Johnston v Blue Circle Southern Cement Pty Ltd
[2010] FWA 5149
•29 JULY 2010
[2010] FWA 5149 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Antony Johnston
v
Blue Circle Southern Cement Pty Limited
(U2009/13832)
SENIOR DEPUTY PRESIDENT HARRISON | SYDNEY, 29 JULY 2010 |
Application for unfair dismissal remedy - whether the dismissal was a case of genuine redundancy.
[1] This decision concerns an application made under s.394 of the Fair Work Act 2009 (the Act). It arises out of the termination Mr Johnston’s employment with Blue Circle Southern Cement Limited (Blue Circle or the Employer). The Employer objects to the application on the ground that the termination was a case of genuine redundancy as that term is defined in s.389 of the Act. The Applicant asserts, consistent with s.385 of the Act, that his dismissal was unfair and not a case of genuine redundancy.
[2] The Applicant represented himself and the Employer was represented by Mr Chadwick, a solicitor. The matter proceeded by way of a hearing before me with each party requesting that be the manner in which I should deal with the issues in contention.
[3] Permission to appear for the Employer was granted to Mr Chadwick. In doing so I was of the opinion that would aid the efficiency in presentation of the issues involved and, on balance, it would otherwise be unfair to require the Employer to be represented by one of its employees. I took into account the fact the Applicant clearly had legal advice in the preparation of his extensive written submissions and the identification of the key issues that I needed to rule upon. It was necessary that each of the witnesses for the Employer be cross-examined and it appeared likely they would be challenged in respect to contentious issues. In these circumstances I granted permission to Mr Chadwick to appear.
[4] The Applicant gave evidence and tendered written submissions which had a number of attachments. Evidence on behalf of the Employer was given by Mr Angel, Human Resources Manager, Mr Yousaf, Engineering and Reliability Manager, and Mr Northey, Planning Superintendent.
[5] Section 389 of the Act is the primary provision I am required to consider in this decision. It is in the following terms:
“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.”
[6] The Applicant submitted that his job was still being performed, his employment was covered by an award and the Employer had not complied with the consultation terms in that award. He also submits that it would have been reasonable for him to have been redeployed.
[7] I should here note that s.389(1)(b) needs to be read together with item 36 of Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009. That item provides that the reference in s.389(1)(b) to a modern award is taken to include a reference to an award-based transitional instrument and the reference to an enterprise agreement included a reference to an agreement-based transitional instrument. The types of transitional instruments that are encompassed by these two classes are referred to in item 2. For the purposes of this decision they include a notional agreement preserving State awards such as the Blue Circle Southern Cement Ltd (State) Award 1 (the BCSC Award) and a preserved collective State agreement such as the Blue Circle Southern Cement Limited Enterprise Agreement2 (the Agreement). That agreement is in the same terms (other than wage rates) as the BCSC Award. Through a combination of state and federal legislative changes (the detail of which is not here important3) the status of the BCSC Award in the federal system was that of a preserved collective State agreement.
[8] Throughout the evidence each of the parties made references to the BCSC Award however in respect of events that occurred in late 2006 onwards they probably should have referred to the Agreement. For the purpose of this decision little rests on this and I too will generally refer to the BCSC Award unless the context requires specific identification of the Agreement.
[9] If the termination of the Applicant’s employment was a case of genuine redundancy then his s.394 application can proceed no further. This is the consideration I deal with in this decision. I now record my findings based on the evidence before me.
[10] Mr Johnston commenced employment at Blue Circle at its Maldon works on 19 February 1990. He was employed in the position of mechanical tradesperson and subsequently as a maintenance planner. Between 23 October 2002 and December 2007 his employment was covered by the BCSC Award. That award covered Blue Circle’s Maldon, Berrima and Marulan works. In December 2007 the Applicants classification level under that award was “Level 10+ 5%”.
[11] During 2007, Blue Circle restructured its electrical and maintenance departments. The Applicant, and two other employees who were also maintenance planners, had their position, responsibilities and accountabilities changed and their employment transferred from being award covered to salaried staff positions. The Applicant was offered and signed a new employment contract dated 21 November 2007. 4 It is on Boral Construction Materials Ltd (Boral Construction Materials) letterhead and titled “Re: Offer of Transfer of Employment” (I refer to this letter and its attachments as the Staff Contract). It appears that staff or salaried employees at Maldon at this time were employed by Boral Construction Materials and the wages employees under the BCSC Award were employed by Blue Circle.
[12] The Applicant was initially offered an annual salary of $70000 but after a request by him for that to be reconsidered it was increased to $72000, the amount which is in the letter of 21 November 2007. His prior service was to be recognised for all service related staff benefits. His salary was to be reviewed annually. The letter indicated that it had attached to it a document titled “Blue Circle Southern Cement Staff Conditions”. It is not clear whether it was attached but in any event the Applicant had a copy of the staff conditions shortly after the date of this letter. He commenced in this new staff position in January 2008.
[13] From January, 2008 until the termination of his employment the Applicant remained a staff member and had annual salary increases and annual bonuses 5 paid in accordance with the Staff Contract. All of the other provisions and entitlements of the Staff Contract were applied to him up to the date of his termination.
[14] On 26 June 2009 Blue Circle sent a letter to the Applicant. A similar letter was sent to all staff employees at Maldon. Mr Angel, for example, received such a letter. It refers to corporate restructuring which had occurred (unrelated to the issues in this decision) and notes that a number of staff had been informed in the past that their “technical employer” would be Boral Construction Materials. It advised that the Boral Management Committee had decided that they would revert to the historical situation where the employing entity was the company within the Boral group were employees were actually working i.e. the operating company. In the circumstances of Mr Johnston therefore his employer, from 1 July 2009, would be Blue Circle. He was assured that any accrued benefits, terms and conditions of employment remained unchanged and unaffected.
[15] Until his redundancy, the Applicant never raised any query about his being engaged and paid in accordance with the Staff Contract rather than the BCSC Award or the Agreement. After he accepted the Staff Contract he was no longer in any classification in these two industrial instruments. Additionally, his maintenance planner role and salary level, took him outside these instruments. Being in a classification in the BCSC Award was the pre-requisite for the award covering an employee. His terms and conditions were not those of the award employees but those applicable to staff. His salary increases where on account of annual staff reviews not increases payable to wages employees. 6
[16] In about mid 2009 a decision was made that there needed to be a reduction in the order of 10% in the operational costs across all Blue Circle sites. A review at the Maldon works was undertaken. It appears that total output had dropped significantly (45% since 2006) necessitating a reduction in operating and fixed labour costs. A number of cost reductions had been implemented across the entire Blue Circle businesses during 2008 however more cost reductions were required. A decision was made that at Maldon there would be structural and operational changes which would affect all of its activities including the maintenance and engineering (M&E) department where the Applicant was employed.
[17] A number of positions were identified as redundant. These included eight positions in the production area, seven positions in the M&E department and one in accounting and administration.
[18] On 5 August 2009 the Maldon Works Manager, Mr Kirkby, made a site wide announcement concerning the commencement of a process to implement manning reductions. Employees were advised that the Employer had to make changes to the structure of its workforce to ensure the viability of the business, that a number of positions across various departments had been identified as redundant and that the business was about to commence a process of consultation with employees and relevant unions.
[19] At this time the M&E department consisted of 33 employees which included two mechanical maintenance planners (one of whom was the Applicant) and one electrical maintenance planner. The M&E department had operated on the basis of three teams, two mechanical teams and one electrical team. The restructuring proposal was that seven positions had been identified as redundant (six trades’ positions and a mechanical maintenance planner’s position) and the two team mechanical structure would be consolidated into one team.
[20] A meeting of the M&E department occurred after the meeting addressed by Mr Kirkby. Mr Yousaf spoke about the need for consultation with the unions in relation to employees covered by the BCSC Award. He gave more detail about how this process would proceed. Also on 5 August 2009 the Applicant and a small number of other employees from the M&E department attended a meeting with Mr Yousaf. Mr Reed, who was the other employee in a mechanical maintenance planner position, was on sick leave and did not attend the meeting. Mr Yousaf confirmed that one of mechanical maintenance planner’s position had been identified as being redundant. Mr Johnson indicated that he believed it was he that they were trying to get rid off. This was denied by the Employer. Its position was that because a reduction in the number of mechanical maintenance planners was dependent upon reducing the number of mechanical trades positions and collapsing two mechanical teams to one, it could not proceed with identifying and progressing the redundant planner’s position until it had worked through a process with the relevant unions, as was required under the BCSC Award.
[21] On 7 August 2009 the Applicant sent Mr Yousaf an email referring to the meeting of 5 August and indicating that in so far as the Employer had to have agreement with the site unions before they could proceed to identify which of the two mechanical maintenance planners would be retrenched that he was not represented, nor did he wish to be represented, by any of the unions and they did not act on his behalf. The Employer had not assumed they did.
[22] On 18 August 2009 Mr Angel had a meeting with Mr Johnston. Mr Johnston expressed his concern that there had been no further discussions with him about progressing the mechanical maintenance planner’s role which would be redundant. Mr Johnston was advised that further discussions would occur once the discussions with the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) in relation to resolving the retrenchments of the mechanical trades employees were finalised.
[23] On 7 September 2009 Mr Johnston sent Mr Angel an email again expressing concern about a lack of communication concerning the mechanical planners position which was to be made redundant. He noted that the discussions with the unions about redundancies “had nothing to do with me” and expressed concern about the impact the delay was having on him and his family. Mr Angel replied, noting that he was sympathetic to the Applicant’s concerns and that he was hopeful to have some agreement with the unions by the end of September. He would speak to him and Mr Reed no later than early October.
[24] By 8 September 2009 there had been seven site meetings with the AMWU in an effort to agree upon issues relating to the reduction in mechanical trades’ employees. On 15 September agreement was reached.
[25] Having decided that six trades’ positions would be made redundant, it was confirmed that the two mechanical team structure would be consolidated into one team. This meant that the Employer would now reduce the two mechanical maintenance planners’ positions to one. The process to identify whether it would be the Applicant or Mr Reed who would be retrenched, unless they were able to be redeployed, would now proceed.
[26] On 23 September 2009 the Applicant applied for a position of a production shift team leader (shift team leader) at Maldon. He was not given an interview for that position nor appointed to it.
[27] There was as meeting on 8 October 2009 between Mr Northey, Mr Johnston and Mr Reed. Mr Northey confirmed that a process was taking place to identify which of the two planners would be made redundant. He accepted it was taking a long time but said that the BCSC Award employee redundancies had to be finalised first. He also said (and later confirmed in an email) that any redundancy payments would be calculated at whichever of the award or the staff conditions would produce the higher amount.
[28] On 8 October Mr Northey conducted an employee assessment and selection process to determine which one of the two employees would be retrenched. The process was conducted by him and three supervisors from the areas the planners dealt with being maintenance, planning and dispatch and production. Each of them carried out an analysis of the skills and competencies of Mr Johnston and Mr Reed. Assessment forms were completed by each of the four persons participating. Mr Johnston scored lower than Mr Reed in each of the areas assessed. Length of service was not a relevant criterion but I do note each man had very long service with Blue Circle with Mr Reed‘s being around six months longer than Mr Johnston’s.
[29] I accept that the documentation required to be completed by each assessor provided a comprehensive list of criteria and called for attention to be given to the skills, plant knowledge work behaviour performance and conduct of each of the employees. It was the manner in which the selection was implemented which raised concerns. Mr Northey said that the four assessors were all in the same room at the time they completed the forms. The Applicant asserts that three of them were influenced by Mr Northey’s assessments of him. In this respect I note that the assessment forms, which comprise seven pages, all had the same level of assessment for Mr Johnston on pages 2 and 3. Furthermore, all of the assessments amended the level for the “Blending plant” item in the “Process or Plant Knowledge and Experience” section from a level 3 which is scratched out and a level 2 inserted. In the part titled “Technical/Advanced Trades Skills” the lines “Level of competence” and “Extent of experience” all have a level 1 entry scratched out and a level 3 inserted. Although it is noted that in this respect the amended assessment is higher for the Applicant it is the fact all entries are identical which, understandably, is relied on by the Applicant to discredit the exercise.
[30] I note that other parts of assessment forms are filled in differently for example the “Individual competency and character” rating scale reflects varied results for each assessor with Mr Northey’s being the second highest.
[31] In cross examination Mr Northey said he had no knowledge of the similarities in the assessments on pages 2 and 3. He said it was an interesting point as to how all of the assessors could have made the same alteration and he could not account for it. 7 He disagreed with the Applicant’s assertion that all the assessors were being told what to write. He said he did not tell them what to write on the forms.
[32] On 9 October 2009 Mr Johnston sent an email to Mr Angel and Mr Northey. It records his dissatisfaction with comments Mr Northey had made to him the previous day and with the way in which the selection process was being undertaken. He asked for a copy of any industrial instrument that may cover any proposed redundancy and said he believed management had already decided who would be redundant and that the selection process was a sham.
[33] There was a delay in notifying Mr Johnston of the outcome of the assessment as between 9 October 2009 and 23 October 2009, Mr Yousaf was required to travel overseas as his father had passed away and a funeral and family matters had to be attended to.
[34] The results of the assessments were collated by Mr Northey and he made a recommendation to Mr Yousaf that the Applicant should be retrenched. Mr Yousaf made the final decision to retrench the Applicant. It appears that decision was made on 23 October 2009. In doing so he based his decision on the assessment results and Mr Northey’s recommendation. I find he was not aware of there being any irregularity in the selection process. I also find that, in the circumstances, it would not have been reasonable for him to have scrutinized the assessment results more closely or to doubt Mr Northey’s recommendation.
[35] Mr Angel considered whether there were any positions into which the Applicant could be redeployed. On 26 October 2009 he notified all the Human Resources Managers in the Blue Circle and Boral businesses about Mr Johnston’s skill set, competence and qualifications and asked them to advise him if they had any suitable roles. He received a reply from all but one of them that they had no suitable position available. He also had a discussion with the Manager’s at the Berrima and Marulan works. He did this as the type of work at those sites was the closet to that done at Maldon. They had no suitable positions.
[36] Throughout the Applicant’s evidence he referred to incidents or occasions which confirmed his view that Mr Northey wanted to get him out of Maldon. Examples included a complaint the Applicant had made in December 2008 against Mr Northey for harassing him. I note the complaint was investigated and not established. The Applicant believed that he was chosen to be made redundant on the grounds of personality and not job performance. The Applicant’s written submission described his termination as “spiteful and prejudiced” and that he believed his past history of being an active union delegate meant he was perceived as a troublemaker and that Blue Circle had taken the opportunity to dismiss him. Mr Northey’s view of Mr Johnston was that his working relationship with him was “fine” and his work was satisfactory. He had most recently, in the June 2009 performance assessment, rated the Applicant as “Fully Satisfactory” and that he was working well and easily able to achieve objectives set for him.
[37] On 27 October 2009 Mr Johnston saw his doctor as he was stressed due to the uncertainty about the proposed redundancy. He said his doctor had diagnosed him as having clinical depression and thereafter he had taken a period of sick leave.
[38] On 2 November 2009 Mr Northey telephoned the Applicant and said he wanted him to attend a meeting to discuss the outcome of the assessment. Mr Northey was aware he was on sick leave and said it was subject to his being prepared to attend and that he could choose the location. The meeting was agreed to be at Maldon on 4 November.
[39] On 4 November 2009 Mr Johnston attended a meeting with Mr Yousaf and Mr Northey. At that meeting he was informed that his employment was to be terminated because of redundancy and details of his termination payments were explained. He complained that he was on sick leave and this was making him worse and he should have been interviewed for other positions. He also said that under the BCSC Award there were to be no forced redundancies. A letter of termination of employment dated 4 November 2009 was provided to him. He was offered outplacement assistance but rejected that offer.
[40] On the termination of his employment Mr Johnston received five weeks pay in lieu of notice ($7,413.46), 53.28 weeks redundancy pay ($78,990.44), a further age benefit sum of $14,611.93, accrued annual leave and long service of $18,639.40 and wages up to and including 6 November 2009.
[41] By 6 November 2009, 14 employees had been made redundant at Maldon since the restructuring process had been announced on 5 August 2009.
[42] I now turn to the provisions of s.389. The first consideration is whether the Applicant’s job was no longer required to be performed by anyone because of changes in the operational requirements of Blue Circle’s enterprise.
[43] Mr Johnson submits that prior to his redundancy the duties performed by him and Mr Reed, the other maintenance planner were different. The kiln for which Mr Reed was responsible closed and so therefore it should have been his position that was made redundant. However, he was now performing duties that Mr Johnston had previously performed. He said that in those circumstances there was not a genuine redundancy.
[44] I am not persuaded by the Applicant submissions. It was not put in issue that their was an operational need to restructure and, as a consequence, there would be numerous redundancies across the Maldon site including in the M&E department. The Applicant accepts this and also that the Employer was entitled to decide that one planner’s position would be redundant. 8 The consideration therefore is whether or not the Employer still requiring the Applicant’s job to be performed. It is not relevant to this consideration that aspects of his duties are still being performed. In terms of s.389(1)(a) that would not mean the redundancy is not genuine. Relevant examples are given in the Explanatory Memorandum where duties of an employee who has been made redundant continue to be performed by other employees but nonetheless this is a genuine redundancy. I reproduce below an extract from the Explanatory Memorandum to the then Fair Work Bill 2009:
“Clause 389 – Meaning of genuine redundancy
1546. This clause sets out what will and will not constitute a genuine redundancy. If a dismissal is a genuine redundancy it will not be an unfair dismissal.
1547. Paragraph 389(1)(a) provides that a person‘s dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer‘s enterprise. Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.
1548. The following are possible examples of a change in the operational requirements of an enterprise:
• a machine is now available to do the job performed by the employee;
• the employer‘s business is experiencing a downturn and therefore the employer only needs three people to do a particular task or duty instead of five; or
• the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person‘s job no longer exists.
1549. It is intended that a dismissal will be a case of genuine redundancy even if the changes in the employer‘s operational requirements relate only to a part of the employer‘s enterprise, as this will still constitute a change to the employer‘s enterprise.”
[45] I now turn to consider in this context whether the process of selection is relevant. In this respect I note the following comment in the Explanatory Memorandum:
“1553. Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy. However, if the reason a person is selected for redundancy is one of the prohibited reasons covered by the general protections in Part 3-1 then the person will be able to bring an action under that Part in relation to the dismissal.”
[46] I have earlier referred to the fact the Applicant submits that in the past he was an active union delegate and that may have in some way informed the Employer’s decision to terminate his employment. There was no evidence to support this assertion. If the Applicant does have any relevant evidence nothing in this decision should be seen as compromising any rights he has to take such action under other provisions of the Act as he sees fit.
[47] The most significant consideration here is the selection process undertaken by Blue Circle and Mr Northey’s role in that process. I have given serious consideration to the evidence about this. It is not credible that without some discussion, or worse, coaching, pages 2 and 3 would have been completed by all assessors in the manner they were. However the evidence is not such as to allow me to go so far as to find that four people collaborated in an inappropriate way so as to ensure the Applicant received ratings lower than Mr Reed’s. I think it likely Mr Northey did play a more active role than he was prepared to concede. But where does that observation take me? There is no evidence that Mr Yousaf, who made the final decision, had any bias against the Applicant nor had pre-determined he would be the planner selected for retrenchment.
[48] Although this issue has caused me some concern, where, as here is the case, the business restructure was genuine and numerous redundancies were to occur as a consequence, then the selection process, even if unsatisfactory, is not relevant to my application of s.389(1)(a).
[49] I now turn to the question of whether Blue Circle complied with any obligations in an award or enterprise agreement that applied to the employment to consult about the redundancy. The Applicant asserts that his employment was covered by the BCSC Award. He relies on the consultation provisions contained within Schedule B. He identifies clause 2 as providing that there will be proper consultation about the need for positions to be redundant and agreement will be sought with affected parties and their representatives. He also relies on clauses 3 and 4 which provide that where there are to be redundancies then a voluntary redundancy package is to be offered. If the person occupying the redundant position does not wish to take that offer discussions are to take place as to other available options.
[50] Mr Johnson accepts that when he took up the staff conditions following his acceptance of the 21 November 2009 letter of offer his employment was no longer covered by the BCSC Award. He submits however that when he received the letter of 26 June informing him that his employer would thereafter be Blue Circle (rather than Boral Construction Materials) his employment again came under BCSC Award. I do not agree with this submission. Nothing in the letter of 26 June supports it. It seems to me that this view of the Applicant that he was covered by the BCSC Award is of recent origin and arose only when he was aware his position may be made redundant. His earlier denial of having anything to do with the consultation under the BCSC Award or with the unions (who are the parties recognised in the award) about representing him is at odds with this most recent submission.
[51] In any event the Applicant’s opinion about award coverage is not determinative. In my opinion, since entering into the Staff Contract, the Applicant had not been covered by the BCSC Award. That remained so up to the date his employment was terminated.
[52] Finally I turn to consider whether it have been reasonable, in all the circumstances, for the Applicant to have been redeployed within Blue Circle or an enterprise of an associated entity.
[53] The Applicant submits that it would have been reasonable for Blue Circle or Boral to have redeployed him. The Employer never discussed redeployment options with him. There were positions available to which he could have been deployed, there had been no issues with his performance capability and he was a long-standing employee. He identifies a shift team leader and yard crew positions as ones he should have been offered. He applied for the team leader position but was not given an interview. The yard crew positions came to his attention after his employment had been terminated. He accepts that if he had been given the shift team leader position he would have required some training but he could do that job and had done a similar job for four months in 2007. The Applicant submits that no real attempt was made to redeploy him as the Employer simply wanted to terminate his employment.
[54] I think the evidence establishes that the bare minimum necessary was done to attempt to redeploy the Applicant. I acknowledge that s.389(2) does not oblige the Employer to find a position to redeploy the Applicant. The consideration is one of reasonableness in all the circumstances. I have sympathy for the submission that an opportunity should have been given to the Applicant to advise if he was prepared to accept a lesser position on significantly lower wages. I also have the strong impression that, in the first instance, the Employer attended to what it saw as its obligation to employees under the BCSC Award to offer redeployment to award employees. It was not suggested however that Mr Angel’s attempts to identify suitable positions were disingenuous. Having considered all of the evidence I am not satisfied it would have been reasonable for the Employer, or its associated entities, to have redeployed the Applicant.
[55] The s.394 application is dismissed.
SENIOR DEPUTY PRESIDENT
Appearances:
A. Johnston on his own behalf.
N. Chadwick for Blue Circle Southern Cement Pty Limited.
1 AN120053
2 AG871083
3 Industrial Relations Amendment Act 2006 No 1 (NSW) and Workplace Relations Act 1996 Schedule 8, item 10
4 A1 attachment B and R4 annexure A
5 PN339-341
6 PR983783. For example the BCSC Award increases payable May 2009 did not apply to him - PR983783.
7 PN804-873
8 PN 1219
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