McAlister v Bradken Limited

[2010] FWA 203

[2010] FWA 203

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Bruce McAlister
v
Bradken Limited
(U2009/10931)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 22 JANUARY 2010

Summary: whether genuine redundancy – redeployment – nexus between economic circumstances and redundancy decision.

[1] This matter concerns an application under s.394 of the Fair Work Act 2009 (“the FW Act”) by Mr Bruce McAlister (“the Applicant”), who alleged that the termination of his employment with Bradken Limited (“the Respondent”) was harsh, unjust or unfair.

[2] The application was the subject of a conciliation conference, which was not successful in resolving the matter. The Respondent subsequently objected to Fair Work Australia (“FWA”) further dealing with the application until a jurisdictional issue was determined. That issue concerned whether the Applicant’s employment had been terminated for reason of genuine redundancy. A hearing in this regard was conducted on 14 January 2010.

BACKGROUND

The Applicant was employed as an Occupational Health and Safety Coordinator (“OHSC”) on 2 October 2006 at the Respondent’s Karrabin site, and his employment was terminated on 22 July 2009. 1

[3] For reasons that will become important later, it is worth noting that it appears that the Respondent employed a number of OHSCs; one each in its Rail, Foundry and Engineered Products divisions at its Karrabin site. 2 The Respondent decided to rationalise two of these OHSC positions and create a single position in a consolidated Industrial Division, which was to comprise both the Foundry and Engineered Products Divisions.

[4] The Applicant was the OHSC for the Engineered Products division. The two other OHSCs (for the Rail and Foundry divisions) were not made redundant.

[5] Apart from these three OHSCs, the Respondent also employed an OHSC Administrative Assistant, who was required to fulfil the role of the Workplace Health and Safety Officer (“WHSO”) under s.93 and Schedule 3 of the Workplace Health and Safety Act 1995 (Queensland) (“the WHS Act”). That person was Ms Linda Hislop. 3 The Respondent contends that at all times Ms Hislop has remained the duly appointed WHSO, though the Applicant contested whether there had been a formal appointment.4

[6] It also appears that Ms Hislop was also assigned as a supplementary OHS resource to the Rail division. 5

REDUCTION OF STAFF

[7] Owing to the Global Financial Crisis (“GFC”), the Respondent claims that it suffered a downturn in demand and production across its business, Australia-wide, which had impacted also on its order book at Karrbin. 6

[8] Mr Matthew Criss, the General Manger - Industrial, gave evidence that went unchallenged that in the relevant period the business suffered a 40% reduction in orders, and that most capital projects were deferred. 7

[9] In response to these circumstances, the Respondent decreased the size of its labour force.

[10] In this regard, Mr Garry Frost, the Manufacturing Manager for Engineered Products for the Respondent, Mr Morton, the Human Resources Coordinator for the Respondent and Mr Criss gave evidence that:

• The Respondent reduced staffing levels at Karrabin from late 2008, initially by reducing the number of casuals, contractors and labour hire employees. 8



• Towards the end of 2008 some 5 employees were let go, with 20 contractors released by May 2009. 9



• Between February 2009 and July 2009, a further 40 positions were made redundant. 10



• 33 of these employees were factory floor employees and 7 were administrative staff. 11



• A “general management review” determined that the OHS-related positions be reduced by one to two positions, and that this would be given effect by retaining the position in the Rail division but creating one OHSC position across both the Engineered Products and Foundry divisions (that is, within the consolidated Industrial Division). 12



• This proposal emerged from benchmarkings comparisons with interstate divisions. 13



• The Applicant had initially been an OHSC in the Foundry, but was moved into the Engineered Products Division in early 2008, following some tensions in the working relationship between the Foundry Manager and the Applicant over the course of 2007. 14



• The Applicant was supported by Mr Frost in the selection process but, because of the similarity in the skills profiles, Mr Matthew Criss, the new General Manager took on the decision to select the OHSC to be retained himself. 15 Following consultation the National Safety Manager, a review of a skills matrix16, and interviewing the potentially affected OHSCs, Mr Criss selected the Applicant for redundancy.17



• Mr Criss’ evidence was that he selected the Applicant for redundancy principally after considering the depth of strategic perspective on the part of each employee in relation to their job role in the business (presumably with all other matters being largely equal, it appears). 18



• There was discussion with the Applicant with Mr Frost about the prospective redundancies. 19



• Given “the general downturn suffered across the Respondent’s business and the specialised nature of his role, it was not possible to redeploy [the Applicant] elsewhere on site or within the business.” 20 This was because “[a]ll positions relating to OH&S were filled and in the circumstances it was not practical or possible to look at increasing the OH&S complement elsewhere in the business”.21



• Mr Morton gave evidence that before actuating the Applicant’s redundancy he checked an on-line notice-board to ensure that there were no other OHSC positions or similar positions to be found amongst any of the Bradken businesses across Australia. Mr Morton’s research indicated that in one Bradken Limited business in Western Australia at that time two HR and OHSC positions had been amalgamated into a single position. 22



• The Industrial Division has not advertised for any Project Coordinator\Engineering positions as the Applicant claimed (see below) and that such advertisements were related to a requirement in the separate Rail Division 23.

[11] It does not appear, for purposes of s.389(1)(b) of the FW Act that there is any applicable workplace agreement in force at the time that obligated the Respondent to consult with the Applicant over the circumstances redundancy. The Applicant did not demur from the Respondent’s position in this respect.

[12] The Applicant contended by submission in response that:

• The redundancy was based on a sham restructure motivated by various incidents over some 2 years in which the Applicant claimed management had taken an adverse view of his reporting of a number of safety matters. 24



• The Respondent advertised for a Project Coordinator / Engineer only 6-8 weeks after the Applicant’s position was made redundant for reason of the financial climate in the express context of supporting the “Company’s considerable growth”. 25



• Mr Criss did not consult with him about any redundancy. 26



• The OHSC retained, by virtue of the selection process, was less well qualified and less experienced than himself and there was no skills matrix developed 27, in which Mr Morton gave evidence of Mr Waddell’s practical and academic achievements.



• The OHSC retained did not posses a qualification that permitted him to perform the role of a WHSO or a Fire Safety Officer and in the regulatory environment it was not open to the Respondent to select the less well qualified OHSC for redundancy.



• The Applicant’s OHSC position still exists and is required to be done by another employee and that therefore there was no redundancy.



• The Respondent had only presented a generalised operational need for the reduction in employee numbers, and did not establish the reasons why the number of OHSC positions needed to be reduced as such.



• There is no evidence to satisfy the obligation that falls on an employer under s. 389(2)(a) or 389(2)(b) of the FW Act to “employment options elsewhere” including displacing any casual employees in any part of the enterprise or its associated entities.

STATUTORY CONTEXT

[13] Section 385 of the FW Act makes it clear (albeit in the converse) that a person will not be “unfairly dismissed” if the dismissal was the result of a “genuine redundancy”. Section 385 of the FW Act reads as follows:

“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.” [my emphasis]

[14] Section 389 of the FW Act provides the meaning of a genuine redundancy, and reads as follows:

“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.”

[15] The Explanatory Memorandum was referred to at the hearing and there appears to have been some uncertainty as to its content and importance for this application. For the benefit of the Applicant I will replicate relevantly the Explanatory Memorandum to the FW Act:

“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 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 redeployment 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.”

[16] The Explanatory Memorandum also provides an illustrative example of a genuine redundancy, which I have not here replicated.

CONSIDERATION

[17] Issues of credit may be important in establishing whether a redundancy existed as a fact (such that it was a genuine redundancy) or if it was a fabrication, designed to mask the dismissal of a particular employee for other reasons.

[18] This is a different consideration to whether an employee was unfairly selected for redundancy.

[19] In some situations, such as this one, it may be indisputable that an employer was affected by a downturn in business and that it took the necessary decisions to decrease its labour force. It is another thing, however, to determine that there is a nexus between the necessity to decrease labour force numbers and the decision to decrease numbers in a particular part of the business or enterprise or undertaking or to make redundant a particular employee’s position.

[20] In this case, having heard the evidence, I am not able to discern that the witnesses for the Respondent concealed an agenda to single out the Applicant. Rather, in my view, the evidence establishes that the Respondent was subject to a declining order book in the relevant period and took action across its business (in Karrabin) to reduce the numbers of employees. The contraction of credit had impacted on other of the Respondent’s businesses as well, and they had responded by reducing employee numbers; a process that came to impact upon the number of OHSCs operating across the various business divisions.

[21] It is simply not credible that the Respondent embarked on significant reductions to its workforce at Karrabin in order to effect the termination of the Applicant’s employment.

[22] As part of this process (by way of a management review) it identified that it was possible to re-organise the dedicated OHSCs in the Foundry and Engineered Products divisions so that only one such position was required in a consolidated Industrial Division. This appears to have been the situation prior to the separation of the OHSC roles in early 2008.

[23] Regardless, it appears to me to have been reasonable to consider the rationalisation of such resources. The Respondent effectively had four OHSC employees (including the WHSO who provided supplementary OHSC assistance in the Rail division).

[24] It appeared from the evidence of Mr Frost that the Respondent became aware by its own benchmarking approaches that another subsidiary in Perth had one OHSC for its site, and that this brought into question the OHSC resourcing at Karrabin. 28

[25] Further, it does not appear to me on the evidence I have heard that the re-organisation to which the Respondent was subject owing to the GFC was opportunistically seized upon by the Respondent to rid itself of an employee with whom it was dissatisfied and the circumstances of this redundancy do not lead me to draw such an inference as such circumstances include that:

• the Applicant had the backing of his direct manager in the Engineered Products division;



• there was a relatively procedurally rich process involving a comparative skill profile;



• the decision as to which employee was selected was taken by a person (Mr Criss) who was the new Manager and was unfamiliar with and gave evidence of being uninterested in any historical tensions between the Applicant and the manager in the Foundry division; 29 and



• the final decision was based on Mr Criss’ assessment of the strategic depth of each OHSC’s perpective on his role in the business.

[26] Much of the Applicant’s argument went to the selection process rather than the nature of nexus between the downturn in business and the redundancy amongst the employer’s OHSC resources.

[27] It was contended in the main that the Applicant was a more qualified and capable OHSC than the employee who was retained, and that he could perform the duties of a WHSO (though he had been appointed to no such position) while the other OHSC (at least at that time) could not.

[28] In some circumstances, selection issues of this kind may be supportive of a finding that a redundancy was not a genuine redundancy. But in the circumstances I have considered, these issues do not have bearing on whether there was a genuine redundancy. The evidence as I have set it out above is sufficient to demonstrate that there were sound reasons for the decision to reduce staffing numbers and that the rationalisation of OHSC resources was reasonable in that context.

[29] Because of this, the selection-related issues agitated by the Applicant are not relevant to whether his redundancy was a genuine redundancy. However, as the Explanatory Memorandum to the FW Act makes clear, an employee may otherwise seek relief:

“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.”

[30] The Applicant also contended that because his various duties and responsibilities were being carried out by another employee working in a consolidated role, the fact of a redundancy being in existence could not be proven. The argument in this regard was that the position or job the Applicant held was still being performed by someone else.

[31] It is often the case that in periods of business re-organisation actual positions or jobs are lost and sets or duties and responsibilities are reconfigured and\or else performed by other employees. This does not make the re-organisation any less demonstrative of a redundancy than a situation in which the set of duties and responsibilities are not performed by anyone any longer. It is to this circumstance that the Explanatory Memorandum of FW Act makes express reference:

“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.” [My emphasis]

[32] That said, for a redundancy to meet the meaning of a genuine redundancy set out at s.389 of the FW Act, two other statutory requirements must be met. Section 389(1)(b) of the FW Act requires that:

“the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.”

[33] As I have discussed above, there is no dispute between the Applicant and the Respondent that there is no such obligation upon the Respondent in this particular case.

[34] There was some deal of discussion at the hearing about the full extent of the consultation between Mr Frost and the Applicant concerning the prospect of a redundancy amongst the OHSC personnel, this evidence is not relevant to the statutory task currently before me.

[35] Notwithstanding, I would add that on the balance of probability, that the evidence strongly suggested that Mr Frost had been in discussions with the Applicant about the general prospect of the OHSC positions being subject to rationalisation. 30

[36] Section 389(2) of the FW Act requires as follows:

“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.”

[37] The evidence put to me establishes that the OHSC position was a specialised position and not one for which there were any vacancies otherwise in the employer’s enterprise. Mr Morton, in his role as HR Coordinator, had direct knowledge of vacancies in the employer’s enterprise and Bradken Limited’s other business across Australia (through the on-line notice board he had researched) and his evidence in this regard must be taken on its face. His evidence went unchallenged.

[38] The Applicant contended that there was a positive obligation to identify positions for which the Applicant was capable of performing other than in relation to the position that the held at the time of the redundancy. 31

[39] I cannot discern from where such an obligation might arise. The meaning of a genuine redundancy at s.389(1)(a) of the FW Act is in relation to “a person’s job” at the time of the alleged redundancy and evidences no intention to take on a wider meaning for the purposes of s.389(2) of the FW Act.

[40] In my view, if the FW Act intended that an employer was required by virtue of s.389(2) of the FW Act to identify any position at all that an employee may be able to perform it would have expressly so directed, and perhaps with some conditionality as to the range of such alternative positions which might be so identified.

[41] In any event, it is most unlikely that at the time of the redundancy when, as the evidence showed, so many of the Bradken Limited businesses were reducing employee numbers that such an opportunity might have been available.  32

CONCLUSION

[42] On the basis of the above, I conclude that the Applicant’s employment was terminated for reason of a genuine redundancy. Consequently, I must dismiss his application for relief under s.394 of the FW Act.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr G Pinchen of a Whole New Approach for the Applicant

Mr D Miller of the Australian Industry Group for the Respondent

Hearing details:

Brisbane

2010:

14 January.

 1   Statement of Mr Brian Morton dated 25 November 2009 at PN 4 and 5

 2   Statement of Mr Brian Morton dated 25 November 2009 at PN 4

 3   (see Annexure BM4 and Statement of Mr Bruce McAlister dated 30 November 2009 at PN 31

 4   Statement of Mr Brian Morton dated 25 November 2009 at PN 4, 8 and 9; Further Statement of Brian Eric Morton dated 8 January 2010 at PN 8; Mr Bruce McAlister dated 30 November 2009 at PN 34

 5   Statement of Mr Gary Frost dated 25 November 2009 at PN 7

 6   Statement of Mr Matthew Criss dated 8 January 2010 at PN 2

 7   Transcript dated 14 January 2010 at PN 157

 8   Statement of Mr Gary Frost dated 25 November 2009 at PN 5 - and transcript 154-158

 9   Statement of Mr Gary Frost dated 25 November 2009 at PN 5

 10   Statement of Mr Gary Frost dated 25 November 2009 at PN 6

 11   Statement of Mr Brian Morton dated 25 November 2009 at PN 12

 12   Statement of Mr Gary Frost dated 25 November 2009 at PN 7; Statement of Mr Brian Morton dated 25 November 2009 at PN 13. This review had been undertaken prior to the appointment of Mr Criss as General Manager and also see Transcript PNs 174-175.

 13   See Transcript dated 14 January 2010 at PN 174

 14   Further Statement of Brian Eric Morton dated 8 January 2010 at PN 6

 15   Statement of Mr Matthew Criss dated 8 January 2010 at PN 4

 16   Further Statement of Brian Eric Morton dated 8 January 2010 at PN 18 and also see Transcript PNs 299-302

 17   Statement of Mr Gary Frost dated 25 November 2009 at PN 8; Statement of Mr Matthew Criss dated 8 January 2010 at PN 3, 6-10; Statement of Mr Brian Morton dated 25 November 2009 at PN 14

 18   See Transcript dated 14 January 2010 at PN 273 and PN 313

 19   See Transcript dated 14 January 2010 at PNs 225 – 229

 20   Statement of Mr Gary Frost dated 25 November 2009 at PN 9

 21   Statement of Mr Brian Morton dated 25 November 2009 at PN 15

 22   Third Statement of Mr Brian Eric Morton dated 14 January 2010

 23   Statement of Mr Brian Eric Morton dated 8 January 2010 at PN 17

 24   Statement of Mr Bruce McAlister dated 30 November 2009 at PN 37 -51

 25   Statement of Mr Bruce McAlister dated 30 November 2009 at PN 83

 26   Statement of Mr Bruce McAlister dated 30 November 2009 at PN 66

 27   Statement of Mr Bruce McAlister dated 30 November 2009 at PN 21 and 70-73 and 76 but compare with the Statement of Mr Brian Eric Morton dated 8 January 2010 at PN 9-11

 28   See transcript dated 14 January 2010 at PN 174

 29   See Transcript dated 14 January 2010 at PN 292-297

 30   See Transcript dated 14 January 2010 PNs 225-229 and PNs 404-446 and PNs 450-462

 31   See Transcript dated 14 January 2010 at PNs 86-90

 32   See Transcript dated 14 January 2010 at PN 89 and Statement of Mr Criss dated 8 January 2010, PN 2

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