Leo Raffoul and Health Services Union of Australia v Blood Transfusion Service of the Australian Red Cross Society

[1995] IRCA 669

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 4347 of 1995

B E T W E E N :

LEO RAFFOUL &
HEALTH SERVICES UNION OF AUSTRALIA
Applicants

AND

BLOOD TRANSFUSION SERVICE OF
THE AUSTRALIAN RED CROSS SOCIETY
Respondent

Before:          Judicial Registrar Millane
Place:            Melbourne
Date:              20 December 1995

REASONS FOR DECISION

The first applicant seeks reinstatement to his former employment with the respondent alleging contravention of Division 3 Part VIA of the Industrial Relations Act 1988 (the Act).

The claim is contested by the respondent alleging that the first applicant was the subject of a genuine redundancy which, in all the circumstances, was not harsh, unjust or unreasonable. 

THE BACKGROUND TO THE CLAIM

The first applicant is a qualified medical scientist (Grade 1) who was employed by the Red Cross Blood Bank (the Blood Bank) between 6 October 1986 and 1 September 1995.
It appears from the latter part of 1992 the Blood Bank was engaged in reorganising its haematology unit with the introduction of a quality assurance function.  This development was essentially a response to requirements placed on it to become a licensed manufacturer of therapeutic goods and the need to meet certain codes of manufacture and Australian standards.

The haematology unit was made up of four sections which in 1993 included the Quality Control Laboratory and the Haematology Laboratory.  The lastmentioned sections consisted of 14 employees, 7 of whom were medical scientists including the first applicant.  The remaining 7 were medical technicians.

The reorganisation of the unit contemplated in 1993 that only 11 of the 14 staff would be required to perform the tasks of the new Quality Assurance Unit.  These 11 were to be contained in three groups.  The first group was identified as Group A, the Quality Systems Team.  This latter group’s duties were to involve a significant change from those currently performed.  The first applicant was not at any stage identified as being part of Group A. 

Group B consisted of the Quality Assurance Technical Support Team, the members of which would continue to perform mainly their previous technical duties with some minor changes to their job description.  The personnel affected by the change for this group were 5 medical technicians and 4 medical scientists, one of whom was the first applicant. 

Group C consisted of the 3 employees who missed out on selection for Group B and, following the selection process in early 1993, the first applicant found himself in this group along with 2 medical technicians. 

It is important to bear in mind that throughout the process of reorganisation through to the date of the alleged redundancy there was no allegation that there had been a failure to consult regarding any of the structural changes occurring within the Blood Bank. 

The formal notification of the changes and how the changes would be effected was contained in a document published to the staff and dated 25 March 1993.

Part of the reorganisation was the transfer of finger pricking tests from the haematology department to the donor services unit by 1 December 1993.  Insofar as the Group C employees were concerned they were to be given the opportunity to transfer to another unit where positions were available and where they were able to meet the position criteria.

Following the reorganisation of the unit the first applicant took 17 weeks leave between May and September 1993 and, on his return worked with the haematology laboratory before being redeployed in December 1993 to the donor services unit in accordance with the planned restructure (see Exhibit A7).  This redeployment left him without laboratory duties as he was principally engaged in finger pricking testing.

It is clear from the documentation that as at March 1993 the individuals affected by the reorganisation were to be given the opportunity to transfer to another unit if they were able to fulfil the job criteria for that alternate unit and unit managers were on notice that the redeployed employees were to be given the opportunity to apply for any vacancies “in the near future” before external advertisements occurred (see Exhibit A1).

The first applicant alleges that the process whereby he was originally selected for transfer was flawed and unfair inasmuch as the Blood Bank failed to interview another affected medical scientist to determine whether or not she would be placed in Group B or C.  This was contrary to the understanding that all affected employees would be interviewed and compete for selection to Group B.  The Blood Bank concedes that one medical scientist was overseas on 12 months leave from November 1992 with a guarantee of her position on her return in late 1993.  She was not interviewed and did return to the Blood Bank remaining there as a medical scientist and as part of the Quality Assurance Team.

The first applicant remained in donor services until at his request and, in order to build on and maintain his laboratory skills, the Blood Bank transferred the first applicant to the red cell serology laboratory for a temporary training position of six months’ duration commencing on 1 March 1994.  This transfer was made on the basis that the Blood Bank was following its policy of preferring redeployees for suitable positions.  The grade 1 scientist who normally filled this position was on parental leave and the temporary position was given to the first applicant (see Exhibit A3).  The position did not last more than six months and, although the first applicant’s Counsel, Mr Fehring, opened the first applicant’s case with reference to matters allegedly resulting in the early termination of the training position, no evidence was called from the first applicant on this matter.

When the first applicant left the training position he eventually resumed work in donor services until his employment was terminated.  However, in the period between October 1994 and August 1995 just prior to the date of his termination the first applicant applied for six positions within the Blood Bank, all of which applications were unsuccessful.  The first two applications were made in late 1994 after the first applicant had notice of the restructuring of the donor services unit.  The first applicant gave no evidence as to why he did not seek redeployment to another unit until October 1994; that is to say redeployment to any vacancies “in the near future” other than the temporary position in early 1994.  Neither did the first applicant cross-examine the Blood Bank’s witnesses on whether any suitable vacancies occurred in the period between being notified of his redeployment in or about May 1993 and his first application in October 1994.
The reason for the first applicant applying for permanent positions from October 1994 may best be explained by the organisational changes which commenced within the donor services unit from at least September 1994.  The changes contemplated and eventually implemented led to what was referred to as “a one-stop-shop” approach to the interviewing and haemoglobin testing of donors.  Prior to this new concept of service and efficiency emerging in the area of haemoglobin testing (otherwise referred to as finger pricking), the testing could be carried out by the first applicant and medical technicians.  By restructuring the process a single function was allocated to registered nurses because they have, amongst other things, the appropriate training in physiology and pharmaceuticals to carry out the required donor interviews.  The idea behind the restructure was for the registered nurse to both interview and conduct the test as one service.

The implementation of the abovementioned changes meant that the first applicant was not appropriately qualified to perform the “one-stop-shop” function.  It was never suggested that the first applicant was not fully aware of the change taking place in this unit.  Indeed, the documents tendered in evidence indicate that he attended and participated in numerous meetings between late 1994 and 1995 concerning the change to donor services.

In his opening Mr Fehring told the Court that until written notification of redundancy was received in May 1995, the first applicant had felt secure in his employment and in his belief that he would be suitably redeployed.  The first applicant contradicted this in his evidence by telling the Court that in March 1995 he was informed by the Blood Bank’s acting director that his position in donor services was redundant, however, he would be redeployed to another area.  This allegation was not put to any of the Blood Bank’s five witnesses. 

It was agreed that the first written notice to the first applicant of a possible redundancy came by letter dated 10 May 1995 (see Exhibit R8) stating:

“Arising from the proposed transfer of haemoglobin testing into Assessing, your current position is no longer required to be performed by anyone.  We seek immediate discussions with you or your representatives on the questions of redeployment options and/or redundancy. 

The date of effect of the change is 1 July 1995.  If you have any queries in relation to this matter, please do not hesitate to contact either myself or Joe Goddard, Human Resources Manager.”

Discussions between the Blood Bank and the first applicant’s representatives relating to the first applicant’s position followed the abovementioned letter.  Judging from the correspondence these discussions were not amicable ones.  One of the critical areas of dispute was that surrounding the interpretation of the representations made by the Blood Bank in 1993 regarding the opportunity to be afforded to Group C employees who sought transfer to other Blood Bank positions.  It was alleged, and this allegation was maintained at hearing, that the Blood Bank had agreed to give these employees preference for positions available at the Blood Bank from time to time.  The Blood Bank’s contention is that any preference given was to be subject to the redeployed employee meeting the relevant job criteria for the position offered.  It is evident from the Blood Bank’s actions in allowing the first applicant to join the red cell serology laboratory for training in a temporary position that the Blood Bank had been mindful of the need to give the first applicant some preference.  Nevertheless any sensible interpretation of the original arrangement suggests that selection to alternate positions did in 1993 and still does depend on the candidate meeting the job criteria relevant to the position.

No evidence was called in any way suggesting that when the first applicant was interviewed for the four positions applied for following notification of his impending redundancy from donor services on 3 July 1995, he was denied the opportunity to compete fairly with other candidates.  At its highest the first applicant’s case amounts to an allegation that no preference was given to him, without indicating what preference could be given other than the opportunity to be amongst the group of interviewees and possibly to have his application as an internal candidate considered ahead of any external candidate.

The first applicant did not call evidence to show that the unit managers and panels conducting the interviews had failed to prefer him in the sense that they had not borne in mind the need to grant him an interview as an internal candidate.  Notwithstanding the opportunities given they found he did not meet the job criteria identified as significant to the filling of the positions offered.  For example, Gabrielle Anne Hewitson (Hewitson), a medical scientist and deputy manager of the distribution section of the Blood Bank, explained to the Court the detailed process followed and the criteria applied in considering the first applicant’s August 1995 interview for the position of medical technician grade 1.  This was not a position necessarily requiring a medical scientist’s qualifications and, if anything, the first applicant’s qualifications and classification made him more highly qualified on paper than any medical technician applying for the job.  Hewitson was not cross-examined as to whether the first applicant was interviewed first for this position; that is to say ahead of the other six external candidates, one of whom was eventually offered the position.  On her evidence, the first applicant did not score well in a number of areas of significant criteria (see Exhibit R6).  The decision to reject the first applicant’s application was only made after consultation with both named referees who on the evidence did not provide what might be called “glowing references”. 

Apart from notifying the first applicant of the opportunity to apply for the existing alternate positions, the Blood Bank also provided an eight week out placement service from 3 July 1995 to the date of termination, the function of which was to assist the first applicant in finding alternate employment either within or outside the Blood Bank.  During the period of out placement the first applicant was paid his full salary.  In addition to this, at termination he was paid a redundancy package of $23,300.00 together with accrued entitlements and outstanding wages of $12,775.67.  The redundancy payment, aside from the Award amounts, included $10,000.00 for compensation.

FINDINGS

In 1993 when the first applicant was redeployed to donor services there was a fundamental variation of his contract of employment leaving him with the option of treating the change as a termination of his existing contract of employment (see Quinn v Jack Chia (Aust) Ltd [1992] 1 V.R. 567). What he did however was to accept redeployment to donor services presumably to avail himself of the opportunity to transfer to a position in the Blood Bank if one arose, more suited to the use and development of his medical scientist skills.

Whilst the circumstances surrounding the restructuring process in 1993 help explain the first applicant’s predicament and his belief that he should be a preferred candidate for any internal position in the future, those circumstances are not directly relevant to the determination of the question of whether the redundancy, which occurred in the donor services section from 3 July 1995 was a genuine redundancy.

The evidence supports a finding that the first applicant accepted redeployment in 1993 to the donor services unit; albeit with the hope of availing himself of any opportunity to transfer to another position.  His first application for another permanent position was not made until after the reorganisation of the donor services unit was mooted in late 1994.  I infer from this that he then understood his position in donor services was under threat with the transfer of his function to registered nurses who perform dual functions.  Therefore, he then understood he should take steps to find an alternative position and he set about doing this in response to the changes in donor services.

The evidence establishes to my satisfaction that the reorganisation of the donor services unit and the loss of the first applicant’s function in finger pricking was the result of a bona fide redundancy brought about by the Blood Bank’s operational requirements.  Accordingly, I find that the Blood Bank has proved on the balance of probabilities that there was a sound, defensible or well founded reason for termination (see Selvachandran v Peteron Plastics Pty Ltd (unreported), Northrop J., No. VI 1322R of 1994, 7 July 1995).

HARSH, UNJUST OR UNREASONABLE - SECTION 170DE(2)

The evidence of the matters occurring in 1993 and the circumstances surrounding the first applicant’s redeployment has some peripheral relevance to the determination of whether the redundancy from the donor services unit in 1995 did, objectively speaking, produce a harsh or unjust result.  In its 1995 correspondence the Blood Bank acknowledged the need to look after the first applicant’s interests given the transfer that took place in 1993.

No evidence was called by the first applicant, nor were the Blood Bank’s witnesses cross-examined in such a way as to seriously challenge the consultation process or any selection criteria applied for the redundancy which occurred in the donor services unit.

What the first applicant sought to challenge was the matters relating to the avoidance or mitigation of the effects of the proposed redundancy on the first applicant, particularly through the selection process for alternate positions within the organisation. 

I do not accept as being accurate Mr Fehring’s submission that this Court should scrutinise the selection criteria applied to other jobs offered by the Blood Bank in the same way as the Court looks at the formation and application of selection criteria used by an employer to select an employee for redundancy.  The latter process is clearly sign posted as an appropriate guideline by paragraph 23 of Recommendation No.166 (see Schedule 11 to the Act). 

I was referred to a number of decisions by this Court by Mr Fehring and, in particular, to the decision of Parkinson JR in Fenton v Casey College of TAFE (unreported), No. VI 1107 of 1994 and the more recent decision of Wilcox CJ in Kenefick & Ors v Australian Submarine Corporation Pty Ltd 131 ALR 197.

Both the abovementioned cases involved large scale redundancies and particular attention was given by the Court in each case to the formation and application of selection criteria for the purpose of identifying employees for redundancy.  In other words, the concern of the Court was directed at the fairness of the selection process for redundancy not the fairness of any selection criteria established to select candidates for alternative employment offered both to internal and external applicants.  Indeed, in Fenton’s case the Court was critical of the respondent for not making any attempt to look for alternative positions to offer the employees made redundant.

When discussing the interpretation of s.170DE(1) of the Act in the Australian Submarine Corporation case, Wilcox CJ observed at page 208 of that decision

“... While this sub-section requires the employer to establish that the termination was a logical way of dealing with the problem of employee capacity or conduct, or operational requirements, that gave rise to it, it does not require proof that this was the only logical course.  The sub-section was designed to inhibit capricious terminations, not to put the Court in the employer’s managerial chair.”

The abovementioned observation is apposite to the present discussion.  It identifies the very real limitations on the Court to avoid the temptation to overreach its role by placing itself in a position where it decides; for instance, whether an incumbent employee is a more suitable candidate for employment in an alternative position than an external candidate.
Paragraphs 21 and 24 of Recommendation No. 166 referred to above, suggest that an employer should take steps to avert or minimise the effect of any termination and give some priority in rehiring.  However, these guidelines cannot be interpreted as requiring an employer to employ a redundant employee in an alternate position or to offer an alternate position to a redundant employee ahead of better external candidates, particularly where the redundant employee fails to satisfy significant job selection criteria regarded as appropriate to the alternate position.

The first applicant also relied on my decision in Curtis v Central Bayside Community Health Centre and Younie v Central Bayside Community Health Centre, No. VI 1815 and 1878 of 1994, (unreported).  In that case the positions of three employees were made redundant and their functions absorbed into a new position to be offered first to the internal candidates and, if that group was unsuccessful, the employer was then to advertise externally.

The employer in Curtis and Younie’s case increased the qualification threshold for the new position and proceeded to advertise it externally before interviewing any of the internal candidates.  The independent members of the interview panel were never made aware that any priority in rehiring the redundant employees was desirable; nor were they cognisant of the representation made that internal candidates were to be interviewed first.  This led to the panel not interviewing one of the redundant employees and not making any enquiries as to the performance of another of the redundant employees who had, until the spill of positions, held the most senior position of those made redundant.  Moreover, the two female employees prior to the redundancy had been engaged in some dispute with the employer about its implementation of proper practices in advertising and selecting employees for vacant positions.  For reasons best known to the employer there was a failure to offer the two female employees the opportunity to compete internally for a 3 month locum position in the interval between the date of the redundancies and the new appointment.  This position was given directly to the employee who was eventually successful in obtaining the new position.  Further, the employer failed to offer the two female employees the opportunity to be interviewed for two positions which became vacant on the date they were made redundant.  One of these positions was taken by a part time employee and the other went to an external candidate.

The facts of the abovementioned case clearly distinguish it from the present case.  Whilst it is reasonable to expect an employer to at least give the opportunity to be redeployed if the employee meets the job specifications and, further, reasonable to expect an employer who is acting fairly to give priority to the effected employee where there is little or no difference in the qualities of the employee and any external candidate, it would be unrealistic to expect employers not to seek the best and most suitable candidate for a vacant position in order to maximise its business operation.

In the Curtis and Younie case there was evidence of steps taken by the employer which prejudiced the chances of two of the three redundant employees to compete successfully for the new position and to apply for other positions which they were notionally qualified to fill.

On the evidence in this case I am not satisfied that the first applicant has discharged the onus of proof he carries of showing that the redundancy was harsh, unjust or unreasonable pursuant to s.170DE(2). There was simply no relevant evidence called which established on the balance of probabilities that the first applicant was not given a fair opportunity to compete for the alternate positions in circumstances where the unit managers were aware of his “special” position as a candidate.

Accordingly, the application is dismissed.

MINUTES OF ORDERS

THE COURT ORDERS THAT:

1. The application is dismissed.

NOTE:     Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.

I certify that this and the preceding twelve (12) pages are a true copy of the reasons for judgment of Judicial Registrar Millane.

Associate:                 
Dated:  20 December 1995

Solicitors for the applicants:  Wilson Potter Nicholson
Counsel for the applicants:  Mr I. Fehring

Representatives for the Respondent:     Victorian Employers’ Chamber of
  Commerce and Industry
Counsel for the Respondent:                   Mr Alister McNab

Date of hearing:  14 & 15 December 1995
Date of judgment:  20 December 1995

C A T C H W O R D S

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - REDUNDANCY - whether VALID REASON for termination arising out of the respondent’s OPERATIONAL REQUIREMENTS - whether termination HARSH, UNJUST OR UNREASONABLE - whether there was a failure to give the employee priority in rehiring

Industrial Relations Act 1988 ss.170DE(1), 170DE(2)

CASES:Quinn v Jack Chia (Aust) Ltd [1992] 1 V.R. 567

Selvachandran v Peteron Plastics Pty Ltd (unreported), Northrop J., No. VI 1322R of 1994, 7 July 1995

Fenton v Casey College of TAFE (unreported), Parkinson JR, No. VI 1107 of 1994

Kenefick & Ors v Australian Submarine Corporation Pty Ltd

131 ALR 197

Curtis v Central Bayside Community Health Centre and Younie v Central Bayside Community Health Centre, (unreported), Millane JR, No. VI 1815 and 1878 of 1994

LEO RAFFOUL & HEALTH SERVICES UNION OF AUSTRALIA  - v -  BLOOD TRANSFUSION SERVICE OF THE AUSTRALIAN RED CROSS SOCIETY

No. VI 4347 of 1995

Before:          Judicial Registrar Millane
Place:            Melbourne

Date:              20 December 1995

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 4347 of 1995

B E T W E E N :

LEO RAFFOUL &
HEALTH SERVICES UNION OF AUSTRALIA
Applicants

AND

BLOOD TRANSFUSION SERVICE OF
THE AUSTRALIAN RED CROSS SOCIETY
Respondent

MINUTES OF ORDERS

Judicial Registrar Millane  20 December 1995

THE COURT ORDERS THAT:

1. The application is dismissed.

NOTE:     Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.