Hanna Tyszka v Sun Health Foods Pty Ltd

[2010] FWA 1781

Note: An appeal pursuant to s.604 (C2010/3328) was lodged against this decision.

[2010] FWA 1781

FAIR WORK AUSTRALIA

DECISION

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

Hanna Tyszka
v
Sun Health Foods Pty Ltd
(U2009/12403)

COMMISSIONER FOGGO MELBOURNE, 19 MARCH 2010

Unfair dismissal remedy, genuine redundancy.

[1] This is an application lodged pursuant to s.394 of the Fair Work Act 2009 (the Act) by Mrs Hanna Tyszka (the Applicant) which seeks remedy for her alleged unfair dismissal from employment with Sun Health Foods Pty Ltd (the Respondent).

[2] The Employer’s Response filed by the Respondent claimed that the reason for the dismissal was genuine redundancy and as such the Applicant was excluded from making the claim. The matter was the subject of a conciliation conference on 20 October 2009 however the matter was unable to be resolved at this point. Subsequently the matter proceeded to Jurisdiction and Arbitration hearing before a member of the Tribunal as currently constituted.

[3] Mr Dircks represented the Applicant and Ms Walsh from the Australian Industry Group (AiG) represented the Respondent.

[4] Ms Walsh sought an adjournment on the basis she believed that a union official who had been involved with the alleged redundancy process would be in attendance and giving evidence and she wished to deal with relevant issues in cross examination. That person was not called by the Applicant as a witness. Ms Walsh stated that she had not contacted the union official and submitted that the Respondent was still considering calling her as a witness but that this course had not been definitely determined.

[5] An adjournment was not granted on the basis that the application had been on foot since 25 September 2009, that no substantive matters were put to the Tribunal other than the Respondent being too busy too contact the union official concerned and that a significant issue regarding costs arose for the Applicant if an adjournment was granted. It was left open for Ms Walsh to raise issues regarding an adjournment at a later point in the proceedings but no application was made.

The Legislative framework

[6] The following provisions in the Act are relevant to the extant application;

“394 Application for unfair dismissal remedy

(1) A person who has been dismissed may apply to FWA for an order under Division 4 granting a remedy.

(2) The application must be made:

(a) within 14 days after the dismissal took effect; or

(b) within such further period as FWA allows under subsection (3).

(3) FWA may allow a further period for the application to be made by a person under subsection (1) if FWA is satisfied that there are exceptional circumstances, taking into account:

(a) the reason for the delay; and

(b) whether the person first became aware of the dismissal after it had taken effect; and

(c) any action taken by the person to dispute the dismissal; and

(d) prejudice to the employer (including prejudice caused by the delay); and

(e) the merits of the application; and

(f) fairness as between the person and other persons in a similar position.”

[7] There is no contention that the Applicant in this matter was dismissed from her position in production as a process worker/packer at Sun Health Foods. She commenced her employment with the company in July 1988 and apart from a brief period of dismissal and reinstatement in 1991, which was counted as continuous service, she worked for the company for 21 years until the dismissal on 11 September 2009.

[8] The Respondent stated that it had been suffering hardship arising from the loss of at least two large contracts and there had been a downturn in the work as a result. It said it had consulted throughout the process with a representative of the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) leading to the decision to make employees redundant. On 10 September 2009 the Respondent advised the union that it had no option other than to proceed with redundancies and met with the union on 11 September 2009 to discuss the decision prior to a meeting of the employees and individual interviews with each employee regarding their future. On 11 September 2009 16 positions were made redundant, 14 Production and two Office positions.

[9] The Act does not provide for the option on making an unfair dismissal claim in circumstances where the dismissal has occurred as a result of a genuine redundancy. The relevant provisions are as follows;

“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 Applicant

[10] Mr Dircks referred in his submissions to each of the factors above in s.389. He stated that the nature of the employer’s work was variable and over the long period of her employment there had been fluctuations of work according to the seasons. The employer produces health food snacks and in evidence, the Applicant stated this caused seasonal variations in workload. The alleged redundancy occurred in September and she stated that August and September were usually a quiet time and previously staff had taken leave at that time which was unpaid if they had no accrued annual leave. 1

[11] Mrs Tyszka took long service leave between 6 July and 24 August 2009. She stated that on her return and prior to returning to work she spoke to a friend who worked at the company and she told her that only one line was working instead of the two lines and staff was rostered one week on/one week off.

[12] The Applicant returned to work on 24 August 2009 and it was the evidence of Mr Stoter the Operations Manager, that he asked the Applicant’s supervisor Ms Verma to meet with the Applicant and bring her up to speed with the slowdown of work and the new working arrangement. 2 It was agreed by the Applicant, Mr Stoter, and Ms Verma that this meeting took place. There was disagreement between the Applicant and Ms Verma regarding precisely what was said during their meeting but both agreed that the discussion had included statements that production was slow and working arrangements had been altered to accommodate the slowdown.

[13] Mrs Tyszka completed the first week back from leave and then in accordance with the new arrangements, was not rostered for work the second week after she returned. She returned to work in the week commencing 7 September 2009 and stated that she worked as usual until Thursday 11 September 2009 when the shift commenced at the earlier time sometimes worked in summer. She stated that her supervisor told her that the lines would not be running on Friday 11 September 2009 and staff would be doing cleaning duties and some packing.

[14] When the Applicant arrived at work at 7.15am on Friday 11 September 2009 she saw the union car in the street. The staff were not changed into their usual uniforms and were gathered in the tea room. A meeting of staff was convened at 7.30am and attended by the Sales Director Mr Andriopoulos, the Operations Manager Mr Stoter and the union organiser Ms Mary Churcher.

[15] Mrs Tyszka stated that employees were told that 11 people from production and two people from the office were to be made redundant and that each person would be called into the office to be advised whether they were staying or being made redundant. When she was asked to attend the individual meeting Mrs Tyszka stated that her supervisor advised her to take the union organiser with her.

[16] The Applicant stated she was the longest serving member of staff and yet she was told that there was not a job for her. She was shown the Award and advised that she would receive 12 weeks redundancy pay. She added that the union organiser did not say anything but the Applicant asked her to check whether she should receive more than 12 weeks for 21 years of service. Her dismissal took effect on the same date. Mrs Tyszka stated she was provided a document which she was asked to sign within 30 days.

[17] On 14 September 2009 there was a meeting at the union office of some of the employees who had been made redundant and a foreshadowed claim to the Tribunal was discussed. She stated that she was told that some casual employees had been engaged by the Respondent to do her job.

[18] The Applicant stated that she was not paid her termination pay and had been required to get a representative to receive her payments. She also stated that she had been offered casual work by Ms Verma several weeks after her redundancy but had declined because she had sought and found other work and Mr Verma did not offer anything certain.

[19] In the circumstances of the Applicant’s dismissal, Mr Dircks submitted that the Respondent had breached the requirements of s.389(1)(b) in that it had failed in its obligation to consult the Applicant. He acknowledged that during the period during which the Applicant had been on leave there had been meetings between management and the employees but that such meetings did not obviate the requirement of consultation relevant to the introduction of change as per clause 26 of the 2002 Enterprise Agreement which had continued in force.

[20] He specifically referred to the consultation requirements when change arose and noted that employees (and their union) were to be notified, the likely change on employees to be discussed, measures to avert or mitigate adverse affects to be considered and that all relevant information about the proposed changes was to be in writing.

[21] Mr Dicks emphasized that the Applicant had not attended the union meeting, as alleged by Ms Verma, on 25 August 2009 and was not aware of the company’s situation. He also emphasized that despite what level of consultation occurred with the union, the employer had a responsibility to properly consult the Applicant (or generally with its employees) over the proposed redundancies, to provide an opportunity to raise possible redeployment opportunities or question her performance against the rating she was given on the alleged skills matrix which the company stated determined the employees to be made redundant. This was all the more so given the Applicant’s absence on leave during the period during which changes occurred.

[22] He also stated that the company had breached the Agreement in so far as clause 16 stated that redundancy arrangements were to be negotiated if redundancies occurred and yet the Applicant was merely told that she would receive the minimum payments as provided for in the award. On the issue of redeployment it was submitted that it was reasonable for the Applicant to be moved into one of the new or restructured positions.

[23] Mr Dircks submitted that the circumstances of the extant matter were similar to the Windsor Smith 3decision where the Full Bench referred to SDP Watson’s decision regarding “reasonable concerns about the lack of consultation, lack of opportunity to contest assessments made or to suggest alternatives.”4

[24] Additionally Mr Dircks stated that no evidence had been adduced regarding the skills matrix on which the company had stated it had relied in selecting the employees to be made redundant. He referred to the decision of the Full Bench in Lockwood v Sulocki 5 as support for the submission that the process allegedly including a skills matrix which identified employee’s skills was not transparent and the employees were not notified of employer’s concerns regarding their performance.

[25] Reference was made to the Explanatory Memorandum 6 and the requirement that employers fulfil obligations under an award or agreement to consult about the redundancy if the dismissal is to be a genuine redundancy. Mr Dircks acknowledged that there was not an ‘absolute obligation’ imposed on the employer to consult but it must he contended be consistent with the requirements to consult found in the agreement or relevant award.

[26] He submitted that the reliance by the Respondent on the decision of SDP O’Callaghan in Mr M v LD Pty Ltd 7in which he found that obligation to consult had been satisfied in a ‘somewhat rudimentary fashion’, was not dicta for the notion that ‘rudimentary consultation’ met the requirements of consultation in s.389(1) of the Act.

[27] As a remedy to the finding of the dismissal of Mrs Tyszka being harsh, unjust and “above all unreasonable” 8, Mr Dircks sought compensation in lieu of reinstatement to the amount of $18,877 on the basis of compensation applying the rules in Sprigg9.

The Respondent

[28] The Respondent denies all the assertions from the Applicant and submits in its contentions that the Applicant was one of 17 employees made redundant by the employer, that casual work was offered to the Applicant, an offer she refused to accept and that the processes leading to the redundancies were done in full co-operation with the relevant union, the AMWU, and all employees were aware of the loss of contracts which led to reduced operations and reduced work requirement. 10

[29] The company provided details of the company’s work. 11 Briefly summarised it is a small business manufacturing health food and snack bars. It has a typical slow down period in January, February and the start of March and the peak period is the second half of the year. In July 2009 the company lost two major supermarket customers who deleted the company’s snack bar products from their stores. Several other smaller customers stopped placing orders around the same time.

[30] It was submitted that these events radically changed the financial position of the company and management decided to reduce its product lines by two thirds and run one line of manufacture and implement a one week on/one week off arrangement in order to spread the available work as evenly as possible across the employees.

[31] In 6 August 2009 the company contacted Ms Mary Churcher the AMWU organiser to consult with her over the downturn in orders and advised of the company’s intention to meet all staff on 7 August 2009. That meeting with staff proceeded and the staff was advised by Mr Andrianopolous and Mr Stoter of the week on/week off arrangement to be on a temporary basis, the serious financial situation and that the situation would be reviewed in two weeks.

[32] Between 7 August 2009 and 11 September 2009 the Respondent met or spoke with the union through Ms Churcher on ‘at least four occasions.’ The details of those meetings and those people involved were detailed by the company. 12 The Respondent submitted it advised the union was advised on 10 September 2009 that the company had no option other than to make 16 positions redundant and Ms Churcher was invited to attend a meeting on 11 September 2009 with management prior to the meeting with staff later on the same morning.

[33] Ms Churcher was present at the meeting between the managers and staff at which time they were told that the 16 redundancies were to occur effective that day and she also attended each of the individual meetings at which time employees were advised whether or not they were being made redundant. The Respondent is adamant that the union was informed that the employees to be made redundant were selected on the basis of the skills and competencies matrix.

[34] In relation to specific circumstances relevant to the consultation which occurred with Mrs Tyszka regarding the downturn in the company’s work and the redundancies, Mr Stoter gave considerable evidence. He was aware that the Applicant was absent on leave during the meetings with staff which had been conducted on 7 August and 21 August 2009 and asked Ms Verma to advise the Applicant of the serious financial position of the employer.

[35] Mr Stoter gave evidence to the effect that there was a good working relationship between the company and the union. He also gave written 13 and oral evidence on the consultation he had carried out with the AMWU organiser regarding the company’s financial position, the changed working arrangements for staff and the options available to company including redundancy which was finally decided as the viable option by the company. In relevant respects Mr Stoter’s evidence regarding consultation and the awareness of employees regarding the perilous position of the company was confirmed in the evidence of Mr Andriopoulos14 and Ms Verma.

[36] Ms Verma’s evidence was that she advised the Applicant on her return to work from leave on 24 August 2009 of the slow down of work, the changed work arrangements and of Mr Stoter’s advice to staff at the meeting on 21 August 2009 that “things were not looking good and they didn’t know how long we can keep doing this because how little work is available.” 15

[37] It was also Ms Verma’s evidence that she was updated by Mr Stoter and Mr Andriopoulos of developments and that she passed on the information to her team that things could not continue and it was likely that people would be paid off. She is certain the Applicant heard her make this comment. She further stated that she saw the Applicant in the tea room on 25 August 2009 at a meeting being conducted by the union organiser.

[38] On 10 September 2009 the production employees along with the Applicant were advised that there was no production running on 11 September 2009 but there would be a meeting in the morning. On the morning of 11 September 2009 the Applicant asked Ms Verma if she should change into her work uniform and was given a non committal answer by Ms Verma to the extent that she could change then or change later.

[39] The meeting at which the redundancies were announced proceeded, with the union in attendance, on 11 September 2009. The selection matrix criteria were explained and the process by which the company, with the union representative in attendance, would meet with each employee individually. The Respondent was adamant that it had stated 16 as the number of employees to be made redundant not the 11 the Applicant stated.

[40] The meeting with the Applicant proceeded with Mr Stoter, Mr Andriopoulos and Ms Churcher also in attendance. The Respondent submitted that she was advised that based on her score from the matrix she had been selected for redundancy, was given an opportunity to ask questions but declined and provided written advice regarding payment and asked to return a signed copy within three weeks. The Applicant did not return her form and it was on this basis that the company stated it was required to wait until it clarified the Applicant’s redundancy and entitlement payments.

[41] It was confirmed that Ms Verma rang the Applicant several weeks after the termination of employment to ask her if she was interested in short term casual work for some five to six days over two weeks to complete an order which had been received but the Applicant declined. Ms Verma stated that the Applicant responded she would not swallow her pride and return to the company.

[42] The primary submission of the Respondent is that the change in operational requirements arose from a downturn in trade due to the loss of significant contracts and the reduced requirement for employees and subsequent redundancies were precisely what was encompassed in s.389(1) of the Act.

[43] The Respondent rejected the submissions from the Applicant regarding slowdowns being a usual part of the operations of the company. It submitted there had never been a slowdown in August/September, slowdowns were the result of seasonal peaks and troughs not the loss of two thirds of its business and no new positions had been created but that some casual work had been available as new orders were lodged with the company.

[44] In relation to Consultation as outlined in clause 26 of the 2002 Agreement, the company submitted that it had complied with its obligations to notify ‘the employees who may be affected by the proposed changes and their union.’ It submitted it had advised the employees of the changes throughout the period of the loss of contracts and the change to the working arrangements and had asked Ms Verma to advise the employees that there was a down turn in work.

[45] It took particular steps to update the Applicant of the situation when she returned to work and she was also advised by her union of the downturn and serious problems.

[46] The Respondent referred to the Explanatory Memorandum of the Act stating that it did not impose an absolute obligation on an employer to consult about redundancy but that in any case it had consulted its employees and the union. The Respondent also referred to the decision in Mr T v LD Pty Ltd stating that consultation would meet the requirements of the Act even if carried out in ‘a somewhat rudimentary fashion.’

Conclusion

[47] On the basis of the outline of submissions lodged in accordance with Directions, the written and oral evidence of Mrs Tyszka the Applicant, Mr Stoter, Ms Verma and Mr Andriopoulos for the Respondent and the oral and written submission of the Advocates, I find that the Application should not be granted.

[48] In my view the case for the Applicant that she was unfairly dismissed because the termination of her employment was not for the reason of genuine redundancy cannot be sustained. The case put by the Respondent is overwhelming with respect to the serious downturn in the financial position of the company due to a loss of major contracts in July 2009. I do not accept the submissions that the downturn in August/September 2009 was in any way related to seasonal fluctuations in the business and accept the evidence of the Respondent’s witnesses to the contrary.

[49] In the circumstances of this case neither can it be sustained that the dismissal was harsh, unjust or unreasonable. If the dismissal was a case of genuine redundancy then arising from s.396(d) of the Act, there is no jurisdiction to pursue an application for unfair dismissal on the basis that the dismissal was ‘harsh, unjust or unreasonable.’

[50] The facts are that due to the loss of contracts and consequent serious downturn in the Respondent’s work, and in lieu of changed working arrangements and new contracts being able to improve its financial position, the company decided that it needed to make redundant 14 employees from Production and two employees from administration on 11 September 2009. While the Applicant was adamant that the staff were told that there were a different number of people to be made redundant, I accept the figures provided by the Respondent. I also accept that these were genuine redundancies.

[51] In lieu of any evidence to the contrary, I accept the Respondent’s submissions and evidence that a skills matrix was developed as a selection mechanism and the employees to be made redundant chosen through that device. I am fortified in the view that the selection process was satisfactorily carried out given the inclusion of the union organiser regularly throughout the slowdown period from July leading to the changed rosters and decision to make employees redundant.

[52] There has been no reason advanced to suggest that the union organiser after consultation with the Respondent disagreed with the processes leading up to and including the decision to make employees redundant and notification to them. In fact it is agreed by both party’s witnesses that the union organiser participated in the meetings between staff and the managers and separate union meetings were held relevant to the slowdown and finally the redundancies.

[53] Mrs Tyszka was in a position due to her leave arrangements whereby she did not receive the same level of information regarding the loss of contracts and work slowdown as the other employees. However, given that she had a meeting with Ms Verma on 24 August 2009 specifically to discuss the slowdown and changed work arrangements due to the slowdown and that of her own volition she had contacted a work colleague who told her of the new working arrangements prior to the Applicant’s return to work, I believe her view that she was unaware of the company’s position and that the one week on/one week off arrangement for employees was due to the downturn, to be disingenuous.

[54] The Applicant was a long term part-time employee who had been through periods of seasonal fluctuation with the company and on her own evidence, the variations to working hours occurred during the summer months due to heat. Mr Stoter agreed that during summer production sometimes started earlier. However his evidence contradicted the evidence of the Applicant regarding the timing of the seasonal nature of the work. He disagreed with the Applicant’s statements regarding the seasonal nature of the work and stated August/September to usually be busy months. I prefer the evidence of Mr Stoter in this regard.

[55] Additionally, the evidence of Ms Verma was that the Applicant was present when she said that the downturn was bad and there could be redundancies and I accept her evidence. Her evidence was consistent with Mr Stoter’s view that she could say that redundancies were a possibility.

[56] The Applicant denies she was at the union meeting on 25 August 2009 and Ms Verma states she saw her there. Given that the Applicant was aware of changed work patterns, aware that only one line was running, that there was a serious downturn in work and had spoken with other employees and specifically with Ms Verma, even if she did not attend the meeting it would be extremely unusual for her not to ask what had been said at the meeting.

[57] One of the issues that was raised by the Applicant in evidence was that it was unfair that she received only 12 weeks redundancy payment plus entitlements for 21 years service. In 2008 there had been an attempt by the union to negotiate with the company to vary the redundancy clause in the enterprise Agreement to state that negotiations on redundancy payments would occur at the time any redundancies occurred rather than adopt the table of benefits proscribed in the agreement. There was no agreement over this issue and the relevant clause regarding redundancies is the clause which has been applied in this case.

[58] At the dismissal meeting Mrs Tyszka was provided a form to complete to facilitate her final payments from the company. She did not return the form by the required date which was unfortunate because there was a delay in the payment of benefits and entitlements and she sought the assistance of her representative to get the payments. Having received the payments the Applicant continued to pursue the case for unfair dismissal.

[59] For completeness it should be noted that some of the employees who had been made redundant at the same time as Mrs Tyszka lodged a claim through the AMWU but this claim was later withdrawn.

[60] I do not place weight on the offer of casual work to the Applicant after her dismissal. The facts are that the offer was extremely limited in its application, not ongoing and not immediate. Whether there was an issue of loss of pride in returning to the company raised by the Applicant is not relevant.

[61] The Respondent did not completely follow the various requirements of clause 26 from the Agreement regarding consultation. This is certain in that the relevant information regarding the nature of the changes proposed was not put in writing to the employees or to the union in accordance with clause 26(iii). However the adherence to the clause was followed in the intent to truly consult over change and the chronology of events and the evidence shows that the company, the union and the employees were all participants in the change process.

[62] True it is that there were no discussions with the Applicant regarding redeployment to suitable alternative positions because there were no such positions. This is a relatively small company and it believed that it complied with the consultative requirements as it had dealt with the AMWU, the AiG and its employees throughout the process. I accept the submissions that it in substance it did comply.

[63] The fact that the company failed to commit the situation to writing as per the agreement does not obviate the regular contact it had with the relevant people and, in its totality, I find it complied with the consultative arrangements as provided for in the Agreement and is consistent with the provisions of the Act.

[64] On the basis of the reasons above I find that the termination of Mrs Tyszka’s employment was a case of genuine redundancy. The application is therefore dismissed.

COMMISSIONER

Appearances:

G. Dircks for the Applicant.

N. Walsh for Sun Health Foods Pty Ltd.

Hearing details:

2010.

Melbourne:

March 1.

 1   see transcript PN114 – 144.

 2   see Exhibit R1.

 3   Print Q3462.

 4   Submissions Exhibit A4.

 5   PR908053 at [33].

 6   Paragraph 1550.

 7   [2009] FWA 1676.

 8   Exhibit A1 paragraph 48.

 9   Print R0235.

 10   see Form F3.

 11   Exhibit R5 generally and Exhibit R1 paragraphs 5 to 9.

 12   Exhibit R5 paragraphs 5 to 8.

 13   Exhibit R1.

 14   Exhibit R3.

 15   Exhibit R2 paragraphs 5 and 6.

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