Michael Phillips v Boeing Aerostructures Australia Pty Ltd

[2021] FWC 965

[2021] FWC 965

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Michael Phillips
v
Boeing Aerostructures Australia Pty Ltd
(U2020/15674)

DEPUTY PRESIDENT COLMAN MELBOURNE, 23 FEBRUARY 2021

Application for an unfair dismissal remedy – whether ‘genuine redundancy’ – whether applicant targeted for redundancy – whether consultation obligations met – significance of ‘contingent labour’ provision – whether it would have been reasonable for the company to insource work for redeployment (s 389(2)) – redundancy ‘genuine’ – application dismissed

[1] Mr Michael Phillips has made an application for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Act). Mr Phillips was employed by Boeing Aerostructures Australia Pty Ltd (company) from 13 July 2013 until his dismissal for reason of redundancy on 4 December 2020. Mr Phillips contends that the company targeted him for redundancy, and that it did not properly consult with him about his redundancy as required by the terms of the Boeing Aerostructures Australia Pty Ltd (Port Melbourne) Enterprise Agreement 2018 (Agreement). Mr Phillips further contends that the company could reasonably have redeployed him to another position, or to work that could have been insourced from a third party contractor. He contends that his dismissal was unfair and seeks reinstatement.

[2] The company objects to the application on the basis that Mr Phillips’ dismissal was a case of ‘genuine redundancy’ within the meaning of s 389 of the Act. The company submits that Mr Phillips’ position was not needed, that the company complied with all of its consultation obligations under the Agreement, and that it would not have been reasonable to redeploy Mr Phillips. The company submits that in any event the dismissal was not unfair.

Factual background

[3] Eleven witness statements were filed from nine witnesses, eight of whom, including Mr Phillips, gave oral evidence and were cross-examined.  I will summarise the essential evidentiary background. Later, I will make findings about relevant disputed facts.

[4] Since May 2020 the company has made several hundred positions redundant. The impact of the COVID-19 pandemic has seen a marked reduction in orders for Boeing aircraft, and a corresponding decline in demand for the flight control surfaces that are manufactured at the company’s Port Melbourne plant. The evidence of Ms Marie Yarak was that prior to the pandemic the company was producing 14 monthly ‘shipsets’ of components for its B787 program, but now, because of the decline in B787 production rates, it produces only five shipsets. In its B737 program, the company was previously producing 50 monthly shipsets, but now produces just two. In response to the lower demand for its components, the company has had to reduce production and retrench workers. Three rounds of redundancies have occurred to date. A fourth round was announced on 20 January 2021.

[5] Mr Phillips was employed as a materials handler in the warehouse. He was covered by the Agreement. On 5 August 2020, the company notified Mr Phillips that it had identified a need to reduce the number of materials handler positions from twelve to nine. The following day, the company sent Mr Phillips a pack containing a voluntary redundancy nomination form, an indicative severance payment figure, and details of the ‘knowledge, skills and attributes process’ (KSA), which the company uses to assess and rank employees in the same ‘work assessment group’ (WAG) whose numbers are to be reduced for reason of redundancy.

[6] The KSA process is governed by attachment 2 of Part 11 of the Agreement and comprises thirteen steps. It requires employees to be assessed by a panel that includes their current manager and a second manager. Observers from human resources and the union are present during the assessment process (step 1). Employees have the right to know who their assessors will be (step 2). The managers must reach a consensus on the score to be given to an employee (steps 6 and 7). The human resources department ranks the employees and determines the cut-off point by reference to the number of redundancies identified for the group (step 12). Attachment 3 of Part 11 provides for a right of appeal that allows employees to challenge their KSA scores. That attachment also provides for a process, known as ‘mix and match’, that allows an employee who has been selected for redundancy to seek to swap places with an employee who has volunteered for retrenchment, subject to a skills assessment and the company’s agreement to the swap.

[7] The KSA process was applied to Mr Phillips’ WAG. Of the twelve employees in his group, Mr Phillips obtained the third lowest KSA score. However, he was not made redundant at this stage, because the company realised that one of the employees in the materials handling team was in fact a secondee, and that only two positions therefore needed to be made redundant at that time. Due to an error, on 18 September 2020, Mr Philips was notified that his position was redundant. This was then corrected. On 15 October 2020, Mr Phillips lodged an internal complaint in which he contended that he had been targeted for redundancy because he had spoken out about health and safety matters. An investigation was commenced by the company’s corporate investigator, which later found the complaint unsubstantiated.

[8] On 20 October 2020, the company wrote to Mr Phillips and advised him that, as a result of a further reduction in the B787 program, his WAG had been identified for a further reduction of one position. As Mr Phillips had the lowest KSA score of those remaining in the team, he was selected for redundancy. By letter dated 5 November 2020, the company advised Mr Phillips that his position was redundant, and that he could either accept his selection for compulsory redundancy, lodge an appeal, request to be considered for the company’s ‘mix and match’ process or apply for any other vacant positions.

[9] Mr Phillips appealed his KSA scores. The appeal was partially successful and resulted in two of Mr Phillips’ scores being increased, but this did not elevate his ranking. On 19 November 2020, Mr Phillips wrote to Ms Natalie Talevska from human resources and requested that he be allowed to perform ‘pin cleaning’ work that was being done by a contractor, Programmed Industrial Maintenance Pty Ltd (Programmed). Later that day, Ms Talevska replied and stated that Mr Phillips was not able to apply for such work. She did not elaborate on the reasons. However, as will be discussed further below, the possibility of employees being redeployed to pin-cleaning work had been the subject of a dispute between the AMWU and the company earlier in the year. Also, several other employees had earlier requested of the company that they be redeployed to pin cleaning work. Those requests had been rejected. The letters of rejection sent to two of these employees, dated 9 October 2020, were tendered in evidence. The letters, which were in the same substantive terms, noted that the AMWU had previously requested the company to insource the pin cleaning work from Programmed so that company employees who would otherwise be made redundant could be redeployed on this work, and that the company had declined the request. The letters explained that the company had undertaken the pin cleaning work until several years ago, but that there had been various problems which had led the company to outsource the work: employees considered the work boring and unpleasant; having a small number of employees doing the work full-time led to fatigue and lack of motivation, which slowed down production; and there were a significant number of injuries in the area. The letters stated that outsourcing the work to the ‘maintenance company’ (Programmed) had fixed those problems. The jobs of the contractor’s staff had been redesigned to have a larger number of employees doing the work for a small part of the day. This had produced fewer injuries and had also been cost effective for the company. The letter stated that insourcing the work would lead back to the old problems, and that in any event there would not be sufficient pin cleaning work for a full-time position.

[10] Along with eleven other employees, Mr Phillips then elected to participate in the ‘mix and match’ process, as there had been one volunteer for redundancy. In the mix and match assessment process, Mr Phillips was considered to be unsuitable for the position. Another employee was selected for the position but later decided not to accept it. On 24 November 2020, the company’s managing director sent a notification to all employees advising of a further rate reduction in the B787 program. As a consequence of this, Mr Sorrenson, the supply chain manager, determined that the mix and match role was not needed and would not be filled.

[11] Mr Phillips’ retrenchment had effectively been suspended pending the outcome of his internal complaint of 15 October 2020. On 2 December 2020, the corporate investigator concluded the investigation into the complaint and advised Mr Phillips that it had been found to be unsubstantiated. Mr Phillips’ redundancy took effect on 4 December 2020. He received a severance payment as prescribed by the Agreement in the amount of 44 weeks’ pay.

Submissions of the parties

[12] The company objected to the application on the basis that the dismissal was a genuine redundancy within the meaning of s 389. First, the company contended that the evidence had clearly established the company’s need to reduce positions generally, and in the materials-handling area in particular, due to a downturn in production rates, and that Mr Phillips’ role was selected for that purpose in accordance with the requirements of the Agreement. The company did not require Mr Phillips’ job to be done by anyone, because of a change in its operational requirements.

[13] Secondly, the company submitted that it had complied with all of its consultation obligations in the Agreement, namely those in clause 1.8, which concerns the introduction of change, and Part 11, which prescribes a detailed redundancy process that includes consultation and is overseen by a consultative body consisting of union, employee and management representatives. The company said that the evidence of Ms Gountrombis demonstrated that all of these requirements had been met.

[14] Thirdly, the company contended that it would not have been reasonable to redeploy Mr Phillips to the ‘mix and match’ position because the mix and match assessment process had concluded that another employee, and not Mr Phillips, was suitable for selection, there were many other applicants for the same position, and the position was ultimately not required; even if Mr Phillips had been redeployed to it, the position would have been made redundant. The company further contended that it would not have been reasonable to redeploy Mr Phillips to the pin cleaning duties because this work had been contracted out to a third party some four years earlier, and because there would not be sufficient work for a full-time position.

[15] The company submitted that, were the Commission to find that the dismissal was not a case of ‘genuine redundancy’, it should nevertheless conclude that the dismissal was not unfair, having regard to the considerations in s 387 of the Act. It submitted that Mr Phillips’ dismissal for redundancy was entirely legitimate in the circumstances and was effectuated pursuant to a rigorous, consultative and fair process prescribed by the Agreement, at the conclusion of which Mr Phillips received a large severance payment.

[16] Mr Phillips contended that he had been targeted for redundancy because of his occupational health and safety activities, and on this basis, he argued that his dismissal did not satisfy the first limb of the definition of ‘genuine redundancy’. He contended, in effect, that the presence of an alternative motivation for his dismissal called into question whether the company no longer wanted his job to be done by anyone.

[17] As to the second element of ‘genuine redundancy’, Mr Phillips contended that the company had contravened the provisions of clause 11.1 of the Agreement which concern the minimisation of the impact of redundancies and job losses, and that the company had not acted in accordance with the objectives of Part 11. However, Mr Philipps’ principal contention concerning consultation was that the ‘contingent labour’ provision in clause 4.12 of the Agreement imposed an obligation on the company to consult with him and the union in relation to the continued use of contract labour and the possibility of insourcing this work for redeployment purposes, and that the company had not done so. Clause 4.12.1 provides:

“4.12 CONTINGENT LABOUR

4.12.1 The Company may employ contingent labour to meet certain operational requirements.

These are broadly in the areas of:

•  meeting peak workloads;

•  use of skills not available in the Boeing Aerostructures Australia workforce;

•  long term leave relief.

4.12.2 To meet these requirements the company may make use of labour which is employed directly by the company i.e. fixed term, part time (including permanent part time) or casual labour, or labour which is contracted through a “third party” for a specific time / task.

4.12.3 The company shall consult with the unions before using contingent labour. This shall include information in regard to:

•  reasons and likely duration;

•  customer requirements;

•  workload assessment and labour utilisation;

•  alternate proposals considered;

•  proposals for possible skills transfer.

4.12.4 The overall number of permanent part time, casual and contract labour will be reviewed from time to time, but no less than every six months, between the Union and the Company. The Company will at all times try to maintain levels at the minimum required to meet operational needs, and in the case of permanent part time employees, the individual’s needs.

4.12.5 Use of contingent labour shall not prejudice the ongoing employment of full time employees. The company must ensure the wages and conditions of contract labour engaged to do work covered by this agreement are no less favourable that the wages and conditions provided for in this agreement for equivalent or similar work.

4.12.6 Contracts for labour through a “third party” shall specify the tasks to be performed and the period of the contract. As a rule such contracts shall be for no more than 12 months. However the period is dependent upon the task and a greater period than 12 months may be necessary. Where such longer term is proposed there shall be consultation with the Union prior to any contract being let.

4.12.7 The Company will implement a process to enable the transfer of skills from the contract labour to employees, such that the need for contract labour is reduced in the future.

4.12.8 Provided that the contingent labour clause is adhered to and complied with by the Company and the processes therein are followed the Union will support where necessary the use of contract labour.”

[18] Mr Phillips contended that the pin cleaning work undertaken by Programmed was ‘contingent labour’ for the purposes of clause 4.12.1, and that the use of this labour was prejudicing his ongoing employment, contrary to clause 4.12.5, because if the work were being done internally, he could be redeployed on this work, instead of being retrenched. He said that the company was required to consult with him and the union about the continued use of Programmed’s contingent labour, and that such consultation should have included a consideration of how the pin cleaning work could be insourced.

[19] Mr Phillips noted that the AMWU had earlier sought to persuade the company that the ‘pin cleaning’ work, which had been outsourced in 2016, should now be insourced, so that this work could be made available to employees of the company who were facing redundancy. Like Mr Phillips, the AMWU had invoked clause 4.12 of the Agreement, which it said required the company to consult about this proposal. The company refused, on the basis that pin cleaning work did not involve the use of contingent labour, and that the clause was not relevant to the union’s proposal, or to redundancy and redeployment in general. The AMWU then raised a dispute with the company under the dispute resolution procedure in Part 2 of the Agreement, and the dispute was referred to the Commission (C2020/5853). The AMWU’s arguments before the Commission were similar to those of Mr Phillips, described above. The union contended that, contrary to clause 4.12.5 of the Agreement, the company’s use of the ‘contingent labour’ of Programmed to undertake pin cleaning work was prejudicing the ongoing employment of full-time company employees, because that work was not available for their redeployment. It also contended that the company had not met other obligations under the clause 4.12, including the requirement that the numbers of permanent employees and contract labour be reviewed every six months (clause 4.12.4), and the requirement to consult with the union ‘prior to any contract being let’ for contingent labour that exceeds 12 months (clause 4.12.6).

[20] The matter did not proceed to arbitration. However, in an unpublished written opinion dated 16 September 2020, Commissioner McKinnon expressed the view that the pin cleaning function was ‘an arrangement for the provision of labour to perform a specified task’, and that it therefore met the description of contingent labour for the purpose of clause 4.12. The Commissioner stated, at [10], that Boeing ‘should consider whether the pin cleaning function can be insourced as part of its efforts to mitigate the effect of redundancies among employees, having regard to clause 4.12.5 of the Agreement.’ And at [11] she stated that the parties ‘should ensure that each has taken the necessary steps to comply with the Agreement in relation to the dispute settlement procedure and the consultation and review processes in clause 4.12.’

[21] Mr Phillips contended that the company subsequently refused to consult with him or the union about the possibility of the pin cleaning work being insourced. He contended that it is not enough for the company to meet some or even most of its consultation obligations, and that because it had not complied with the consultation obligation in clause 4.12, his dismissal was not a case of genuine redundancy.

[22] Mr Phillips submitted that his dismissal also failed to satisfy the third element of a ‘genuine redundancy’, because it would have been reasonable for the company to redeploy him either to the ‘mix and match’ role, or to work that could have been made available to him had the company agreed to insource the pin cleaning work from Progammed. He contended that the purpose of s 389(2) was to give ‘paramountcy’ to having employees identified for redundancy placed in alternative roles and that if there is a suitable job, and that job is not offered to a redundant employee, there should be recourse to an unfair dismissal remedy. He submitted that the company bore him ill will and that it had been ‘gaming its redeployment obligations’.

[23] Mr Phillips also submitted that, by refusing to consult about the possibility of the pin cleaning work being insourced, particularly following Commissioner McKinnon’s opinion, the company had not met its obligations under Part 11 because it had failed to ‘minimise the impact of redundancies’ or ‘minimise the loss of jobs’, as contemplated by that Part. He contended that it would have been reasonable in all the circumstances for the company to have redeployed him within its enterprise, and that his dismissal therefore did not satisfy the third limb of the definition of a ‘genuine redundancy’.

[24] Mr Phillips contended that, when the Commission then comes to considering the question of whether he was unfairly dismissed, taking into account the matters in s 387, it should conclude that his dismissal was harsh, unjust or unreasonable. He submitted that if the jurisdictional objection was rejected there could be no valid reason for his dismissal. He said that he had not been notified of any valid reason and had had no opportunity to respond to any reason for dismissal related to his capacity or conduct. He said that he had received no warnings, and that a further relevant consideration supporting a conclusion that his dismissal was unfair was the company’s inadequate response to Commissioner McKinnon’s opinion.

Consideration

[25] A person has been unfairly dismissed if the Commission is satisfied of the matters in s 385, including that ‘the dismissal was not a case of genuine redundancy’ (s 385(d)). There are three elements of a ‘genuine redundancy’. The first two elements are set out in s 389(1), which states that a dismissal was a case of ‘genuine redundancy’ if the 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’ (s 389(1)(a)); and the employer ‘has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy’ (s 389(1)(b)).

[26] As to the first element, I find that the company no longer required Mr Phillips’ job to be performed by anyone. I accept the evidence of Ms Yarak and Mr Sorrenson about the marked decline in demand for the company’s aircraft components and the company’s need to reduce its workforce accordingly, including in the materials handling area. I accept the evidence of Ms Gountrombis concerning the first further rate reduction that resulted in the additional redundancy in Mr Phillips’ group. I also accept the evidence of Mr Sorrenson that the second further rate reduction caused him to decide that the mix and match position would not be filled, because there was going to be a further decrease in workforce numbers in the materials handling area and the position was therefore no longer needed. The reason why the company no longer required Mr Phillips’ job to be performed by anyone was clearly because of changes in the operational requirements of its enterprise.

[27] I reject Mr Phillips’ contention that he was targeted for redundancy because of his workplace health and safety activities. There is simply no substance to the claim. Mr Louis strongly denied the claim. In particular, he denied the suggestion that he was determined to give Mr Phillips scores in the KSA assessment that would lead to his redundancy. I believe him. Mr Louis was a credible witness. In cross-examination, Mr Louis was asked why Mr Phillips scored only 4 out of 5 for ‘safety’, when he had previously received high praise for his work in this area. Mr Louis explained that Mr Phillips had indeed scored well in this area, but that some issues were not to standard, including ‘walking and talking’ while using his mobile telephone. I found Mr Louis’ explanations convincing. I reject the contention of Mr Phillips that it is somehow suspicious that Mr Louis did not warn or counsel him about matters that resulted in him receiving less than a perfect score. It is unrealistic to expect any deficient conduct or performance to be the subject of disciplinary action. I also reject Mr Phillips’ contention that, had he scored a ‘5 out of 5’ for safety, this would have affected his ranking. There is no evidence to support this. On the contrary, the KSA assessment sheet attached as ‘AG8’ to the statement of Ms Gountrombis suggests the very opposite. I also reject Mr Phillips’ contentions that sought to impugn the legitimacy of the other scores and evaluations that he was given in the KSA and the mix and match assessments. In particular, the fact that Mr Phillips possessed various licences whereas another employee did not is no reason to conclude that Mr Phillips should necessarily have received a higher score for ‘knowledge’, or for any other area, than that employee. Mr Louis explained that the assessment considered a range of matters, and that the other employee was considered to possess other useful knowledge.

[28] Mr Storer, the senior manager for health and safety, also denied the claim that Mr Phillips was targeted for redundancy because of his workplace safety activities. He described the proposition as inconceivable. I accept his evidence. I note that Mr Phillips appended to his statement various commendations from the company, including in relation to his role as a health and safety representative; such commendations are hardly indicative of a company that would target Mr Phillips for this same work. Mr Phillips’ evidence on this matter was speculative and weak. He said in his statement that he ‘felt that he had been targeted’ but provided nothing to substantiate this. In his oral evidence, Mr Phillips acknowledged that the company had a strong safety culture, and that management encouraged employees to speak out about safety. Mr Phillips’ theory that he was targeted because of his health and safety work does not make sense.

[29] Mr Phillips also said that Mr Louis had told him that he had ‘nothing to worry about’ in the redundancy process, suggesting, it would seem, that he would not be selected. Mr Louis denied having said this. I accept his denial. It seems to me an improbable thing for Mr Louis to have said in the circumstances. Mr Phillips relied on this alleged statement of Mr Louis as evidence to support his theory that he was targeted for redundancy. But this is illogical. If the statement was made, it would suggest that Mr Louis expected Mr Phillips would not be selected for redundancy. If Mr Phillips’ contention is that he was given an assurance that was not honoured, I reject it. But that would in any event not be a contention that supported a theory that he was target in some way. Mr Phillips also said that Mr Louis told him that the managers loved him. But this too goes against the point that Mr Phillips seeks to make. 

[30] It was unfortunate that Mr Phillips was told in September 2020 that he was redundant when in fact, at that stage, he was not. But that was a mistake. It was quickly corrected. Mr Phillips did not receive the lowest score and was not selected in the first round of retrenchments in his area. This too is inconsistent with Mr Phillips’ claim that he was targeted for selection. It was only when the further rate reduction occurred, and a further position was redundant, that Mr Phillips was selected for redundancy, because he was now the lowest ranked employee. The company’s explanation of its reasons for making Mr Phillips’ position redundant is sensible and convincing. I find that Mr Phillips was not targeted for redundancy because of his safety work, or for any other reason.

[31] As to the second element of the definition of ‘genuine redundancy’, I find that the company complied with its consultation obligations under Part 11 of the Agreement to consult about Mr Phillips’ redundancy. I accept the evidence of Ms Gountrombis about the detailed consultation and redundancy process that was undertaken by the company. The company informed the unions and employees of the potential second round redundancies affecting the materials handling WAG, and the need to establish a KSA assessment process for this group. It informed them of each step in the process and provided the steering committee with employees’ KSA rankings. No concerns were raised about this at the time. The company informed the unions and employees of possible redundancy mitigation measures, namely redeployment within the company as well as ‘mix and match’. It called for expressions of interest for the mix and match process, in which Mr Phillips participated. The union and employee representatives were involved in the redundancy process. It is true that the union had little ability to seek to alter the scores during the KSA process, but the collective agreement does not provide for codetermination of KSA scores with the union. Rather, the union is an observer of this process and employees have the ability to appeal their scores. Mr Phillips availed himself of this right.

[32] I also find that the company complied with its consultation obligations under clause 1.8 of the Agreement, which concerns the introduction of change, and the general consultation obligation in clause 1.9. It is clear that the company notified the union and employees who were to be affected by the proposed redundancies, including Mr Phillips, and that it had discussions with them about the redundancies, including about the likely effects of the changes and measures to avert or mitigate adverse effects on employees.

[33] I reject Mr Phillips’ contention that clause 4.12 imposed an obligation on the company to consult with him or the AMWU in relation to the possibility of his redeployment on pin cleaning work, or in relation to his redundancy generally, for the following reasons.

[34] First, the clause is concerned with the use of contingent labour to meet certain operational requirements in the three specified areas. Contingent labour is labour that is subject to a contingency and is not always needed. Pin cleaning, like maintenance, is work that needs to be done on an ongoing basis. The work has been outsourced. But it is not subject to any contingency. Further, the pin cleaning work does not fall within any of the three areas specified in clause 4.12.1: it has nothing to do with peak workload, the use of external skills or leave relief, or anything broadly connected to these areas. What is more, clause 4.12 is concerned with contingent labour, not with the provision of services that involve labour. Clause 4.12.2 states that contingent labour can be hired directly by the company on a fixed-term, part-time or casual basis, or contracted through a third party. Where contingent labour is contracted through a third party, a labour hire company provides workers to the company to perform the contingent work. This is not what Programmed does. It provides a service to the company, which covers the pin cleaning function. Mr Storer’s evidence was that pin cleaning is non-core work that is now performed by Programmed as part of the general maintenance contract with the company, and that the maintenance function was outsourced over twenty years ago. I respectfully disagree with the opinion of Commissioner McKinnon. In my view, clause 4.12 does not apply to the outsourced pin cleaning function undertaken by Programmed.

[35] Secondly, even if the pin cleaning work were to be regarded as contingent labour, clause 4.12 simply does not say that the company is required to consult about the possibility of redeploying redundant employees to roles that might be insourced from contractors. The word ‘consult’ appears only once in the clause, as does the word ‘consultation’. Clause 4.12.3 requires the company to ‘consult with the unions before using contingent labour’. Clause 4.12.6 then states that where a term longer than 12 months is proposed for the use of contingent labour, ‘there shall be consultation with the union prior to any contract being let.’ Both of these provisions create obligations that apply before the company engages the contingent labour. Mr Sorrenson’s evidence was that the company’s contract with Programmed was made in 2017 or 2018. That was the time when these provisions had any work to do. They are not concerned with the discontinuation of contingent labour. And neither of these clauses has anything to do with redundancy or redeployment.

[36] Had clause 4.12 been intended to require the company to consult with the unions about the use or continued use of any contractors in cases where there are insufficient redeployment options for redundant employees, I consider that the clause would have said so expressly. This would be an obligation with far-reaching implications, as it would require the company to contemplate the insourcing not just of pin cleaning, but also of maintenance, and other functions involving contracted services, as part of any redundancy process. One would expect such an obligation to be created by clear language. I also consider that the presence in the Agreement of a very detailed provision prescribing extensive redundancy obligations, including in relation to consultation, is an important contextual indication that clause 4.12 is not concerned with redeployment and redundancy. Part 11 deals comprehensively with those matters. Clause 4.12 deals with arrangements for the use of contingent labour.

[37] Mr Phillips placed emphasis on the first sentence of clause 4.12.5, which states that contingent labour ‘shall not prejudice ongoing employment of full-time employees’. He contended that the company’s use of Programmed to undertake the pin cleaning work was prejudicing his ongoing employment, because it was preventing him from being redeployed to that work, and that clause 4.12 required the company to consult with him about this matter. I disagree. Again, the pin cleaning work undertaken by Programmed is not contingent labour, and clause 4.12 does not require consultation about redeployment. Further, I consider that clause 4.12.5 reinforces the conclusion that ‘contingent labour’ means labour hire for work that is covered by the Agreement. Clause 4.12.5 is a ‘site rates’ clause. Employees of contractors must not be paid less than company employees, because this affects job security. The reference in the first sentence of clause 4.12.5 to the concern for ongoing employment is important, because without this connection, a site rates clause would be of questionable validity, as it could stray into the forbidden territory of a simple ban on the use of contractors, which does not pertain to the employment relationship (see s 172(1) and 253(1)(a)). But even accepting that the purpose of the first sentence of clause 4.12.5 is not just to validate the ‘site rates’ obligation, but also to prohibit the use of contingent labour that prejudices ongoing employment of full-time employees, it is clear that clause 4.12.5 is concerned with the use of labour hire in respect of work that is covered by the Agreement. The second sentence says so. And this must be the case, otherwise the sites rates obligation could have no meaningful application. The pin cleaning work is not undertaken by a labour hire contractor. And it is not work that is covered by the Agreement (see clause 1.3 and the classification structure in clause 5.1 of the Agreement). Mr Phillips effectively conceded as much by his suggestion that the company ought to have consulted with him about how the Agreement could be varied to cover the work. Finally, the transfer of business provision in clause 4.4.1 clearly contemplates the possibility of outsourcing. Clause 4.12.5 would not be read as effectively prohibiting what clause 4.4.1 allows.

[38] I would note that the question of whether the company complied with the non-binding opinion expressed by Commissioner McKinnon in the s 739 matter is not strictly speaking relevant to the jurisdictional question of whether the dismissal was a genuine redundancy within the meaning of s 389. Section 389(1)(b) is concerned with the employer’s obligations under an award or an enterprise agreement to consult about the redundancy, and the Commissioner’s opinion does not determine the company’s obligations. The position might have been different had the Commissioner arbitrated the dispute under stage 5 of Part 2 of the Agreement and thereby determined, in the exercise of private arbitration powers conferred on the Commission by the terms of the Agreement, a binding interpretation of the meaning of the provision. But it is common ground that this is not what occurred.

[39] Clause 4.12 did not impose any obligations on the company to consult in relation to Mr Phillips’ redundancy. I find that the company complied with all of its obligations under the Agreement to consult about Mr Phillips’ redundancy. The second limb of the definition of ‘genuine redundancy’ in s 389(1) has therefore been satisfied.

[40] The third element of ‘genuine redundancy’ is set out in s 389(2) of the Act, which provides that 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’, either ‘within the employer’s enterprise’ or that of an associated entity. Mr Phillips contended that it would have been reasonable for the company to insource the pin cleaning work and deploy him on such work, or to redeploy him to the ‘mix and match role’. I reject both of these contentions.

[41] In my view, the pin cleaning work cannot properly be described as work ‘within the employer’s enterprise’. It is done by a maintenance services contractor. The company could not have redeployed Mr Phillips to do this work within its enterprise without first insourcing the work. Because the company did not insource the work, it remained outside the enterprise. The assessment of whether Mr Phillips might reasonably have been redeployed ‘within the employer’s enterprise’ requires consideration of the work done within the enterprise at the time. The pin cleaning work was no more within the enterprise of the company than maintenance work, which was outsourced twenty years ago. Further, if an employee of Programmed were to be made redundant and brought an unfair dismissal action against Programmed, the pin cleaning work would surely be regarded as work within Programmed’s enterprise for the purpose of s 389(2). How then could it also be work within the company’s enterprise? 

[42] But even if one were to regard the outsourced pin cleaning work as falling within the company’s enterprise, I am not satisfied that it would have been reasonable for the company to insource the work and redeploy Mr Phillips to perform it. This was not a case where a contractor was performing excess work, covered by the Agreement, that could readily be taken back and reallocated to direct employees. Pin cleaning work is a non-core function that the company does not wish to undertake and is not covered by the Agreement. The company had sound reasons for outsourcing the work, as explained in the letters of 9 October 2020. It would not have been reasonable to expect the company to unwind the outsourcing decision made four years earlier, forego the benefits it had thereby attained, and create alternative work for Mr Phillips to perform by insourcing a non-core function.

[43] In any event, I consider that the company has established that there were good reasons why Mr Phillips should not have been redeployed on pin cleaning work, even if the work had been insourced. Mr Sorrenson’s evidence was that there was insufficient pin cleaning work for a full-time position, and that in 2021 it was expected that Programmed would invoice the company for around 20 to 25 hours per week. He also stated that, given the monotonous nature of the work, he would not have assigned an employee to work solely on this task, but would have had a number of workers perform it occasionally. I accept this evidence. It would not have been reasonable to expect the company to deploy Mr Phillips to undertake part of a part-time role performing work that the company does not wish to undertake directly in the first place.

[44] Mr Phillips’ alternative contention, that it would have been reasonable for the company to redeploy him to the mix and match position, is without merit. Mr Phillips challenged the reliability of the assessment process. Mr Louis was cross-examined about why some matters were afforded more or less weight than others. I do not consider that the evidence establishes any deficiency in the assessment process. But in any event, the mix and match position was not filled, and had it been, the position concerned would have been made redundant. I accept Mr Sorrenson’s evidence that, following the further rate reduction, the mix and match position was not needed. I reject the contention that the company bore Mr Phillips’ ill will or that it was ‘gaming its redeployment obligations’. There is no basis to question the genuineness of the second further rate reduction that caused Mr Sorrenson to decide not to fill the role. The managing director wrote to all employees on 24 November 2020 to explain the matter. I infer that Mr Sorrenson’s decision that the mix and match position was not needed was made on or shortly after 27 November 2020, when he became aware that the person who had been selected for the position had declined it. Further, there is no reason to think that, had the position still been required, it would have been reasonable to redeploy Mr Phillips to the position rather than any of the other employees who had participated in the mix and match process.

[45] The evidence does not establish that it would have been reasonable for the company to redeploy Mr Phillips to any other work within its enterprise or that of an associated entity. The COVID-19 pandemic has wrought havoc on the aviation sector. The company has made hundreds of positions redundant, including several in Mr Phillips’ area. I accept Mr Sorrenson’s evidence that the company remains on a downward trajectory in terms of production. The mix and match position does not exist. It is not reasonable to expect the company to insource non-core work to create positions that it does not want. There is no other work that Mr Phillips has identified to which he might reasonably have been redeployed.

[46] I would note that, contrary to Mr Phillips’ submission, s 389 does not give ‘paramountcy’ to redeployment. It does not impose redeployment obligations at all. Instead, it 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 in the employer’s enterprise or that of an associated entity. I also reject Mr Phillips’ contention that the company failed to meet ‘obligations’ under Part 11 to ‘minimise the impact of redundancies’ or ‘minimise the loss of jobs’. Clause 11.1 states that the process in that clause is one that ‘attempts to minimise the impact of redundancies’. It further provides that one of the purposes of consultation under the clause is to minimise the loss of jobs. These are provisions of importance that inform the meaning of Part 11, but they do not create independent obligations. The company complied with Part 11 and acted in a manner consistent with its purpose. Part 11 does not guarantee that redundancy will be avoided. Although there are numerous avenues for exploring alternatives, the Agreement clearly contemplates that involuntary redundancies can and will occur.

[47] Mr Phillips’ dismissal was a case of ‘genuine redundancy’ within the meaning of s 389. The dismissal therefore does not meet the definition of an unfair dismissal in s 385. Mr Phillips’ application for an unfair dismissal remedy must be dismissed.

[48] I would note that, even if Mr Phillips’ dismissal had not qualified as a ‘genuine redundancy’ I would not have considered that, in all the circumstances, his dismissal was harsh, unjust, or unreasonable, having regard to the considerations in s 387 of the Act. It is well settled that in cases where redundancy is the reason for dismissal, the consideration in s 387(a) (whether there was a ‘valid reason for the dismissal related to the person’s capacity or conduct’), and related considerations, are not relevant, because a decision to make a position redundant is not a reason related to capacity or conduct. Rather, the reason for dismissal is to be considered under s 387(h), ‘any other matters that the Commission considers relevant’. In my view there was plainly a legitimate reason for Mr Phillips’ dismissal. The need to reduce the size of the workforce has been clearly demonstrated. Mr Phillips was fairly selected because he ranked at the bottom of the KSA ranking at the time. He was consulted about his redundancy. He appealed his KSA scoring. And when he was retrenched, he received 44 weeks’ severance pay. The dismissal was not harsh, unjust or unreasonable. I note that part of the object of Part 3-2 is to ensure that a ‘fair go all round’ is accorded to the employer and the employee (s 381). Mr Phillips clearly received a ‘fair go’.

[49] Although it was not binding, the company’s reaction to Commissioner McKinnon’s opinion could have been relevant to the question of whether the dismissal was harsh, unjust, or unreasonable. However, the company did not ignore the Commissioner’s opinion. The evidence of Mr Sorrenson and Mr Storer demonstrates that the company did reconsider whether to insource the pin cleaning work. The company had of course considered this question previously and perhaps unsurprisingly it reached the same conclusion. Further, minutes of the steering committee meeting on 21 September 2020, and of an employee consultative committee meeting on 15 October 2020, record that the question of employees being redeployed to undertake pin cleaning work was discussed at those meetings. Mr Phillips said that there was never any discussion about how the pin cleaning work might be insourced, or the conditions that might apply to it, but the Agreement did not require this, and in my view neither did the Commissioner’s opinion.

[50] Finally, although the question of remedy was to be heard separately at a later time in the event that the dismissal were found to be unfair, I must say that it is very difficult to see how it could have been appropriate to reinstate Mr Phillips at a time when the company has been shedding hundreds of jobs, and in circumstances where Mr Phillips was selected for redundancy in accordance with a rigorous procedure prescribed by a collective agreement which resulted in a substantial severance payment of nearly a year’s pay.

Conclusion

[51] Mr Phillips’ dismissal was a case of genuine redundancy and was therefore not unfair. The application for an unfair dismissal remedy is dismissed.

DEPUTY PRESIDENT

Appearances:

R Wainwright for Mr Phillips
R. Preston of counsel for Boeing Aerostructure Australia Pty Ltd

Hearing details:

2021
Melbourne
18 and 19 February

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