Jihong Wang v West Dairy Pty Ltd

[2020] FWC 6459

[2020] FWC 6459

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jihong Wang
v
West Dairy Pty Ltd
(U2020/12816)

DEPUTY PRESIDENT COLMAN MELBOURNE, 1 DECEMBER 2020

Application for an unfair dismissal remedy – whether genuine redundancy – whether dismissal complied with the Code – dismissal unfair – measure of compensation one week

[1] This decision concerns an application by Ms Jihong Wang for an unfair dismissal remedy under s 394 of the Fair Work Act (Cth) 2009 (Act). Ms Wang was employed as a packaging machine operator with West Dairy Pty Ltd (company) from 12 June 2018 until her dismissal on 11 September 2020 for reason of redundancy. Ms Wang contends that her termination was unfair because her position was not redundant and that the real reason for her dismissal was related to complaints that she had made to the Fair Work Ombudsman (FWO). She seeks compensation. The company objects to the application on the jurisdictional grounds that it complied with the Small Business Fair Dismissal Code (Code) and that the dismissal was a case of ‘genuine redundancy’ for the purpose of s 389. It submits that in any event the dismissal was not unfair.

[2] As I explain below, I have concluded that the dismissal did not comply with the Code because the Code is not concerned with dismissal for reason of redundancy, and that the dismissal was not a case of ‘genuine redundancy’ because the company did not comply with its consultation obligations under the relevant award. There are two other matters that s 396 of the Act requires the Commission to decide before considering the merits of an unfair dismissal application, which I must briefly address. First, Ms Wang’s application was made within the 21-day period required by s 394(2) of the Act. Secondly, Ms Wang was a person protected from unfair dismissal, as she earned less than the high-income threshold and had undertaken the minimum period of employment (s 382).

[3] I have also concluded that, although there was a legitimate reason for the dismissal, it was nevertheless unfair, because the company did not meet its consultation obligations, and that the appropriate compensation to be ordered is one week’s pay.

Factual background

[4] The company is a repackaging business that takes orders from food manufacturers. At the time of Ms Wang’s dismissal, the company employed six people. It has no associated entities. Mr Shaolin Zhang, the company’s general manager, gave evidence that as a result of the COVID-19 pandemic the company experienced a significant decline in orders from clients, resulting in a substantial loss of revenue of some fifty percent. Mr Zhang said that on 8 August 2020 he telephoned Ms Wang and told her that the company was in financial difficulty and that he was considering making her position redundant. Ms Wang replied that she wanted to continue to work, and Mr Zhang said that he could offer her casual work, but Ms Wang declined. Mr Zhang’s evidence was that he had similar telephone discussions with Ms Wang on 10, 12 and 16 August 2020. Ms Wang said that there was only one such call, on 8 August 2020. I prefer the evidence of Mr Zhang on this point, which was clear and convincing and supported by telephone records.

[5] On 28 August 2020, Mr Zhang decided to make Ms Wang’s position redundant. He prepared a letter to Ms Wang dated 28 August 2020. It stated that, following a review of its operational requirements, the company no longer needed her position, and that her employment would end on 11 September 2020. The letter stated that Ms Wang would be paid two weeks’ redundancy pay, however the company later realised that, as a small business, it was not required to make redundancy payments under the Act. Mr Zhang posted the letter to Ms Wang, and on 29 August 2020 he emailed it to her. Ms Wang said that she did not receive the termination letter until 12 September 2020, and that she did not receive the email copy of it at all. She acknowledged however that it was sent to her correct email address. I find that Ms Wang was notified of her redundancy on 29 August 2020.

[6] Ms Wang said that she believed her position was not really redundant and that she was dismissed because of her various complaints to the FWO in July and August. The first complaint concerned her exclusion from the workplace after undergoing a COVID-19 test in mid-July 2020. She said that despite the fact that she had a doctor’s certificate confirming her negative test result, Mr Zhang would not allow her to return to work until she provided the test result directly from the laboratory. Ms Wang called the FWO to ask about her rights. On 24 July 2020 the FWO sent Ms Wang a message stating that, if an employer directs an employee to stay at home, the employee should continue to receive their normal pay. Ms Wang raised other complaints with the FWO: she submitted a letter from the FWO dated 2 September 2020, advising her that the company had committed to rectifying certain contraventions relating to JobKeeper payments, annual leave credits, and a misclassification.

[7] In his evidence, Mr Zhang denied that the decision to dismiss Ms Wang was related to her complaints to the FWO. He said that he was not even aware that she had made any complaint until 18 August 2020, by which time he had already been speaking to Ms Wang about her possible redundancy. He said there were two machine operators employed at the time, and the other operator, Gavin, had been working at the company for longer than Ms Wang. He said that he did not need two permanent machine operators and decided to make Ms Wang’s position redundant because of her shorter period of service. I return to these matters below.

Submissions of the parties

[8] Ms Wang contends that her position was not genuinely redundant, because her position of machine operator was still needed, and that the real reason for her dismissal was related to her complaints to the FWO. In this regard, Ms Wang notes that she was the only employee to be made redundant. She further contends that the company did not properly consult with her about her alleged redundancy. Ms Wang submits that there was no valid reason for her dismissal, either for the purpose of the Code or s 387, and that she was not advised of the reason for dismissal or given a chance to respond to any reasons. She says that in all the circumstances, her dismissal was harsh, unjust or unreasonable.

[9] The company contends that it dismissed Ms Wang for a genuine and valid reason, because her position was not needed as a result of the business downturn caused by the pandemic. It submits that the dismissal was consistent with the first limb of the Code, and was also a genuine redundancy, because each of the elements of s 389 was satisfied. The company contends that, in any event, the dismissal was not unfair, because it occurred for a legitimate business reason in difficult financial circumstances.

Compliance with the Code

[10] I will deal first with the company’s contention that the dismissal was consistent with the Code. I adopt in this matter the observations I made in Solway v Vision Blonde 1 concerning the relevance of the Code to dismissals for reason of redundancy. In its application to dismissals that are not summary dismissals, the Code requires that there be a valid reason for dismissal based on an employee’s ‘conduct or capacity’. The dismissal of an employee for reason of redundancy is not one that is based on conduct or capacity, but rather on the employer’s business or operational needs. In this respect the Code is more restrictive than s 387, instead of being more flexible, contrary to what appears to have been the legislative intention. As there was no reason for Ms Wang’s dismissal related to her capacity or conduct, the dismissal was not consistent with the Code.

Genuine redundancy

[11] The company’s second jurisdictional objection was that Ms Wang’s dismissal was a case of genuine redundancy, and therefore could not have been unfair (see s 385 of the Act). ‘Genuine redundancy’ is defined in s 389 of the Act as follows:

“(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.”

[12] I consider that the company no longer required Ms Wang’s job to be performed by anyone because of changes in the operational requirements of its enterprise. I accept the evidence of Mr Zhang that the company had experienced a significant downturn, and that the company no longer needed two permanent machine operators. I accept his explanation of his reason for selecting Ms Wang’s positions for redundancy. I find that the decision to make this position redundant occurred because the company needed to reduce employment costs in the face of the downturn, which was a change in the operational requirements of its enterprise.

[13] Ms Wang said that machine operator work is still required, and that she did not understand how this work could be said to be redundant. However, the question of whether there has been a genuine redundancy focuses on whether the position was no longer required, not the work. It is often the case that a position is made redundant even though the work is still needed. It is common for a position to be made redundant when there is a reduction in the amount of available work for positions of that kind. That is what happened here. Ms Wang’s permanent position was redundant.

[14] Ms Wang contended that the company had ulterior motives for ending her employment. She said that in her opinion, the company targeted her for redundancy because she had raised complaints with the FWO. I accept that Ms Wang suspected that the company had ulterior motives for wanting to dismiss her, but I do not accept that the company did in fact have any such motives, or that it dismissed Ms Wang wholly or partly for such reasons. I accept Mr Zhang’s evidence about the reasons for dismissing Ms Wang. These are credible reasons.

[15] Next, it is necessary to consider whether the company complied with its award obligation to consult Ms Wang about her redundancy. The company acknowledged that Ms Wang’s employment was covered by the Food, Beverage and Tobacco Manufacturing Award 2010 (Award). Clause 9 of the Award requires an employer to consult with employees about major workplace change. Clause 9.1 states that where an employer has made a ‘definite decision’ to make major changes in organisation, structure, or various other matters, that are likely to have significant effects on employees (which includes termination), the employer must give notice of the changes to all employees who may be affected by them, and discuss the changes, their likely effect on employees, and measures to avoid or reduce the adverse effects of changes on employees. Clause 9.2 provides:

“For the purposes of the discussion under clause 9.1(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.”

[16] The company contended that it consulted with Ms Wang about her redundancy, because Mr Zhang called her several times in August to discuss the possibility of her redundancy and the proposal that she work as a casual. However, clause 9.1 requires consultation to occur when the company has made a definite decision. No final decision was made until 28 August 2020. Consultation for the purpose of clause 9 of the Award required the company to advise Ms Wang that her position was to be made redundant and discuss any ‘measures to avoid or reduce the adverse effects of changes on employees’. I appreciate that Mr Zhang had, in effect, considered and discussed possible mitigation measures, because he offered to provide Ms Wang with casual work. However, the clause entitled Ms Wang to be consulted in a particular way, and this did not occur. In particular, it is clear that Ms Wang was not provided with the relevant information in writing, as required by clause 9.2.

[17] As the company did not comply with its award obligation to consult with Ms Wang about her redundancy, the requirement of s 389(1)(b) has not been satisfied. I conclude that the dismissal was not a case of ‘genuine redundancy’.

Was the dismissal unfair?

[18] A finding that a dismissal was not a case of genuine redundancy does not necessarily lead to a conclusion that the dismissal was unfair. Rather, the Commission proceeds to consider the unfair dismissal application on its merits. Section 387 states that in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account the matters in subsections 387(a) to (h).

[19] In circumstances of dismissal for reason of redundancy, no relevant finding can be made in relation to the consideration in s 387(a), namely whether there was a ‘valid reason for the dismissal related to the person’s capacity or conduct’. The company does not contend that there was any valid reason for dismissal related to Ms Wang’s capacity or conduct. Rather, its reliance on redundancy as the reason for dismissal is to be considered in connection with s 387(h), ‘any other matters the Commission considers relevant’, to which I shall return.

[20] Similarly, the considerations in ss 387(b) and (c) are not relevant. They concern whether the employee was ‘notified of that reason’ (i.e. the valid reason) and whether the person was given an opportunity to respond to any reason related to capacity or conduct. The consideration in s 387(d) is whether there was ‘any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal.’ There was no such refusal in this case. If a dismissal relates to unsatisfactory performance, s 387(e) requires the Commission to consider whether the person has been warned about that performance prior to the dismissal however the present matter does not concern performance.

[21] The Commission is required to consider the degree to which the size of the employer’s enterprise, and the absence of dedicated human resources expertise, would be likely to impact on the procedures followed in effecting the dismissal (ss 387(f) and (g)). The company is a small business employer with no internal human resources expertise, and this likely affected its approach to the dismissal of Ms Wang.

[22] This brings me then to s 387(h). My conclusions in relation to the ‘genuine redundancy’ jurisdictional objection are relevant to the question of whether the dismissal was unfair. The company did not need Ms Wang’s role to be undertaken by anyone. Its decision to make Ms Wang’s position redundant was a legitimate reason to end her employment in the circumstances. Even though the dismissal was not a ‘genuine redundancy’ for the purposes of the jurisdictional objection, this does not mean that the dismissal was not a real and bona fide redundancy. Although it could not be a valid reason related to capacity or conduct for the purposes of s 387(a), Ms Wang’s dismissal occurred for a good reason. This tells against a finding that the dismissal was unfair.

[23] I do not consider the matters that were the subject of Ms Wang’s complaints to the FWO to be relevant to the consideration of whether her dismissal was unfair. On one view, the company’s refusal to allow her to return to work following the negative test result was unwarranted, although the company says it was entitled to take a very cautious approach to COVID-19 because it packages food. However, the fact that a person may have been treated unfairly during his or her employment is not relevant to the consideration of whether a dismissal was unfair. And as noted above, I reject the contention that the dismissal was related to these matters.

[24] As to the question of whether Ms Wang could reasonably have been redeployed, there is no evidence that any other work was available for Ms Wang to perform. The company is a small enterprise that employed six people and had suffered a substantial reduction in business. There is no basis to conclude that it would have been reasonable to redeploy Ms Wang.

[25] It is also relevant to take into account the manner in which Ms Wang’s employment was terminated. In particular, she was entitled under the Award to be consulted in a particular way, as I have explained above. This did not occur. The process leading to Ms Wang’s dismissal was deficient because the company did not comply with the requirements of clause 9 of the Award. Ms Wang’s employment was ended during the COVID-19 lockdown, when finding alternative employment would prove a challenging prospect. If the company had complied with the Award consultation provisions, and provided information to her in writing, Ms Wang could have had further notice of the impending termination of her employment. In my view, Ms Wang’s dismissal was not unreasonable or unjust. However, I consider that, in the circumstances, the company’s failure to comply with the consultation provision in the Award rendered Ms Wang’s dismissal unfair.

Remedy

[26] Reinstatement is not sought and would not be appropriate. I consider that an award of compensation is appropriate. Section 392(2) provides that in determining an amount of compensation, the Commission is to take into account all the circumstances of the case, including the matters identified in subsections 392(a) to (g).

[27] There is no evidence to suggest that an award of compensation would affect the viability of the employer’s enterprise (s 392(2)(a)). As to Ms Wang’s length of service (s 392(2)(b)), I note that she had worked for the company for over two years.

[28] Section 392(2)(c) of the Act directs the Commission to take into account the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed. This requires the Commission to consider how long the person would have remained employed, but for the dismissal. Given the company’s financial situation and the fact that it had decided Ms Wang’s role was not required, I consider it likely that, had she not been dismissed with effect from 11 September 2020, she would have been dismissed a very short time later. I assess this hypothetical situation from the standpoint that any subsequent dismissal of Ms Wang would have occurred according to law. If the company had made her position redundant in full compliance with the consultation provision in the Award and provided her with information in writing about her redundancy and the reasons for it, as contemplated by clause 9, I consider that this would have taken not more than one week.

[29] Ms Wang’s salary was a gross amount of $1,545 per fortnight. One week’s pay is $772.50. To this I will add 9.5% in respect of superannuation, resulting in a sum of $845.89. Ms Wang submitted, and I accept, that she applied for jobs after her dismissal. I also consider that, during the first week following her dismissal, she would have been unlikely to find work.

[30] I will order compensation to be paid to Ms Wang in the amount of $845.89 with deduction of any taxation required by law, which is to be paid by the company to Ms Wang within 28 days of the date of this decision. An order is separately issued in PR725045.

DEPUTY PRESIDENT

Appearances:

J. Wang for herself

Y. Chen for West Dairy Pty Ltd

Hearing details:

2020
Melbourne
30 November

Printed by authority of the Commonwealth Government Printer

<PR725044>

 1   [2020] FWC 4233