Jacqueline Moran v Medico Legal Specialists Pty Ltd

[2014] FWC 3435

[2014] FWC 3435

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jacqueline Moran
v
Medico Legal Specialists Pty Ltd
(U2013/3088)

SENIOR DEPUTY PRESIDENT HARRISON SYDNEY, 28 MAY 2014

Application for relief from unfair dismissal - genuine redundancy - Fair Work Act 2009 - ss.385, 389, 596.

Introduction

[1] An application for an unfair dismissal remedy was filed by Ms Moran (the Applicant) in relation to the termination of her employment with Medico Legal Specialists Pty Ltd (the Respondent). The Respondent submits that the termination of the Applicant’s employment was due to a genuine redundancy within the meaning of s.389 of the Fair Work Act 2009 (the Act). It asserts that the dismissal was not an unfair dismissal and the application made under s.394 should be dismissed. I have decided that the dismissal of the Applicant was in circumstances of genuine redundancy. These are my reasons for that decision.

The Relevant Legislation

[2] I should first set out the two key sections of the Act relevant to this decision. They are ss. 385 and 389.

“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

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; 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.”

“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.”

[3] In proceedings before me the Applicant was represented by Mr Christoulou and the Respondent by Ms Craven. Each was granted permission to appear for their respective clients. I was of the opinion that, consistent with s.596(2) of the Act, it would enable the matter to be dealt with more efficiently taking into account the complexities in the matter, if each side was legally represented.

[4] Prior to the hearing each party had filed an outline of submissions together with the witness statements of the witnesses they proposed to call. In the hearing before me the Applicant gave evidence. In support of the Respondent’s case, evidence was given by Dr Michael Levitt, who is the Managing Director and Ms Sarah Burns, the Manager–Quality and Compliance.

My findings based on the evidence

[5] I will now indicate the findings that I have made based on both the documentary and oral evidence. I have not referred to all of the matters raised by the evidence but only those which, in my opinion are relevant to the considerations that I must take into account in deciding whether the dismissal of the Applicant was a case of genuine redundancy.

[6] The Applicant was employed by the Respondent on 30 March 2009. She was engaged as the Respondent’s Practice Manager. That position was the most senior management role within the Respondent's business. The Respondent commenced operations in March 2009 and the Applicant was one of the first persons engaged.

[7] In December 2012, Dr Levitt commenced in the position as Managing Director of the Respondent. Dr Levitt is also a specialist anaesthetist in private practice. Upon commencing in his role as Managing Director he decided that a number of changes needed to be made to the operations of the Respondent’s business. Dr Levitt thought it might be wise to diversify out of workers compensation to life insurance claims (including income protection and total permanent disability). The Respondent did not have any person on its payroll with knowledge of that industry. The doctors on its panel were "New South Wales centric and Orthopaedic centric" and number of them were not suitable to providing services to insurance companies.

[8] A business development manager was recruited in late February 2013 to advise and assist the Respondent to break into the life insurance market.

[9] In March 2013, the Applicant’s position of Practice Manager was no longer required by the Respondent and was made redundant. Her title was changed to Client Liaison Manager. The title of the new position reflected the fact that the Respondent’s business was not a ‘Practice’ and the new title better represented the Applicant's role.

[10] Subsequently, the Applicant was offered and accepted the position Customer Service and Client Liaison Manager. In May 2013 she commenced in that role. The salary for the new position was the same as the Applicant had previously been receiving, that is $96,000 per annum. The Applicant remained on that salary up until the time of the termination of her employment.

[11] A job description for the position of Customer Service and Client Liaison Manager was in evidence. There was an issue about when the Applicant first received the typed version of that job description but she accepted she had been aware that there had previously been a hand written version of it 1 and that it had been read out to her in a meeting in late May when the position was offered to her. I also accept the Respondent’s evidence that the typed version of the job description was available on a subfolder within the Respondents shared office drive and able to be accessed by all staff. The Applicant accepted that the job description accurately described her tasks and responsibilities.

[12] I have taken the whole of the job description into account. I will provide a summary of it. The Applicant was to report to the Directors and liaise with the business development manager. She had responsibility for the management and training of the receptionists, the document co-ordinator and customer liaison officers. She was responsible for ensuring that all employees presented in a professional and courteous manner to clients, doctors and other staff members; and for monitoring and enhancing ways to increase productivity and efficiency in the Respondent’s various departments. She also had responsibility for implementation and supervision of reporting systems which included systems relating to appointments, scanning of paperwork, productivity of clinics, sales reports and sales calls to clients, implementation and distribution of information to doctors on the Respondent’s panel of specialists. Additionally, in her evidence, the Applicant said she had responsibility for the management of telephone room staff, training new junior staff, listing clients, keeping the specialist panel updated, sending copies of documents to clients, booking rooms, organising clinics and recruiting new doctors to the Respondent’s panel. 2

[13] I should here describe the Respondent’s business.

● The Respondent is an intermediary between its clients and medical or other practitioners, for the provision of independent medical assessments and reports. It functions as a brokerage for professional medical opinions. It does not provide healthcare, or any medical or dental services. It does not employ medical staff.

● The client base includes insurance companies, the coroner and law firms seeking a medical assessment and report with respect to a claimant.

● The Respondent has a contractual arrangement with medical and other practitioners for the provision of their services to its clients. The Respondent’s staff arranges an appointment for the claimant to see one of the practitioners on its Panel. The practitioner conducts a targeted medical examination pertaining to the relevant injury and prepares a report which is sent to the Respondent’s quality assurance team to ensure that the report answers all of the questions asked by the client. The report is then provided to the client.

● The majority of practitioners see these claimants from their own medical practices or rooms. Few doctors see claimants at the Respondents premises in the Sydney CBD.

● The medical practitioner invoices the Respondent when he or she has completed each assignment. The Respondent bills its client for the practitioner’s fees and an additional commission which it retains.

● The Respondent and the practitioners, with whom it has a contractual arrangement, are precluded from providing claimants with advice about the claim or providing medical care or treatment to them. Treating doctors are barred from giving any independent medical reports regarding claimant’s condition, treatment or capacity to return to work.

[14] There were significant changes to legislation in New South Wales having effect from November 2012 through to June 2013 which impacted on the number of claims that could be litigated. The impact of these legislative changes was such as to reduce the revenue to the Respondent by over 30%. There were also changes to the maximum benefit period for workers compensation claims.

[15] The Respondent, had until recent times, written over 90% of its income from the provision of independent medical examinations and reports for workers compensation insurance companies in the State of New South Wales.

[16] The effect of the changes to legislation and the impact on the Respondent's revenue was discussed at all management meetings from January to July 2013. The meetings were attended by the Applicant.

[17] Within the first half of 2013, the Respondent had suffered a significant loss. I accept the assessments made by the Respondent of the quantum of that loss and do not propose, for privacy reasons, to record them in this decision. The attempts to enter into the life insurance market had proved to be very slow and there was little prospect of increased revenue coming from that source in the short term.

[18] Meetings were held by Dr Levitt, a Dr Wallace and a Ms Miller (the other major shareholder) with the Respondent’s accountants. Extensive reviews were undertaken of the activities, expenses and projected incomes of the Respondent. The Respondent had to urgently reduce its costs.

[19] Consideration was given to the employees of the Respondent in their respective roles and the cost to the business of each of the employees. The Respondent formed the view that the Applicant’s role should be made redundant. It took into account the other roles that were essential to be retained through examination of the skills of persons in those roles. It took into account the skills and qualifications of the Applicant and the contribution her role had made to the revenue of the Respondent.

[20] The Respondent decided, having taken legal advice, to make the position of the Applicant redundant.

[21] On 25 July 2013, when the Applicant arrived at the office she was asked to attend a meeting with the Respondent’s Chief Financial Officer a Ms Hill, Dr Levitt and Dr Wallace. The Applicant was advised that her position was being made redundant and that the Respondent was unable to redeploy her into another role.

[22] The Applicant was provided with a letter titled "Termination of your employment by reason of redundancy". The letter advises that as a result of both a change in operational requirements and economic downturn driven by changes to workers compensation legislation the Applicant’s position was no longer needed. The Respondent had attempted to find an alternative position but no appropriate position was available. Based on the Applicant’s length of service and the terms of her contract she was entitled to a notice period of one month. The Respondent advised it did not require her to work through that time. The letter also addressed the entitlements that would be paid to her upon cessation of her employment.

[23] The Respondent has not retained and does not intend to retain the position which the Applicant had previously held. There is no comparable role that has been filled by any other person. The duties that the Applicant had performed which the Respondent still required to be done were being performed by the remaining employees. The Applicant said that since the termination she had heard "on the grapevine" 3 that the Respondent had employed two additional staff members. I am not persuaded these are additional employees and find if they were engaged, they were as replacements for employees who had left. I accept that there are fewer employees now than at the time the Applicant’s position was made redundant. Dr Levitt does not intend to engage any more managerial employees.

The application of my findings to s.389 of the Act

[24] Based on the forgoing findings I accept the evidence of the Respondent that there was a genuine need for it to restructure its business. I note that the Applicant made no serious challenge to this fact. I accept that the Respondent no longer required the Applicants’ job to be performed by anyone. The Respondent has not, subsequent to the termination of the Applicants’ employment, engaged any other person or persons in that role. It does not intend to engage any new managerial employees.

[25] In the s.394 application the Applicant identified the Clerks-Private Sector Award 2010 4 (Clerks Award) or the Miscellaneous Award 20105 (Miscellaneous Award) as applying to her employment. Neither award (nor any other award) was referred to in the Applicant’s written outline of submissions.

[26] No submission was made about the approach to be taken to the question of whether an employee was covered by an award. No reference was made to any case law. All the Applicant did was point to some indicative tasks in the Clerks Award and the Health Professionals and Support Services Award 2010 (HPSS Award) .6 and assert they were similar to a task or responsibility listed in the Applicant’s job description. In this respect Mr Christoulou identified some tasks that are referred to in the classification criteria of a Level 8 Support Services employee under the HPSS Award and a Level 5 employee under the Clerks Award. He asserted that some modern award must cover the Applicant. He identified some tasks referred to in the Applicant’s job description and submitted that it should be compared with some tasks in HPSS Award and Clerks Award at the classification some levels identified.

[27] The approach taken by Mr Christodoulou to identifying coverage by either of the two modern awards is not one consistent with the proper approach to be taken. There are numerous decisions that are frequently cited which discuss the “principle purpose” test and the approach to be taken to considering whether an employee falls within the coverage of a modern award. 7

[28] I refer to the HPSS Award. I am not persuaded that the Respondent was in the health industry or that the Applicant was in a classification as referred to in the coverage clause of that award. I have earlier described the nature of the business of the Respondent. It is not, in terms of the coverage clause of the HPSS Award, an employer in the health industry as defined by clause 3 of that award. The Respondent has not taken me to any decisions that discussed the definition of the health industry and the reference to the delivery of any of the services in that definition. I have earlier referred to the approach taken by Mr Christodoulou to persuade me that the Applicant was in a support services classification listed in that award. I am not satisfied the principle purpose for which the Applicant was engaged was as a support services employee. The principle purpose for which the Applicant was engaged was as a manager with the executive and managerial responsibilities I have earlier referred to. It was not suggested that any of the health professionals classifications in the HPSS Award were relevant. Additionally, no submission was made to suggest that, consistent with s.143(7) of the Act, I should read the HPSS Award as covering employees in senior roles, like managerial roles, who have traditionally not been covered by awards.

[29] In the alternative, the Applicant submits that she was classified by the Clerks Award. I am not persuaded the principle purpose for which she was engaged was as a clerk. She was a manager, indeed the Respondent considered her an executive. The Applicant was the senior manager in the business and the highest paid. On the basis of the evidence it is clear that if I was to consider either the principal purpose for which the Applicant was employed or her primary function it was not that she was engaged to perform clerical duties. She was not wholly or principally, engaged in clerical work.

[30] No reference was made in the submissions about the Miscellaneous Award and I assume that the Applicant did not press for that to be found to be the modern award which applied to her employment. It is sufficient for me to observe that had she attempted to pursue this argument an answer to it properly lay in the exclusion contained in that award of those classes of employees who, because of the nature or seniority of their role, have not traditionally been covered by awards. Managerial employees are contained within this class and, as I had earlier found the principle purpose for which she was engaged was a managerial role. 8

[31] Based on the evidence, I accept that the Applicant was not covered by any modern award or enterprise agreement. I am persuaded by the Respondent’s evidence that it could not have reasonably, in all the circumstances, redeployed the Applicant within its enterprise. It was not suggested that there was any enterprise of an associated entity to which I needed to give consideration to.

[32] The application issued by Ms Moran under s.394 of the Act is dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr G Christoulou, Solicitor for the Applicant.

Ms L Craven, Solicitor for the Respondent.

Hearing details:

2014.

Sydney.

February 13.

 1   Exhibit R2 annexures B and C.

 2   Exhibit A1 paragraph 11, Exhibit A2 paragraph 8.

 3   PN 82.

 4   MA000002.

 5   MA000104.

 6   MA000027.

 7   e.g. Carpenter and Corona Manufacturing Pty Ltd PR925731; Brand and APIR Systems Limited PR938031; Layton and North Goonyella Coal Mines Pty Ltd [2007] AIRCFB 713 and McMenemy and Thomas Duryea Consulting Pty Ltd [2012] FWAFB 7184.

 8   Clause 4.2.

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