[2020] FWC 2713

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jennifer Wilson
v
Monizumi Pty Ltd ATF The Takezawa Trust T/A Shoji Australia
(U2020/2585)

COMMISSIONER WILLIAMS

PERTH, 27 MAY 2020

Application for an unfair dismissal remedy.

[1] This decision concerns an application made by Ms Jennifer Wilson (Ms Wilson or the Applicant) under s.394 of the Fair Work Act 2009 (Cth) (the Act) for an unfair dismissal remedy. The Respondent is Monizumi Pty Ltd ATF The Takezawa Trust T/A Shoji Australia (Shoji Australia or the Respondent).

[2] At the time of her dismissal Ms Wilson was advised that her position was redundant.

[3] The Respondent objects to the application on the ground that it says the dismissal was a case of genuine redundancy.

The relevant facts

[4] Ms Wilson worked for Shoji Australia for ten years.

[5] She is a qualified high school teacher with a strong knowledge of the education industry and utilized her contacts for the benefit of the company.

[6] She was previously the State Coordinator for Nacel where she had placed high school and university students in individual and group school exchange programs (short and long term) and young adults in work experience programs. She says she utilized her knowledge and contacts from this for Shoji Australia.

[7] Ms Wilson says she brought an immeasurable amount of knowledge, experience, and skills to the position of Program Manager at Shoji Australia.

[8] Ms Wilson says the main business was (and still is) student exchange programs between Australia and Japan. As communications and documentation became increasingly digital, Ms Mitsue Takezawa (Ms Takezawa) and her felt they could manage as a team of two in the office with casual staff as needed, particularly during the inbound exchange periods.

[9] Ms Wilson says inbound tours from Japan generally occurred during two periods of the year being March/April and July/August.

[10] Ms Takezawa had the managerial role overseeing the general running of the company, including financial management. For the programs Ms Wilson says Ms Takezawa’s role was to maintain communications with the Japanese agents and schools, prepare quotes for inbound and outbound exchange programs, coordinate Japanese staff and resources in Japanese, and assist in facilitating the programs.

[11] Ms Wilson says her role was to be the main contact for all the WA schools and teachers, as well as the host families leading up to the exchange. She recruited schools for inbound programs and outbound programs and liaised with them to design and structure the programs.

[12] She also recruited host families and conducted 90% of the home visits to approve hosts and follow up on all documentation while Ms Takezawa did this role for one group.

[13] She says she recruited and trained staff to teach English as a Second Language and coordinate school programs. She presented at meetings with schools, parents, and business meetings. She says she was the main ‘face’ of Shoji Australia for schools and teachers.

[14] Ms Wilson says she introduced many initiatives including the idea of acting as a travel insurance agent and in offering travel services to general clients and specialised small group adult escorted tours to Japan.

[15] Ms Wilson says that at the time of her dismissal, 13 February 2020, there had been cancellations but these were only for March/April.

[16] She says one primary school group had cancelled and two other groups, travelling together and controlled by the same Japanese educational company, had cancellations because they were booked to fly through Hong Kong. This concern led to the company changing to a direct flight at a much greater cost and that meant more cancellations.

[17] Mr Simon Phillips (Mr Phillips) is a Director of the company who participates in travel to Japan.

[18] Ms Wilson says a new Japanese staff member, started just ten days before her dismissal. They were the only two employees.

[19] Ms Wilson says on 13 February 2020 Ms Takezawa telephoned her to ask if she could visit her at her home to discuss business changes relating to diversification.

[20] Ms Wilson says Ms Takezawa had previously mentioned in early January that she had been meeting with a business coach and looking at changes but not what she had planned except for hiring an extra employee.

[21] After arriving Ms Wilson says Ms Takezawa said that she felt she should be making more profit and Ms Wilson was a drain on her potential to retain more money from the business. Then she told her she was dismissing her, effective immediately. Ms Wilson says Ms Takezawa told her that now she felt she could reshuffle some work and pay less.

[22] Ms Wilson says Ms Takezawa mentioned the recent cancellations of groups and said the Coronavirus impact was also a reason for the redundancy.

[23] Ms Wilson says she told Ms Takezawa that if she was really concerned about this there were alternatives they could put into place if the situation became worse. She says Ms Takezawa was not interested in discussing any alternatives. Instead she was keeping on the new, inexperienced employee who was on probation and letting Ms Wilson go. Ms Wilson say Ms Takezawa said she would be reshuffling the duties, so she took on Ms Wilson’s duties and the new employee could take on some of her duties as well and if the situation got worse then she would have to let the new employee go too.

[24] Ms Takezawa says that in October 2019 Mr Royce Gatti (Mr Gatti), a Consultant Business Advisor, was contacted by the Directors of Shoji Australia for advice. The business had been growing and there was potential to diversify and grow further with an effective structure implemented. The business needed to reinstate a Japanese Coordinator position after the position being vacant for 6 months and business activities were expected to increase in coming years.

[25] The decision to seek external advice was made to plan how to diversify, grow, and restructure the business.

[26] The first meeting on 20 December 2019 was conducted to set the business goal for the next one to two years and strategies to pursue these. The first step to be taken was to delegate tasks to a new staff member and ensure the work is carried out effectively within the business.

[27] Three possible candidates for the Japanese Coordinator position were selected and interviews were conducted between 13 and 24 December2019. It was decided that two of them would be suitable for the job and further selection processes started.

[28] On 6 January 2020 the business decided to employ Ms Haruka Drinkwater (Ms Drinkwater). She was informed about the employment and conditions were discussed. The employment contract was signed and she was due to start on 3 February 2020 as a full-time staff.

[29] Her responsibilities as a Coordinator were mainly dealing with Japanese clients and Japanese student services. The main task she was assigned was to look after the new student service contract with a large agency in Japan which started on 1 January 2020. Shoji Australia was assigned to be their “Perth Support Office” and responsible for facilitating language school admissions, accommodation placement, arrival orientation and support during their stay. She was expected to manage all enquiries and work on the online management system (in Japanese) provided by the agency.

[30] A further meeting with Mr Gatti was held on 13 January 2020 to discuss the new structure of the business now that Ms Drinkwater was starting, as well as what has been happening with the business.

[31] Ms Takezawa says the business’s financial position looked a lot weaker than previously thought, as it was found that over $8,000 superannuation contribution was unpaid for the previous 3 quarters and a tax debt of over $40,000 was found in December 2019. Due to the oversight in bookkeeping, over $50,000 of unexpected outgoings had been incurred between December 2019 and January 2020.

[32] Despite the weaker than expected financial position, there were good opportunities in engaging in new business with Japan including new types of inbound tours, expanding student support services and relocation services, and business and investment coordination. The July/August period is the peak time for inbound tours and an increase was expected in 2020 for that season. The new student service business started well and the agency in Japan was very keen to expand the Perth market as they had confidence in Shoji Australia’s ability.

[33] Ms Takezawa says that on 7 February 2020 she received two notices of tour cancellations due to the Coronavirus outbreak. There was another tour also in doubt. She says the potential for more tour cancellations were likely.

[34] Despite the fact that mainstream media was not taking the outbreak very seriously at the time, there was information available to alert the potential for a global pandemic due to the exponential nature of the virus.

[35] Ms Takezawa says the decision to continue to grow the business throughout the year was made with the anticipation of income from the March/April tours to support the interim cashflow. If all tours were cancelled, the risk of the business going under would have become high unless she took strong measures. Usually the business does not have much income during the April to June months. The period is mostly used to prepare for the peak July/August season and usually the expenses during the April to June period goes up while not much income is coming in. There was a possibility that there would not be enough reserve to survive until the next income flow begins in July 2020.

[36] Ms Takezawa says that as more information on the seriousness of the Coronavirus started to emerge, the chance of more inbound and outbound tours being affected became very likely, which would cause massive loss to the business.

[37] In 2008, due to the outbreak of Swine Flu, the WA government banned all international exchanges and Shoji Australia lost all July/August tours wiping out over 70% of the business’s income for the year.

[38] Rather than risking the business going under, Ms Takezawa says it was decided to make Ms Wilson’s position redundant.

[39] On 13 February 2020 Ms Takezawa says she met Ms Wilson at her house and explained to her about the business’s situation related to the Coronavirus and announced her redundancy. The letter of termination was also given. She was paid out her long service leave, annual leave, and 5-weeks’ notice period.

[40] The termination of employment letter dated 13 February 2020 reads as follows,

“Dear Jenni,

The purpose of this letter is to confirm the outcome of a recent review by Monizumi Pty Ltd ATF The Takezawa Trust (the employer) of its operational requirements, and what this means for you.

As a result of severe downturn of the business activities caused by the recent Coronavirus outbreak and the concerns of future risks in the travel business under the current and foreseen future’s global outlook, the Company has decided to restructure its business for its survival. The restructuring has resulted in your position no longer needed as remining tasks will be carried out by the business owners. Regrettably this means your employment will terminate. The decision is not a reflection on your performance.

Based on your length of service, your notice period is 5 weeks. Therefore, your employment will end on 19 March 2020. The company decided to provide you with a payment in lieu of notice.

You will also be paid your accrued entitlements and any outstanding pay, up to and including your last day of employment. This includes the balance of any time off instead of overtime accrued but not yet taken (paid at the overtime rate applicable when the overtime was worked), and superannuation.

The final amounts will be calculated and paid into your bank account on 20 February. The final superannuation payments will also be paid into your superannuation fund.

We thank you for your valuable contribution during your employment with us and wish you all the best in your future endevours.” (sic)

[41] Ms Takezawa says the business needed a cash injection by Mr Phillips to make the redundancy payment and long service leave payment.

[42] Ms Drinkwater’s position was kept, supporting the ongoing business with the expectancy of the position either being made redundant or having significantly reduced hours.

[43] Following the government’s announcement regarding the ban on international travel, all outbound tours for the year were cancelled and inbound tours were in doubt. The outlook of the future business activities became extremely concerning and it was decided to make Ms Drinkwater’s position redundant and one weeks’ notice was given on 5 March 2020.

[44] Ms Drinkwater’s employment terminated effective 12 March 2020.

[45] By Mid-March 2020 all outbound tours were cancelled and payments were refunded. All inbound tours for the current financial year were cancelled and payments were refunded.

[46] On 2 April 2020 Ms Takezawa sent a cancellation notice for the July/August study tours to the Japanese agencies as there was no prospect of WA schools hosting a Japanese study tour.

[47] Ms Takezawa says that Shoji Australia has no revenue, and therefore all costs needed to be stopped. It is unsure at present whether the business will remain a going concern or be wound up.

[48] Statements each of Mr Phillips, a Director of Shoji Australia, and Mr Gatti say they agree with the timeline and sequence of events above given by Ms Takezawa.

[49] Mr Phillips also says that he first became alarmed at the economic knock on effects of what is now known as Covid-19 whilst he was in Japan in late January 2019 and specifically as soon as the Wuhan area was shut down.

[50] It is a notorious fact that the Wuhan lockdown began on 23 January 2020. 1

Submissions

The Respondent

[51] The Respondent submits there was a market downturn in the travel business due to the Coronavirus outbreak. This provided the catalyst for restructuring the Shoji Australia business.

[52] This market downturn had immediate effect on the revenue of the Shoji Australia business with tours cancelled and less people traveling.

[53] The restructuring resulted in Ms Wilson’s position becoming redundant. Ms Wilson’s travel related tasks were to be carried out by the owners of the business.

[54] The remaining employee (Japanese Coordinator) at the time of Ms Wilson’s dismissal was kept to look after the new business which started on 1 January 2020, providing coordination service and support office services to take care of intakes of Japanese students for Wish International (agency for study abroad programs in Japan) as well as doing predominately the administration, bookkeeping, financial tasks in the business that she has previous experience in.

[55] This staff member was on probation until the end of June 2020 and there was an intention to make this position redundant if further market downturn occurs or new business was not able to sustain the employment, which became true and the position became redundant as of 5 March 2020.

[56] The management was also restructuring and diversifying the business into other Japanese

markets (not travel market) for the business to survive in these tough times.

[57] At the time of Ms Wilson’s dismissal the business was already experiencing a loss of income due to the Coronavirus outbreak and the fear of further damage has been vindicated as the expected loss of income for this year is 90%+. Fears of bankruptcy were justified; hence immediate action was taken. 2

The Applicant

[58] Ms Wilson’s opinion is that at the time of her dismissal the cancellations that happened were expected to be a short-term situation and in the second half of the year they were expecting a higher number of inbound exchange groups than ever before.

[59] Ms Wilson argues that her work still existed. While there was a downturn for the following two to three months the workload for the second half of the year was expected to be high and would need someone doing her role.

[60] In any case the work would resume at some point. School exchanges that did not happen this year would be rescheduled for the future (as was the case in the past with the Swine Flu year and the Fukushima earthquake and nuclear power plant issue) and could be expected to increase significantly in the following year. Ms Takezawa intends to retain the student exchange which is the work Ms Wilson did. This work will have to be done by someone.

Consideration

[61] Section 385 of the Act, set out below, defines what is an unfair dismissal.

“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.”

[62] To be an unfair dismissal, amongst other things, the dismissal must not be a case of genuine redundancy.

[63] Section 389 of the Act, set out below, then defines what a genuine redundancy is.

“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.”

[64] Ms Takezawa’s view in February 2020 of the likely impact of the Covid-19 pandemic on the business was prescient. It is now known that the negative impact of the Covid-19 pandemic on the Respondent’s income has continued after the Respondent dismissed Ms Wilson. The fact that Ms Takezawa correctly predicted this at an early stage is to her credit.

[65] There is no requirement for a business to wait until a possible financial crisis has actually manifested itself before it takes action to protect its’ business interests.

[66] Ms Takezawa’s assessment was that the cancellations of bookings in February 2020 were a portent. The business was already in a poor financial state as the result of unexpected debts having been identified in January 2020, so she decided to make changes to reduce costs to protect the business.

[67] Consequently, in February 2020 Ms Takezawa decided that the business did not need Ms Wilson’s particular job to be performed by anyone. Certainly some duties that made up part of that job still needed to be done and these were undertaken by others.

[68] The fact some of Ms Wilson’s duties still needed to be done after she was dismissed does not mean her job was not redundant. An employee’s job may still be redundant even where there are some of the employee’s duties still being performed by other employees. 3

[69] I am satisfied that because of changes in the operational requirements of the Respondent’s business Ms Wilson’s job was no longer required to be performed by anyone.

[70] Ms Wilson submitted that the Clerks Private Sector Award 2010 (the Clerks Award) 4 applied to her employment.

[71] The coverage clause of the Clerks Award is set out below.

“4. Coverage

4.1 This award covers employers in the private sector throughout Australia with respect to their employees engaged wholly or principally in clerical work, including administrative duties of a clerical nature, and to those employees.”

[72] Considering the evidence provided by Ms Wilsons I do not accept that she was engaged wholly or principally on clerical work or administrative duties of a clerical nature. The evidence is that the breadth and complexity of her responsibilities went well beyond this.

[73] I find that the Clerks Award did not apply to the employment of Ms Wilson.

[74] There is no suggestion that any other modern award or enterprise agreement applied to Ms Wilson’s employment.

[75] Noting the Respondent was a very small business there is no evidence that it would have been reasonable in all the circumstances for Ms Wilson to have been redeployed to some other position.

[76] Considering all the material before the Commission I am satisfied that the dismissal of Ms Wilson was a case of genuine redundancy. Consequently, the dismissal cannot have been unfair.

[77] This application will be dismissed and an order [PR719612] to that effect will now be issued.

Final written submissions:

Respondent, 24 April 2020.
Applicant, 8 May 2020.

Printed by authority of the Commonwealth Government Printer

1 See Form F3 – Employer response to unfair dismissal application dated 20 March 2020 at Q.2.2.

3 Dibb v Commissioner of Taxation [2004] FCAFC 126 at para 43.

4 MA000002.

Jennifer Wilson v Monizumi Pty Ltd ATF the Takezawa Trust T/A Shoji Australia