Kylie Stirk v Guru Productions Pty Ltd

[2015] FWC 7567

[2015] FWC 7567

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Kylie Stirk
v
Guru Productions Pty Ltd
(U2015/6328)

COMMISSIONER ROBERTS SYDNEY, 23 DECEMBER 2015

Section 394 – application for unfair dismissal remedy – jurisdictional objection – small business – redundancy – Small Business Fair Dismissal Code.

[1] This decision concerns an application lodged on 7 July 2015 by Ms Stirk pursuant to s.394 of the Fair Work Act 2009 (the Act) in relation to the alleged unfair termination of her employment by Guru Productions Pty Ltd (Guru or the Company). The Company raised a threshold jurisdictional objection arguing that it was a small business within the meaning of the Act and that it had followed the Small Business Fair Dismissal Code (the Code) in effecting Ms Stirk’s termination and therefore an unfair dismissal had not occurred. Ms Stirk does not dispute that Guru is a small business.

[2] On 27 July 2015, conciliation was conducted by a Fair Work Conciliator but it was not successful. The matter was then set down for hearing before me in Perth on 21 October 2015. Further unsuccessful conciliation was conducted prior to the hearing by Commissioner Riordan. Prior directions were issued for the filing of written submissions, witness statements and any supporting documents.

[3] At the hearing on 21 October 2015, Ms Stirk represented herself. The Company was represented by Mr T Cochrane, a Director of Guru.

Background

[4] Guru is a small television production house. Ms Stirk commenced employment with the Company on or about 27 January 2014. At the time of her dismissal, she was employed as Sales Development Manager on a salary of $70,000 per annum. Guru claims that the dismissal was a genuine redundancy and that, as a small business, no redundancy payment was due. Ms Stirk alleges that the termination of her employment amounted to an unfair dismissal. She claims compensation but does not seek reinstatement.

Legislative Framework

[5] Sections 385 and 389 of the Act provide:

385 What is an unfair dismissal

A person has been unfairly dismissed if FWA 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.

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 Explanatory Memorandum to the Fair Work Bill 2008 (Explanatory Memorandum) defines ‘genuine redundancy’ as follows:

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.

1550. Paragraph 389(1)(b) provides that it will not be a case of genuine redundancy if an employer does not comply with any relevant obligation in a modern award or enterprise agreement to consult about the redundancy. This does not impose an absolute obligation on an employer to consult about the redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.

1551. Subclause 389(2) provides that a dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or within the enterprise of an associated entity of the employer (as defined in clause 12).

1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for red employment or there may be no positions available for which the employee has suitable qualifications or experience.

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.”

The Modern Award

[7] Ms Stirk’s employment was governed by the Commercial Sales Award 2010 (the Modern Award).

[8] Clause 8.1 (Consultation) of the Modern Award provides:

8.1 Consultation regarding major workplace change

(a) Employer to notify

(i) Where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the employees who may be affected by the proposed changes and their representatives, if any.

(ii) Significant effects include termination of employment; major changes in the composition, operation or size of the employer’s workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of employees to other work or locations; and the restructuring of jobs. Provided that where this award makes provision for alteration of any of these matters an alteration is deemed not to have significant effect.

(b) Employer to discuss change

(i) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 8.1(a), the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.

(ii) The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in clause 8.1(a).

(iii) For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that no employer is required to disclose confidential information the disclosure of which would be contrary to the employer’s interests.”

The Code

[9] The Small Business Fair Dismissal Code provides:

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other Dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity. A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

Jurisdictional objection

[10] Given that Guru is a small business, if it is made out that a genuine redundancy was the basis for the termination of Ms Stirk’s employment then it could not be an unfair dismissal nor would redundancy pay be due to Ms Stirk.

[11] Ms Stirk’s evidence and submissions 1 were that she was unaware until she received an email on 5 June 2015 that Mr Cochrane was critical of her performance. The 5 June email was followed by a meeting on 8 June between her and Mr Cochrane “to go through a spreadsheet of sponsorship clients we were then talking to”. At the 8 June meeting Mr Cochrane also alleged that she had ‘bad mouthed’ the business. She had denied this. On 13 June she received a further email from Mr Cochrane which contained the words: “It might be a good time to identify as a finishing point.”

[12] A further email to Ms Stirk was sent on 13 June which stated: “As discussed Kylie talking to people outside of the Company and to clients critically is not acceptable behaviour from someone charged with your responsibility. I am back in the office on Tuesday and clarify the points we discussed last week.”

[13] On 16 June Ms Stirk advised Mr Cochrane by email that she would be on ‘medical leave’ for the period 16 to 19 June. On 18 June Mr Cochrane emailed Ms Stirk in the following terms:

“I have been trying to make phone contact with you since your e-mail mentioning you are off work sick and despite many calls and messages being made I have not had a returned call, if you could get the Doctors certificate through as offered it would be good. I hope you are feeling better soon.

Kylie, following our discussions after our last sales meeting with Roger and after further consideration of the situation I have decided it is best for both parties for the role you have worked in to be made redundant. As discussed the results from the role have been below expectations and sales budgets and continuing the role is not possible. The redundancy is immediate and we offer two weeks' notice meaning the position will officially finish on the 2^nd of July 2015. Considering the confidential nature of the company information you are exposed to you will not be expected to return to work and I ask you return the security pass, your office equipment including all data gathered in your role including clients contact details and mobile phone contact data to Channel 9 security this coming Monday. If you are not in a position to return the security passes and equipment we can arrange for this to be picked up.

[14] As recently discussed we have received feedback from clients and industry that you have presented the company in a less than positive light which is a clear breach of trust. You expressed disappointment that this had gotten out into the market and regret that this has damaged our relationship. I hope that this will cease now and we wish you well with your future career endeavours.”

[15] On 18 June 2015, Mr Cochrane also emailed other staff advising them of the end of Ms Stirk’s employment. 2

[16] On 22 June Ms Stirk wrote to Mr Cochrane disputing the termination of her employment and accusing him of failing to follow correct procedure and not consulting with her regarding redundancy and/or redeployment within Guru’s business. She later filed her application for relief in this Commission.

[17] In essence, Ms Stirk alleges that the termination of her employment was falsely characterised as a genuine redundancy when in reality Guru was attempting to avoid making bonus payments to her and also believed that she had been disloyal to the Company.

[18] Mr Cochrane’s evidence and submissions 3 were that Ms Stirk was employed as a sales person, “responsible for attracting the revenue for productions to be produced and employment to be possible”. Her role ceased to be viable due to the level of sales achieved. Her role then became redundant and she has not been replaced by any other person. In fact, other employees have also been made redundant.

[19] “The claimant’s role within the organisation was responsible for raising the funding for TV productions and our budget was $2.93M in the 2014/15 financial year. In this period her endeavours in the role attracted revenue of $274,000. As part of standard management practises, management made a review of the revenue stream and a decision was made that the company’s sustainability would be in danger without a careful restructuring of the company making several roles redundant. The claimant was counselled verbally on several occasions as to other options and her roles performance, and other employment options were discussed.”

[20] Mr Cochrane went on to say that the Applicant was working in another job during the time she worked for Guru and this “often impacted her availability for work outside of the most basic office hours.” The Applicant had contacted clients of Guru and made derogatory claims against the company. Guru has never before faced an unfair dismissal claim.

[21] In addition to his witness statement evidence, Mr Cochrane entered into evidence a number of documents relating to payments made to Ms Stirk and I have paid regard to that material.

[22] I have also paid regard to the cross-examination of both witnesses.

Conclusions and findings

[23] It is clear from the provisions of s.389 of the Act that a genuine redundancy would only have occurred if Guru had complied with the consultation obligations contained in clause 8.1 of the Modern Award. Section 1550 of the Explanatory Memorandum emphasises this point and expands upon it.

[24] In UES (Int'l) Pty Ltd v Harvey 4 (Harvey), the majority of the Full Bench found that a dismissal was not a case of genuine redundancy within the meaning of s.389 because the company had not consulted about the redundancy in accordance with its obligation in the applicable Modern Award5.

[25] In Maswan v Escada Textilvertrieb T/A ESCADA 6 (Escada), Vice President Watson said: "The failure to notify and consult with Mr Maswan in accordance with the award is a serious defect in the procedure."7 His Honour went on to say: "The failure to consult is not a trivial matter."8 Subsequent case law has been consistent with Harvey and Escada.

[26] On the totality of the evidence and materials available to me, I have concluded that the provisions in clause 8.1 of the Modern Award were not followed and that therefore there was no genuine redundancy and I so find. Accordingly, I must dismiss Guru’s jurisdictional objection. This does not automatically mean that there was no valid reason for the termination of Ms Stirk’s employment.

[27] Correspondence and meetings between Mr Cochrane and Ms Stirk clearly show that there was a deteriorating relationship between the two of them, based on alleged performance issues and Mr Cochrane’s belief that Ms Stirk was behaving disloyally towards the company. Underlying those factors were the Company’s financial problems and its consequent need to reduce staff numbers. In that regard, I accept Mr Cochrane’s evidence and submissions concerning the company’s financial position and the departure of other staff for financial and operational reasons. I note also that Ms Stirk was paid two weeks’ wages on termination.

[28] On balance, I find that there was a valid reason for the termination of employment based on the operational needs of Guru.

[29] I now move to determine the questions of harsh, unjust and unreasonable and any resulting award of compensation. In this regard, I do not intend to again traverse the evidence and submissions of the parties but I have paid regard to all the relevant material in making my determination.

[30] Section 387 of the Act provides:

Criteria for considering harshness etc

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person's capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person--whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

[31] The question of valid reason is dealt with above. In that regard, I emphasise that my finding only relates to the financial and organisational reasons behind the termination of Ms Stirk’s employment. There was nothing before me to adequately support any allegation against her performance or behaviour. In relation to the remaining criteria set out in s.387 of the Act, I find that Ms Stirk did not have an adequate opportunity to respond to the reasons given by Mr Cochrane for her dismissal and that there were no adequate discussions relating to the dismissal. The lack of any real discussions concerning termination of employment, for whatever reason, meant that Ms Stirk was not able to avail herself of the help of a support person. The size of Guru’s enterprise would have impacted to a significant degree upon the procedure followed by Mr Cochrane in effecting the dismissal. It is clear that Guru does not have access to dedicated human resource management specialists or expertise. However, this does not excuse Guru from its obligation to follow basic procedural fairness. In that regard, Mr Cochrane and the company failed.

[32] I have also taken into account other factors. These include Ms Stirk’s length of employment with the company, the vague nature of the allegations against her relating to performance or behaviour issues, her age and future employment prospects, together with the personal effects of the termination of employment on her. I have given significant weight to the financial situation of Guru and in this regard I am satisfied that the evidence of Mr Cochrane was truthful. Guru had reasonable operational reasons to end its employment relationship with Ms Stirk. If it had complied with its obligations in that regard, it would probably not find itself in the position it is now in. I find that the termination of Ms Stirk’s employment was harsh as to the manner in which it was carried out.

[33] Section 390 of the Act sets out the criteria concerning the ordering of remedy for unfair dismissal and I have paid regard to each of those criteria.

[34] It is not controversial that the first remedy to be considered by the Commission after making a finding that a dismissal is unfair is the possibility of reinstatement. Ms Stirk does not seek reinstatement. In all of the circumstances of this case, reinstatement will be both impracticable and undesirable. The employment relationship between Ms Stirk and Mr Cochrane could never be restored. In addition the financial situation of the company would most likely make reinstatement impossible in any event.

[35] Where reinstatement is not ordered, the Commission may order the payment of monetary compensation. Section 392(2) of the Act sets out the criteria for deciding the suitable level of compensation, and I have paid regard to each of those criteria.

[36] I have considered the possible effect of any order I may make on the viability of Guru, and I have also taken into account the length of Ms Stirk’s service and remuneration she would have been likely to receive if she had not been dismissed. It is clear to me that the employment relationship between Ms Stirk and Guru would have ended about the same time anyway due to the company’s financial situation and operational requirements.

[37] All in all, I find that the termination of Ms Stirk’s employment lacked a valid reason and was harsh in the manner in which it was carried out.

[38] An order will be issued that Guru pay her a total of one week’s wages (less tax according to the law) within 14 days of the date of this decision.

[39] In accordance with s.381(2) of the Act, I am further satisfied that each party has been accorded a ‘fair go all round’.

[40] An order reflecting this decision is in PR574479.

COMMISSIONER

Appearances:

K Stirk, the Applicant

T Cochrane, for Guru Productions Pty Ltd

Hearing details:

2015

Perth

October 21

 1   Exhibit A1 and A2 respectively.

 2   Exhibit R3

 3   Exhibit R5

 4   [2012] FWAFB 5241 per Senior Deputy President Acton, Senior Deputy President Kaufman and Commissioner Bissett

 5   Ibid at para 40

 6   [2011] FWA 4239

 7   Ibid at para [37]

 8   Ibid at para [39]

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