Jason Janus and Marianna Janusova v Red Star Gold Coast Pty Ltd
[2024] FWC 531
•11 MARCH 2024
| [2024] FWC 531 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Jason Janus and Marianna Janusova
v
Red Star Gold Coast Pty Ltd
(U2023/9085; U2023/9086)
| DEPUTY PRESIDENT LAKE | BRISBANE, 11 MARCH 2024 |
Application for an unfair dismissal remedy – jurisdictional objection raised – genuine redundancy – consultation not consistent with Award – jurisdictional objection dismissed – remedy to be determined.
Mr Jason Janus and Mrs Marianna Janusova (the Applicants) made separate applications seeking a remedy for unfair dismissal from Red Star Gold Coast Pty Ltd (the Respondent) under s.394 of the Fair Work Act 2009 (the Act). The applications were made on 20 September 2023. The matters were joined as the facts remain consistent in both matters.
Directions were issued for the filing of material and listed the matter for Hearing on 7 December 2023 via Microsoft Teams. The Applicant was represented by Mr Matthew Krog of Hope Earle Lawyers and Ms Sharon He appeared as General Manager for the Respondent.
The Respondent raised the jurisdictional objection that the dismissals were cases of genuine redundancy. I have considered all the evidence and submissions in determining whether the dismissal can be classified as a genuine redundancy within the meaning of the Act. I provide my consideration below.
Background and Procedural History
The Applicants commenced their employment with the Respondent on 24 January 2023 in the shared position of Motel Manager. The Respondent operates a chain of hotels/motels.
The Applicants were made redundant on 1 September 2023 because of business restructuring and building renovations. The Applicants’ employment was ended immediately and they were provided one week in lieu of notice.
The Applicants submissions argue that the redundancy was not genuine as other employees were performing their role, they were not consulted about the redundancy and that they would have accepted a redeployed role if they were asked during consultation.
The Respondent’s submissions are that the Applicants’ role was made genuinely redundant and that there were no roles that they could be redeployed to. The Respondent acknowledges that consultation was not provided as prescribed by the Award but note that this would have not changed the outcome of the Applicants being made redundant.
The Applicants sought an Order to Appear for eight employees. Three employees were not approved on the basis that they would not provide much probative value in determining the question of the decision to make the Applicants genuinely redundant as they were not involved in the redundancy process. The five who were called were cross examined, four of whom were executive decision makers in the redundancy decision process. The other witness was Ms Charlee Graham, a casual receptionist of the Respondent.
An Order to Produce was granted regarding emails from the Respondent about the redundancy process, and emails which detailed the duties of the Applicants.
Was the Applicant’s dismissal a genuine redundancy under s.389 of the Act?
Section 390(1) of the Act sets out the circumstances in which the Commission may grant a remedy by way of reinstatement or compensation for unfair dismissal.
“390 When the FWC may order remedy for unfair dismissal
(1)Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).”
Section 396 of the Act sets out a number of matters which the Commission must consider before turning to the merits of an unfair dismissal application. It provides:
“396 Initial matters to be considered before merits
The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
1.whether the application was made within the period required in subsection 394(2);
2.whether the person was protected from unfair dismissal;
3.whether the dismissal was consistent with the Small Business Fair Dismissal Code;
4.whether the dismissal was a case of genuine redundancy.”
(emphasis added)
As is made clear from the above provisions of the Act, there must be a consideration of whether the termination of the Applicants was a genuine redundancy before considering the merits of the application.
Section 389 of the Act defines genuine redundancy for the purposes of s.396 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.”
Section 396(d) of the Act requires consideration of genuine redundancy. I consider the criteria under s.389 of the Act below.
1. Did the Applicant’s employer no longer require the Applicant’s job to be performed by anyone because of operational requirements of the employer’s enterprise?
Where there is no longer any function or duty to be performed by an employee, his or her position becomes redundant even where aspects of that employee’s duties are still being performed by other employees.[1]
Hamberger SDP considered the issues arising from restructuring or downsizing when dealing with genuine redundancy in Kekeris v A. Hartrodt Australia Pty Ltd T/A a.hartrodt.[2] The test is whether the previous job has survived the restructure or downsizing, rather than a question as to whether the duties have survived in some form.
In Ulan Coal Mines Limited v Howarth and others (Ulan Coal),[3] the Full Bench considered and applied the decision of Ryan J in Jones v Department of Energy and Minerals[4] stating:
“[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.
(emphasis added)
Operational requirements
‘Operational requirements’ is a broad term which encompasses present performance of the business, the state of the market in which the business operates, steps to improve efficiency by installing new processes/equipment/skills, or arranging labour to be used more productively, or the application of good management to the business.
Ms Sharon He is the General Manager for the Respondent. The reasons she provided for redundancy of the Applicants was that the business was generating a negative profit for more than 60 days, there was a decline in bookings and significant decrease in sales, escalating expenses in housekeeping, maintenance, room supplies and linen expenses. The Respondent was also completing a renovation of the motel. [5]
To mitigate the increased costs and reduce the losses that were being experienced, the Respondent adopted a centralised model of management after a formal meeting with the overseas owner in August 2023 who gave approval for the restructuring.
After examining the duties of the Applicants, the Respondent determined that some activities would be centralised back to the Sydney office and other remaining tasks would be completed by a number of remaining employees.
Ms Effie Ouyang is the Financial Manager for the Respondent and provided a witness statement on 22 November 2023. I found Ms Ouyang to be a witness of truth in explaining the costs savings of making the Applicants redundant.
Ms Ouyang is responsible for preparing and interpreting the financial statements. The profit margin in April 2023 was not as good the year prior in April 2022.
Ms Ouyang identified that operating expenses had increased from 2022 and 2023. Ms Ouyang stated that the trend from the previous costing patterns was not consistent with the Applicants expenditure. Ms Ouyang noted that Operational Expenses, Repair Expenses and Marketing expenses had dropped, meaning that the hotel had performed better even though employment expenses had remained the same.
Although the numbers do fluctuate based on peak seasons, the reasoning was substantiated in the emails that Ms Ouyang provided to management. This was further explained in the hearing. I find that the operational requirements have been substantiated by the Respondent.
Is the Motel Manager role no longer required?
Following the implementation of the Applicants’ redundancy, the Respondent attested that there is no employee fulfilling the Motel Manager or equivalent role since the Applicants were made redundant on 1 September 2023.
The Applicants contest this stating that Mr Peter Chambers and Ms Charlee Graham were now performing the role of the Applicants and therefore there was not a genuine redundancy. The evidence provided by the Respondent’s witnesses do not support the Applicants’ assertions.
Ms Graham provided a witness statement on 22 November 2023 and provided evidence regarding her role. The Applicants raised that Ms Graham was a live in manager. However, I do not find this to be the case.
The practical reality is that Ms Graham is 18 years old and would sometimes occupy a room to save commuting back and forth from work. It was clear that Ms Graham was doing receptionist duties and was not performing any form of management duties that Mr Janus and Mrs Janusova were doing.
For instance, Ms Graham does not manage the motel, monitor casual staff, monitor wages, hire/replace ground staff when needed or provide weekly reports to the Operations Manager. These are duties that are now done in the head office in Sydney.
I found Ms Graham to be credible and a witness of truth. I do not find her to be replacing Mr Janus or Mrs Janusova’s role as a Motel Manager.
Mr Peter Chambers is a receptionist and caretaker for the Respondent. Mr Chambers was the caretaker for the Respondent in Red Star Hotel West Ryde and also performed receptionist duties at The Select Inn.[6] Mr Chambers was flown up to the Gold Coast from 1 September 2023 to 18 September 2023 in order to temporarily cover receptionist duties and caretaker duties while the business restructure was taking place. After assisting with the Palm Beach Hotel, Mr Chambers had returned to Sydney.
Mr Chambers was not performing the role of Motel Manager at the Palm Beach hotel and the Motel Manager role had not been replaced by any staff member in this hotel. I found Mr Chambers to be credible and a witness of truth.
Ms Sharon He provided a statement on 22 November 2023, and provided evidence on the Motel Manager role. Ms He performs the duties of hiring and replacing staff, providing weekly reporting, making business decisions on the motel, managing website inventory, rostering, and supervising the front office and housekeeping team from the Sydney head office. I found Ms He’s evidence on her management duties to be credible and truthful.
The Applicant’s belief that his role was being performed by other employees performing reception or caretaker duties does not mean that they were performing the Motel Manager role.
I emphasise that Ulan Coal makes it clear that some of the duties that the Applicants were performing can be performed by other employees. The emphasis is on the job which is the Motel Manager position. This position at the Palm Beach Hotel no longer exists even though Ms Graham performs reception duties which a Motel Manager may also perform.
I am satisfied that the Respondent had no longer required the Applicants job to be performed because of operational requirements.
2. Did the Respondent comply with any obligations in a modern award or enterprise agreement that applied to the employment to consult about redundancy?
The obligation on an employer to consult about redundancy only arises when a modern Award or enterprise agreement applies to an employee and that modern Award or enterprise agreement contains requirements to consult about redundancy. There is no legislative requirement to consult about the redundancy before a decision is made to make an employee redundant.
The Applicants are covered by the Hospitality Industry (General) Award 2020 (the Award). The Award outlines the consultation requirements of employers in relation to major workplace changes. The consultation requirements are as follows:
“38. Consultation about major workplace change
38.1If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:
(a)give notice of the changes to all employees who may be affected by them and their representatives (if any); and
(b)discuss with affected employees and their representatives (if any):
(i)the introduction of the changes; and
(ii)their likely effect on employees; and
(iii)measures to avoid or reduce the adverse effects of the changes on employees; and
(c)commence discussions as soon as practicable after a definite decision has been made.
38.2For the purposes of the discussion under clause 38.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:
(a) their nature; and
(b) their expected effect on employees; and
(c) any other matters likely to affect employees.
38.3Clause 38.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.
38.4The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 38.1(b).
38.5 In clause 38 significant effects, on employees, includes any of the following:
(a) termination of employment
…
38.6Where this award makes provision for alteration of any of the matters defined at clause 38.5, such alteration is taken not to have significant effect.”
In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Vodafone Network Pty Ltd, Commissioner Smith stated that consultation “is not perfunctory advice on what is about to happen”, and that it is instead “providing the individual, or other relevant persons, with a bona fide opportunity to influence the decision maker.”[7]
In Sharma v GTS Australia Pty Ltd,[8] I determined that the Applicant being told of his redundancy by telephone call, and it being presented to him as a something that was already happening was not proper consultation.[9]
The Respondent submitted that the decision to make the Motel Manager position redundant was made on 24 August 2023. On 1 September 2023, Mr Thomas Stark (Operations Manager for the Respondent) met with Mr Janus and informed him that he and his wife were to be made redundant as a result of a restructure in the Respondents business.
Clause 38 of the Award requires the employer to give information in writing about relevant changes. Mr Stark met with Mr Janus and provided a letter regarding the restructure and the outcome of termination. However, the termination letter that was provided to Mr Janus on 1 September 2023 was not for the purposes of consultation in accordance with clause 38.1(b) and 38.2 of the Award.
The Applicants were not given proper consultation regarding the redundancy.
3. Was it 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 case of Helensburugh Coal Pty Ltd v Bartley[10] reaffirmed the rules of redeployment set out in Pettet and Ors v Mt Arthur Coal Pty Ltd[11] as succinctly encapsulating the relevant considerations in relation to s.389(2)(a) of the Act as follows:
“The principles concerning the interpretation and application of s.389(2) have been stated in two Full Bench decisions, Ulan Coal Mines Ltd v Honeysett and Technical and Further Education Commission t/a TAFE NSW v Pykett. Those principles were summarised in Huang v Forgacs Engineering Pty Limited as follows:
(1) The exclusion in s.389(2) poses a hypothetical question which must be answered by reference to all of the relevant circumstances.
(2) The question is concerned with circumstances which pertained at the time of the dismissal.
(3) In order to conclude that it would have been reasonable to redeploy the dismissed person, the Commission must find, on the balance of probabilities, that there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee.
(4) A number of matters are capable of being relevant in answering the question, including the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job and the remuneration which it offered.”
(emphasis added)
The Applicants queried why a casual caretaker or receptionist role was not offered to them. Mr Stark provided evidence that there were limited resources. At this time, a receptionist was working on reduced hours, Mr Stark was on a base salary meaning that it would not incur additional expenses and only had to pay Mr Chambers’ expenses. I accept that Mr Stark’s answer is credible. Although there were staff engaged, they were doing either caretaker duties or receptionist duties, not management duties.
The receptionists were performing the role on a casual basis, while mainly Mr Janus was performing his role as a Motel Manager on a full-time basis. Mrs Janusova also had multiple leaves of absence. The Applicants stated that they would have undertaken receptionist duties or caretaking duties at a lower salary if offered.
Redeployment into suitable alternative roles involves a consideration of the requisite reduction in pay, change in duties and change in hours compared to the role being made redundant. In this case, though reception and caretaking duties were a part of the Motel Manager role the Applicants held, the change to casual employment and reduction in hours, meant that either of those roles may not have been appropriate or actually accepted by the Applicants, despite their submission that they would have been. The question was not well explored at the hearing and therefore I am unable to form any definitive conclusion as to the redeployment opportunities suitability.
The Applicants also tendered in an Indeed job post of Hotel/Motel Manager that was posted on 30 November 2023 during the Hearing. The Respondent stated that the job post was not reflective of the specific Gold Coast role but a general advertisement and that it did not apply to specific properties. The advertisement location is listed as ‘Australia’ which could have been indicative of any other hotel/motel which the Respondent owns. For comparison, in the same tendered document, a job advertisement for Receptionist at Red Star Mollymook was specific in its location.
I can only consider redeployment at the time of the dismissal. Although the job may have been advertised on 30 November 2023, this was at least 3 months from the genuine redundancy and the non-specificness of the job advertisement indicates that there was not a role at the time where they could be redeployed to. The job advertisement could have been placed for future roles but was not indicative that there was a role available at the time of the dismissal.
There were at least 8 properties under the Respondent’s control, but the Motel Manager role was either occupied, or the role had been in the process of being centralised. Ms He had stated that as at 1 September 2023, there were no identifiable existing or vacant roles which the Applicants could have been redeployed to.
On the facts, redeployment to a directly similar role does not appear to have been available at the time of the redundancy. A further hearing will need to be undertaken as to the viability of the Applicants claims regarding redeployment.
Was the Applicant unfairly dismissed?
Section 387 of the Act provides the criteria and considerations the Commission must take into account when deciding if the dismissal was harsh, unjust, or unreasonable. As required by the Act, I consider the following:
(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.
Relevant considerations - harshness
I acknowledge that the loss of a job can be considered harsh. In the circumstances, the Applicants raised harshness as they were forced to seek alternate accommodation at their investment property where they were leasing it out as an Airbnb, staying with friends, flying to Sydney to stay with family, along with looking after a newborn baby.
I consider that any harshness of the dismissal was significantly reduced as the Applicants had benefited from the live-in arrangements of the Motel Manager role and since the dismissal have had the option to move back into the AirBnb they own and had a support network and financial ability to fly to Sydney.
The Respondent also raised that the Applicants’ performance was not up to standard with the costs that they incurred while performing the role. The Respondent submitted that structuring the role as redundant was an aim to resolve the matter amicably. Therefore, there may have been a motive to make the Applicants redundant through dismissal because of disagreements of excessive expenditures from the Applicants.
However, the Respondent is only required to establish that the operational requirements of the redundancy existed, and that the role was no longer required to establish genuine redundancy. Mr Janus and Mrs Janusova’s expenditure may have an additional reason as to why they were made redundant, and I sympathise that redundancy is a difficult process given the Applicants’ new family. However, the business has discretion to determine redundancies if there are genuine operational requirements.
Further considerations will be made upon determining the Applicants’ viability of redeployment in a further hearing.
Conclusion
I am satisfied that the Applicants were not given the proper consultation which makes the dismissal harsh, unjust or unreasonable within the meaning of s.394 of the Act. However, whether this redeployment would have been viable is an important consideration in determining the appropriate remedy.
I will consider the appropriate remedy through listing the matter for further hearing.
DEPUTY PRESIDENT
Appearances:
M. Krog from Hope Earle Lawyers appearing on behalf of the Applicant.
S. He for the Respondent.
Hearing details:
7 December 2023
Brisbane
Hearing via Microsoft Teams
[1] Jones v Department of Energy and Minerals [1995] IRCA 292 (16 June 1995), [(1995) 60 IR 304 at p. 308 (Ryan J)]; cited with approval in Ulan Coal Mines Limited v Howarth and others [2010] FWAFB 3488 (Boulton J, Drake SDP, McKenna C, 10 May 2010) at para. 17, [(2010) 196 IR 32].
[2] [2010] FWA 674.
[3] [2010] FWAFB 3488.
[4] (1995) 60 IR 304.
[5] Witness Statement of Sharon He [9].
[6] Witness Statement of Peter Chambers [2].
[7] PR911257 (AIRC, Smith C, 14 November 2001) at [25].
[8] [2020] FWC 6556 at [19].
[9] Ibid
[10] [2021] FWCFB 2871.
[11] [2015] FWC 2851.
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