Lois Nichols v Hoad Fabrics Corp Pty Ltd T/A Hoad Fabrics
[2010] FWA 6205
•18 AUGUST 2010
[2010] FWA 6205 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Lois Nichols
v
Hoad Fabrics Corp Pty Ltd T/A Hoad Fabrics
(U2010/7869)
DEPUTY PRESIDENT HAMILTON | MELBOURNE, 18 AUGUST 2010 |
Was there a genuine redundancy? The Act provides compensation for unfair dismissal, and separate compensation for redundancy - link between operational reasons and termination - comparison of old and new jobs - where they the same or sufficiently similar - Applicant compensated for hardship by redundancy pay
[1] On 20 April 2010 Ms.Lois Nicholls lodged an application for an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (‘the Act’). Conciliation was unsuccessful.
[2] The employer, Hoad Fabrics Corp Pty Ltd, submitted that Ms.Nichols was not unfairly dismissed, and that it was a case of genuine redundancy. The applicant denied this.
[3] The matter was listed for a jurisdiction/arbitration hearing before me on 5-6 August 2010. The applicant was represented by Mr McKenna of counsel, and the respondent by Mr.Kirkwood of counsel. Ms.Nichols gave evidence, as did Mr.Papapetrou.
Agreed Facts
[4] An agreed outline of facts was developed by me, and was amended by the parties. Exhibit FWA 1 represents the amended document 1. In summary, it was agreed that:
1. Ms.Nichols worked at the Glen Iris showroom. Her job title was ‘Showroom Manager’. The applicant’s tasks were those set out in the Showroom Manual (LN1) and other duties at a salary of $73,500. She had a sales budget or target. She reported directly to the National Sales Manager.
2. The Glen Iris and Fitzroy Hoad’s Showrooms were closed and a new showroom opened in Hawthorn to replace them.
3. The applicant was offered a position at Hawthorn as ‘Showroom/Reception’ at a salary of $47,500 plus superannuation, and with no sales budget or target to meet. There were changes to duties which included no longer being required to contact customers directly for marketing and public relations purposes, no longer to engage directly in online marketing campaigns with interior decorators and events management companies, no longer being expected to source new avenues for business and clientele, she would support the Creation Baumann manager rather than working autonomously and reporting to the National Sales Manager.
4. She was told that her previous position was redundant and as a result was being offered this new position.
5. A Showroom manager of the Hawthorn showroom was appointed. This manager reported directly to the National Sales Manager and has a sales budget or target to meet, and works autonomously.
Consultation
6. It was agreed that s.389(1)(b) was not brought into operation because no enterprise agreement or award applied to the work.
[5] In this matter the employer submits that the dismissal was a genuine redundancy within ss.385(d), and 389, and for that reason the application should be dismissed. It says that the employer had taken over a business, Creation Baumann. It restructured its operations as a result of this by amalgamating its two showrooms into one at new premises, and made Ms.Nichols redundant.
The Statutory Provisions and Authorities
[6] Section 381 of the Act provides:
381 Object of this Part
(1) The object of this Part is:
(a) to establish a framework for dealing with unfair dismissal that balances:
(i) the needs of business (including small business); and
(ii) the needs of employees; and
(b) to establish procedures for dealing with unfair dismissal that:
(i) are quick, flexible and informal; and
(ii) address the needs of employers and employees; and
(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.
(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned.
Note: The expression “fair go all round” was used by Sheldon J in in re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95.
[7] The unfair dismissal procedures which are intended to accord a ‘fair go all round’ to both the employer and employee concerned include those set out in ss.382-389. Those sections provide that a dismissed person may apply for a remedy on the grounds that he or she has been unfairly dismissed, and also provide that such an application cannot be made in certain cases 2. They accord a ‘fair go all round’ by providing a remedy for unfair dismissals, or recognising that compensation to a redundant employee is provided elsewhere in the Act and that an additional remedy for unfair dismissal should not be provided, or by recognising that the contract of employment is for a limited duration or purpose and that no unfair dismissal remedy should therefore apply to such legitimate contracts (eg. probationary, training, or fixed term or seasonal contracts), or that certain higher income employees should seek a remedy elsewhere.
[8] As I said in Hill v. Adult Multicultural Educational Services 3in relation to an earlier version of the Act:
[72]The intention of providing a ‘fair go all round’ applies to ‘The procedures and remedies referred to in paragraphs (1)(a) and (b), and the manner of deciding on and working out such remedies’(s.653(2)). This is a very broad scope. It refers to all the procedures relating to conciliation and arbitration of termination of employment matters, and this must include the various jurisdictional exemptions, which relate to access to conciliation and arbitration.’
[9] The drafting of every one of the exemptions in the Act has also departed in important respects from earlier versions of the Act. An unusual body of legalism that developed in relation to the earlier provisions is now of only limited relevance. For example, a fair go all round must now be accorded in interpreting and applying the exemptions.
[10] In Byrne v. Australian Airlines Ltd [131 ALR 422 at 461] McHugh and Gummow JJ drew attention to the consequences for the personal and economic situation of a former employee of a dismissal:
“Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided on inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”
[11] It is relevant to note that these adverse personal consequences arise whether or not the dismissal is harsh. They also apply where the employer has valid reason for termination and has afforded procedural fairness. The very fact of adverse personal consequences may on occasion affect the employee’s judgement in deciding to pursue a claim, including claims that have no or very little merit.
[12] Sections 385 and 389 relevantly 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.’
‘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.’
[13] In Ulan Coal Mines Limited v. Henry Jon Howarth 4 a Full Bench considered the new redundancy provisions in the context of a matter in which 38 mineworker positions and others were determined to be surplus to requirements, although non-trades mine work was still done by someone, and there was reallocation of work. The Bench said:
‘[15] These were the circumstances in which it was necessary to consider the meaning and application of the relevant statutory provisions and, in particular, the expression “the person’s employer no longer required the person’s job to be performed by anyone” in s.389(1)(a) of the Act. These words have long been used and applied in industrial tribunals and courts as a practical definition of redundancy (see e.g. R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Cooperative Limited (1977) 16 SASR 6; Termination, Change and Redundancy Cases (1984) 8 IR 34 and (1984) 9 IR 115; Short v F.W. Hercus Pty Limited (1993) 40 FCR 511). They have also been adopted in the National Employment Standards provided under the Act in dealing with entitlements to redundancy payments (see s.119).
[16] The Explanatory Memorandum to the Fair Work Bill 2008 provides examples as to when a dismissal will be a case of genuine redundancy:
“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.”
[17] It is noted that the reference in the statutory expression is to a person’s “job” no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals (1995) 60 IR 304 a job involves “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees’ organisation, to a particular employee” (at p. 308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. In these circumstances, it was said that:
“What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant…” (at p.308)
This does not mean that if any aspect of the employee’s duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation (2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the “job” of that employee no longer exists.
[18] In Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674 Hamberger SDP considered whether a dismissal resulting from the restructure of a supervisory team was a case of genuine redundancy. As a result of the restructure, four supervisory team leader positions were replaced by three team leader positions. The Senior Deputy President said:
“When one looks at the specific duties performed by the applicant prior to her termination they have much in common with those of two of the new positions in the new structure. The test is not however whether the duties survive. Paragraph 1548 of the explanatory memorandum makes clear that it can still be a ‘genuine redundancy’ where the duties of a previous job persist but are redistributed to other positions. The test is whether the job previously performed by the applicant still exists.” (at par [27])
[19] In the present case, the Commissioner appears not to have drawn an appropriate distinction in his reasoning between the “jobs” of the mineworkers who were retrenched and the functions performed by those mineworkers or take proper account of the nature of the restructure at the mine which led to an overall reduction in the size of the non-trades mineworker workforce. The Company restructured its operations in various ways including by outsourcing certain specialised, ancillary and other work and increasing the proportion of trade-qualified mineworkers in underground development and outbye crews. As a result, it was identified that there were 14 non-trades mineworker positions which were surplus to the Company’s requirements. The mineworkers whose employment was to be terminated were determined according to the seniority principle as provided in the Agreement. This did not mean that the functions or duties previously performed by the retrenched mineworkers were no longer required to be performed. It also did not mean that the positions of some of these mineworkers (e.g. in underground crews) did not continue, although those positions might after the restructure be filled by more senior non-trades mineworkers transferred from other parts of the operations or by trade-qualified mineworkers. However fewer non-trades mineworker jobs were required overall at the mine as a result of the operational changes introduced and, for this reason, the jobs of the 14 mineworkers selected for retrenchment could be said to no longer exist.
[20] These circumstances readily fit within the ordinary meaning and customary usage of the expression in s.389(1)(a) of the Act where a job is no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.’
The Evidence and Submissions
[14] In this case the applicant submitted that the old and the new job offered to her were the same or sufficiently similar so that the requirement in s.389(1)(a) that the employer no longer required her ‘job’ to be performed by anyone is not met. However, while there is a clear similarity in duties, there are also differences. The new job description provides 5 that instead of reporting to the National Sales Manager, Sue Stuckey, she would report to the Showroom Manager at the new Showroom. Her title ‘Receptionist/Showroom’, and other descriptions of her duties, suggest that instead of being the ‘Showroom Manager’, as she was, she would be an assistant to the Showroom Manager at the new Showroom. Her duties would be as directed by the new Showroom Manager, and under his supervision, although they would be somewhat similar in nature as they necessarily would have to be6. There are only so many duties that can be performed in a Showroom. Formerly she worked to some form of budget or target. It was only loosely implemented or checked by management, even ‘aspirational’ as counsel for Ms.Nichols said7, but nevertheless it existed and she was reminded of it in sales reports that were sent to her and which included a column headed ‘monthly sales budget’ and the figure ‘350,010’ was included8. This was the figure mentioned by the Chief Executive, Bill Papapetrou in his evidence, which I accept9. In her new proposed job there would be no sales target or budget. There is a sufficient distinction between the old and the new jobs to make the termination a redundancy.
[15] The applicant also submitted that there was no link between the new Showroom commencing and the termination, and the termination could not be attributed to the operational requirements of the employer’s enterprise 10. However, the cause and reason for the termination was the purchase of Creation Baumann by Hoad’s, the consequent process of amalgamation of the two old showrooms, and the commencement of a new merged and amalgamated showroom, and the restructuring of employment that was necessarily consequent on that. It is by no means unusual for there to be delay or uncertainty about the actual new restructured operations taking effect after changes in the operational requirements of a business, for reasons such as the ones that applied in this case11. If I were to find otherwise it would constitute a very narrow application of the genuine redundancy provisions of the Act, and one that is contrary to the ordinary meaning of the language of the provisions. It would also be a change to the longstanding understanding of the nature of a redundancy.
[16] This is a genuine redundancy of the usual kind known for some time in industrial law: R v. Industrial Commission of South Australia (1977) 16 SASR 6; Termination, Change and Redundancy Cases (1984) 8 IR 34 and (1984) 9 IR 115. Such decisions are now reflected in the provisions of s.389(1)(a).
[17] I have had regard to all the evidence and submissions. Consistent with Ulan Coal, I am satisfied that the provisions of s.389(1)(a) are met.
[18] It is agreed that in this matter the provisions of s.389(1)(b) are not brought into operation because there is no obligation in a modern award or enterprise agreement that applied to the employment. Even if there had been a modern award in application I would have been satisfied that the consultation requirements were met.
[19] With respect to s.389(2), the applicant also submitted that it would have been reasonable for Ms.Nichols to have been redeployed within the employer’s enterprise. However, Ms.Nichols refused an offer of redeployment to a lower paying position 12. There was no other position to which she could have been reasonably redeployed. There was public relations work which she offered to perform. However the evidence was that this work was performed by a public relations company. I am satisfied that the provisions of s.389(2) are met.
[20] In conclusion, this is a genuine redundancy, but there has been an adverse effect on Ms.Nichols. That is to be regretted and some sympathy may appropriately be expressed. Because of this hardship Ms.Nichols has received the special form of compensation which Parliament has determined should apply with respect to such hardship. She has received redundancy or severance pay. The purpose of redundancy pay, as developed in successive test cases and now provided for in s.119 of the Act, has been described in various ways. It was for example described in 1984 in the Termination, Change and Redundancy Test Case, the case which first established general award obligations on employers to pay redundancy pay as:
‘the inconvenience or hardship associated with searching for another job and/or the loss of compensation for non-transferable credits that have been built up such as sick leave and long service leave’. 13
[21] The Act distinguishes between cases of redundancy, in which employees are compensated for through redundancy payments (s.119), and cases of unfair dismissal, which are compensated for separately by compensation and reinstatement orders (Part 3-2). The Act provides that this is consistent with according a fair go all round to both Ms.Nichols and Hoads. This is not a new distinction, but is one that has existed since at least 1984.
[22] The requirements of s.389 are complied with. I am required to dismiss the matter pursuant to s.385. An order dismissing the application is contained in PR500523.
DEPUTY PRESIDENT
Appearances:
Mr McKenna of counsel for the applicant.
Mr Kirkwood of counsel for the respondent.
Hearing details:
Melbourne
2010
5 August
1 PN23-120
2 They exempt cases in which there is no dismissal, the application is out of time, the minimum employment period has not been completed, no award or agreement applies and earnings exceed the high income threshold, the dismissal is at the end of a specified period of time, specified task or season, the dismissal is at the end of a training arrangement, a demotion was not significant, or the case is one of a genuine redundancy.
3 (2008) 171 IR 360 at 371-372
4 [2010] FWAB 3488, Boulton SDP, Drake DP, McKenna C, 10 May 2010
5 Exhibit N1, attachment LN2
6 Evidence of Ms.Nichols, PN672
7 PN809
8 Exhibit H4
9 Exhibit H1, witness statement of Bill Papapetrou, paragraph 11
10 PN828-830
11 PN751
12 Evidence of Ms.Nichols, PN674
13 Termination, Change and Redundancy Test Case (1984) 8 IR at 62
Printed by authority of the Commonwealth Government Printer
<Price code C, PR500522>
0
6
0