Diana Carnall v John R Keith (QLD) Pty Ltd
[2021] FWC 4786
•10 AUGUST 2021
| [2021] FWC 4786 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Diana Carnall
v
John R Keith (QLD) Pty Ltd
(U2021/3952)
COMMISSIONER HUNT | BRISBANE, 10 AUGUST 2021 |
Application for an unfair dismissal remedy – jurisdictional objection – genuine redundancy – position no longer required to be performed by anyone – failure to consult in accordance with the award – consultation would have taken one week with employment ending on account of redundancy – compensation ordered
[1] On 7 May 2021, Ms Diana Carnall made an application under s.394 of the Fair Work Act 2009 (the Act) alleging that her dismissal from John R Keith (QLD) Pty Ltd (the Respondent) was harsh, unjust or unreasonable.
[2] In her Form F2 – Unfair Dismissal Application, Ms Carnall stated that the reason given for her dismissal was that she was not present in the office on Wednesday, 5 May 2021 when Mr John Keith, the Respondent’s owner visited from Sydney. Ms Carnall stated that she was working from home that day, and until June 2021 needed to work from home on Mondays and Wednesdays. From July 2021 she would only need to work from home on Mondays due to her caring responsibilities.
[3] Ms Carnall also suggested that Mr Keith had been displeased to see dirty dishes in the sink from ‘the lads’ who worked for the Respondent. Ms Carnall was employed as an Administration Manager. She stated it was not her responsibility to clean up the mess made by others.
[4] On 19 May 2021, the Respondent filed a Form F3 – Employer response to the application. In the Form F3, the Respondent made a jurisdictional objection to the application, asserting the dismissal was a genuine redundancy.
Legislation
[5] Section 385 of the Act provides that a person has been unfairly dismissed if the Commission 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.
[6] Section 396 of the Act sets out the following:
“The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
(a) whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;
(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;
(d) whether the dismissal was a case of genuine redundancy.”
[7] As set out above in s.396 of the Act, consideration as to whether the dismissal was harsh, unjust or unreasonable cannot occur if the dismissal was a case of genuine redundancy. If the Commission determines that the dismissal was a case of genuine redundancy, the application will be dismissed.
[8] If the Commission determines that the dismissal was not a case of genuine redundancy, it will be necessary to determine if the dismissal was unfair, having regard to the considerations in s.387 of the Act.
[9] Section 389 of the Act provides the meaning of 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.”
[10] It is not disputed that Ms Carnall was employed pursuant to the Clerks – Private Sector Award 2020 (the Award). The Award contains the following consultation clause:
“38. Consultation about major workplace change
38.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:
(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and
(b) discuss with affected employees and their representatives (if any):
(i) the introduction of the changes; and
(ii) their likely effect on employees; and
(iii) measures to avoid or reduce the adverse effects of the changes on employees; and
(c) commence discussions as soon as practicable after a definite decision has been made.
38.2 For the purposes of the discussion under clause 38.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:
(a) their nature; and
(b) their expected effect on employees; and
(c) any other matters likely to affect employees.
38.3 Clause 38.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.
38.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 38.1(b).
38.5 In clause 38 significant effects, on employees, includes any of the following:
(a) termination of employment; or
(b) major changes in the composition, operation or size of the employer’s workforce or in the skills required; or
(c) loss of, or reduction in, job or promotion opportunities; or
(d) loss of, or reduction in, job tenure; or
(e) alteration of hours of work; or
(f) the need for employees to be retrained or transferred to other work or locations; or
(g) job restructuring.
38.6 Where this award makes provision for alteration of any of the matters defined at clause 38.5, such alteration is taken not to have significant effect.”
Hearing of the application
[11] I listed the matter for a telephone hearing of the parties on 5 August 2021. After seeking the views of the parties, I decided to conduct the matter as a determinative conference. Ms Carnall appeared and gave evidence on her own behalf. Mr Ryan Khatri, CFO of the Respondent appeared for the Respondent and gave evidence.
[12] The Respondent filed witness statements of the following individuals, who attended and were cross-examined:
• Mr Patrick Tuite, General Manager; and
• Mr David Coughlan, former Operations Manager.
Evidence and submissions of Ms Carnall
[13] Ms Carnall commenced employment with the Respondent on 13 April 2018. At the time of her dismissal, she had completed three years’ service. She was paid $50,000 per annum plus superannuation. It is her position she has not been paid the appropriate rate of pay pursuant to the Award, and she intends on pursuing an underpayment of wages claim.
[14] Ms Carnall stated that she spoke with Mr Tuite in 2021 and informed him that she needed to work from home on Wednesdays for a short while, in addition to working from home on Mondays. She agreed that she was emotional at this time, as she needed to disclose personal family issues to him. Her mother needed caring for, and while Ms Carnall’s daughter principally cared for Ms Carnall’s mother, her daughter had other responsibilities on Mondays and Wednesdays.
[15] It is Ms Carnall’s evidence that she said to Mr Tuite, “I can’t afford to lose my job”, to which Mr Tuite replied, “No, that’s OK, we do what we have to for family.”
[16] Ms Carnall stated that on 6 May 2021, while she was working, Mr Coughlan came and sat at the opposite side of her desk at reception. He did not ask her to sit down with him, and he did not mention the word redundancy to her. While Mr Coughlan did not say to her that there had been a slow down in business, he did say that Mr Keith was unhappy that she had not been present in the office the day earlier and it was a mess.
[17] Ms Carnall did not give a step-by-step run down of the dialogue alleged to have taken place between her and Mr Coughlan, however it is her evidence that when Mr Coughlan returned to speak to her after having left her at reception, he said, “No, it’s still not acceptable, so it still stands.” She understood that he had made a phone call to somebody, but she didn’t know to whom.
[18] She asked him, “Are you putting me off?” Mr Coughlan answered, “Yes, if it is any consolation, I don’t think I will be far behind you. I can’t afford it. John doesn’t speak to me anyhow.”
[19] Ms Carnall’s evidence is that Mr Coughlan informed her she would be paid four weeks’ wages in lieu of notice, and he asked her if she was OK. She told him she was not. She requested a written reference, to which Mr Coughlan promised he would provide to her.
[20] Ms Carnall asked when she was required to finish work, and she was told, “Now.” She said that she was half-way through a lot of work. She said to him, “I hate leaving things half done.” Mr Coughlan replied, “Just leave it,” and shrugged his shoulders.
[21] Ms Carnall was not informed who would thereafter be undertaking the duties she performed. She does not consider they will be performed as well as she performed them, nor will her colleagues have time to perform all of her former duties.
[22] It is her evidence that the Respondent employs two other project administrators, Mr Chris Curtis and Mr Paul Conroy. She enjoyed working with them. While Mr Curtis was very busy with site administration works on a particular project, she did not consider that Mr Conroy was particularly busy. In her evidence to the Commission, she said that if she had been consulted in relation to her termination, she would have suggested that Mr Curtis or Mr Conroy be made part-time employees to allow her to continue to work for the Respondent. Alternatively, Ms Carnall would have considered working part-time.
[23] Regarding mitigation, Ms Carnall confirmed that she has been applying for many roles, however none of them offered the same conditions she had working for the Respondent. Ms Carnall requires at least one day of work per week from home, and the work needs to be near her home. She considers that while she is very experienced, employers only wish to pay junior wages.
[24] Ms Carnall suggested she should have been afforded many months of work to ready the business to operate without her assistance. She considers that the Respondent will not have the benefit of the many tasks she previously performed, and she considers that the Respondent will soon learn this when business picks up.
Evidence of the Respondent
Evidence of Mr Khatri
[25] Mr Khatri stated the Respondent’s business slowed down in 2021, resulting in the Respondent no longer requiring anybody to perform Ms Carnall’s role. Her duties have been distributed among existing employees.
[26] Mr Khatri conceded the Respondent did not consult with Ms Carnall pursuant to the Award.
[27] He stated that the Respondent did consider all other options rather than making Ms Carnall redundant. His evidence is that even if the Respondent did consult with Ms Carnall for a period of two to three days, the result would have been the same; she would have been made redundant.
[28] Mr Khatri’s evidence is that the two retained administrators, Mr Curtis and Mr Conroy hold greater skills than Ms Carnall, and in fact greater technical skills than those which Mr Khatri possesses. He described them as knowing the job “inside out”. They are involved in preparing and claiming the variations for current and past projects, and they have greater knowledge of current and past projects, which is considered an asset. The above two employees can do the following which Ms Carnall cannot do:
• Produce monthly payment claims;
• Quantify variation claims including submission with all technical supporting documentation;
• Assess payment schedules including reconciliation and negotiation with clients;
• Contract management and compliance including notifications regarding notices of delay and change to scope of works; and
• Monthly project reporting and cost tracking.
[29] Mr Khatri noted Ms Carnall was provided with a separation certificate on 10 May 2021, stating that the reason for the dismissal was shortage of work. In cross-examination he conceded that a more appropriate reason should have been ticked on the form, stating redundancy. Mr Khatri did not complete the separation certificate. An Assistant Accountant in the Sydney office completed the separation certificate. Ms Carnall’s wages for 6 and 7 May 2021 were paid to her before the four-week notice period was applied from 10 May 2021.
[30] Mr Khatri noted the Respondent is not familiar with making office staff redundant, but is well-versed in making tradespeople, predominantly plumbers, redundant. In those situations, payments made into funds such as the Australian Construction Industry Construction Redundancy Trust (ACIRT) and the Building Employees Redundancy Trust (BERT) cover the payments required when tradespeople are made redundant. The Respondent did not immediately inform Ms Carnall she would be entitled to seven weeks’ severance pay. It rectified that approximately 12 days following her dismissal. The seven weeks’ severance payment was taxed as a bona fide redundancy, resulting in Ms Carnall receiving the payment tax-free.
[31] In cross-examination, Ms Carnall suggested to Mr Khatri that Mr Conroy could have been a part-time employee if it meant her job was saved. Mr Khatri responded that the Respondent would not have wanted to lose Mr Conroy as would have expected Mr Conroy to look for full-time work elsewhere if he were reduced to part-time employment with the Respondent. He stated that Mr Conroy and Mr Curtis can do some of Ms Carnall’s duties, but she cannot do their duties.
Evidence of Mr Tuite
[32] Mr Tuite stated that when Ms Carnall commenced working for the Respondent in 2018, it had projects on foot to the value of over $81 million throughout Queensland, northern New South Wales and the Northern Territory. On 6 May 2021 when Ms Carnall’s employment ended, it had secured projects to the value of only $17 million.
[33] Mr Tuite recalled having a discussion with Ms Carnall regarding her working from home. He understood it was only on Mondays, and did not include Wednesdays. He recalled Ms Carnall was upset and asked him if it would jeopardise her employment. He said to her, “No, I am always sympathetic to family issues and will work with you until you can find a resolution.”
[34] Mr Tuite conceded the Respondent did not consult with Ms Carnall regarding her employment ending, however, he stated it would not have changed the result. It is his evidence that the Respondent had already assessed the skill set of existing employees and had made a choice best suited to the Respondent.
[35] Mr Tuite conceded the Managing Directors were not pleased with Ms Carnall’s requirement to work from home long-term. However, he said it was his decision alone to make Ms Carnall redundant, and he was not asked by the Managing Directors to terminate her employment.
[36] He stated that at all times, Ms Carnall acted with professionalism, was courteous and respectful. She did not engage in any misconduct.
[37] Mr Tuite stated that with a massive reduction in the work within the business, he had the unpleasant task of reducing the workforce by around 25 people. He stated that the construction industry is fickle, and projects will be won and lost. At the time of Ms Carnall’s commencement with the Respondent there were eight employees administering projects; the Respondent now only employs two employees to administer projects.
[38] Mr Tuite stated that the duties performed by Ms Carnall are now being performed by the remaining two project administrators. He stated that the Respondent does not have any particular projects in the pipeline, and if it did, it would have considered retaining the cost of staff as an alternative to hiring staff and training when projects are won.
[39] In cross-examination, Mr Tuite agreed that the Respondent had been thinking about reducing the roles within the business for around six weeks prior to Ms Carnall’s dismissal. He stated that he has always struggled with having to terminate a person’s employment, and it is an unpleasant part of his role.
[40] Ms Carnall suggested that Mr Curtis or Mr Conroy could have been made part-time instead of the Respondent dismissing her. Mr Tuite responded that Mr Curtis was very busy with a particular project, and they both have skills that Ms Carnall does not. He stated that he would not put them on part-time. He does not understand why Ms Carnall is declaring that they were not busy.
[41] When asked if the Respondent could have put Ms Carnall on part-time as an alternative to dismissing her, Mr Tuite said that he would not have done so.
[42] Mr Tuite denied that Ms Carnall was dismissed because of her requirement to work from home some days. He instructed Mr Coughlan to terminate her employment on account of the role being made redundant. He said that it was unfortunate that he was away at the time, and perhaps Mr Coughlan did not say all of the things he was required to say to Ms Carnall; he does not know.
[43] Mr Tuite estimated that in the period April-May 2021, he had to terminate the employment of 14 employees.
Evidence of Mr Coughlan
[44] Mr Coughlan was employed by the Respondent until late June 2021. He has approximately 30 years’ experience in the building and construction industry and had worked for the Respondent for around four years.
[45] The evidence of Mr Coughlan is that he sat with Ms Carnall at reception on 6 May 2021 and informed her that her employment was ending. He conceded that he did not consider inviting her into a room and holding the discussion with her away from reception.
[46] Mr Coughlan informed Ms Carnall that the Respondent would be consolidating its administrative function. His evidence is that Ms Carnall questioned if this was because of her non-attendance at work. He responded that as she is the receptionist, it is not ideal that she has been working from home. He said that the Respondent’s reduced turnover drove the decision to be made, and further redundancies would be likely.
[47] His evidence is that he offered to speak again to Mr Tuite, as a skills matrix had been undertaken and others would perform the work she had been performing. After speaking with Mr Tuite, he returned and informed her the decision was final and she would receive four weeks’ payment in lieu of notice. He inquired on her well-being. Ms Carnall left shortly thereafter.
[48] In cross-examination, Mr Coughlan conceded that when he spoke with Ms Carnall, he did focus on her non-attendance in the workplace and that is how he commenced the discussion. He said that he was directed to inform Ms Carnall that the role was being split up and performed by her colleagues, and if he failed to explain it properly, it is his error.
[49] He conceded that it took for Ms Carnall to ask if she was being put off for the issue of termination to come about.
[50] He said to Ms Carnall that he needed to make a phone call. He spoke with Mr Tuite.
[51] Mr Coughlan conceded that he could have handled the situation better. He stated that he is a plumber, not a human resources partner. He is used to informing plumbers when projects end due to the rise and fall of projects.
[52] Following Ms Carnall’s departure from the business, and up until Mr Coughlan’s employment ended, he was the one who primarily answered the phone at work. Ms Carnall has not been replaced.
Consideration
Genuine Redundancy
[53] I turn now to a consideration of the criteria set out in s.389 of the Act. For Ms Carnall’s dismissal to be a case of genuine redundancy, the Respondent must meet each of the criteria set out in s.389 of the Act, where relevant.
s.389(1)(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
[54] The test to be applied when considering whether there has been a reorganisation or redistribution of duties is whether the employee has any duties left to discharge.1 Where there is no longer any function or duty to be performed by an employee, his or her position becomes redundant even where aspects of that employee’s duties are still being performed by other employees.2
[55] The decision in Kekeris v A. Hartrodt Australia Pty Ltd T/A a.hartrodt3 considered this point and established that the test is whether the previous job has survived the restructure or downsizing, rather than a question as to whether the duties have survived in some form. The Full Bench in Ulan Coal Mines Limited v Howarth and others [2010] FWAFB 3488 considered and applied the decision of Ryan J in Jones v Department of Energy and Minerals (1995) 60 IR 304 and said:
“[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.”
[56] In early May 2021, the Respondent was faced with a reduced project portfolio, significantly down on the volume of work it had experienced three years earlier when Ms Carnall’s employment commenced.
[57] Operational requirements is a broad term, involving present performance of the business, the state of the market in which the business operates, steps that may be taken to improve efficiency by installing new processes, equipment or skills, or by arranging labour to be used more productively, and the application of good management to the business.
[58] I accept the Respondent’s evidence that it no longer required three administration staff to perform the work and it satisfied itself the work of Ms Carnall could be absorbed into the work performed by Mr Curtis and Mr Conroy.
[59] Where Ms Carnall proposed in these proceedings that the reduced work could or should have been shared between the three administrators, including herself, that is not a consideration in determining if s.389(1)(a) has been satisfied. In determining this limb of the jurisdictional objection, notions of fairness do not come into play, nor does any analysis of a person’s skills or abilities against one’s colleagues.
[60] I am satisfied that following the changes in the operational requirements of the Respondent’s enterprise, the Respondent no longer required Ms Carnall’s job to be performed by anyone else. The criterion in s 389(1)(a) of the Act is satisfied.
s.389(1)(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
[61] The obligation on an employer to consult about redundancy only arises when a modern award or enterprise agreement applies to an employee and that modern award or enterprise agreement contains requirements to consult about redundancy. It is not disputed that Ms Carnall was employed under the Award; the consultation clause is produced at [10].
[62] Whether the cessation of one employee from a pool of three administration employees constitutes significant effects on employees for the purposes of clause 38 of the Award, including major change, and therefore an obligation to consult in accordance with the provisions of the Award must be determined.
[63] In Port Kembla Coal Terminal Ltd v CFMEU (Port Kembla)4, Jessup J observed 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.”5 However, as White J noted in Port Kembla, a simple comparison between the number of employees to be dismissed and the number of employees in the workforce overall is not conclusive of whether there are major changes.6 Much depends upon the circumstances of a case.
[64] Paragraph 1548 of the Fair Work Bill 2008 (Cth) Explanatory Memorandum to the Act sets out as follows:
“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 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.”
[65] The Respondent made a definite decision to make a major change to the business, reducing its administration employees from three to two. The Respondent’s decision had a significant effect on employees, including by the elimination of a position. It follows that the Respondent was required to comply with the consultation obligations in clause 38 of the Award.
[66] The Respondent concedes it failed to consult with Ms Carnall. Further, the Award consultation obligations require communication to the relevant employee in writing, which of course did not occur. The written notification is an express term of clause 38.2.
[67] Having regard to these findings, I am not satisfied that the Respondent complied with the consultation obligations prescribed by the Award. Accordingly, I am not satisfied that the cessation of Ms Carnall’s employment was a genuine redundancy within the meaning of s.389 of the Act. The Respondent’s jurisdictional objection is dismissed.
[68] In light of the conclusion reached, it is unnecessary to consider s.389(2), being whether it would have been reasonable in all the circumstances for Ms Carnall to have been redeployed within the Respondent, or an associated entity. However, for completeness, and in case I am incorrect about the consultation obligations above, I have determined the issue below.
s.389(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.
[69] In Hallam v Sodexo Remote Sites Australia Pty Ltd7a Full Bench of the Commission stated the following:
“…Subsection 389(2) states 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. Subsection 389(2) places no obligation on an employer to redeploy, or to do everything possible to achieve a redeployment outcome. The exception is applied at the time of dismissal. It operates so that a dismissal that would otherwise be a case of genuine redundancy under subsection 389(1) will not be so if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or with an enterprise of an associated entity of the employer.” [references omitted]
[70] As the Full Bench observed in TAFE NSW v Pykett,8 to show that it would have been reasonable for the Respondent to redeploy Ms Carnall, it is not necessary to identify a particular job or position in which Ms Carnall 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 Ms Carnall.
[71] Whether redeployment of an employee is considered reasonable will depend on the circumstances that exist at the time of the dismissal.9
[72] The material before the Commission does not support Ms Carnall’s contention that redeployment would have been reasonable in all the circumstances. Ms Carnall effectively contended that the work performed by herself and two other administrators be shared between them, with somebody performing part-time work. She effectively called for a dilution of hours of work – firstly those of her colleagues, and only if necessary, her own. That is not the test before the Commission; it is whether there was an alternative job, position or work which clearly is not the case. There was no ability for redeployment in the shrinking operation.
[73] If it were necessary to do so, I would find that it was not reasonable in all the circumstances for Ms Carnall to be redeployed within the Respondent or the enterprise of an associated entity of the Respondent.
Was the dismissal harsh, unjust or unreasonable?
[74] A dismissal may be unfair, when examining if it is ‘harsh, unjust or unreasonable’ by having regard to the following reasoning of McHugh and Gummow JJ in Byrne v Australian Airlines Ltd:10
“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.”
[75] I am duty-bound to consider each of the criteria set out in s.387 of the Act in determining this matter.11
s.387(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)
[76] When considering whether there is a valid reason for termination, the decision of North J in Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373 provides guidance as to what the Commission must consider:
“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 reasons 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, common-sense way to ensure that the employer and employee are treated fairly.”
[77] However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.12
[78] I am not satisfied that Ms Carnall was dismissed on account of some consternation regarding her requirement to work from home on some days, instead of in the office. I consider that Mr Coughlan was extremely clumsy when he informed Ms Carnall of the reasons for the dismissal. I do not consider the redundancy matter was fabricated following Ms Carnall’s application to the Commission. The Respondent has not replaced Ms Carnall and is simply doing without her, which satisfies me that the reason for the dismissal was not related to her working from home issue.
[79] To support this view, I appreciate the Respondent has had little experience in making severance payments to office staff, and it is more familiar with making regular payments to industry redundancy funds held by trade employees. I accept this reason for the delay in the severance payment made to Ms Carnall.
[80] I am satisfied that the Respondent no longer required Ms Carnall’s job to be performed by anyone because of changes in the operational requirements of the enterprise. The reason for Ms Carnall’s dismissal was not related to her capacity or conduct.13 As such, this is a neutral factor with respect to whether Ms Carnall’s dismissal was harsh, unjust or unreasonable.
s.387(b) - Whether the person was notified of that reason
[81] As Ms Carnall’s termination of employment did not relate to capacity or conduct, this is a neutral factor.
s.387(c) - Whether there was an opportunity to respond to any reason related to the capacity or conduct of the person
[82] This criterion deals with procedural fairness in respect of a reason for dismissal related to an employee’s capacity or conduct. As Ms Carnall’s employment ended by way of redundancy this is a neutral factor.
s.387(d) - Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to the dismissal
[83] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, an employer should not unreasonably refuse that person being present.
[84] There is no positive obligation on an employer to offer an employee the opportunity to have a support person. The Explanatory Memorandum, Fair Work Bill 2008 (Cth) at [1542] states the following:
“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.”
[85] In the circumstances, I find that the Respondent did not unreasonably refuse to allow Ms Carnall to have a support person present at discussions relating to the dismissal on 6 May 2021. However, I note that Ms Carnall was not on notice of the meeting’s purpose such that she was not afforded the opportunity to request a support person. This matter is appropriately considered under s.387(h).
s.387(e) - Was there a warning of unsatisfactory work performance before dismissal
[86] Ms Carnall’s dismissal did not relate to unsatisfactory performance. This is a neutral factor.
s.387(f) - Whether the respondent’s size impacted on the procedures followed and s.387(g) - Whether the absence of a dedicated human resource management specialist impacted on the procedures followed
[87] The Respondent is a business of 58 employees. No submissions were made by the Respondent, even on invitation relevant to this criterion in s.387 of the Act.
s.387(h) Other matters
[88] I am satisfied that the Respondent had a valid reason to dismiss Ms Carnall having regard to its operational requirements. The valid reason was not related to Ms Carnall’s capacity or conduct; it was nonetheless a bona fide reason. It is a consideration that tells against a finding that the dismissal was unfair.
[89] Regrettably, the Respondent failed to meet its positive obligation to consult with Ms Carnall relevant to its definite decision to introduce major change to the business. No evidence was provided by the Respondent of any consideration it gave to the Award. The Respondent, it seems, had no awareness of its obligation under the Award to consult in the extensive manner required by the Award, particularly in writing.
[90] It would have been appropriate for the Respondent to conduct a meeting with Ms Carnall, allowing for a support person, if she wished, and to explain the scenario and inform her in writing that it was considering ending her employment which had been in place for three years. It is at that time the Respondent could have held discussions relevant to how it was going about its decision making in reducing the number of administrators it employed from three to two. Ms Carnall would have had an opportunity at that time to propose alternatives to being made redundant. Simply having the opportunity to influence the Respondent would have been sufficient to render the dismissal fair. On the evidence before me, I am satisfied the Respondent would still have decided, correctly in my view, that Ms Carnall was the correct employee to choose to make redundant.
[91] I have had regard to the skills matrix considered by the Respondent. It is not a relevant consideration in any analysis of s.389, although many applicants present, before the Commission, hurt and insulted in such a scenario that it is they who have been chosen to be made redundant when they consider that some other employee should have been let go before them. It is a very common scenario.
[92] I do consider that I may have regard to the skills matrix considerations in considering s.387(h).
[93] I understand the unfairness in not providing the skills matrix to Ms Carnall prior to the dismissal. Having had the benefit of the parties’ evidence at the determinative conference, I am satisfied that even if Ms Carnall had been provided with the skills matrix and made the same requests relevant to part-time work, the Respondent would still have selected Ms Carnall to be let go. On the evidence before the Commission, in retaining Mr Curtis and Mr Conroy, it had a highly skilled small number of employees who could effectively administer projects of a substantial size.
[94] I accept the Respondent’s findings that Ms Carnall was not competent in some areas of work, and could not perform some technical aspects of the work performed by Mr Curtis and Mr Conroy. Accordingly, I consider that it was an appropriate decision for the Respondent to make to select Ms Carnall to be dismissed and retain Mr Curtis and Mr Conroy.
[95] I have had regard to the clumsy way Mr Coughlan effected the dismissal on Ms Carnall. Regrettably, he is not experienced in properly informing an employee of significant matters to do with their employment, yet on his account he has had to let numbers of plumbers go with the rise and fall of contracts. The discussion with Ms Carnall should have been held in private and with clear structure of the matters to be discussed. I accept Mr Tuite’s evidence that he provided instructions to Mr Coughlan to terminate Ms Carnall’s employment on account of redundancy and not for any other reason. In hindsight, Mr Tuite should have satisfied himself that Mr Coughlan could competently convey the correct reasons for the dismissal to Ms Carnall, which would have properly been done if the Respondent had met its consultation obligations.
[96] I have had regard for Ms Carnall’s length of service of three years, noting it is not a lengthy period of time. I have had regard for Ms Carnall’s age, noting that she is 59 years old.
[97] I have also had regard for the fact that the dismissal was conducted in breach of the consultation provisions of the Award and that issue weighs heavily for a finding that the dismissal was harsh, unjust or unreasonable.
Conclusion
[98] The jurisdictional objection that the dismissal was a case of genuine redundancy requires two affirmative elements and one negatory element which must be satisfied so as to establish whether a dismissal was or was not a case of genuine redundancy.
[99] I have determined that the second affirmative element was not satisfied in this case. Specifically, the Respondent has not complied with an obligation in the Award that applied to Ms Carnall’s employment to consult about his redundancy. Therefore, the dismissal did not satisfy the meaning of genuine redundancy as contained within s.389(1)(b) of the Act.
[100] The jurisdictional objection has been determined and rejected, and therefore it is necessary to turn to the substantive merits of the application. Having appropriate regard for the various factors contained within s.387 of the Act, I determine that Ms Carnall’s dismissal on 6 May 2021 was unjust. The primary reason for this is the failure to consult with Ms Carnall regarding a proposed dismissal as required by the terms of the Award.
[101] I have formed a view that, had the Respondent consulted with Ms Carnall over a few days, the decision to dismiss her on the grounds of redundancy would have nonetheless been made, and in those circumstances the dismissal would not have been harsh, unjust or unreasonable, and therefore not unfair.
Remedy
[102] Section 390 of the Act reads as follows:
“390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) The FWC may make the order only if the person has made an application under section 394.
(3) The FWC must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.”
[103] Ms Carnall is a person protected from unfair dismissal for the Act’s purposes and is a person who has been unfairly dismissed. Accordingly, I am empowered to exercise discretion as to whether she can be reinstated.
[104] I am satisfied that it is inappropriate to order reinstatement due to the size of the business and the work available to the small number of administrative employees still employed.
[105] I now turn to consideration of compensation.
Compensation
[106] Section 392 of the Act provides:
“392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.”
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”
Authorities
[107] The approach to the calculation of compensation is set out in a decision of a Full Bench of the Australian Industrial Relations Commission in Sprigg v Paul’s Licensed Festival Supermarket.14 That approach, with some refinement, has subsequently been endorsed and adopted by Full Benches of the Commission in Bowden v Ottrey Homes Cobram and District Retirement Villages inc T/A Ottrey;15 Jetstar Airways Pty Ltd v Neeteson-Lemkes16 and McCulloch v Calvary Health Care (McCulloch).17
[108] I have had regard to the above authorities, and I have considered the submission of each party.
The effect of the order on the viability of the respondent
[109] No submissions were made relevant to this issue. There is no evidence to suggest that an award of compensation would affect the viability of the Respondent’s enterprise.
The length of Ms Carnall’s service
[110] Ms Carnall had just over three years’ service. This is not a long period of time.
The remuneration that Ms Carnall would have received, or would have been likely to receive, if she had not been dismissed
[111] I am satisfied that, had the Respondent consulted with Ms Carnall as required by the Award, it would still have determined to dismiss Ms Carnall. I have already stated that I consider that this would have been fair.
[112] In all of the circumstances, noting the significant loss in work of the Respondent at the time, I consider that it would have been appropriate to consult with Ms Carnall for a period up to Wednesday, 12 May 2021, being a period of one week from the Thursday the week earlier. I have determined that one week would have been the appropriate amount of time to consult with Ms Carnall given the size of the Respondent and few employees it had to choose between to meet its operational requirements.
[113] I note that Ms Carnell was paid wages, not notice, for the Thursday and Friday of that week. Accordingly, there would only be a requirement to pay to Ms Carnell for the period Monday to Wednesday of the next week. That is an amount of $576.92.
The efforts of Ms Carnall (if any) to mitigate the loss suffered because of the dismissal
[114] Having decided Ms Carnall’s employment would have continued for an additional one week, I need only consider the efforts of Ms Carnall to mitigate her loss in that week. I am satisfied that she made relevant attempts to do so.
The amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation
[115] Ms Carnall did not earn any remuneration from employment or other work in the one week following the dismissal. Ms Carnall received four weeks’ pay in lieu of notice, and seven weeks’ severance pay. These amounts constitute remuneration, and I find that Ms Carnall would have received these same payments following one weeks’ consultation regarding the proposed redundancy. That is, Ms Carnall’s entitlements would have been almost mirrored one week later.
The amount of any income reasonably likely to be so earned by Ms Carnall during the period between the making of the order for compensation and the actual compensation
[116] This factor is not relevant in the circumstances of this matter.
Other relevant matters
[117] I do not consider that there are any other relevant matters to consider that I have not already addressed above.
Misconduct reduces amount
[118] Section 392(3) of the Act requires that if the Commission is satisfied that the misconduct of a person contributed to the employer’s decision to dismiss the person then the Commission must reduce the amount it would otherwise order by an appropriate amount on account of the misconduct.
[119] The section requires that consideration be given by the Commission, amongst other things, as to whether a person’s misconduct contributed to the decision to dismiss an employee even if the Commission has found that there was no valid reason for the person’s dismissal. However, if there was no valid reason for the dismissal that may be relevant to the Commission’s decision as to the appropriate amount by which the amount of compensation should be reduced.18
[120] I do not find that Ms Carnall engaged in any misconduct that would reduce the amount to be awarded to her.
Shock, distress etc. disregarded
[121] I confirm that any amount ordered does not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt caused to Ms Carnall by the manner of the dismissal.
Compensation Cap
[122] I must reduce the amount of compensation to be ordered if it exceeds the lesser of the total amount of remuneration received by the applicant, or to which the applicant was entitled, for any period of employment with the employer during the 26 weeks immediately before the dismissal, or the high income threshold immediately prior to the dismissal.
[123] The high income threshold immediately prior to the dismissal was $153,600, and the amount for 26 weeks was $76,800. The amount of compensation the Commission will order does not exceed the compensation cap.
Payment by instalments
[124] This is not a relevant consideration given the size of the Respondent.
Order of compensation
[125] I have determined that the amount of $576.92 gross, less tax as required by law, is to be paid by the Respondent to Ms Carnall on account of the period of time the consultation would have taken to fairly make Ms Carnall’s role redundant. Ms Carnall would still have been entitled, following that period, to a period of four weeks’ notice and seven weeks’ severance pay, and I consider that it would be inappropriate not to award any sum to Ms Carnall on account of the payment she would lawfully receive following a short period of consultation.
[126] For the sake of clarity, I determine that Ms Carnall’s employment would have ended on 12 May 2021 and she would have been entitled to four weeks’ notice and seven weeks’ severance pay. She has already been paid those amounts, so it is necessary to make an appropriate deduction of those amounts pursuant to s.392(2)(c) of the Act. She has not been paid for 10-12 May 2021, and the amount of $576.92 represents the wages she would have received for those three days.
[127] In addition, the Respondent is to pay superannuation on the amount of $576.92 at the rate of 9.5% (as it was prior to 1 July 2021), being an amount of $54.81 into Ms Carnall’s superannuation fund.
[128] The compensation ordered is required to be paid by the Respondent within 14 days of the date of this decision. An Order of compensation [PR732601] will be issued concurrently with this decision.
COMMISSIONER
Printed by authority of the Commonwealth Government Printer
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1 Jones v Department of Energy and Minerals [1995] IRCA 292 (16 June 1995), [(1995) 60 IR 304 at p. 308 (Ryan J)]; cited with approval in Ulan Coal Mines Limited v Howarth and others [2010] FWAFB 3488 (Boulton J, Drake SDP, McKenna C, 10 May 2010) at para. 17, [(2010) 196 IR 32].
2 Ibid.
3 [2010] FWA 674.
4 [2016] FCAFC 99.
5 Ibid at [186]. See also Australian Nursing and Midwifery Federation v Bupa Aged Care Australia Pty Ltd [2017] FCA 1246at [22]-[31].
6 Ibid at [499].
7 Hallam v Sodexo Remote Sites Australia Pty Ltd [2017] FWCFB 6847 at [20].
8 [2014] FWCFB 714, (2014) 240 IR 130 at [36].
9 Ulan Coal Mines Limited v Honeysett (2010) 199 IR 363 at [28].
10 (1995) 185 CLR 410, [465].
11 Sayer v Melsteel[2011] FWAFB 7498 at [20].
12 Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681, 685.
13 UES (Int’L) Pty Ltd v Harvey[2012] FWAFB 5241 at [42].
14 (1998) 88 IR 21.
15 [2013] FWCFB 431.
16 [2014] FWCFB 8683.
17 [2015] FWCFB 2267.
18 Crawford v BHP Coal Pty Ltd [2017] FWC 154, [345] – [346]; Read v Gordon Square Child Care Centre Inc. [2013] FWCFB 762, [83].
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