Deanna Reichman v P G Lion Resources Australia Pty Ltd

[2010] FWA 3535

Note: An appeal pursuant to s.604 (C2010/3885) was lodged against this decision - refer to Full Bench decision dated 4 August 2010 [[2010] FWAFB 5431] for result of appeal.

[2010] FWA 3535

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Deanna Reichman
v
P G Lion Resources Australia Pty Ltd
(U2009/11423)

COMMISSIONER RAFFAELLI MELBOURNE, 12 MAY 2010

Application for unfair dismissal remedy- genuine redundancy or otherwise.

[1] On 20 August 2009, Ms Deanna Reichman (the Applicant) made application for an unfair dismissal remedy. The Applicant alleged that her termination had been unfair and that her former employer‘s contention that her job was redundant was not correct.

[2] For its part, her former employer, PG Lion Resources Australia Pty Ltd (the Respondent) maintained that the Applicant was terminated because it was a case of genuine redundancy.

[3] Section 385 of the Fair Work Act 2009 (the Act) defines what is meant by unfair dismissal. It says:

“A person has been unfairly dismissed if FWA 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”

[4] Clearly, all of the matters in the four paragraphs need to be satisfied in order for there to be an unfair dismissal. If any of them is not satisfied the termination of employment will not fall into the definition of unfair dismissal.

[5] In this matter before me, the Respondent alleged that this was a case of genuine redundancy and as a consequence, the application for an unfair dismissal remedy cannot be made or sustained.

[6] As to what is meant by “genuine redundancy” section 389 gives it meaning and reads:

“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.”

[7] Additionally, section 396(d) provides that before considering the merits of the case, Fair Work Australia (FWA) needs to decide the question of genuine redundancy or otherwise. For this reason the proceedings before me on 3 May 2010 and this decision concern the question of whether this was a case of genuine redundancy.

[8] The Respondent relied firstly on the evidence of Mr Michael Rael, the Respondent’s managing director. His evidence included that during 2008 and 2009, the Respondent experienced a reduction in revenue and volume of work. From September 2008 to the current time the employment of 93 employees had been reduced to 64.

[9] As at mid-2009, the area in which the Applicant was employed, Accounts Receivable, was the only one where a reduction in the number of employees had not yet occurred. However, by late June 2009, he considered that billing revenue figures pointed to the need to review the operation of the Accounts Receivable area. He asked his finance operations manager to consult with the manager of Accounts Receivable and have that manger review workload and staffing levels.

[10] In late July 2009 he was informed that the workload and time demands in the Accounts Receivable area had decreased by approximately 15% or the equivalent of one full-time credit portfolio manager. He authorised the manager of Accounts Receivable, Ms Althea Thomas to select the person to be made redundant. He subsequently approved Ms Thomas’s selection of the Applicant.

[11] His evidence was that the selection for redundancy was not based on performance. He agreed that all portfolio managers in Accounts Receivable, including the Applicant, had performed well.

[12] He denied that the making of Ms Melissa Heringes a permanent employee in May 2009 within the Accounts Receivable team was inappropriate given the redundancies that followed. He put that a vacancy had been created in April 2009 and at that time redundancies in this area were not being considered. It was therefore logical to make Ms Heringes, a current temporary employee, permanent. He also denied any suggestion that Ms Heringes’s permanency was in any way related to the redundancy that occurred in August 2009.

[13] Mr Rael also said that at the time of the Applicant’s termination, there were no full-time or part-time positions to which she could have been redeployed, not surprisingly given the reduction in the Respondent’s employment that had already occurred. There were also no suitable positions in agencies associated with the Respondent.

[14] Ms Thomas’s evidence included that on 9 July 2009 she had been asked by the financial operations manager to look at workload and staffing levels in her area. Her subsequent analysis of the Accounts Receivable area indicated that with the reduction in workload, the existing eight positions of portfolio managers could be reduced to seven. She was subsequently asked to make an appropriate selection of one portfolio manager for retrenchment.

[15] Her evidence was that she approached the selection by looking at the portfolio of clients managed by the eight credit portfolio managers. She decided on some streamlining of portfolios and their re-allocation among managers. Ultimately, she decided that Ms Christine Tan’s portfolio could be merged with that of Ms Heringes and given to Ms Heringes. This left the Applicant’s portfolio to be retained by the Applicant or given to Ms Tan.

[16] In the end she determined that Ms Tan would be given the Applicant’s former portfolio and the Applicant was made redundant. In choosing Ms Tan, she was conscious of Ms Tan’s workers compensation injury and her difficulty in finding alternative employment. She felt that the portfolio formerly with the Applicant would be more suitable to her “return to work” plan.

[17] She denied that the making of Ms Heringes a permanent employee in May 2009 was inappropriate. She needed someone to fill a vacancy and took steps to do so.

[18] The evidence of the Applicant included the following:

• It is implausible that in a period when the Respondent had been reducing the number of its employees, it would not have foreseen that reductions in the remaining area of Accounts Receivable would be likely. Given that, its decision to make Ms Heringes a permanent employee in May 2009 was inappropriate and tells against the genuineness of the Applicant’s redundancy.



• The evidence is clear that her work was given in its entirety to Ms Tan. Consequently, it could not be said that her job would no longer be performed by anyone.



• Ms Tan, herself was terminated some two weeks later. The Respondent took no steps to re-engage the Applicant.



• The Accounts Receivable area had been commended by Mr Rael on its performance only weeks before her termination



• The reason for her termination may have been because Ms Heringes was younger and paid less than her.



• The Respondent failed to consult her about her predicament, nor did it consider possible redeployment.

Conclusion

[19] I am satisfied that the Respondent was faced with falling workload and income associated with the Accounts Receivable area. This was consistent with the operating difficulties that it had faced through 2008 and 2009 and which had resulted in significant reduction of employees. The figures point to at least a 15% reduction in relevant volumes for the Accounts Receivable and this translated to a need to reduce the eight portfolio managers to seven.

[20] It was not the case of the Applicant that the figures relied on were not correct. Nor did she seriously challenge the need for the reduction of eight persons to seven.

[21] I am satisfied that operating and financial imperatives dictated a change in the operational requirements of the Respondent in its Accounts Receivable area.

[22] The fact that since August 2009, when the retrenchment occurred, there has been no increase in employment in the area, underscores the validity of the actions taken by the Respondent in reducing its labour.

[23] Usually, once it is found that an employer has genuine grounds for declaring positions surplus, the method of selection for retrenchment ought not to be the subject of further examination. To do so is to venture into the merits of the unfairness allegations rather than to remain focused on the preliminary question of genuine redundancy or otherwise.

[24] However, at times the way persons are chosen for retrenchment and associated factors may still need to be looked at as they may be relevant in assessing the genuineness of the redundancy of positions.

[25] In this case, I have had to consider the matter of Ms Heringes’s permanency made on 11 May 2009, not too much earlier than the commencement of the examination of labour needs in Accounts Receivable.

[26] Ms Thomas’s evidence that she needed to fill a vacancy fails to address the question as to why Ms Heringes was made permanent. She could presumably have filled the role and remained a temporary employee. Given the environment of cost-cutting and employment reduction, it is surprising that an existing temporary employee was made permanent.

[27] However, the worst that can be said of the Respondent and its mangers was that they mismanaged the circumstances in May 2009.

[28] There is however no basis for viewing the permanency of Ms Heringes as impacting on the genuineness of the soon to be declared redundancy. To do so would require my finding that some plot existed, whereby the Respondent knew of an imminent redundancy, took steps to make Ms Heringes permanent so as to create a surplus of permanent employees that would then need to be settled by the retrenchment of the Applicant. There is no basis for any such consideration.

[29] In my view, at its highest the May 2009 decision to make Ms Heringes permanent was a bad one in the circumstances, but not one that is relevant to the consideration of the genuineness of the redundancy.

[30] I have also considered the fact that the entire portfolio managed by the Applicant was given to Ms Tan. The more obvious decision of an employer would have been to leave the Applicant as she was and retrench Ms Tan. The explanation given by Ms Thomas for retaining Ms Tan is not susceptible to any large degree of criticism. She seemed concerned at Ms Tan’s fate as a recently injured worker. While she does not seem to have considered the consequences for the Applicant of loss of employment, her concern for Ms Tan is reasoned.

[31] In the circumstances, the choosing of Ms Tan over the Applicant does not point of itself to the retrenchment of the Applicant not having been genuine.

[32] I have also considered the Applicant’s submission that given that her portfolio was still untouched (and not reduced in any way) it could not be said that her job was not being done by anyone. It was in fact to be done by Ms Tan.

[33] I disagree with the Applicant’s argument. The Applicant was employed as credit portfolio manager (Exhibit Respondent 4). She was responsible for a series of customers or clients or portfolios. These could be changed, reduced, enlarged or reallocated by the Respondent. This is evident from the Applicant’s contract of employment (Exhibit Respondent 4) where it states:

“We are delighted to confirm our offer of employment . . . in the role of Credit Portfolio Manager.

. . .

The Company retains the right, at its discretion, from time to time to change your job responsibilities as necessary in the light of changes within the work environment.”

[34] While it might sometimes be appropriate to focus on an employee’s job to determine whether it is a redundancy or not, in most cases one should approach the question by looking at the entire workforce or an appropriate section of the workforce. If the workforce is deemed to have excess employees, a reduction of surplus numbers may be justified without analyzing exactly which of the employees’ current functions are surplus to needs.

[35] The Respondent’s reference to the Explanatory Memorandum to the Act is relevant. At paragraph 1548 of the Explanatory Memorandum it states:

“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.”

[36] In my view, the circumstance described in the second bullet point applies here. Once it is determined that a surplus of labour exists in a defined work area an employer is entitled to re-allocate its work among remaining employees as it considers appropriate.

[37] I am satisfied that there was a surplus of labour in the Accounts Receivable area. Given that, the decision of Ms Thomas to re-allocate the entire workload of eight persons among seven was not inappropriate and this includes her decision to transfer the applicant’s entire portfolio to Ms Tan.

[38] Although the Applicant alleged that she may have been terminated because she was older and paid a higher salary than Ms Heringes, there is nothing to substantiate this. Indeed, the evidence was that while Ms Heringes was paid about $51,000 per annum, the Applicant was paid about $52,000. This fact in no way adds support to the allegation.

[39] I find that the Respondent no longer required the Applicant’s position of credit portfolio manager being one of eight such positions because of changes in the operational requirements of the Respondent’s enterprise.

[40] Section 389(1)(b) of the Act only requires an employer to consult the employee about a redundancy if such a requirement is contained in an enterprise agreement or modern award. I was not referred to any enterprise agreement that applied, and can only assume that none applied. Further, because the dismissal occurred in August 2009, and modern awards began operating from 1 January 2010, no such award applied. Accordingly, there were no obligations of the type referred to in section 389(1)(b) and I so find.

[41] As to the issue of redeployment, although the Applicant says that redeployment was not discussed or explored, the evidence of Mr Rael was that there were no alternative positions for the Applicant. This was not surprising given that reductions had already occurred over previous months in other areas of the enterprises and in those of associated advertising agencies.

[42] I find that there is no evidence that it would have been reasonable in all the circumstances for the Applicant to have been redeployed elsewhere in the Respondent’s enterprise nor in any associated entities.

[43] Given my findings above, I find that the Applicant’s termination was a case of genuine redundancy. Because of that finding and pursuant to the provisions of section 385 of the Act, this is not a case of unfair dismissal.

[44] The Applicant’s application is dismissed for want of jurisdiction.

[45] I do however state my displeasure at the conduct of the Respondent. Firstly, I note that Ms Tan was terminated some few weeks after the termination of the Applicant. The Applicant raised the fact that she could have been re-engaged given the vacancy created. The Respondent gave no explanation concerning this and I conclude that its conduct is surprising and at odds with its moral (although not legal) obligation to minimise the adverse impact of retrenchment. Such re-engagement would have been consistent with Mr Rael’s evidence that the Applicant’s termination was not the result of any performance issue.

[46] Secondly, the evidence of Ms Thomas (Exhibit Respondent 2) was that the Applicant, on being informed of her retrenchment, was effectively marched off the premises. In my view her treatment by the Respondent lacked any grace or sensitivity. She was treated as if she had been terminated for some serious misconduct.

[47] I would hope that the Respondent reviews (or implements) it’s internal fair treatment policy. Unfortunately the Respondent’s conduct is not susceptible to any order by Fair Work Australia.

COMMISSIONER

Appearances:

D. Reichman self-applicant.

C. Lawrence of counsel with D. Fitzharris solicitor for the respondent.

Hearing details:

2010

Sydney:

May 3.

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