Danmar Malik v Authentic Signs Pty Ltd

[2015] FWC 6842

[2015] FWC 6842

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Danmar Malik
v
Authentic Signs Pty Ltd
(U2015/4424)

COMMISSIONER WILLIAMS PERTH, 6 OCTOBER 2015

Termination of employment – jurisdiction - genuine redundancy.

[1] This decision concerns an unfair dismissal remedy application by Mr Danmar Malik (Mr Malik or the applicant) made under section 394 of the Fair Work Act 2009 (the Act). The respondent is Authentic Signs Pty Ltd (the respondent).

[2] The respondent objects to the application on the grounds that the dismissal was a case of genuine redundancy. If the dismissal was a case of genuine redundancy then a person has not been unfairly dismissed.

[3] This decision deals with this jurisdictional objection raised by the respondent.

[4] Mr Malik gave evidence on his own behalf as did Mr David Pottinger (Mr Pottinger) the Managing Director and major shareholder of the respondent.

The evidence and factual findings

[5] The respondent manufactures and installs display signage predominantly for real estate businesses.

[6] The applicant had been employed for approximately 10 years. By letter dated 13 March 2015 the applicant was advised of the termination of his employment by reason of redundancy. The letter explained that following a review of the operational requirements of the business and as a result of an economic downturn the applicant’s position was now redundant.

[7] The respondent is a small business. For the past five years it has employed three full-time and two part-time staff including Mr Pottinger. For many years prior to March 2015 the business operated with two full-time staff being Mr Malik and Mr Ishwan Murtopo (Ishwan) working in the factory, one part-time staff member in the office handling accounts and sales enquiries and one other part-time staff member driving the truck to complete deliveries and carry out installations and also Mr Pottinger.

[8] Mr Malik and his colleague Ishwan in the factory were employed to laminate the printed material with application paper and then apply prints to signs which had previously been stripped. On some occasions anti-graffiti coating was applied to signs. Once the employee had completed the sign it was moved into a rack from which the installer would later collect the sign for erection.

[9] The evidence of Mr Pottinger which I accept is that Mr Malik and Ishwan undertook the same duties.

[10] At the time of his redundancy Mr Malik believed that a large customer, Burgess Rawson, was considering committing to a long-term relationship with the respondent which would have involved a large amount of work for the business. Contrary to this belief however I accept the evidence of Mr Pottinger that whilst he had hoped early in 2015 that this customer would move a large amount of work to the respondent this did not occur and a relatively small amount in the range of $11,500 in sales for the financial year 2014/2015 is all that has been received.

[11] Mr Malik in his evidence pointed to the purchase of a new printing machine, installation truck and new luxury cars for the company Directors as evidence that the business was not suffering financially. Under cross-examination Mr Malik conceded the printer he referred to had been brought three to four years earlier and he was unaware that Mr Pottinger’s wife had purchased a second hand car in 2013 for her own job. Mr Pottinger’s evidence was that in 2014 a new truck was purchased to replace the previous vehicle that was no longer reliable and that this purchase had to be financed with a loan which involved increasing the monthly repayments to $914 per month over three years.

[12] Mr Malik says that the tasks he had been undertaking were now being completed by his co-worker Ishwan. Mr Pottinger agrees this is the case as the two employees in the factory undertook the same work.

[13] Mr Pottinger’s evidence was that throughout 2014 sales had fallen and there were many occasions when the company did not have enough new orders to keep Mr Malik and Ishwan busy in the factory.

[14] Whenever there was a slowdown in work Mr Pottinger would ask both Mr Malik and Ishwan to strip down signs and clean the warehouse however increasingly there were many days when there was simply little work for them to do.

[15] Mr Pottinger has provided financial statements that do demonstrate a dramatic deterioration in the financial position of the company in terms of net profit for the financial year ending 30 June 2014. Mr Pottinger also provided figures for the first three quarters of the financial year ending 30 June 2015 which however somewhat unhelpfully does not include debtors and so does not allow a direct comparison with previous years.

[16] Whilst these financial records demonstrate the historical financial deterioration of the business the real question is whether there was a change in the business such that it no longer required the work Mr Malik was doing to be done by anyone.

[17] Mr Pottinger’s evidence was that the business had been through a similar downturn in 2002 however one staff member went backpacking so he was able to avoid laying off any staff. His evidence was that he was hopeful in early 2015 that he would be able to avoid laying off any staff either because he would be able to attract extra work or that perhaps one of his staff would decide to move on given the work had fallen off. Unfortunately however neither of these things occurred.

[18] Mr Pottinger’s evidence which I accept is that in March 2015 it was obvious that because of the downturn in sales, which had continued, the business did not need two employees in the factory to do the reduced amount of work that was to be done and accordingly one position could be made redundant. Mr Pottinger’s decision was that he would make Mr Malik’s position redundant.

[19] Since making Mr Malik’s position redundant the business has operated with only one employee in the factory other than on the odd occasion when Mr Pottinger has engaged a casual employee to deal with additional work resulting from a spikes in sales.

Consideration

[20] As can be seen in section 385 of the Act set out below a person cannot have been unfairly dismissed if the dismissal was a case of genuine redundancy.

“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.”

[21] The meaning of genuine redundancy is defined in section 389 of the Act set out below.

“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.”

[22] In this case I am satisfied on the evidence that there was a downturn in the business of the respondent which reduced the number of employees required to work in the factory from two to one. It was a decision for the respondent as to which of the two employee’s positions would be made redundant. It is not for the Commission to review that decision. The respondent decided that it no longer required Mr Malik’s job to be formed by anyone due to the changed operational requirements.

[23] There was no other position to which Mr Malik could be redeployed within the respondent’s enterprise.

[24] As the letter of dismissal explained the dismissal was in no way a reflection on Mr Malik’s performance.

[25] Considering the above I am satisfied that the dismissal of Mr Malik was a genuine redundancy. Because the dismissal was a genuine redundancy Mr Malik’s dismissal cannot have been an unfair dismissal.

[26] Mr Malik was not unfairly dismissed and this application will be dismissed. An order to that effect will be issued in conclusion with tis decision.

COMMISSIONER

Appearances:

D. Malik on his own behalf.

D. Pottinger on behalf of the respondent.

Hearing details:

2015.

Perth:

September 23.

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