[2020] FWC 3004

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Dimitra Karantzounis
v
Lencrow Pty Ltd
(U2020/1705)

COMMISSIONER JOHNS

SYDNEY, 9 JUNE 2020

Application for an unfair dismissal remedy – Jurisdictional objection – Genuine redundancy.

Introduction

[1] On 16 February 2020, Ms Karantzounis made an application to the Fair Work Commission (Commission) pursuant to s.394 of the Fair Work Act 2009 (Cth) (FW Act) seeking a remedy for unfair dismissal. The application is in respect of the termination of her employment on 7 February 2020 by Lencrow Pty Ltd (Respondent/Employer/Lencrow), a forklift hire company. Ms Karantzounis seeks an order that the Respondent pay compensation to her.

[2] On 12 March 2020, the Respondent filed a response to the unfair dismissal application. It objected to the Commission exercising jurisdiction in relation to the matter on the basis that, it contended, the dismissal was a case of genuine redundancy.

[3] If the termination was a genuine redundancy, then Ms Karantzounis’s application for an unfair dismissal remedy must be dismissed. If the termination was not a genuine redundancy, it becomes necessary to determine if termination of employment was unfair.

[4] Conciliation was attempted, but the dispute remained unresolved. Consequently, the matter was listed for a jurisdictional hearing on 12 and 20 May 2020.

[5] At the determinative conference:

a) the Applicant represented herself.

b) the Respondent was represented by Mr John Flinn, its Chief Executive Officer. Mr Flinn also gave on behalf of the Respondent in addition to:

i. Mr Matthew Humphrey, the Chief Financial Officer of the North Fork Group (being the parent company of the Respondent), and

ii. Mr Chris Cunliffe, the Respondent’s General Manager of Sales and Marketing.

[6] In relation to the matter, the parties filed the following materials. In coming to this decision, the Commission, as presently constituted, has had regard to the filed material, the oral evidence and other documents tendered during the determinative conference:

EXHIBIT NO.	DESCRIPTION
1	Form F2 – Application
2	Form F3 – Employer’s response
3	Respondent’s Outline of Argument – Objections
4	Witness Statement of John Flinn
5	Witness Statement of Matthew Humphrey
6	Witness Statement of Chris Cunliffe
7	Applicant’s Outline of Argument – Objections
8	Applicant’s Outline of Argument – Merits
9.1	Termination Letter
9.2	Employment contract and signed acknowledgement
9.3	Employment handbook
9.4	Deed of Release
9.5	Email correspondence to all staff dated 7 February 2020
9.6	Complaint sent to John Flinn on 15 November 2019
9.7	Complaint sent to John Flinn on 10 January 2019
9.8	Email from John Flinn dated 10 January 2019
9.9	Email from John Flinn dated 12 January 2019
10	Respondent’s Reply the Applicant’s Outline of Argument
11	Email chain dated 10 January 2020
12	Position description
13	Job lists
14	Confidential exhibit – Unredacted Q1 2020
15	Confidential exhibit – “Fork Force”
16	Confidential exhibit – 6 February 2020

Background

[7] I make the following findings of fact:

a) On 23 May 2019, the Applicant commenced employment with the Respondent (although she had been employed within the Lencrow Group since 11 July 2016). Under clause 6(b) of the employment contract the Respondent’s policies gave rise to no contractual entitlement.

b) The Applicant was the Respondent’s Chief Financial Officer (CFO).

c) The Applicant was paid a salary of $67.13 per hour ($132,648.88 per annum).

d) The Applicant’s employment was not covered by a Modern Award or an enterprise agreement (see discussion below at [27]).

e) On 30 June 2019 the Respondent was purchased by the North Fork Group (NFG). The transaction was completed on or about 1 June 2019. 1

f) Subsidiaries of the NFG are:

i. the Respondent, Lencrow,

ii. Hystandard Handling and Equipment (Hystandard), and

iii. Fork Force

g) Neither Hystandard nor Fork Force employed a CFO. However, Hystandard did employ a financial controller. The Applicant’s role was similar to that of the financial controller of Hystandard, but also involved some higher level responsibilities.

h) The CFO of the NFG was Matthew Humphrey.

i) NFG is the majority owned Australian subsidiary of, Japanese company, Nishio Rent All Co Ltd (Nishio).

j) Following the acquisition of the Respondent there followed a process of consolidating the operations of the subsidiaries, including:

i. Consolidating NFG’s premises in Brisbane, Sydney and Melbourne,

ii. Relocating finance and administration employees to a shared location in Sydney,

iii. Merging operating processes

k) On 29 October 2019, the Managing Director of NFG, Mr Steve Cunliffe made a presentation to Nishio entitled “Financial Year 2020, Q1 Update”. 2 Mr Cunliffe reported on (amongst other matters):

i. Lencrow – post acquisition update,

ii. Future Senior Organisational Structure effective 1 July 2020. The new structure envisaged one Financial Controller for the entire group.

l) On 15 November 2019, the Applicant made a formal complaint to Mr Flinn about the conduct of another employee (GH). The Applicant alleged that GH made “constant offensive comments, most recently in an email dated 14 November 2019”. The Applicant alleged that the fellow employee’s conduct was in breach of the employee handbook.

m) During November/December 2019 a strategic review occurred called “One Integration Project” (OCI Project).

n) In early December 2019 the Managing Director of NFG, Mr Steve Cunliffe made a presentation to Nishio entitled “Fork Force ‘One Company’”. 3 Mr Cunliffe reported on (amongst other matters):

i. ‘Key benefit – cost’ of “removing duplication in our organisational structure with save $500k in finance and administration alone.”

ii. A proposal to have Mr Humphrey, the NFG CFO, as the only CFO for the group.

o) On 5 December 2019, an in-principle decision was made by Nishio to the consolidate the three subsidiaries into one legal entity in accordance with Mr Cunliffe’s presentation/recommendation.

p) On 9 January 2020 at 12.16 pm, the Applicant made another complaint against GH about his “continuous rudeness and insulting behaviour…”

q) Mr Flinn forwarded the complaint to GH at 5.11 pm.

r) At 1.07 pm on 10 January 2020, GH emailed Mr Flinn. He rejected the complaint made against him. He complained about the Applicant. GH’s complaint about the Applicant was not forwarded to her.

s) Having received complaints from the Applicant and GH about each other, on 10 January 2020, Mr Flinn conducted a conference call with the Applicant and GH.

t) After the call Mr Flinn wrote an email to members of senior management including the NFG CEO, Steve Cunliffe, where the subject line identified the Applicant and GH. He wrote,

“Following yet another incident between these two employees I engaged with both employees on a conference call today and confirmed the following:

• They must behave as professional senior managers in any dealings with each other.

• They are not to use language written or verbal which is unprofessional or rude.

• They must answer reasonable requests from each other which are in support of the business in a reasonable timeframe.

• They must either provide requested support or direct each other to that support wherever it is available.

I confirmed with both that the failure to do this as senior managers will result in me instigating termination proceedings against the offending person as this behaviour is damaging the business.

They both confirmed to me that they would give this support for the benefit of the business when required and we can therefore put this behaviour in the past.”

u) Following receipt of the above email, the Applicant wrote to Mr Flinn to complain about his handling of her grievance against GH and to challenge the premise underlying some of the comments made by Mr Flinn in his email.

v) On or around 24 January 2020, Mr Flinn discussed with the NFG Managing Director, Mr Steve Cunliffe and the NFG CFO, Mr Matthew Humphrey, the need to meet with the Applicant about her position being made redundant.

w) On 6 February 2020, the Managing Director of NFG, Mr Steve Cunliffe made a presentation to Nishio entitled “Board of Directors Meeting – Osaka Japan 6^th February 2020”. 4 Mr Cunliffe reported on (amongst other matters):

i. One company integration,

ii. The proposed Fork Force Australia Organisational Structure from July 2020 with Mr Matthew Humphrey as its CFO.

iii. A project plan. The making of the Applicant’s position redundant is not included on the project plan.

iv. The proposal to make an internal announcement about the ‘one company’ business structure in April 2020 and externally in June 2020.

x) On 6 February 2020, the Board of the Japanese parent company, Nishio, formalised the decision to consolidate the subsidiaries.

y) On 7 February 2020:

i. the Applicant attended a meeting with Mr Humphrey and Mr Chris Cunliffe.

ii. the Applicant’s employment was terminated by the Respondent.

iii. the Applicant was paid:

A. 4 weeks’ pay in lieu of notice,

B. 7 weeks’ redundancy pay, and

C. her statutory entitlements.

iv. the Applicant received a letter in the following terms:

“Further to our meeting on 7 February 2020, I take this opportunity to confirm the matters that were discussed as follows:

1. We have investigated North Fork Pty Ltd and its subsidiaries (NFG), including Lencrow Pty Ltd’s (Lencrow) operational needs moving forward and have come to the conclusion that, from an operational perspective, your role as CFO of Lencrow will likely be made redundant, due to:

a) consolidation of NFG’s subsidiaries,

b) there being no requirement for two CFOs in the NFG…”

v. during the meeting the Applicant said words to the effect “I have no response … but was expected, just not this soon.”

z) The position of CFO within the Respondent has not been replaced.

aa) It is proposed that on 1 July 2020 the subsidiaries of the NFG (or which the Respondent is one company) will consolidate.

Was the Applicant protected from unfair dismissal?

[8] An order for reinstatement or compensation may only be issued where the Commission is satisfied the Applicant was protected from unfair dismissal at the time of the dismissal. Section 382 of the FW Act sets out the circumstances that must exist for the Applicant to be protected from unfair dismissal and, in the present matter, the Respondent does not submit that the Applicant was not protected.

[9] There being no dispute, the Commission, as presently constituted, is satisfied the Applicant has completed the minimum employment period and earned less than the high-income threshold. Consequently, the Commission, as presently constituted, is satisfied the Applicant was protected from unfair dismissal.

[10] I will now consider if the dismissal of the Applicant by the Respondent was unfair within the meaning of the FW Act.

Was the dismissal unfair?

[11] A dismissal is unfair if the Commission is satisfied, on the evidence before it, that all of the circumstances set out at s.385 of the FW Act existed. Section 385 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

(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.”

Was the Applicant dismissed?

[12] A person has been unfairly dismissed if the termination of their employment comes within the definition of “dismissed” for purposes of Part 3–2 of the FW Act. Section 386 of the FW Act sets out the meaning of “dismissed”. In the present matter it is common ground that the Respondent dismissed the Applicant.

[13] Consequently, the Commission, as presently constituted, finds that the Applicant was dismissed from her employment with the Respondent within the meaning of s.386 of the FW Act.

Was the dismissal consistent with the Small Business Fair Dismissal Code?

[14] A person has not been unfairly dismissed where the dismissal is consistent with the Small Business Fair Dismissal Code. In the present matter the Respondent was not, at the time of the dismissal, a small business. At the time of the dismissal the Respondent employed 20 people.

[15] Consequently, the Commission as presently constituted, finds the Respondent was not a small business employer within the meaning of s.23 of the FW Act.

Was the dismissal a genuine redundancy?

[16] The Respondent submits I should dismiss the application because the dismissal was a case of genuine redundancy. Section 389 of the FW Act defines the meaning of genuine redundancy:

“389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been sreasonable 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.”

Was the Applicant’s job no longer required to be performed because of operational changes?

[17] To be satisfied the dismissal was a case of genuine redundancy, I must be satisfied that the role of Chief Financial Officer within Lencrow was no longer required to be performed by anyone because of operational changes undertaken by the Respondent. The Respondent contended that this was the case.

[18] The Applicant contended that there was a sinister reason for the termination of her employment associated with her complaint about GH and her subsequent complaint to Mr Flinn about his handling of the same.

[19] She rejected the contention that Lencrow no longer required the CFO position to be done by anyone because of changes to operational requirements. She contended that:

“My role as CFO was exactly the same as the role of the current financial controller of Hystandard did. We had the same duties, reports and responsibilities, but my title was CFO and hers is financial controller. They used my title as the reason to dismiss me. I did not have seniority over her either because of my title. This was my title when I was employed at Lencrow at it remained after the sale.”

“After the sale we were advised that the Lencrow and Hystandard were to be one. This consolidation was happening and we work in preparation for this merge with contact meeting, discussions internally and with external providers like the IT and software provider. This operational decision was made straight after the sale. The Finance and Admin staff were told to move into Hystandard’s premises in Arndell Park by no later than August 2019. So we can engage with the other company. My staff and I were working from, and commuting to these premises daily. This was a major operational change, and we knew all about it. The decision to ask Fork Force in the consolidation was made in December. But two out of the three companies were already consolidating.”

….

“[My] role is still being done by someone else other than the Group CFO. An email was sent out straight after my departure stating that the Hystandard Financial Controller will be their new contact. This is still the case. I do not understand why they keep advising [the Commission] that Matthew [Humphrey] the Group CFO was to be the new contact for the role. This decision is solely based on my complaints about another brance supervisor and the fact that I challenged the CEO on his handling of the complaint I had made.”

[20] In referring to the “complaint I had made” Ms Karantzounis is referring to the complaint she made against GH and Mr Flinn’s handling of the same.

[21] The evidence in this matter is that Mr Flinn was not the decision maker about making the Applicant’s position redundant. That was decision was ultimately made by the Nishio Board on recommendation of the NFG CEO, Mr S Cunliffe. Mr Cunliffe had been recommending a single NFG CFO to the Nishio Board during 2019 and in February 2020. The final sign off occurred in February 2020.

[22] The Applicant was not privy to all of the plans that Mr Cunliffe was recommending to the Nishio Board. It is little wonder therefore that, in a temporal sense, she associates her letter of complaint to Mr Flinn (about his response to her complaint about GH) and the termination of her employment as linked events. However, while the timing is coincidental there is no evidence to suggest that it was the events that the Applicant complained about that led Mr Cunliffe to recommend to the Nishio Board that there be a consolidation of the finance function (with the consequence that the Applicant’s position was to be made redundant). For the better part of four months that was always Mr Cunliffe’s plan.

[23] The evidence in this matter further demonstrates that the position of Chief Financial Officer within the Respondent was abolished. There is a CFO of the NFG. There is a Financial Controller at Hystandard, but there is no CFO or Financial Controller at Lencrow. The Applicant’s position, however characterised, ceased to exist at Lencrow.

[24] Further, it is apparent that the duties comprising the Applicant’s position were dispersed to others remaining within the NFG, both the Financial Controller within Hystandard and the CFO of the NFG. This underscores the finding that no one is performing the role of CFO within Lencrow. Consequently, I am satisfied that the position was “no longer required to be performed … because of operational changes”. The presentations made by Mr Cunliffe to the Board of Nishio consistently envisaged no CFO other than Mr Humphreys as the CFO of the NFG and a consolidation of the finance function across all of the subsidiaries. The Applicant may argue that it should have been the Financial Controller at Hystandard who had their position made redundant in preference to hers, but that does not change the fact that on and from 7 February 2020, there was no CFO or Financial Controller employed by the legal entity known as Lencrow.

[25] Consequently, having considered all the evidence in the matter the Commission, as presently constituted, is satisfied that, as a result of changes in operations, the role of Chief Financial Officer within Lencrow was no longer required to be performed.

Did the Respondent have any obligation to consult?

[26] I must now consider whether the Respondent complied with any obligation in a modern award or enterprise agreement that applied to the Applicant’s employment to consult about the redundancy.

[27] The Applicant contended that she was covered by the Clerks Private Sector Award 2010. I have carefully considered the coverage of that modern award and reject the Applicant’s contention because it is an occupational award that covers private sector employers throughout Australia in relation to employees wholly or principally engaged in clerical work. I have reviewed the Applicant’s position description. As the Respondent’s CFO she was not wholly or principally engaged in clerical work.

[28] Consequently, in the present matter the Applicant was not employed pursuant to any Award or enterprise agreement as defined by the FW Act. Consequently, there was no obligation to consult with the Applicant about the operational decision. There being no obligation to consult, s398(1)(b) of the FW Act is not relevant in the present matter.

Was redeployment reasonable in all the circumstances?

[29] Section 389(2) provides that even if the Commission is satisfied that,

(a) the role of Chief Financial Officer was no longer required to be performed by anyone because of operational needs (which I am not), and

(b) all consultation obligations in a modern award or enterprise agreement that applied to the Applicant’s employment were complied with (not relevant in the present matter),

a dismissal will not be a genuine redundancy if redeployment was reasonable in all the circumstances.

[30] Whether redeployment of an employee is considered reasonable will depend on the circumstances that exist at the time of the dismissal. 5

[31] In determining whether the redeployment was reasonable a number of matters may be relevant including:

a) whether there exists a job or a position or other work to which the employee can be redeployed; 6

b) the nature of any available position;

c) the qualifications required to perform the job;

d) the employee’s skills, qualifications and experience; and

e) the location of the job in relation to the employee’s residence and the remuneration (pay and entitlements) which is offered. 7

[32] The Applicant pointed to a position filed by a contractor (CP) as a position that she could have been redeployed into.

[33] The Respondent conceded that,

“Whiles the Applicant could have completed the role now being undertaken by [CP], the Respondent maintains that at the time the Applicant’s role was made redundant, the Respondent did not have a position available for the Applicant, as the Respondent had not, at that time, considered the need for [CP] to be converted from a contractor to an employee.”

[34] I am satisfied that the evidence establishes that CP performed the contractor role for the previous owner of the Lencrow and assisted with the transition of the business. The previous owner left Lencrow on 29 February 2020. An assessment was then made that, in all the circumstances, it was not appropriate to continue to engage CP as a contractor. The NFG CFO, Mr Humphreys, made the assessment that CP should properly be engaged as an employee. From that point she was engaged as an employee (4 days per week) in a project manager role. What is apparent from the above is that the position that CP was employed into did not exist when the Applicant was made redundant on 7 February 2020. In fact, the conversion of CP from a contractor to employee was not contemplated at that time. It occurred in March 2020. A review of CP’s position only occurred after the previous owner of Lencrow left the business.

[35] For these reasons, in the present matter the evidence does not support a finding that there was any other job that the Applicant could have been redeployed into on 7 February 2020 either within Lencrow or the NFG.

Conclusion

[36] For the reasons set out above, the Commission, as presently constituted, is satisfied that:

a) the Applicant was protected from unfair dismissal,

b) the dismissal was a case of genuine redundancy within the meaning of s.389 of the FW Act.

[37] Consequently, Ms Karantzounis’ application for an unfair dismissal remedy must be dismissed.

[38] Order [PR720030] to this effect will be issued with this Decision.

COMMISSIONER

Appearances:

Ms D Karantzounis for herself.
Mr J Flinn, Director, for the Respondent.

Hearing details:

12 and 20 May, via teleconference.

Printed by authority of the Commonwealth Government Printer

1 A redacted version of the presentation was annexed to Mr Flinn’s statement. Later in the proceedings I called for the unredacted version. It was provided on a confidential basis. I am satisfied that the unredacted copy accurately reflects the redacted copy of the presentation.

3 A redacted version of the presentation was annexed to Mr Flinn’s statement. Later in the proceedings I called for the unredacted version. It was provided on a confidential basis. I am satisfied that the unredacted copy accurately reflects the redacted copy of the presentation.

4 A redacted version of the presentation was annexed to Mr Flinn’s statement. Later in the proceedings I called for the unredacted version. It was provided on a confidential basis. I am satisfied that the unredacted copy accurately reflects the redacted copy of the presentation.

5 Ulan Coal Mines v Honeysett (2010) 199 IR 363, 370 [26].

6 Technical and Further Education Commission (t/a TAFE NSW) v Pykett (2014) 240 IR 130, [36].

7 Ulan Coal Mines v Honeysett (2010) 199 IR 363 [28].

Dimitra Karantzounis v Lencrow Pty Ltd