Iannello v Motor Solutions Australia Pty Ltd
[2010] FWA 3125
•16 APRIL 2010
[2010] FWA 3125 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Kristina Iannello
v
Motor Solutions Australia Pty Ltd
(U2009/14544)
VICE PRESIDENT WATSON | MELBOURNE, 16 APRIL 2010 |
Application for unfair dismissal remedy – whether Small Business Fair Dismissal Code complied with – whether termination the result of genuine redundancy.
Introduction
[1] This decision concerns an application filed by Kristina Ianello for an unfair dismissal remedy pursuant to s 394 of the Fair Work Act 2009 (the FW Act) in relation to the termination of her employment from Motor Solutions Australia Pty Ltd (Motor Solutions).
[2] The matter did not settle at conciliation and Ms Ianello elected to proceed to arbitration.
[3] A hearing was conducted on 9 April 2010 in Sydney. Ms Ianello appeared on her own behalf and Mr Henderson appeared for Motor Solutions.
Background
[4] Motor Solutions provides a range of services to the automotive industry including training, marketing and recruitment services. Ms Ianello was employed by Motor Solutions from 23 May 2001 to August 2007 and subsequently after the business was franchised with Total Selling Solutions Pty Ltd trading as Motor Solutions (NSW). On 7 December 2008 Ms Ianello went on maternity leave. At the time of her leave she was employed as Recruitment Manager. Her primary responsibilities concerned the recruitment of sales, marketing and administrative positions for clients. At the time of commencing leave another employee, George Hennessy reported to her. He was responsible for service and parts recruitment.
[5] The maternity leave was expected to conclude on 1 April 2009. However, because of work shortages Ms Ianello did not return to work at this time. A number of meetings were held between March and November 2009 between Ms Ianello and the directors of Motor Solutions. The company explained that there was insufficient work for a return to full time work.
[6] At a meeting in September 2009 Ms Ianello indicated her desire to return to work full time as living on one income was proving difficult. She suggested that she could work from home on three days per week and work on the other 2 days per week at the office. Motor Solutions responded in an email of 16 October 2009 by suggesting a return to work 2 days per week (as another employee in Victoria who had returned from maternity leave was doing) until work picked up sufficiently to revert to full time employment.
[7] Ms Ianello responded to that email on 23 November 2009 in the following terms:
“Mark,
I am feeling fit and well. I have read your email about working part-time 2 days per week and I was puzzled. As I have been employed by Motor Staff in a full-time capacity up until my maternity leave, I think it strange for you to suggest that on expiration of my 12 months maternity leave.
In light if this I will be returning to work in my former capacity as Recruitment Manager on Monday December 7th, 2009.
In reference of your comment, ‘The market is improving but remains patchy. However the consensus is that by next Feb, only 3 months away, the market would have improved enough to support you going full-time’, I would like to remind you that I am still employed by Motor Staff full time and that as discussed with you at our last meeting in October, should you believe that your business could sustain my position, then I would expect you to outline your intentions more clearly.
As previously stated my 12 months maternity leave will lapse in December and I will be resuming my role as normal and contacting my clients to advise them of my return to the business. In the best interests of George I suggest you advise him of my return and that he will only be handling service & parts clients in the future, as he was previously employed to do before I went on maternity leave.
I look forward to returning very soon where my skills are greatly needed to lift the business and I am excited at the prospects of a strong 2010.
Kind regards,
Kris”
[8] Motor Solutions then sent the following email which was effectively a letter of termination:
“Kris,
It is obvious from the content and tone of your email that you have no intention of trying to work out a compromise with us, during these difficult times.
That being the case it is with great regret that I have to inform you we are unable to support a full time Recruitment Manager at this time.
We therefore have no choice but to give you 4 weeks notice of termination as of the 7th of December, 2009.
Your 4 weeks redundancy pay will be paid into your account as of this date and upon return of any MSA property in your possession.
I am sorry that it has come to this but your intransigence in this matter has given us no other option.
Regards,
Mark Henderson”
[9] The employer employed 13 employees at the time of termination and now employs 12 employees.
[10] The employer contends that the termination of Ms Ianello’s employment was on the grounds of a genuine redundancy and was consistent with the Small Business Fair Dismissal Code.
[11] Pursuant to s 396 of the FW Act I am required to determine those questions before considering the merits of the application.
The Small Business Fair Dismissal Code
[12] Motor Solutions asserts that the Small Business Fair Dismissal Code (the Code) provides that when employees are dismissed because of a business downturn, or their position is no longer needed, they are unable to bring a claim for unfair dismissal. It relies on a publication produced by the Australian Government dated 1 July 2009 headed “Small Business Fair Dismissal Code” and containing a Small Business Fair Dismissal checklist.
[13] However the passage relied on appears to me to be of an introductory nature which summarises the effect of ss 385(d) and 389 of the FW Act. The Code itself does not appear to me to deal with terminations on the ground of redundancy. Although little may turn on this distinction I am unable to conclude that the termination was covered by the Code and was consistent with it.
Genuine Redundancy
[14] Section 385(d) of the FW Act provides that one of the ingredients of an unfair dismissal is that Fair Work Australia (FWA) is satisfied that the dismissal was not a case of genuine redundancy. The definition of genuine redundancy in s 389 is 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.”
[15] There have been various decisions of FWA on the meaning of s 389. They have essentially proceeded on the basis that the words of the section need to be applied to the circumstances of the case. 1 I agree with that general approach.
[16] It is important in this case to also note the applicable provisions of legislation dealing with maternity leave and the return from maternity leave. Unpaid parental leave is currently an entitlement under the National Employment Standards contained in the FW Act. At the time the leave commenced and subsequently when the return to work was being considered, it was an entitlement under the Australian Fair Pay and Conditions Standard contained in the Workplace Relations Act 1996 (the WR Act). Section 280 of the WR Act provides a right to return to the pre-existing position after maternity leave - or if that position no longer exists, another position which is nearest in status and remuneration to the former position. Similar provisions have existed in standard award provisions since the 1980s.
[17] Motor Solutions submits that the definition in s 389 clearly applies as Ms Ianello has not been replaced and her work is being done by another employee, George Hennessy who is doing both the duties of his previous position and the recruitment duties previously performed by Ms Ianello. Mr Hennessy was employed in March 2008 and is currently the only recruitment consultant employed in the Sydney Office. The employer states that it has employed a new Queensland Manager, Mr Paul Newton and because of his expertise, he has been given some additional national responsibilities over business development.
[18] Ms Ianello submits that Mr Newton has now undertaken some duties she previously performed. She also relies on comments made by the employer to the effect that revenue from recruitment had dropped substantially partly as a result of her absence and references in the correspondence to her medical condition and her email about a return to work as indications that the true reasons for termination were not genuine redundancy.
[19] In this case it is not contended that there is an applicable modern award or enterprise agreement containing consultation obligations. Nor is it contended that there is a vacant alternative position to which Ms Ianello could be redeployed. Ms Ianello contends that her job remains and she had the right to return to it. The employer contends that the job no longer exists, although there is another job which is now held by George Hennessy. The primary question under s 389(1) therefore is whether the termination was for the reason that the employer did not want the employee’s job to be done by anyone because of operational changes in the employer’s enterprise. It is also necessary to consider under s 389(2) whether it would have been reasonable to redeploy Ms Ianello in the composite job currently being performed by Mr Hennessy.
[20] This is not a conventional case of a termination on account of redundancy because the termination occurred at the time of the employee’s return from maternity leave. The deferral of the return from leave appears to have been clearly on account of the downturn in business and was either agreed or accepted. It also appears clear that things came to a head over the disagreement on the basis of the return to work. Ms Ianello wanted to return full time. The employer did not want her to do so. Unless there were other reasons involved, this is also consistent with there being a shortage of work as this suggests that the employer did not have a problem with her return as such – only that the workload did not support a return on a full time basis.
[21] The letter of termination and the email communications leading to that correspondence do mention other factors – her medical condition, and her response to the proposal to return two days per week. On hearing Mr Henderson in relation to these matters I am of the view that the economic reasons referred to in the correspondence were genuine. The other factors were more of an attempt to find a mutually acceptable basis for a return to work and displayed some disappointment that Ms Ianello was not prepared to cooperate with the company’s desire that she return part-time.
[22] It also appears clear that the employer’s net employment levels have dropped by one and that the duties previously performed by Ms Ianello and Mr Hennessy have been combined into one near full time role, in which Mr Hennessy works four days per week and is employed on a commission only basis.
[23] There were assertions about the title of the ongoing role. Notwithstanding the title, I do not believe that it can be doubted that the duties of the two roles have been amalgamated and now essentially one almost full time role exists.
[24] In all of the circumstances I find that the employer has amalgamated the duties of the two positions and that the termination arises from that circumstance. I find that the employer no longer requires Ms Ianello’s previous full time role to be done by anyone.
[25] However I also consider it necessary to determine whether it was reasonable for the employer to redeploy Ms Ianello in the ongoing amalgamated role currently performed by Mr Hennessy. To do so would require Mr Hennessy to be made redundant. However that fact alone does not seem to me be determinative of the matter.
[26] In my view the nature of the return to work guarantee in the WR Act bears upon the reasonableness of redeployment into the remaining full time role. Although it was not argued before me I consider that it is arguable that the return to work guarantee provided Ms Ianello with a right to return to the one remaining position. If it did, a failure to do so points to the actions of the employer being unreasonable.
[27] In the proceedings before me Mr Henderson said: 2
“I honestly didn’t want to lose Kris because, she’s right, she was an integral part of our business. She did generate a lot of revenue and we wanted to try to hold onto her, but we really didn’t have enough even for Mr Hennessy to continue. He was on commission only, which was one of the reasons that we could continue with his employment, but his commissions were, as you can see from the chart, fairly minimal because of what was being generated. If I thought that by bringing Kris back full-time we would have been in a situation of improving our net profit, as a businessman I’d be silly not to, but unfortunately the recruitment industry and motor industry at the time were devastated by the global financial crisis.”
[28] Mr Hennessy in his statement to the tribunal said:
“…
5. Since the GFC hit both the recruitment and automotive industries our Motor Staff business virtually dried up. In over 10 years in automotive recruitment, I have never experienced a tougher market than during 2009. Even now the market has still not recovered and I believe many recruitment companies went out of business during this time
6. I also firmly believe that, without the revenue and support from the marketing and training divisions, the recruitment division of Motor Solutions Australia (Motor Staff) would not have survived.
7. Mark Henderson discussed Kris’s return from maternity leave on many occasions and he requested that I keep him informed about any perceived upturn in job requirements from our clients. Unfortunately this upturn never eventuated during 2009 and still remains tough today.
8. If Kris had returned from maternity leave towards the end of 2009 there certainly would not have been enough work for us both. In fact I was struggling to make enough placements on my own, as it appeared that the motor industry was shedding a significant number of staff during this time. Virtually no-one was looking to put on more staff, particularly during the historically quiet holiday period of December, January and February, which was the time I believe Kris was wanting to return on a full-time basis.
9. Mark Henderson has never discussed re-filling Kris’s position as he knows that this would have caused me significant financial hardship as well as added cost that the business simply could not afford
10. To this day I remain the only recruitment consultant in the Sydney Office and I am working only 4 days a week.”
[29] This is a difficult case and involves questions of fine balance. To redeploy Ms Ianello into the role being performed by Mr Hennessy would have involved changes to Mr Hennessy’s employment. In all likelihood he would have had to be made redundant. The appointment of Ms Ianello to precisely that role would have required her to undertake new duties, and presumably, if that was the only role in existence, to work four days per week on a commission only basis. Mr Henderson stated that he thought Ms Ianello was adopting the position of wanting to return full time because she wished to be made redundant and be paid redundancy pay. Ms Ianello denies that. Nevertheless it was a factor in Mr Henderson’s thinking at the time.
[30] Mr Henderson may well have created problems for both employees if he redeployed Ms Ianello into Mr Hennessy’s role on her return from maternity leave and such a decision may have been detrimental to the business.
[31] In my view the right to return to work after taking maternity leave is an important factor in this case. Ms Ianello asserted that her termination was illegal because it occurred while she was on maternity leave. In response to that Mr Henderson said: 3
“... As far being illegal, I’m not sure that that is the case. In any case, I didn’t make her redundant when she was on maternity leave. I made her redundant on the day that she was due to come back, so again I don’t know about any illegalities I maybe inadvertently triggered there. This is the first time I’ve ever had to make anybody redundant in my 20 years of business. It hasn’t been a pleasant situation, but unfortunately as the economy stands I had no options.”
[32] In my view Mr Henderson did have another option. He could have considered Ms Ianello’s right to return to work in conjunction with the decision to make redundancies. That would have required him to consider the nature of the ongoing role in the business and if only one position existed, to consider whether Ms Ianello or Mr Hennessy should fill that role. In my view, if he had done that, it is likely, having regard to the favourable comments about her performance, her greater experience and seniority, that she would have been redeployed to that role and Mr Hennessy would have been made redundant. Mr Henderson’s ignorance of his obligations led to an incomplete consideration of the options and possibly a breach of the WR Act.
[33] In these circumstances I am satisfied that it would have been reasonable to redeploy Ms Ianello to the position remaining in the business.
[34] It follows from these findings that Ms Ianello’s termination was not a case of genuine redundancy. The application can continue to be considered on its merits. Should either party request further conciliation in this matter a conference can be convened. Otherwise the matter will be listed for arbitration to consider the merits of the matter.
VICE PRESIDENT WATSON
Appearances:
Ms K Ianello
Mr M Henderson for Motor Solutions Australia Pty Ltd
Hearing details:
2010.
Sydney
April 9
1 See [2009] FWA 1676; [2010] FWA 203; [2010] FWA 674; [2010] FWA 1471[2010] FWA 675; [2010] FWA 2571
2 Transcript at PN169
3 Transcript at PN150
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