Kane Smith v Don Watson Pty Ltd

[2016] FWC 6740

[2016] FWC 6740

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Kane Smith
v
Don Watson Pty Ltd
(U2016/7505)

COMMISSIONER WILSON MELBOURNE, 23 SEPTEMBER 2016

Application for relief from unfair dismissal - genuine redundancy.

[1] Kane Smith was employed by Don Watson Transport between 24 February 2014 and 17 May 2016 when he was dismissed. At the time of dismissal Mr Smith was advised that his termination of employment came about for reason of redundancy.

[2] Section 396 of the Fair Work Act 2009 (the Act) requires the determination of four initial matters to be considered before considering the merits of the application. One of those matters relates to whether or not the dismissal of Mr Smith was for reason of genuine redundancy. This decision relates to that question.

[3] Neither party put forward that any of the other initial matters contained within s.396 required consideration by the Commission. In relation to those other elements of s.396, I find that Mr Smith’s application was lodged with the Fair Work Commission within the 21 day period for making such applications; that at the time he was dismissed he was a person protected from unfair dismissal; and that the question of consistency with the Small Business Fair Dismissal Code does not arise.

[4] For the reasons set out within this decision I find that Mr Smith’s termination of employment by Don Watson Transport was for reason of genuine redundancy. For that reason an order dismissing his application for unfair dismissal is issued at the same time as this decision.

BACKGROUND

[5] Mr Smith was employed by Don Watson Transport as a long-distance truck driver. While employed continuously since 24 February 2014 until the date of his termination, there had also been an earlier, unrelated period of employment in 2011.

[6] Mr Smith’s duties required him to travel in one of his employer’s trucks between Melbourne and other cities, principally Sydney and Brisbane, and his employment was governed by an enterprise agreement, the Don Watson Long Distance Operations 2013 Agreement. 1The company is headquartered in Bacchus Marsh, near Melbourne, and has depots in other cities including Wodonga, Sydney and Brisbane. At the time of Mr Smith’s termination of employment the company employed 40 local drivers, meaning those working in proximity to their respective depot, and 69 long-distance drivers required to travel between the depots.2

[7] In October 2014 Mr Smith was unfortunate enough to suffer a work-related injury in the course of travelling to Brisbane. That injury led to him requiring treatment as well as time off. By early April 2015 Mr Smith was able to return to work, initially on a reduced-hours basis. 3 During May and June 2015 the hours were increased and there appears to have been resumption of full duties by September 2015.4

[8] In the period between the end of 2015 and the beginning of 2016, Mr Smith’s domestic circumstances lead to some changes in his accommodation arrangements. To the extent that is relevant to this matter, he moved out of his accommodation in Melbourne and would, sometimes at least, sleep in the company’s truck. He made other arrangements when he was in Sydney. He reports this continued until the beginning of April 2016, with the exception of a week in January when he was hospitalised in Sydney due to a recurrence of some of his back problems. 5

[9] In March 2016 there was a disagreement between Mr Smith and his employer about changes the company had made at short notice to its requirements of him over the March Labour Day weekend. He had initially made plans with his son, which he had then cancelled, because of the company’s needs. He was then told on the public holiday itself that the company’s needs had changed once more, about which he was frustrated, and he expressed as much to the company. 6

[10] During May 2016 the company sought from Mr Smith updated certificates of capacity, which apparently related to Mr Smith’s back injury and in particular his hospitalisation in January 2016. The particular question for consideration was whether or not Mr Smith would be declared to have a full lifting capacity. Mr Smith reports that during May his doctor was initially reluctant to give such a certification but that she eventually did, with Mr Smith providing, at the company’s request, an updated certificate of capacity to Don Watson Transport on or around 10 May 2016. 7 Mr Smith reports that when he provided the certificate of capacity he thought the circumstances of the meeting were “very strange”, with the meeting being brief and him being told to go home, and him expecting to make a trip to Sydney the following day. The next day he was sent a text message telling him not to leave early, and was then asked to make his way in to the company. When he arrived at the company at about 6 PM he was met by his immediate supervisor, Mr Anthony Viggiano, and Mrs Watson, the company’s Managing Director. Mrs Watson told him that the company was having a restructure which would lead to one current employee being made redundant. In the course of that discussion Mrs Watson provided Mr Smith with a short note indicating the matters that the company was considering. That note was in the following terms;

“KANE SMITH -11TH May 2016

26. Consulative [sic] Process as per EBA

26.5 The change Don Watson Pty Ltd is making is that a current long distance driver will be made redundant.

I am raising the following topics with you in regard to your current work practice (Hard copy 26.5 handed to Kane Smith)

a January to May - 17 speeding alerts
In Breach of Australian Road Act

b Log Book Breaches in the past 6 months (12) 1 Critical, 3 Substantial, 8 minor
This is in breach of NHVL - Fatigue Law

c Mass Management - January - April 37% of loads had no weights recorded against the loads
This is in breach of NHVL - Mass Management Law

d Failure to hand in run sheet and attached Consignment Notes to enable the Invoicing process to be completed in a timely manner

e Not wearing appropiate uniform when attending work; ie thongs, Tee Shirts

f Not having your own accommodation for sleeping, eating or bathing when not working at different times during your employment with Don Watson

g Personal Hygiene very poor.
Breach of Don Watson Hygiene Policy” 8

[11] Having been provided with the foregoing information, Mr Smith was asked whether he had anything to say in relation to the issues raised, to which he responded that he “was sorry these issues had placed me on the short list of people to make redundant, and that I would appreciate the chance to improve, and that I hope the only reason i’ve had employment these last 12 months is not because i’ve been on WorkCover and I actually provided a benefit to the company by my service”. 9 Mrs Watson’s evidence is that she responded to this assertion by saying “No. Its because of the slowdown in Melbourne”.10

[12] Following this discussion, Mr Smith was told he would not be working that night or at all until the decision was made by Don Watson Transport the following Tuesday, and that he would be advised of the decision about his potential redundancy by phone.

[13] Mr Smith was subsequently informed on the following Tuesday, 17 May 2016, that he was the person to be made redundant. 11 A letter was forwarded to Mr Smith subsequent to this communication setting out the reasons for the company’s decision;

“Dear Kane

Re REDUNDANCY

This letter is to complete the Consultative Process that Don Watson Pty Ltd and yourself have participated in since Wednesday 11th May 2016 and our telephone conversation of Tuesday 17th May when you were advised that you had been made redundant.

Attached is a Pay Slip confirming payment into your Bank Account on Thursday 19th May of the following;

• 2 Weeks notice in Lieu of work and



• 6 Weeks Redundancy Payment



• Plus 2 days pay (Monday 16th May and Tues 17th May)



• Plus Annual Leave entitlements



• Less any advances received and not paid back to Don Watson Pty Ltd.

On Wednesday 18th May you were paid a base pay for the week 15^th to 21^st May 2016 when you did not work.

Yours faithfully

DON WATSON PTY LTD

NOELENE WATSON
Director” 12

LEGISLATION

[14] The meaning of “genuine redundancy” is defined by the Act in s.389 in the following manner;

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.

CONSIDERATION

[15] As provided for within s.389 of the Act, a person’s dismissal is a case of genuine redundancy in the circumstances in which their employer no longer requires their job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise and where the employer has complied with any applicable obligation in a modern award or enterprise agreement requiring the employer to consult about the redundancy. A dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for redeployment of the person within the employer’s enterprise.

[16] The evidence of Mrs Watson is that the work of her company, Don Watson Transport, is principally associated with the haulage of meat and dairy products and is thus heavily reliant upon factors associated with the wider agricultural industry. Not only is the requirement for her company’s services related to consumer demand, but it is also significantly related to supply factors. Her evidence is that ordinarily the company would expect a softening of demand for its services in the middle part of the year, but that the softening appeared to commence in about April this year, which is a few months earlier than would ordinarily be the case. In particular, the April 2016 trading results showed that a significant reduction in demand was taking place and that by early May 2016 decisions had to be made by the company about cost reductions. She put this down to conditions within the agricultural sector at that time. There were droughts in the supply catchment areas and in early May 2016 it was the case that farmers and abattoirs did not know if the rains were going to come. That situation meant that her company was unable to predict with any certainty that the downturn it was experiencing would improve at any time in the near future.

[17] Mrs Watson’s evidence is also that Bacchus Marsh was the depot with the largest number of long-distance drivers, and thereby the most significant costs, and that the company had taken the decision it needed to reduce costs in Bacchus Marsh and that it did not need to consider reducing costs in other depots. Her evidence was that the other depots, and in particular Sydney, were in a different trading situation. Mrs Watson’s evidence about the decision to make a driver redundant from Bacchus Marsh took account of the following factors;

“4. The allocation of long distance drivers at our Bacchus Marsh operations reflect two things. Firstly, it was the original location for the business and secondly it reflected the weight and value of freight movement ex-Melbourne.

5. Over the last 12 months, the business has seen a steady decline in both the number of long distance freight movements and the value of those freight movements out of Melbourne. At the same time the value of long distance freight movements out of both Sydney and Brisbane have either remained the same or increased. The Sydney operation is now our largest operation in terms of both the number and the value of carriage contracts for our long distance operations.

6. The change in revenue for long distance operations from the period 1 September December [sic] 2015 through to 31 December 2015 compared with the revenue earned for the period 1 January 2016 through to 30 April 2016 was a decline of 4.6%. When I was advised of these figures, I decided that we need to review our Melbourne long distance operations to better align them to our revenue.

7. Though there is some seasonal fluidity in our businesses revenue, we use these four month reporting periods to even out those fluctuations.

8. The senior management group, of which I am a member, determined that we needed to make at least one long distance driver based in Bacchus Marsh redundant. This decision was taken in the first week of May. We considered moving a driver from Bacchus Marsh to Sydney but we decided it just wasn't feasible.

9. I didn't think it was feasible to move a long distance driver as we simply didn't have the demand for another long distance driver in either depot. We had the right numbers in the right places except for Bacchus Marsh.” 13

[18] The company’s evidence is that, in considering who should be made redundant, it took a multifactorial approach to consideration of its drivers and formed a view of three long-distance drivers that it considered to be least performing. Included in those three were Mr Smith and two other employees. Notes of a management meeting held on 16 May 2016, attended by Mrs Watson, indicate a consideration of the relative performance of each of the three employees. In relation to Mr Smith the notes record the following;

“Kane Smith - Has been given many opportunities over the past 18 months to improve his performance, but has failed to improve. His compliance record of not adhering to legislative requirements will be a legal liability to the company there is a critical and several substantial breaches and many minor breaches. Kane has received written notification of his breaches but has not changed - his breaches continue. His personal situation of living out of a Prime Mover when not working is unacceptable to the company.” 14

[19] The notes recorded in respect of the other two employees are less extensive and indicate appraisals that are somewhat more positive;

“[Employee 2] - Her compliance KPI's are good, her attitude towards fleet allocators needs to be addressed. Her attitude towards the OH&S wheel nuts will not be tolerated by the company, the company has invested in a OH&S change and must be accepted by employees

[Employee 3] - His KPI's on compliance are not very good but are all minors and he gave a commitment to change his attitude during the consultative meeting.” 15

[20] The management meeting also took account of the performance records of each of the candidates, comprising a list of the incidents of concern to the Respondent that had also been considered in forming their opinions.

[21] In his evidence to the Commission, Mr Smith puts forward a defence to the criticisms that are recorded in the foregoing, however the evidence also records that some of the factors indicated above were not directly put to Mr Smith before the company made its decision. The evidence is such that Mr Smith’s specific performance history was not put to him, but rather the more generalised document dated 11 May 2016. Mr Smith objected to the issue of not wearing a uniform, however the Respondent submits that, after further investigation, it was “a factor that was disregarded in our determination of who was to be made redundant”. 16

[22] Don Watson Transport proceeded to make its decision to prefer Mr Smith for selection for redundancy based upon the notes set out above. It relies upon its earlier conversation with Mr Smith on 11 May 2016 as being in satisfaction of the consultation obligations it holds under the Don Watson Long Distance Operations 2013 Agreement. That agreement provides, through an undertaking given to the Commission at the time of approval of the agreement, that the model consultation clause contained in Schedule 2.3 of the Fair Work Regulations will apply instead of the provisions in clause 26 of the enterprise agreement as approved and filed. To the extent that is relevant the model consultation term casts the following obligations on Don Watson Transport for consultation about decisions such as redundancy;

“(1) This term applies if the employer:

(a) has made a definite decision to introduce a major change to production, program, organisation, structure or technology in relation to its enterprise that is likely to have a significant effect on the employees; or

(b) proposes to introduce a change to the regular roster or ordinary hours of work of employees.

Major change

(2) For a major change referred to in paragraph (1)(a):

(a) the employer must notify the relevant employees of the decision to introduce the major change; and

(b) subclauses (3) to (9) apply.

(3) The relevant employees may appoint a representative for the purposes of the procedures in this term.

(4) If:

(a) a relevant employee appoints, or relevant employees appoint, a representative for the purposes of consultation; and

(b) the employee or employees advise the employer of the identity of the representative;

the employer must recognise the representative.

(5) As soon as practicable after making its decision, the employer must:

(a) discuss with the relevant employees:

(i) the introduction of the change; and

(ii) the effect the change is likely to have on the employees;
and

(iii) measures the employer is taking to avert or mitigate the adverse effect of the change on the employees; and

(b) for the purposes of the discussion—provide, in writing, to the relevant employees:

(i) all relevant information about the change including the nature of the change proposed; and

(ii) information about the expected effects of the change on the employees; and

(iii) any other matters likely to affect the employees.

(6) However, the employer is not required to disclose confidential or commercially sensitive information to the relevant employees.

(7) The employer must give prompt and genuine consideration to matters raised about the major change by the relevant employees.” (remainder of term omitted)

[23] The evidence before the Commission is that Don Watson Transport discussed with Mr Smith its proposed decision to make an employee redundant and that it was considering selecting him. Mrs Watson says the following in her evidence about that meeting;

“11. I spoke to each of the three employees who were likely to be impacted by this decision, and I met with each of them separately.

12. I met firstly with the Applicant, on 11 May 2016. This meeting started at just after 1800. Present at this meeting was myself, Mr Smith, Adam Mayhew and Anthony Viggiano. I did most of the speaking on behalf of Don Watson. I had prepared a 'one pager' outlining the issues that we had with Mr Smith's performance and conduct. I provided a copy of that to Mr Smith. A copy of that document has been attached to the application made by Mr Smith.

13. During this meeting I explained that Don Watson needed to make a Bacchus Marsh driver redundant. I raised each issue directly with Mr Smith. I listened to his responses. The area that he disputed was in relation to not wearing a uniform. Mr Smith claimed that he had not received any uniform from us, and that this was the reason that he didn't wear one. I investigated this further after our meeting, and I determined that Mr Smith had not received a new uniform. It is a factor that was disregarded in our determination of who was to be made redundant.

14. I also told him that I was talking to other affected employees, and that he would be advised of our decision by 17 May 2016.

15. After I completed my run through of the notes, I asked Mr Smith if he had anything further to add. He said "I hope the only reason I have been here for the last 12 months wasn't because I have been on WorkCover". I replied "No. Its because of the slow down in Melbourne" .

16. This meeting finished at about 1815. Later that night we received two text messages from Mr Smith. The first asked if he would continue to be paid during the consultative process, which we answered yes to, and the second asked for copies of our notes from the meeting earlier that night. We did not give Mr Smith copies of our notes. ...

17. On Monday 16 May, I met with the other members of the senior management group to decide on our next steps. At this meeting we again briefly considered whether it would be possible to move a driver from Bacchus Marsh to Sydney or Brisbane. I decided that we simply didn't have the spare capacity to make such an offer. …

18. During this meeting we discussed each of the employees, their performance records and their responses. ... We decided to make Mr Smith redundant based on both the length of his service and his work history.” 17

[24] I am satisfied from the evidence before me that the factors for consideration within s.389(1) have been made out by Don Watson Transport. That is, I am satisfied that this is a case in which the company no longer required Mr Smith’s job to be performed by anyone because of changes in its operational requirements and that it has complied with its obligation arising from an enterprise agreement that applied to Mr Smith’s employment to consult about the redundancy.

[25] I am also satisfied that the exclusion from genuine redundancy set out within s.389(2), that it would have been reasonable in all the circumstances for Mr Smith to be redeployed within the employer’s enterprise, is not operative. In relation to this the company further submits, and Mr Smith did not oppose the proposition, that in this case there is no associated entity of the employer of which to take account.

[26] In relation to the prospect of redeployment of Mr Smith elsewhere, he put forward a submission that it would have been reasonable in all the circumstances for Don Watson Transport to consider him for redeployment to a position at the company’s Sydney depot. He argues that not only is he qualified for such position and that he knows the depot well, but that there was a need for additional drivers such as him to work from the Sydney depot.

[27] Mr Smith has also put forward that since his termination there has been advertising on the part of the company for new drivers and that it would have been appropriate for the company to consider him for one of those positions rather than making him redundant. He points to advertising by Don Watson Transport on two websites which support those contentions, one of which was the seek.com.au website and the other of which is a website by the name of driverjobs.com.au.

[28] Mrs Watson’s evidence in relation to this advertising is that the advertisement on the Seek website was initiated at a time when it had a genuine need for drivers and that the arrangement with the website is that the advertisement is placed for display for a period of time, which in this case extended after its need for drivers had reduced. Further, her evidence is that in any event there has not been a driver employed to replace Mr Smith in the Bacchus Marsh depot. She had no direct knowledge of why there might have been an advertisement on the Driverjobs website.

[29] The question of whether it is reasonable in all the circumstances for a person to be redeployed within an employer’s enterprise has been dealt with by the Full Bench in the matter of Ulan Coal Mines Ltd v Howarth 18 with it being held that a decision under s.389(2) about whether “it would have been reasonable in all circumstances” for an employee to have been redeployed will involve various findings of fact regarding the evidence.19 The later Full Bench matter of Ulan Coal Mines Ltd v Honeysett20 (Honeysett) also considered the operation of the provision, which in turn was elaborated upon by the Full Bench in the matter of Technical and Further Education Commission v Pykett,21 in which the following was decided about the operation of s.389(2);

“[33] The Full Bench [in Honeysett] went on to make some obiter remarks about the operation of s.389(2):

“It may be appropriate to make some concluding remarks about the operation of s 389(2). It is an essential part of the concept of redeployment under s 389(2)(a) that a redundant employee be placed in another job in the employer’s enterprise as an alternative to termination of employment. Of course the job must be suitable, in the sense that the employee should have the skills and competence required to perform it to the required standard either immediately or with a reasonable period of retraining. Other considerations may be relevant such as the location of the job and the remuneration attaching to it. Where an employer decides that, rather than fill a vacancy by redeploying an employee into a suitable job in its own enterprise, it will advertise the vacancy and require the employee to compete with other applicants, it might subsequently be found that the resulting dismissal is not a case of genuine redundancy. This is because it would have been reasonable to redeploy the employee into the vacancy. In such a case the exception in s 385(d) would not apply and the dismissed employee would have the opportunity to have their application for a remedy heard. The outcome of that application would depend upon a number of other considerations.

Where an employer is part of a group of associated entities which are all subject to overall managerial control by one member of the group, similar considerations are relevant. This seems to us to be a necessary implication arising from the terms of s 389(2)(b). While each case will depend on what would have been reasonable in the circumstances, subjecting a redundant employee to a competitive process for an advertised vacancy in an associated entity may lead to the conclusion that the employee was not genuinely redundant.”

[34] Honeysett is authority for the proposition that for the purpose of s.389(2)(b) it is sufficient if the Commission identifies a suitable job or position to which the dismissed employee could be redeployed. The Commission must then determine whether such a redeployment was reasonable in all the circumstances. We note that given the factual context the Full Bench in Honeysett did not need to consider whether s.389(2) may be satisfied if the dismissed employee could be redeployed to perform other work within the employer’s enterprise (or that of an associated entity.) Given its particular factual circumstances Honeysett is not authority for the proposition that it is always necessary to identify a particular job or position to which the dismissed employee could have been redeployed.

[35] As we have mentioned, the use of the past tense in the expression ‘would have been reasonable in all the circumstances for the person to be redeployed ...’ in section 389 (2)(a) directs attention to the circumstances which pertained when the person was dismissed. As noted in Honeysett, [T]’he exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances’. The question is whether redeployment within the employer’s enterprise or an associated entity would have been reasonable at the time of dismissal. In answering that question the Full Bench in Honeysett observed that a number of matters are capable of being relevant:

“They include 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 in relation to the employee’s residence and the remuneration which is offered”.

[36] We have earlier set out the submissions of the appellant and the respondent as to the proper construction of s.389(2) (see paragraphs [15] to [18] above). We accept the respondent’s submissions. For the purposes of s.389(2) 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. There must also be an appropriate evidentiary basis for such a finding. Such an interpretation is consistent with the ordinary and natural meaning of the words in the subsection; the Explanatory Memorandum and Full Bench authority. We acknowledge that the facts relevant to such a finding will usually be peculiarly within the knowledge of the employer respondent, not the dismissed employee. If an employer wishes to rely on the ‘genuine redundancy’ exclusion then it would ordinarily be expected to adduce evidence as to the following matters:

(i) that the employer no longer required the dismissed employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;

(ii) whether there was any obligation in an applicable modern award or enterprise agreement to consult about the redundancy and whether the employer complied with that obligation; and

(iii) whether 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 employer.

[37] The evidence in relation to (iii) would usually include canvassing the steps taken by the employer to identify other work which could be performed by the dismissed employee.” 22 (references omitted)

[30] I am satisfied from the totality of the evidence before me, and especially that provided by Mrs Watson, to the effect that there was not a job or a position or other work within her enterprise to which it would have been reasonable in all the circumstances to redeploy Mr Smith. In particular I take account of the consideration given in the management meeting held on 16 May 2016 about whether it would have been possible to move a driver from Bacchus Marsh to Sydney or Brisbane. I take account of the decision made by the company that it did not have the spare capacity to make such an offer. 23

CONCLUSION

[31] For the reasons set out above, I am satisfied that Don Watson Transport’s dismissal of Mr Smith was a genuine redundancy within the meaning of s.389 of the Act. It is therefore unnecessary for me to consider further the merits of Mr Smith’s dismissal.

[32] As a result Mr Smith’s application for unfair dismissal must be dismissed by me and an Order to that effect is issued at the same time as this decision.

COMMISSIONER

Appearances:

Mr K Smith on his own behalf.

Mr D Houlihan of First IR Consultancy for the Respondent.

Hearing details:

2016.

Melbourne:

September 6.

 1   AE407104.

 2   Exhibit R2, Witness Statement of Noelene Watson, [3].

 3 Exhibit A1, Witness Statement of Kane Smith, [5]-[6].

 4 Ibid [15].

 5 Ibid [11].

 6   Ibid [12]-[13].

 7 Ibid [21].

 8   Attachment to Form F2 Unfair Dismissal Application.

 9 Exhibit A1 [22].

 10 Exhibit R2 [15].

 11 Ibid [18].

 12   Ibid Attachment D.

 13   Ibid [4]-[9].

 14   Ibid Attachment B.

 15   Ibid Attachment B.

 16 Ibid [13].

 17   Ibid [11]-[18].

 18   [2010] FWAFB 3488, (2010) 196 IR 32.

 19 Ibid [36].

 20   [2010] FWAFB 7578, (2010) 199 IR 363.

 21   [2014] FWCFB 714.

 22   Ibid [33]-[37].

 23 Exhibit R2 [17].

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