Michael Hughes v The Trustee for Zippy Unit Trust T/A Zippy Cleaning and Maintenance Services Pty Ltd

[2017] FWC 870

[2017] FWC 870

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Michael Hughes
v
The Trustee for Zippy Unit Trust T/A Zippy Cleaning and Maintenance Services Pty Ltd
(U2016/14231)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 14 FEBRUARY 2017

Application for relief from unfair dismissal – jurisdiction – genuine redundancy.

[1] On 29 November 2016 Mr Hughes lodged an application pursuant to s.394 of the Fair Work Act 2009 (the FW Act). In that application, he asserted that he had been unfairly dismissed by Zippy Cleaning and Maintenance.

[2] In the Employer’s Response to the application (the Form F3) the legal name of the business was established as The Trustee for Zippy Unit Trust T/A Zippy Cleaning and Maintenance Services Pty Ltd (Zippy). I have utilised the discretion in s.587 of the FW Act to amend the application accordingly. That Form F3 also identified that Zippy objected to the application on the basis that it asserted that the termination of Mr Hughes employment was a case of genuine redundancy.

[3] Mr Hughes’ application was not resolved through the conciliation process. Accordingly, the genuine redundancy question was the subject of a determinative conference on 10 February 2017. I note that significant material was provided by Zippy in support of its position but Mr Hughes provided only limited and very belated information in support of his position. Notwithstanding this, there was no dispute that the matter should proceed on 10 February 2017 and I have taken all of the information before me into account.

[4] In this conference Mr Hughes represented himself and Zippy was represented by its General Manager, Mr Johnson.

[5] The background to the matter is relatively straightforward. Mr Hughes commenced employment with Zippy on 1 February 2016. He was engaged as a Client Services Manager which involved responsibility for a number of Zippy Clients. Mr Hughes’ employment was terminated on 8 November 2016. He was paid four week’s salary in lieu of notice.

[6] The only initial or jurisdictional issue relevant to the application goes to the genuine redundancy question. There is no dispute that Mr Hughes’ application was lodged within the statutory time limit and that he was a person protected from unfair dismissal. Zippy is not a small business.

[7] Section 385 states:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC 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.”

[8] A case of genuine redundancy is defined in s. 389 in the following terms:

“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.”

[9] Zippy contend that the requirements of this definition were met in Mr Hughes’ circumstances such that the termination of his employment could not then be considered to be unfair. Mr Hughes’ position is that other Client Services Managers are now covering his work. Mr Hughes asserts that Zippy was aware of its difficult financial position some months before it acted to make him redundant and asserts that the termination of his employment occurred for reasons other than a downturn in business. Mr Hughes asserts that Zippy’s approach to his selection for redundancy was unfair.

The Evidence

[10] Mr Johnson’s evidence went to the loss of revenue between January 2016 and October 2016 and the current loss-making position of Zippy. Mr Johnson detailed the conclusion reached by Zippy’s senior management on 2 November 2016 to the effect that a reduction in the number of Client Services Managers was required, and the steps subsequently taken to talk with each of the Client Services Managers, collectively and individually, on 7 November 2016 about the proposed restructuring.

[11] Mr Johnson addressed the selection process to determine which of the Client Services Managers would be made redundant. In this regard he liaised with Ms Watson, the Zippy Operations Manager. Mr Johnston’s evidence was that Mr Hughes had not been replaced but that the restructure resulted in the reallocation of clients amongst other Client Services Managers. I note that Mr Johnson provided substantial supporting documentation for his evidence.

[12] Mr Hughes was advised of the termination of his employment on 8 November 2016. That advice also confirmed that Zippy had no other positions available at the same or an equivalent level but may have some cleaning vacancies if Mr Hughes was interested.

[13] Ms Watson’s evidence went to the actions she took after Mr Johnson advised her of the proposed restructure on 3 November 2016. Ms Watson advised that she spoke with all the Client Services Managers on the following day to advise them of the meeting on 7 November 2016. She attended that meeting and confirmed that Mr Johnson had explained the substantial loss in contracts since March 2016 and the company’s financial difficulties. She confirmed that Mr Johnson advised that at least one Contract Services Manager position would be made redundant and, in response to a question, addressed the selection criteria and approach.

[14] Mr Hughes’ evidence was that there had never been any issues associated with his performance and he had satisfactorily passed his six-month probationary period. Mr Hughes asserted that Zippy had known of its precarious financial position for many months but had continued to hire Client Services Managers. Fundamental to his position is his contention that other managers are now continuing to cover his clients. Mr Hughes asserts that he was told he was amongst the best of the Client Services Managers. Mr Hughes asserted that other Client Services Managers had been responsible for some of the client losses whereas he had maintained or grown his portfolio. Mr Hughes asserts that, subsequent to the termination of his employment, Zippy is not operating responsibly in terms of the manner in which Client Service Managers now undertake their duties. He contended that Zippy had a poor record of dismissing employees.

[15] Mr Hughes also asserts that he was treated differently after having four weeks off due to surgery and that Zippy required him to purchase a new car around July 2016. Mr Hughes asserts that Ms Watson was an erratic manager. He asserts that after the termination of his employment other employees were told that he had died. Mr Hughes asserts that Zippy’s past employment practices were questionable and that he had not been paid his appropriate superannuation entitlements.

Findings

[16] If the termination of Mr Hughes’ employment meets the definition of a genuine redundancy set out in s.389 of the FW Act, that termination cannot be unfair and the application must be dismissed accordingly.

[17] The evidence before me establishes that Zippy no longer required the job done by Mr Hughes to be performed by anyone because of a change in its operational requirements. That evidence establishes that Zippy required fewer Contract Services Managers because of a downturn in business. The extent of that downturn and its direct financial effect on Zippy, are not matters about which I need to make findings notwithstanding that the evidence supports those findings in any event. It is simply the case that, as a consequence of that downturn, Zippy restructured its business so as to operate with fewer Contract Services Managers. The fact that Mr Hughes’ work was allocated amongst other Contract Services Managers does not diminish the extent to which Zippy no longer required him to undertake that work and did not replace him. That approach is consistent with the Full Bench position in Ulan Coal Mines Ltd v Honeysett & Others. 1 In that matter the Full Bench stated:

“[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] For the sake of completeness, I note that the Explanatory Memorandum refers to this provision of the FW Act in the following terms:

“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.”

[19] The fact that Mr Hughes disagreed with the selection methodology adopted by Zippy does not diminish the extent to which the termination of his employment occurred because Zippy no longer required that position. The majority position in UES Int’l v Harvey 2 summarised this issue in the following terms:

“26 We have concluded, however, that s 387(a) of the FW Act regarding the matter of whether there was a valid reason for the dismissal related to the person's capacity or conduct does not go to the process for selecting the person for redundancy. We have come to this conclusion having regard to the following factors and for the following reasons.

27 The terms of s 389 of the FW Act suggest the process for selecting individual employees for redundancy is not relevant to whether a dismissal was a case of genuine redundancy. The relevant Explanatory Memorandum confirms as much. Setting aside jurisdictional pre-requisites and the matters in s 396(a) to (c), FWA only needs to consider s 387(a) concerning whether there was a valid reason for a person's dismissal related to the person's capacity or conduct if one or more of the criteria in s 389 of the FW Act, which sets out the meaning of genuine redundancy, have not been met. The criteria in s 389 which have not been met can be taken into account in FWA's consideration as to whether the dismissal was harsh, unjust or unreasonable as part of s 387(h), being “any other matters that FWA considers relevant”

(references removed)

[20] There is nothing in the definition of a genuine redundancy which enables or requires the Commission to make an assessment about why Mr Hughes was selected as distinct from another employee. Mr Hughes has not demonstrated to me that the termination of his employment had anything at all to do with his absence from work on sick leave and, in fact, the evidence of Mr Johnson was directly contrary to this assertion. There is simply no dispute that Zippy restructured its management arrangements so that it had six Client Services Managers rather than seven as a result of its financial position. Consequently, I am satisfied that the requirements of s.389(1)(a) were met in this instance.

[21] In terms of s.389(1)(b), I am not persuaded that Mr Hughes’ employment was covered by a modern award or an agreement. In any event, even if Mr Hughes’ employment was covered by an award, such as the Cleaning Services Award 2010, Zippy’s actions in informing all of the Contract Services Managers of its proposed restructure the day after it decided that this restructure was necessary, and its subsequent discussions with all of the personnel involved, including Mr Hughes, would meet the requirements of the consultation provisions set out in clause 8 of that, and most other Awards. Consequently, I have concluded that, to the extent that there was any obligation relative to s.389(1)(b), Zippy met that obligation.

[22] Zippy advised that, at the time of the termination of Mr Hughes’ employment, it had four full-time senior managers, seven full-time Client Services Managers, four Finance or administrative employees and 373 part time cleaners. Zippy invited Mr Hughes to consider a cleaning position but he understandably declined to do so. Section 389(2) operates so that if it would have been reasonable in all of the circumstances for Mr Hughes to be redeployed within either Zippy or an associated entity, his redundancy would not then be genuine. In concluding that I am satisfied that there was no suitable alternative position into which Mr Hughes could have been redeployed, I have taken into account the recent Full Bench Decision in Skinner, Pemberton, Ross, Lucas, Hill, Bryant and Preston v Asciano Services Pty Ltd T/A Pacific National Bulk 3. In my view, that decision does not disagree with the position “that there is no general obligation for an employer to implement or facilitate a process whereby employees whose positions are redundant can swap with other employees who wish to volunteer for redundancy. Any employer who does not implement such a process will not automatically be found to have failed to meet the requirement in s.389(2) of the Act for the redundancy to be considered to be genuine.”4Notwithstanding that finding, the Full Bench in that matter considered the particular circumstances of the redundancies being implemented by Asciano.

[23] There are significant differences between the circumstances here to those in Asciano. These differences go to the practicality of this, very common situation, and the extent to which the Asciano decision appears to address some more exceptional circumstances. The general application of the conclusion reached in Asciano would create an impractical and unreasonable burden on businesses, inconsistent with the provisions of s.389(2). Zippy is not a particularly large business and there were only seven Client Services Managers. Furthermore, Mr Johnson met with all seven of these persons and confirmed that none of them sought to be made voluntarily redundant. The evidence indicates that position swaps were simply not practical in these circumstances. There is nothing to indicate that arrangements of that nature had been previously countenanced nor suggested as a possible option to mitigate the effects of redundancy.

[24] In these circumstances I am satisfied that the requirements of s.389(2) have been met.

[25] As a result of these findings, I have concluded that the termination of Mr Hughes’ employment met the definition of a genuine redundancy and cannot then be considered to be unfair. The application must be dismissed on the basis. An Order (PR590175) to this effect will be issued.

Appearances:

M Hughes on his own behalf.

D Johnson for the Respondent.

Hearing (Determinative Conference) details:

2016.

Adelaide:

February 10.

 1   [2010] FWAFB 3488

 2 [2012] 215 IR 263

 3   [2017 ] FWCFB 574

 4   Asciano, pg 56

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<Price code C, PR590174>