello an extension of time for the making his application and Directions for the filing of material on the question of whether Mr Schiavello’s dismissal was unfair. I conducted a determinative conference on 9 June 2021, at which Mr Schiavello appeared and gave oral evidence. He was assisted by his wife, Ms Kaitlyn Schiavello. Ms Catherine Faul (Chief Financial Officer) and Mr Robert Facchini (National Construction Manager) appeared on behalf of Decon Industries. They also gave evidence, along with Mr Mohamad Tawfik (General Manager for RG Ladd Pty Ltd).
Background
[3] Mr Schiavello commenced employment with Decon Industries as an apprentice electrician on 18 July 2018, having been employed before that as an apprentice for Turnkey Communications & Power Solutions Pty Ltd as trustee for TKS Trust from 24 January 2018. On 18 January 2021, at which time he was a 3rd year apprentice, Mr Schiavello was informed that his position was redundant and that his employment would be terminated with effect on 2 February 2021. Mr Schiavello said that at approximately 1pm, Mr Nam Tran, Workshop Supervisor for RG Ladd Pty Ltd, had told him he was needed in the workshop office. Mr Schiavello said he went to the workshop, escorted by Mr Tran, and when he got there Mr Tawfik handed him an envelope containing a termination letter. When Mr Schiavello opened the letter, he said Mr Tawfik briefly explained what it meant and the reasons for the redundancy, making reference to a downturn in work. Mr Schiavello claims that Mr Tawfik also told him that if a position was available within RG Ladd Pty Ltd, he would have been happy to have him. Mr Tawfik said he advised Mr Schiavello that if there was anything they could do to assist him in finding new employment, such as allowing him to attend interviews during his notice period or provide a reference letter, they would be happy to help. After the conversation ended, Mr Schiavello said he returned to the workshop and continued working until his finish time.
[4] The redundancy was confirmed in writing by letter dated 19 January 2021, which had been amended after some correspondence between Mr Schiavello and Decon Industries. It relevantly stated:
“The purpose of this letter is to confirm the outcome of a recent review by Decon Industries Pty Ltd of its operational requirements, and what this means for you.
You are no doubt aware of significant changes affecting Decon Corporation Pty Ltd and our associated entities, including a downturn in the work required of Decon Industries Pty Ltd.
I must unfortunately confirm that as a result of change in our operational requirements, the position of Apprentice Electrician is no longer needed. Regrettably this means your employment will terminate. This decision is not a reflection on your performance.
Under the terms of your employment contract you are entitled to 2 weeks’ notice - under the conditions of the Decon Industries Pty Ltd and ETU Enterprise Agreement 2017-2021.
Your final day will be 2 February 2021 – you will be paid your wages until the close of business on this date. In this case, you will be entitled to a redundancy payment equivalent to 7 weeks’ salary, you will also be paid your accrued annual leave and RDOs…” 2 (emphasis from original)
[5] At the time of the termination, Mr Schiavello says he was paid an hourly rate of $33.26 for a 40 hour week, plus a daily Travel Allowance of $6.23 and a weekly TAFE Achievement Allowance of $279.54. It is agreed that his gross weekly wage at that time was $1,641.09.
[6] Both Mr Schiavello and Mr Facchini referred to a subsequent discussion they had on 19 January 2019 in which the downturn in work was explained, as well as there being no prospect of new work for Decon Industries coming in. Mr Schiavello says that he understood the circumstances and did not object to his redundancy. He also says there was no mention of possible opportunities in any other entity. Mr Schiavello was given the freedom to attend job interviews during his notice period.
[7] Mr Schiavello says he finished work on 2 February 2021. Subsequently, on 2 March 2021, Mr Schiavello saw a job advertisement on the Seek website 3 in which RG Ladd Pty Ltd (an associated entity of Decon Industries) was seeking applications from 1st year Electrical Apprentices in its “specialist switchboard manufacturing division”. The RG Ladd Pty Ltd job advertisement in question appears to have been posted on the Seek website on 11 February 2021, which was 9 days after Mr Schiavello’s dismissal from Decon Industries took effect. Mr Schiavello says the termination of his employment on the basis of redundancy appeared genuine to him until he became aware of the abovementioned job advertisement on 2 March 2021.
Initial matters to be considered
[8] I will deal with the four matters referred to in ss.396(a)-(d) of the Act, as follows.
[9] Firstly, while Mr Schiavello’s application was not made within the 21-day period required by s.394(2) of the Act (s.396(a) of the Act), I allowed a further period for the making of it in the April Decision.
[10] Secondly, Mr Schiavello is a person protected from unfair dismissal, as he had completed the minimum employment period and further, at the time of his dismissal, his annual rate of earnings was less than the high income threshold (s.396(b) of the Act).
[11] Thirdly, as to whether this matter involves a dismissal that was consistent with the Small Business Fair Dismissal Code (s.396(c) of the Act), it was not in dispute and I find that Decon Industries is not a small business employer within the meaning of s.23 of the Act, having 15 or more employees at the relevant time. As such, I am satisfied that the Small Business Fair Dismissal Code does not apply.
[12] Fourthly, under s.396(d) of the Act the Commission must decide before dealing with the merits of any unfair dismissal remedy application whether the dismissal was a case of genuine redundancy. Further, under s.385(d) of the Act, one of the requirements for an unfair dismissal is that it “was not a case of genuine redundancy”. As Decon Industries submits Mr Schiavello’s dismissal was a case of genuine redundancy, I will now consider this objection as to jurisdiction.
[13] Section 389 of the Act defines “genuine redundancy” as follows:
“(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.”
Section 389(1)(a)
[14] When considering s.389(1)(a) of the Act in Christina Adams v Blamey Community Group, 4 the Full Bench of the Commission stated:
“… it is necessary to state at the outset that consideration of whether the employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the enterprise does not involve a merits review of the employer’s decision to make the person’s job redundant. It is not to the point that it may have been open to the employer to make a different operational decision which may have allowed the relevant employee’s job to be retained. As was stated in Low v Menzies Property Services Pty Ltd, “Whether it was objectively fair or justifiable to decide to abolish a position is beside the point, as long as the employer acted as it did because of changes in its operational requirements.” 5 What s.389(1)(a) requires is for findings of fact to be made as to whether, firstly, the employer has made the decision that the relevant employee’s job is no longer required to be performed by anyone and, secondly, whether that decision was made because of changes in the operational requirements of the enterprise. If there was an ulterior motive for the decision - that is, if the real reason for the decision did not genuinely relate to any change in operational requirements, whatever the ostensible reason may have been - then it will not be possible to make the second finding of fact. However once these findings of fact are made, the element of the genuine redundancy definition contained in s.389(1)(a) is satisfied and no further inquiry is necessary.”6 (my emphasis)
[15] Decon Industries submits that the definition of genuine redundancy in s.389(1)(a) of the Act is made out on the facts. I am satisfied the evidence establishes that Decon Industries has experienced a prolonged downturn in its business. It has been unable to secure new project work and went through a period of completing the work it already had on its books. Ms Faul’s unchallenged evidence was that approximately 50 employees had resigned or been terminated due to redundancy in the 12-month period culminating in Mr Schiavello’s dismissal, reducing total employee numbers from 83 to 33. Further, Ms Faul’s statement that Decon Industries had not hired a new employee since August 2019 was not contested. Ms Faul also said that while Decon Industries had tried to maintain the employment of its employees with the assistance of JobKeeper payments, its financial position continued to deteriorate and with no new significant projects secured and the impact of COVID-19 in Victoria, there was a need to further reduce the size of its workforce. I also note that two other employees were dismissed due to redundancy when Mr Schiavello was notified of his dismissal, including another apprentice electrician.
[16] Having regard to the approach outlined by the Full Bench in Christina Adams v Blamey Community Group, I am satisfied Decon Industries made the decision that Mr Schiavello’s job of 3rd year apprentice was no longer required to be performed by anyone. I am also satisfied that the decision was made because of changes in the operational requirements of Decon Industries.
Section 389(1)(b)
[17] Although neither Decon Industries nor Mr Schiavello made specific written submissions in relation to any obligation to consult imposed on Decon Industries by the Decon Industries Pty Ltd and ETU Enterprise Agreement 2017-2021 7 (the Agreement) applying to Mr Schiavello’s employment, I observe:
• Clause 30.1(a) of the Agreement states that where the employer has made a ‘definite decision’ to introduce major changes in production, program, organisation, structure, or technology that are likely to have significant effects on employees (which includes termination of employment), the employer must give notice of the changes to all employees who may be affected by them;
• Clause 30.1(b)(i) of the Agreement requires the employer to discuss the likely effect of the changes on the affected employees and measures to avert or mitigate the adverse effects of the changes on them and to give prompt consideration to matters they raise; and
• Clause 30.1(b)(iii) of the Agreement provides:
“For the purposes of such discussion, the Employer shall provide in writing to the employees concerned and their representatives, all relevant information about the changes including the nature of the changes proposed; expected effects of the changes on employees and any other matters likely to affect employees...”
[18] In the circumstances of this matter, I am not satisfied Decon Industries complied with its Agreement obligation to consult with Mr Schiavello about his redundancy in the manner outlined in clause 30 of the Agreement. Mr Tawfik, not a Decon Industries employee, conducted the discussion with Mr Schiavello on 18 January 2021 but the decision to dismiss him had already been made. Mr Facchini discussed the circumstances that gave rise to Mr Schiavello’s dismissal on 19 January 2021 but this came after Mr Schiavello had been given notice of his termination. Therefore, the requirement of s 389(1)(b) of the Act has not been satisfied in this case and I must conclude that Mr Schiavello’s dismissal was not a case of “genuine redundancy”. Having made this conclusion, it is then necessary for me to consider whether Mr Schiavello was unfairly dismissed.
[19] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 of the Act provides the following:
“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.”
[20] On the basis of the material and evidence before me, I am satisfied Mr Schiavello was dismissed (s.385(a)) and, as outlined above, that this was not a case of genuine redundancy (s.385(d)).
[21] It has not been submitted that Mr Schiavello’s dismissal was consistent with the Small Business Fair Dismissal Code (s.385(c)) but as I have found that Decon Industries is not a small business employer within the meaning of s.23 of the Act and that the Small Business Fair Dismissal Code does not apply, it follows that it is open to me to find that it was not.
[22] That leaves s.385(b) and in determining whether the dismissal was harsh, unjust or unreasonable, I must give consideration to s.387 of the Act. Section 387 states that in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account the matters outlined below:
“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.”
Was there a valid reason for dismissal relating to Mr Schiavello’s capacity or conduct? (s.387(a))
[23] In this case the reason for the dismissal was redundancy. As such, no relevant finding can be made in relation to whether there was a “valid reason for the dismissal related to the person’s capacity or conduct”, the consideration in s.387(a) of the Act. Decon Industries does not contend that there was any valid reason for dismissal related to Mr Schiavello’scapacity or conduct. Rather, its reliance on redundancy as the reason for dismissal is to be considered in connection with s.387(h), “any other matters the Commission considers relevant”, dealt with below.
Notification of “that reason” (s.387(b)) and opportunity to respond to any reason related to capacity or conduct (s.387(c))
[24] The considerations in ss.387(b) and (c) of the Act are not relevant in this matter because they concern whether Mr Schiavello was ‘notified of that reason’ (i.e. the valid reason) and whether he was given an opportunity to respond to any reason related to capacity or conduct.
Unreasonable refusal by the employer to allow a support person – s.387(d)
[25] This consideration is irrelevant in this case because the evidence before me is that there was no unreasonable refusal by Decon Industries to allow Mr Schiavello a support person at the discussion relating to his termination.
Warnings regarding unsatisfactory performance – s.387(e)
[26] As Mr Schiavello was not terminated on the basis of unsatisfactory performance, this factor is not a relevant consideration in this case.
Impact of the size of the employer on procedures followed - s.387(f) and Absence of dedicated human resources management specialist/expertise on procedures followed - s.387(g)
[27] I do not consider the size of Decon Industries to have been a relevant factor in this case (s.387(f)) but I have noted that the in-house Human Resource Management specialist/expertise was limited to a Payroll/HR Officer, albeit with access to Ai Group external advice.
Other relevant matters – s.387(h)
[28] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant. A finding that a dismissal was not a case of genuine redundancy within the meaning of s.389 of the Act does not necessarily lead to a conclusion that the dismissal was unfair. Even if the dismissal was not a “genuine redundancy” for the purposes of s.389, it does not follow that the dismissal was not a real and bona fide redundancy. As I have concluded above, I am satisfied Decon Industries made the decision that Mr Schiavello’s job of 3rd year apprentice was no longer required to be performed by anyone and I am also satisfied that the decision was made because of changes in the operational requirements of Decon Industries. This was a legitimate reason to end his employment, given the circumstances confronting Decon Industries and tells against a finding that the dismissal was unfair.
[29] There was, however, much focus on the question of whether Mr Schiavello could reasonably have been redeployed into a related entity, RG Ladd Pty Ltd. The evidence before me was that Decon Industries and RG Ladd Pty Ltd are part of the same corporate group. Whereas Decon Industries performs commercial electrical contracting work in the construction industry and engages electrical mechanics, RG Ladd Pty Ltd performs electrical switchboard manufacturing work and engages electrical fitters. Although the precise duration was debated, Mr Schiavello was assigned to the RG Ladd Pty Ltd workshop in an attempt by Decon Industries to maintain his employment in the period leading up to his dismissal due its downturn. In normal times, this practice had been adopted by the two companies to keep Decon Industries employees employed during short breaks between their project work. The assignment to the RG Ladd Pty Ltd workshop saw Mr Schiavello performing different work to that which he had previously been performing. Throughout this period, Mr Schiavello remained an employee of Decon Industries and was paid by it.
[30] Mr Schiavello contends there should have been consideration to redeploying him to RG Ladd Pty Ltd, particularly because it advertised for 1st year apprentices on Seek, on and from 11 February 2021. Mr Schiavello places significance on:
• having performed what he claims was the same sort of work in the RG Ladd Pty Ltd workshop in the period leading up to his dismissal; and
• the job advertisement’s reference to the junior apprentices being “employed under EBA conditions” because he says clause 12.24 of the applicable enterprise agreement, the R.G. Ladd Pty Ltd and ETU Switchboards EBA 2011-2015, 8 outlined a commitment by RG Ladd Pty Ltd to ensuring all apprentices undertake the Certificate III in Electrotechnology (Systems Electrician), which he was undertaking in his employment with Decon Industries Pty Ltd.
[31] Mr Schiavello also argues that notwithstanding the lower pay for an RG Ladd Pty Ltd 1st year apprentice compared with the pay of a 3rd year apprentice for Decon Industries, he ought to have been given an option to accept the position advertised by RG Ladd Pty Ltd. I observe however that Mr Schiavello did not apply for the position and in making and pursuing his application for unfair dismissal, has never sought reinstatement to Decon Industries.
[32] In response, Decon Industries submits based on evidence from Mr Facchini and Mr Tawfik:
• The work performed by RG Ladd Pty Ltd was different;
• The timing of the placement of the job advertisement on Seek was tied to the resignation of an RG Ladd Pty Ltd apprentice, Mr Zachary Hunt, on 11 February 2021 9 and its consequent need to have potential candidates for apprenticeship positions if it was successful in relation to a number of outstanding tenders which were due to be awarded in the ensuing 4-6 weeks; and
• Apprentices for RG Ladd in fact undertake a different course to that which Mr Schiavello had been undertaking during his employment with Decon Industries, namely the Electrical Fitters Apprenticeship introduced in 2017, subsequent to the commencement of the R.G. Ladd Pty Ltd and ETU Switchboards EBA 2011-2015.
[33] I have previously determined that Decon Industries did not comply with its Agreement obligation to consult with Mr Schiavello about his redundancy in the manner outlined in clause 30. While this represents a serious defect in the procedure adopted by Decon Industries, it is relevant to consider what might have been the result of consultation. 10 I consider that in this case, the breach of the Agreement obligation to consult was mitigated because there was a 2-week notice period prior to the cessation of employment, during which time Mr Schiavello had the opportunity to raise any matters in relation to the redundancy for consideration by Decon Industries and the parties had the opportunity to discuss measures to avert it that may have existed at that time. The reality is, however, that Mr Schiavello raised no matters and there were no redeployment options either at Decon Industries or RG Ladd Pty Ltd during that time. I do not consider the consultation required by the Agreement would have changed the decision to dismiss Mr Schiavello on the basis of redundancy. It would not have overcome the operational reasons for the dismissal or led to any other change to the outcome.
[34] Mr Schiavello contends Decon Industries should have kept him employed by giving him a JobKeeper enabling standown direction until the JobKeeper scheme concluded at the end of March 2021 so that he could receive JobKeeper payments and he could be considered for redeployment during the period from 2 February 2021-31 March 2021. As to this, Ms Faul says that Decon Industries had no work, was not generating income and was incurring costs keeping its employees on JobKeeper payments, which it could not afford. Having regard to these circumstances, I do not consider it was harsh, unjust or unreasonable for Decon Industries to terminate Mr Schiavello’s employment with full redundancy entitlements when clearly his job with Decon Industries was redundant and it had no future work in prospect.
[35] Mr Schiavello’s case regarding redeployment then rests on the prospect of him perhaps applying for or being considered for a 1st Year Apprentice role at RG Ladd Pty Ltd that emerged on 11 February 2021. In considering this, it is useful to have regard to the authorities that have dealt with s.389(2) of the Act, which outlines that a person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed either within his or her employer’s enterprise or that of an associated entity. It was noted by the Full Bench in Ms Deborah Hallam v Sodexo Remote Sites Australia Pty Ltd (Hallam), 11 that s.389(2) places no obligation on an employer to redeploy, or to do everything possible to achieve a redeployment outcome. Further, as was noted in Hallam and other Full Bench authorities,12 this exception is applied at the time of dismissal. In Hallam the Full Bench considered whether there were any job vacancies either open or in contemplation at the time of the dismissal and in that case, the Full Bench stated:
“As the Full Bench observed in TAFE NSW v Pykett, 13 to show that it would have been reasonable for an employer to redeploy a person, it is not necessary to identify a particular job or position in which the dismissed employee could have been redeployed. However, the Commission must be satisfied on the balance of probabilities, and based on the evidence, that there was a ‘job or a position or other work’ to which it would have been reasonable to redeploy the person. In the present case, the evidentiary burden did not reach the requisite threshold…”14
[36] Having regard to the evidence in this case, I am not persuaded on the balance of probabilities that at the time of his dismissal there was a job or a position or other work to which it would have been reasonable to redeploy Mr Schiavello. Any work Mr Schiavello had previously performed in the RG Ladd workshop had been funded by Decon Industries as a temporary measure. Further, I am satisfied the 1st Year Apprentice role advertised by RG Ladd Pty Ltd:
• was not contemplated until after the termination of Mr Schiavello’s employment;
• was triggered by the resignation of Mr Hunt on 11 February 2021; and
• required training as an Electrical Fitting Apprentice, which was not the training and apprenticeship Mr Schiavello had been undertaking with Decon Industries.
[37] Finally, I do not accept Mr Schiavello’s proposition that his termination was part of a strategy to replace him with a less expensive apprentice. The 1st Year Apprentice role advertised after he was terminated was an RG Ladd Pty Ltd position and not a position advertised by his employer and further, it involved different work. Additionally, I do not consider the travel payment matters that were the subject of Mr Schiavello’s backpay claim made via application to the Fair Work Ombudsman to be relevant to the consideration of whether or not his dismissal was unfair. In this regard, I note it is not contended that the dismissal was related to these matters.
[38] In summary, I do not find that the matters raised as part of the consideration of s.387(h) of the Act are sufficient to render Mr Schiavello’s dismissal harsh, unjust or unreasonable.
Conclusion
[39] For the reasons outlined above, I find that Mr Schiavello’s dismissal does not fall within the definition of a ‘genuine redundancy’ in s.389 of the Act because of the failure of Decon Industries to comply with its Agreement obligation to consult with Mr Schiavello about his redundancy. However, having considered each of the matters specified in s.387 of the Act, I am satisfied the dismissal of Mr Schiavello was not harsh, unjust or unreasonable.
[40] Accordingly, I find that Mr Schiavello’s dismissal was not unfair. Mr Schiavello’s application for unfair dismissal remedy is therefore dismissed.
DEPUTY PRESIDENT
Appearances:
Mr D Schiavello on his own behalf assisted by Ms K Schiavello.
Ms C Faul and Mr R Facchini for Decon Industries Pty Ltd.
Hearing details:
2021.
Melbourne (via Microsoft Teams):
June 9.
Printed by authority of the Commonwealth Government Printer
<PR730658>
1 [2021] FWC 1855.
2 Exhibit R6 at DCB 296.
3 Exhibit A6 at DCB 378.
4 [2016] FWCFB 7202.
5 [2014] FWC 7829 at [16].
6 [2016] FWCFB 7202 at [14].
7 [2018] FWCA 684.
8 DCB 381.
9 Exhibit R9.
10 Maswan v Escada Textilvertrieb T/A ESCADA [2011] FWA 4239 at [37].
11 [2017] FWCFB 6847 at [20].
12 Ulan Coal Mines Ltd v Honeysett [2010] FWAFB 7578 at [28]; Technical and Further Education Commission T/A TAFE NSW v L. Pykett [2014] FWCFB 714 at [35].
13 [2014] FWCFB 714 at [36].
14 [2017] FWCFB 6847 at [35].
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