Esad Ismailov v Hisoftware (Australia) Pty Ltd

[2014] FWC 3751

[2014] FWC 3751

FAIR WORK COMMISSION

DECISION

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

Esad Ismailov
v
Hisoftware (Australia) Pty Ltd
(U2014/4666)

DEPUTY PRESIDENT SMITH MELBOURNE, 10 JULY 2014

Application for relief from unfair dismissal — not a genuine redundancy — dismissal harsh, unjust or unreasonable — failure to consult — compensation granted.

Introduction

[1] Mr Esad Ismailov alleges that the termination of his employment with Hisoftware (Australia) Pty Ltd (Hisoftware) was harsh, unjust or unreasonable. On 6 January 2013 he was employed by Hisoftware after having served, he argues, with a related company (oneBit Software Ltd) since 1 September 2012. Mr Ismailov arrived in Australia on a 457 visa. Mr Ismailov’s employment was terminated on 31 January 2014. Hisoftware contended that the termination of employment was a genuine redundancy.

[2] This amounts to a jurisdictional objection and must be considered before other matters, per s. 396(d) of the Fair Work Act 2009 (the Act), as a genuine redundancy is not defined as an unfair dismissal. At the commencement of the proceeding I conferred with the parties in accordance with the Act.Efforts were made to conciliate an outcome, but regrettably that failed.

Genuine redundancy

[3] Section 385 of the Act defines an unfair dismissal, which does not include a dismissal which was a genuine redundancy. Section 389 defines genuine redundancy and provides:

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.

The submissions and evidence on genuine redundancy

[4] I will turn firstly to deal with the question as to whether or not Hisoftware no longer required Mr Ismailov’s job to be performed by anyone because of changes in the operational requirements of Hisoftware’s enterprise.

[5] Hisoftware put forward evidence which demonstrated that it had 10 employees in Australia and about 20 in the United States of America. Its evidence was that:

● The company’s bank in the US had terminated its finance package and began to treat the company as a toxic account;

● The Directors had a meeting and decided to issue further shares to keep the company going by injecting a further $650,000;

● The Directors in the US directed that the Australian arm reduce costs;

● The reduction in costs meant that two positions were made redundant, including Mr Ismailov’s; and,

● There were no real opportunities to redeploy Mr Ismailov.

[6] In relation to the statutory test contained in s.389, Hisoftware stated that Mr Ismailov’s work had been divided amongst two other employees: one being the senior manager in Australia and the other being Mr Ismalilov’s previous line manager.

[7] In response, Mr Ismailov argued that:

● He had been given no warning that there was going to be a redundancy;

● He was not consulted about other possible jobs which he might do to given that he was on a 457 visa, which would have serious consequences if he lost his position;

● He did not accept that he could not have been redeployed into other work;

● The method of terminating his employment was particularly harsh given that he was on a 457 visa;

● Given that he was admitted to Australia on a 457 visa, for which it must be proven that an Australian was not available to perform the role, he questioned how the role could subsequently be performed by an Australian; and,

● The failure to pay entitlements was particularly harsh.

[8] It is the clear evidence of Hisoftware that it sought to maintain the employment of its staff in Australia and did not tell staff until a direction came from the United States to make redundancies. Further, Hisoftware did not consider, at the time, redeployment of Mr Ismailov as his combination of skills were no longer needed and there was no vacancy to which he could be redeployed. In response to the suggestion by Mr Ismailov that he could have been redeployed in Europe, it was stated that the company referred to was not Hisoftware or a related company.

[9] Next, I turn to the second limb of the provision, namely whether or not the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment, to consult about the redundancy. Mr Ismailov argued that the Professional Employees Award 2010 (the Award) covered his employment with Hisoftware. It was argued by Hisoftware that the Award did not cover him for two reasons. The first is that Mr Ismailov does not have the tertiary qualifications necessary and, secondly, he does not have sufficient experience to qualify him to be a member of the Australian Computer Society.

[10] Mr Ismailov replied to this submission by stating that he is a member of the Australian Computer Society. This appears to be conclusive of the point.

[11] Against this background it is apparent that Award applied to the employment of Mr Ismailov.

Conclusion on genuine redundancy

[12] To begin, I observe and accept that Mr Ismailov and his partner were devastated by the loss of employment particularly when he was on a 457 Visa. This is made more shocking because there was no warning or any expectation that such a redundancy was in the wind. I also accept that the practice of putting a deed of release in front of a person to access their entitlements (even narrowly defined) can be both inappropriate and intimidating. This was done to Mr Ismailov. It should be noted that this may be relevant in a finding as to whether or not the termination of employment was harsh, unjust or unreasonable, but has limited use under the Act when assessing the level of compensation.

[13] Because the Award applied to Mr Ismailov’s employment, he was entitled to be consulted. This was not done. It follows that in terms of the operation of s.389 of the Act, I find that there was not a genuine redundancy. I dismiss the jurisdictional objection.

Whether the dismissal was harsh, unjust or unreasonable

[14] As I have dismissed the jurisdictional objection, I now turn to consider s.387 of the Act, that is, whether the dismissal was harsh, unjust or unreasonable. Section 387 provides:

Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

[15] In considering whether or not there was a valid reason for the termination of Mr Ismailov’s employment, I have examined the financial situation of Hisoftware. The evidence provided clearly indicated that Hisoftware was facing very serious financial issues and that a redundancy would have been justified on the facts and evidence before me, had it been carried out in accordance with the requirements of the Act. There is nothing to suggest that Mr Ismailov’s employment was terminated for any reason other than due to the financial situation of Hisoftware and its need to make Mr Ismailov’s job redundant. No doubt the personal pressures and financial loss suffered by Mr Ismailov was a driving force behind his application. The evidence of the financial position of Hisoftware is overwhelmingly in favour of finding that a redundancy would have been warranted. Whether or not this constitutes a valid reason relating to a person’s capacity or conduct would depend upon how a review of the selection process for redundancy was characterised. If it were characterised as relative capacity then there would be a valid reason. I find there was a valid reason because it is clear that the job no longer needed the capacity of one person as a discrete position.

[16] Whilst at first blush it might seem incongruous that a finding is made that there was not a genuine redundancy and then a finding made that there was a redundancy, the answer lies in the difference between a jurisdictional test designed to restrict access to the unfair dismissal provisions and the substantive merit of matter based upon a resolution of the facts.

[17] On the basis of the evidence at the hearing, it was clear that Mr Ismailov was not given any opportunities of the kind contemplated by ss.387(b), (c) and (d). Section 387(e) is not relevant in this case.

[18] Sections 387(f) and (g) are relevant as this is a relatively small business.

[19] In relation to any other matter that the Commission considers relevant, I do consider the fact that Mr Ismailov was engaged on a 457 Visa and then dismissed without warning, had a very serious impact upon him.

[20] In this matter I find:

● Mr Ismailov is a person protected from unfair dismissal;

● The combination of work performed by Mr Ismailov was no longer required by the company because of operational requirements. True it is that the role was divided up among at least two people, but this in itself does not mean the role itself was not made or required to be redundant;

● There is a modern award or enterprise agreement covering the employment; and,

● There was no capacity to redeploy Mr Ismailov.

[21] It follows that the termination of Mr Ismailov’s employment was as a result of a redundancy having regards to the operation needs of the enterprise.

[22] However in giving consideration to s.387(h), I have formed the view that the termination of employment was, overall, harsh. Hisoftware had sponsored Mr Ismailov on a 457 visa, which meant that upon the termination of his employment he had to find other suitable employment or leave Australia. His personal circumstances were known to Hisoftware and yet it chose to dismiss him and present a deed of release at the same time to deal with his statutory entitlements.

[23] On the basis of the evidence and taking into account the factors enumerated in s.387 of the Act, I find that the termination of Mr Ismailov’s employment was harsh.

Remedy

[24] I now turn to remedy.

[25] Clearly reinstatement is not an option given my findings in relation to the serious economic circumstances facing Hisoftware. Therefore, consideration is given to compensation and in this regard attention must be given to s.392 of the Act, which 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.

[26] This is an extremely difficult case. Mr Ismailov has sought an amount of compensation, which would impact adversely on Hisoftware. The offer at conciliation by Hisoftware (which was disclosed during the hearing) to pay the entitlements of notice and redundancy was not impressive.

[27] Mr Ismailov was caught in circumstances where his employment ended and there was no serious opportunity for him to continue. This fact impacts upon any assessment which needs to be made as to how long the person would have worked if he had not been unfairly dismissed. The answer: not long. His employment was for a period of about one year. There is little doubt that both he and the business suffered a significant economic impact. Given the nature of the 457 visa requirements Mr Ismailov was unable to simply get another job and this meant that he could not immediately mitigate his loss.

[28] There can be no escape from the fact that there was a failure to consult in accordance with the Award. This is no minor matter, nor is consultation an administrative inconvenience. A clause in relation to consultation not only permits an employee to contribute to the decision-making process about his or her future security, but also permits some preparation for the loss of employment through no fault of their own should that be the result.

[29] Given the factual matrix, the period of consultation could not have lasted more than two weeks. I will award two weeks’ salary as compensation in lieu of reinstatement. An order is attached to this decision.

DEPUTY PRESIDENT

Appearances:

V. Angelova with E. Ismailov the applicant.

M. McAuley with H. Dowell on behalf of Hisoftware (Australia) Pty Ltd.

Hearing details:

2014.

Melbourne:

June, 2.

Final written submissions:

E. Ismailov, the applicant, final submissions in reply, 20 June 2014.

M. McAuley, the respondent, final submissions, 10 June 2014.

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