Harsha Aggarwal v Vision Asia Pty Ltd

[2014] FWC 3125

[2014] FWC 3125

FAIR WORK COMMISSION

DECISION

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

Harsha Aggarwal
v
Vision Asia Pty Ltd
(U2013/17859)

VICE PRESIDENT HATCHER SYDNEY, 14 MAY 2014

Application for relief from unfair dismissal - genuine redundancy.

Introduction

[1] Mr Harsha Aggarwal, the applicant in this matter, has filed an application for an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (the Act) in respect of the termination of his employment with Vision Asia Pty Ltd (Vision Asia). I am required under s.396 of the Act to determine four specified matters before the merits of Mr Aggarwal’s application may be considered.

[2] It was not in dispute, and I find, that:

(1) Mr Aggarwal’s application was made within the 21-day period required in s.394(2)(a).

(2) Mr Aggarwal was a person “protected from unfair dismissal” within the meaning of that expression in s.382 at the time of his dismissal by Vision Asia.

(3) Vision Asia was not a “small business employer” within the meaning of that expression in s.23, and accordingly no issue of consistency with the Small Business Fair Dismissal Code arises.

[3] The fourth matter, about which the parties were in dispute, is “whether the dismissal was a case of genuine redundancy”. Vision Asia contended that its dismissal of Mr Aggarwal was a genuine redundancy within the meaning of s.389 of the Act. Mr Aggarwal denied this.

[4] Section 389 defines what is a case of genuine redundancy for the purpose of the Act as follows:

Meaning of genuine redundancy

(1) A person's dismissal was a case of genuine redundancyif:

(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.

Basic facts

[5] Vision Asia is a business which delivers mainly Indian media content to subscribers in Australia and, through an associated entity, in New Zealand. At the time of Mr Aggarwal’s dismissal it had about 20 employees in Australia, and about ten were employed in New Zealand. Vision Asia is a wholly owned subsidiary of South Asian Television Pty Limited (SATV). SATV does not operate any other business, and is itself a wholly owned subsidiary of World Media Group Pte Ltd (World Media), a media company registered in Singapore. World Media is wholly owned by Multivest Offshore Inc., a company which is registered in the British Virgin Islands and owned in equal shares by Mr Rakesh Aggarwal (Mr Aggarwal’s father), Mr Sudesh Iyer and an investment company.

[6] Mr Aggarwal was appointed as a Director on the boards of Vision Asia and SATV on 18 September 2008, effectively as a representative of his father’s interest in the ultimate ownership of those businesses. He was then employed by Vision Asia as “Director - Business Development”, with his employment commencing on 10 March 2009. His employment was subject to a written contract, which described the primary objective of his position to be to “strategise and execute Vision Asia’s expansion plan, and improve the internal controls and processes within the firm to enhance operations scalability”. The contract set out the “essential functions” of his position as follows:

“Essential Functions

A) Expanding the business operations of Vision Asia to major metros in ANZ.

B) Workload management including prioritization of activities and the maintenance of service levels.

C) Drive organizational growth by exploring new business potential - IPTV, Magazine, Radio and Internet.

D) Identify and implement changes for continual service improvements within the organization to ensure high service standards are achieved.

E) Implement and improve management and accounting processes and reporting.

F) Liaise with investment bankers for potential corporate development initiatives.

G) Any other duties assigned by the CEO or board of directors.”

[7] Mr Aggarwal over the period of his employment took on a range of duties beyond those identified in his contract, including in financial management, accounting, taxation, payroll, human resources, customer relations and payment systems. He performed these duties either as a result of directions from the Chief Executive Officer (CEO) or on his own initiative. Vision Asia’s CEO up until 2012 was Mr Sameer Goswami; after his resignation he was replaced by Mr Gurudutt Satigrama, who had previously managed the New Zealand operations.

[8] At a meeting on 5 December 2013, Mr Aggarwal was informed by Mr Satigrama that his position was redundant and that it was anticipated that his employment would be terminated as a result. He was provided with a letter dated 5 December 2013 confirming this decision which included the following:

“We refer to your meeting with me today.

As discussed, it is with regret that we confirm the Company’s proposal to, for operational requirements, make redundant the position in which you are currently employed being Director, Business Development (“Position”). We appreciate your efforts and the involvement in the development of the Group’s business in the Asia Pacific region to date. Please be assured that this decision has not been made lightly.

As you are aware, over the last 6 months the Company has been reviewing its operational requirements and a loss of subscribers in Australia and, in consequently, the organizational structure of the Australian operations. As a result of this review of the operational requirements, it has been determined that it is not currently financially or commercially viable to maintain the current operational structure in Australia. At a recent Board meeting, the Board determined that implementing cost cutting measures (given the heavy customer loss to ‘pirate’ mediums and other competitors) was an immediate necessity. As a result of this decision, we have undertaken an evaluation and have decided that we no longer require any person to perform the Position.

Given this proposal, the Company has already considered whether there are alternative positions into which you could be deployed. At this stage, given the size of Company’s business and the absence of any current vacancies, we do not consider that there will be any suitable alternative positions into which it would be reasonable, in the circumstances for you to be redeployed. As a consequence, regrettably, we anticipate that given the Position in which you are currently employed will no longer exist, your employment with the Company will cease by reason of redundancy. Notwithstanding, if you would like us to consider any issues relating to redeployment, please let us know.”

[9] On 11 December 2013, after a further meeting with Mr Satigrama, Mr Aggarwal’s employment was terminated effective from that day. In addition to his accrued and untaken annual leave entitlements, he was paid a gross amount of $55,168.01 on termination, consisting of four weeks’ pay in lieu of notice, 14 weeks’ severance pay and a discretionary bonus payment. This amounted to 5.5 months’ pay at his remuneration package value at the time of his dismissal.

[10] On 16 December 2013 and effective immediately, World Media as sole shareholder of SATV resolved to remove Mr Aggarwal as a director of SATV, and SATV as sole shareholder of Vision Asia resolved to remove Mr Aggarwal as a director of Vision Asia.

Mr Aggarwal’s case

[11] Mr Aggarwal’s case that his dismissal was not a genuine redundancy essentially consisted of two propositions. The first was that he performed a wide range of duties and functions which were at least significant if not essential to the successful operation of Vision Asia, and that these duties and functions were still required to be performed at the time of his dismissal. For that reason, he contended that for the purposes of s.389(1)(a) of the Act it could not be said that Vision Asia no longer required his job to be performed by anyone. Mr Aggarwal gave extensive evidence of the duties he had performed and their importance for the success of Vision Asia’s business operations in support of this proposition.

[12] The second proposition was that the redundancy was a sham, in that it was not genuinely motivated by the operational requirements of Vision Asia’s business, but rather by a commercial dispute which had arisen between Mr Rakesh Aggarwal and Mr Sudesh Iyer over control of World Media. This dispute, which appears to have had its origins in 2010, led to Mr Rakesh Aggarwal initiating legal proceedings against World Media, Multivest and Mr Iyer in the High Court of Singapore in November 2012. Those proceedings are continuing.

[13] Mr Aggarwal gave evidence that at a board meeting of SATV and Vision Asia held in Singapore on 14 November 2013, there was an attempt by Mr Iyer to have a dividend declared, which he opposed with the result that the dividend was rejected. Mr Aggarwal submitted that this, together with his involvement in his father’s litigation, was the real reason for his dismissal which occurred soon afterwards, and that “another board member (viz Sudesh Iyer) ... must have decided on the termination of my employment with Vision Asia and directed the interim CEO accordingly ...”.

[14] Mr Aggarwal submitted that the “inappropriateness” in business terms of the decision to dismiss him supported the conclusion that his dismissal was in fact motivated by the commercial dispute between his father and Mr Iyer. In his evidence and submissions he pointed to the importance to the business of the duties that he was performing, the ready availability of other measures to reduce costs, and the fact that the business remained in profit at the time of his dismissal, to support the proposition that his dismissal had no reasonable business rationale and was therefore inappropriate. He also referred to the fact that, at the board meeting on 14 November 2013, no mention was made about his possible redundancy and an increase to his remuneration package was approved as demonstrating that his subsequent redundancy was not genuine.

[15] Mr Rakesh Aggarwal gave evidence in support of his son’s application. In his statement of evidence, he asserted that following the unsuccessful attempt to have a dividend declared at the board meeting on 14 November 2013, “the current CEO was directed to find a way to remove the Applicant from his position” and that “The CEO complied”. No basis for this assertion was provided in his evidence.

Evidence of Mr Satigrama

[16] Mr Gurudutt Satigrama is the current Chief Executive Officer of Vision Asia, having been appointed to that role in May 2012. He had previously been employed in the New Zealand subsidiary of the business since 2002. He gave evidence that since about mid-2012, Vision Asia has been losing, on a net basis, subscriber customers at an accelerating rate. He attributed this to the fact that competitor businesses have used an alternative technology, Internet Protocol Television (IPTV), as the delivery platform for South Asian media content. These competitors have included legitimate businesses, which are able to provide greater content at a lower price through the use of IPTV, as well as “pirate” businesses which, upon purchase of a set-top box, can provide customers with illegally-obtained free content. This has placed the commercial position of Vision Asia in serious peril.

[17] Mr Satigrama gave evidence that at the board meeting held in Singapore on 14 November 2013, he made a presentation to the board (consisting of a slideshow and an accompanying oral address) in which he set out his plan to meet this competition, restructure the business, cut costs and restore Vision Asia’s commercial position. A copy of this presentation was placed into evidence. I do not propose to set out the details of this presentation, which was commercially sensitive, but it included a proposal to “Relook at all positions in the organization”. Except for one other aspect of the presentation which is not presently relevant, the board approved Mr Satigrama’s business plan.

[18] Mr Satigrama’s evidence was that, after the board meeting, he subsequently proceeded to engage in a reconsideration of the positions in the business in accordance with his presentation. By the end of November 2013 he had made the decision that Mr Aggarwal’s position should be made redundant. He did so because he considered that Mr Aggarwal’s primary function of business development had become superfluous in the changed market environment, that Mr Aggarwal was in fact performing little work in this area, and that the other duties which Mr Aggarwal was performing in areas such as finance, tax, human resources, payroll, customer relations and payment systems could be redistributed amongst other employees in the business. Mr Satigrama emphasised that this decision was his own, he did not consider that he needed the board authorisation to make it, and the decision was not directed by Mr Iyer.

[19] Having decided to make Mr Aggarwal’s position redundant, Mr Satigrama said that he considered whether there was any other position to which Mr Aggarwal could be redeployed. However, there were no vacant positions in Vision Asia’s Australian business, or in its associated enterprise in New Zealand. They were the only businesses which SATV conducted in Australia or New Zealand. Mr Satigrama said that the only way he could have accommodated Mr Aggarwal would have been to create a new position for him, but no new position was operationally required.

[20] Mr Satigrama said that the discussion with Mr Aggarwal on 5 December 2013 at which he informed him that his position would be made redundant was a lengthy one lasting approximately three hours. At this meeting, Mr Satigrama explained in detail the operational reasons which had caused him to reach this decision. During this discussion, Mr Aggarwal suggested other positions which could be made redundant, and alleged that the decision was a result of the commercial dispute at the World Media Group level. Mr Satigrama said that he denied this was the case, that the decision was his alone as CEO of Vision Asia, and that he in fact knew little about the commercial dispute. He then proposed that Mr Aggarwal consider the matters they had discussed and then have a further meeting with him.

[21] This meeting, after some postponements, occurred on 11 December 2013. On that day, before the meeting, Mr Satigrama received a written email response from Mr Aggarwal. Mr Satigrama said that he carefully considered the response, but that it did not provide him with any reasonable alternative to the course that he had taken. Mr Satigrama met with Mr Aggarwal later that day and informed him that he had decided to proceed with the decision to make Mr Aggarwal’s position redundant and terminate his employment.

[22] Mr Satigrama gave evidence, in extensive detail, of the cost-cutting and business restructuring program which he is in the process of implementing and will involve a number of major developments during the remainder of 2014. I will not describe the specifics of this evidence because it was highly confidential for commercial and industrial relations reasons. He also gave evidence of the way in which the duties previously performed by Mr Aggarwal had been absorbed into the duties of other positions, including his own.

[23] In respect of the issue of the declaration of a dividend, Mr Satigrama’s evidence was that the issue was deferred at the board meeting on 14 November 2013 pending further advice. He said that advice was subsequently received from the company’s accountants confirming that the payment of a dividend was lawful, and that as a result of this advice a dividend was declared at a board meeting in March 2014.

Consideration re genuine redundancy

[24] Mr Aggarwal’s case essentially involved a challenge to the genuineness of his redundancy for the purposes of s.389(1)(a). It was not contended by either party that there was any modern award or enterprise agreement applicable to Mr Aggarwal’s employment such as to make s.389(1)(b) an issue in the proceedings. Nor did Mr Aggarwal contend, for the purposes of s.389(2), that it would have been reasonable for him to have been redeployed to another position with Vision Asia or any associated entity of Vision Asia.

[25] The first limb of Mr Aggarwal’s case, namely that his position had not genuinely become redundant because the duties he previously performed are still required to be performed, albeit by others, is misconceived. The fact that the duties of a particular job or position which has been abolished have been re-allocated to other positions as part of an employer’s restructure does not alter the fact that the employer no longer requires that position or job to be performed by anyone, as was explained by the Full Bench in Ulan Coal Mines Limited v Henry Jon Howarth and others 1:

“[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.

[18] In Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674 Hamberger SDP considered whether a dismissal resulting from the restructure of a supervisory team was a case of genuine redundancy. As a result of the restructure, four supervisory team leader positions were replaced by three team leader positions. The Senior Deputy President said:

“When one looks at the specific duties performed by the applicant prior to her termination they have much in common with those of two of the new positions in the new structure. The test is not however whether the duties survive. Paragraph 1548 of the explanatory memorandum makes clear that it can still be a ‘genuine redundancy’ where the duties of a previous job persist but are redistributed to other positions. The test is whether the job previously performed by the applicant still exists.” (at par [27])”

[26] The second limb of Mr Aggarwal’s case was that his redundancy was in substance a sham and was motivated not by genuine operational reasons but rather by the commercial dispute at the World Media Group level and Mr Aggarwal’s associated opposition to the declaration of a dividend at the 14 November 2013 board meeting. To uphold Mr Aggarwal’s case in this respect, I would necessarily have to reject the evidence of Mr Satigrama. However, I accept the evidence of Mr Satigrama. He presented as a frank and forthcoming witness, and dealt directly with all the matters that were raised with him in cross-examination. His explanation of the commercial reasons for his decision to make Mr Aggarwal’s position redundant as part of a broader restructuring program was credible and consistent with the facts independently ascertainable in the evidence. Mr Satigrama’s evidence that his decision to make Mr Aggarwal’s position redundant was his own, was based on operational business considerations, and was not the result of anything to do with the commercial dispute at the World Media Group level, was not contradicted by any other probative evidence. In this connection, Mr Rakesh Aggarwal’s statement in his evidence that the dismissal was a result of a direction to the CEO did not rise above the level of assertion and was not supported by any probative evidence.

[27] Mr Aggarwal contended that the temporal proximity between his dismissal and his opposition to the declaration of a dividend at the 14 November 2013 board meeting, together with what he characterised as the clearly “inappropriate” nature of his dismissal in business terms, led to the inference that his redundancy was not motivated by genuine operational reasons and was a sham. However, given that I accept Mr Satigrama’s evidence as to the basis upon which he reached his decision to make Mr Aggarwal redundant, that inference cannot be drawn. Whether or not that decision was the right or the best business decision in the circumstances, or whether there were other reasonable alternatives available that could have equally dealt with Vision Asia’s commercial imperatives, is beside the point. As long as the dismissal was genuinely motivated by “changes in the operational requirements of the employer’s enterprise”, which in this case I am satisfied it was, the appropriateness in business terms of the decision to dismiss does not arise for consideration.

[28] The fact that, at the board meeting on 14 November 2013, no mention was made of Mr Aggarwal’s redundancy and an increase to his remuneration package was approved tends to support rather than disprove Mr Satigrama’s evidence that his subsequent decision to make Mr Aggarwal’s position redundant was his alone and did not involve the board.

[29] It was clear from much of Mr Aggarwal’s evidence and submissions that he regarded his redundancy as adversely reflecting on his qualities as an employee of Vision Asia in an unjustifiable way. However, there was no basis for him to take this view. It is an unfortunate fact of life that diligent and competent employees will, from time to time, have to be made redundant for reasons entirely beyond their control. Here, Vision Asia did not contest Mr Aggarwal’s evidence that he performed a range of important duties in a proficient and conscientious way, and in any event I find that that was the case. The commercial circumstances which caused Mr Aggarwal to be made redundant were in no way due to any fault on his part. However, that is simply not relevant to the question of whether his dismissal was a case of genuine redundancy under s.389.

[30] I find that Mr Aggarwal’s dismissal was a case of genuine redundancy in that:

(1) Vision Asia no longer required his job to be performed by anyone because of changes in the operational requirements of Vision Asia’s enterprise;

(2) no modern award or enterprise agreement applied to Mr Aggarwal’s employment, so that there was no consultation requirement that Vision Asia was required to comply with in respect of his redundancy; and

(3) it was not reasonable in all the circumstances for Mr Aggarwal to be redeployed within Vision Asia’s enterprise or that of any associated enterprise of Vision Asia.

[31] Mr Aggarwal’s application for relief from unfair dismissal must therefore be dismissed. I order accordingly.

VICE PRESIDENT

Appearances:

H. Aggarwal with R. Aggarwal for the applicant
P. Thew of counsel with L. Maclou, solicitor, for the respondent

Hearing details:

2014.

Sydney:

8-9 May.

 1   [2010] FWAFB 3488

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