Mr Alastair Francis Spruyt v Jaston Concrete Cartage Pty Limited
[2010] FWA 5509
•23 JULY 2010
[2010] FWA 5509
The attached document replaces the document previously issued with the above code on 23 July 2010. Errors in paragraphs [4] and [8] have been corrected.
Carolyn Jurott
Associate to Commissioner Asbury
Dated 4 August 2010
[2010] FWA 5509 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Alastair Francis Spruyt
v
Jaston Concrete Cartage Pty Limited
(U2009/5163)
COMMISSIONER ASBURY | BRISBANE, 23 JULY 2010 |
Termination of employment - jurisdiction.
Background
[1] Alistair Francis Spruyt has made an application for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the FW Act), in respect of the termination of his employment with Jaston Concrete Cartage Pty Ltd (Jaston). Jaston, in a Form F3 - Employer’s Response to Application for Unfair Dismissal Remedy asserted, pursuant to s.389 of the Act, that the dismissal was not unfair because it was a case of genuine redundancy.
[2] The matter did not settle at conciliation and Mr Spruyt elected to proceed to arbitration. At a Directions Conference it was agreed that the initial matter of whether the dismissal was a case of genuine redundancy should be determined by way of a hearing. The parties filed and served statements and copies of documents to be relied on and a hearing was conducted on 3 March 2010. Both parties represented themselves at the hearing. At the outset of the hearing both parties were provided with a copy of s.389 of the Act and the hearing was adjourned for a short period to allow the parties to consider the provisions of the section and to ensure that they were aware of the matters that should be addressed.
The Legislation
[3] Section 385(d) of the Act provides that a person has been unfairly dismissed if FWA is satisfied that the dismissal was not a case of genuine redundancy. Section 389 of the Act provides that:
“389(1) A person’s dismissal was a case of genuine redundancy if:
(a) 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; 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.
389(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 or an associated entity of the employer.”
[4] By virtue of Schedule 3, Part 5, Division 3, item 36(a) of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act), Part 3-2 of the FW Act applies on and after the WR Act repeal day, as if the reference in s.389(1)(b) of the FW Act to a modern award, included a reference to an award based transitional instrument. By virtue of other provisions of Schedule 3, a State reference transitional award or common rule, is with some exceptions, an award based transitional instrument.
[5] The Explanatory Memorandum to the FW Act, in relation to s.389, makes it clear that the intention of the Legislature is that if a dismissal is a genuine redundancy, it will not be an unfair dismissal. 1 It is also clear that the only relevant considerations for determining whether a particular dismissal is a case of genuine redundancy, are whether the employer complied with relevant obligations in a modern award or enterprise agreement in relation to consultation, and whether it would have been reasonable to redeploy the person being dismissed. There is no requirement for FWA to be satisfied in relation to matters such as whether the process by which an employee was selected for redundancy was otherwise fair.
[6] Previously, an employer contending that an employee made redundant had not been unfairly dismissed, was required to establish that there was a valid reason for the dismissal based on the operational requirements of the employer’s business, and that the selection of the particular employee who was to be made redundant, was also for a valid reason. 2 Thus even in a case where the reason for a dismissal was a genuine redundancy, the dismissal of a particular employee as a result of those circumstances, could be found to be unfair, on the basis of the selection process.
[7] The Explanatory Memorandum states in relation to this issue that:
“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 application under that Part in relation to the dismissal.”
[8] The effect of s.389 is where the employer establishes that a dismissal of an employee was for the reason set out in s.389(1)(a) and that the obligations in s.389(1)(b) and s.389(2) with respect to consultation and redeployment have been met, the employee cannot pursue a remedy for unfair dismissal on the ground that the selection of the employee for redundancy was otherwise unfair. Further, where the employer establishes that the dismissal was a case of genuine redundancy, the employee cannot pursue a remedy for unfair dismissal on the ground that the employee was selected for a reason that constitutes a contravention under the general protections provisions of the FW Act.
[9] This is apparent from the example set out in the Explanatory Memorandum which makes it clear that a dismissal may be a case of genuine redundancy, and an employee will not be unfairly dismissed, where there are valid operational reasons for the redundancy, even in circumstances where that person is selected on grounds which may contravene the provisions of the Act dealing with general protections. In the example given, an employee selected for redundancy has not been unfairly dismissed, when a decision to reduce staff numbers has been made on valid economic grounds, but the employee is selected for the reason that the employee made a complaint to a union about award entitlements. 3
[10] Decisions of FWA in relation to s.389 have proceeded on the basis that the words of the section need to be applied to the circumstances of the case. 4 This approach is consistent with the Objects of Part 3-2 of the FW Act, which are set out in s.381 as follows:
“(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.
381(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.”
Evidence
[11] Mr Coxhead, the Director of Jaston, gave evidence in the hearing and produced a number of documents which were said to support the contention that Mr Spruyt’s dismissal was based on changes in the operational requirements of the business. Jaston is in the business of concrete cartage, and operates under contracts requiring it to deliver concrete to certain specifications. Jaston is a small business and at the time Mr Spruyt was dismissed, had five employees. None of those employees were employed on a casual basis. A major client of Jaston is Hytec. Mr Spruyt drove a concrete truck delivering concrete to Hytec.
[12] Mr Coxhead said that in or around October 2010, he became concerned about financial stress on the business associated with the economic downturn. By December 2010 the situation had deteriorated and Mr Coxhead was receiving notices from a number of financial institutions relating to defaults associated with loan agreements for company plant and equipment. Mr Coxhead tendered some eleven notices and statements from a number of financial institutions indicating that loans were in arrears, in default and that deductions from accounts for repayments had been refused on the basis of funds not being available.
[13] Mr Coxhead said that on 4 December he held a meeting with his employees and handed them a notice in the following terms:
“TO OUR VALUED EMPLOYEES
Due to the changes regarding wages & employment brought about by the present Government, we have no alternative but to make a few changes regarding these things within our Company.
Up until now, we have had an agreement in place, where everyone got paid based on Queensland Pay scale, plus overtime to a mutually agreed amount which was averaged for the year, this will finish on SUNDAY 13/12/09. However, any annual leave owing to you before this date, will be paid as per our agreement over the Christmas Holidays.
After the 13/12/09 you will be paid in accordance to the QUEENSLAND PAY SCALE, GRADE 5 CONRETE TRUCK DRIVER.
Unfortunately, due to the down-turn in the Construction Industry and financial constraints, we can only guarantee you 38 hours per week & overtime as required by the Company. With decreasing workload and rising costs, some difficult decisions will have to be made im (sic) sure, but if we all work together, we will come through this with no loss of jobs.
I will be coming back to drive at Maroochydore plant to reduce costs and all drivers will be advised on what hours they are required to work and what truck to drive.”
[14] Mr Spruyt was not present on the day of the meeting, and Mr Coxhead delivered the notice to Mr Spruyt’s home. Mr Coxhead said that initially his plan was to reduce the hours worked by Mr Spruyt and to work some of those hours himself. This decision was made because there had been a series of “Corrective Action Requests” and complaints from Hytec, about Mr Spruyt’s work performance. Corrective Action Request forms dated 13 January and 22 May 2009 in relation to delivering concrete that was not correctly “slumped” were tendered by Mr Coxhead. A warning letter to Mr Spruyt from Hytec in relation to the same matter was also tendered, stating that if Mr Spruyt’s performance did not improve, he would be removed from the “approved nominated drivers register”. There was also a Corrective Action Request dated 14 January 2009, in relation to Mr Spruyt reversing up a driveway next door to a job, and damaging a letter box. Mr Spruyt offered to pay for the damaged letter box but had not done so. Two other Hytec trucks had also reversed up the driveway in question causing damage, and Hytec required Mr Coxhead to pay for 1/3 of the damage. Mr Coxhead maintained that a copy of every Corrective Action Request issued by Hytec was given to both Jaston and to the employee concerned, and that Mr Spruyt was aware of these issues.
[15] Mr Coxhead said that after holding the meeting with employees and delivering the notice to Mr Spruyt, he received a Notice of Demand from a bank indicating that he was in default with respect to an agreement and was required to make payment within fourteen days. Mr Coxhead tendered a Notice of Demand dated 8 December 2009, which states that it is in relation to a loan agreement for a truck and that if the stated amount of money (which is not insignificant) is not paid within fourteen days, the goods may be repossessed and legal proceedings for recovery of any loss occasioned by the Bank instituted.
[16] Mr Coxhead said that this caused him to make a decision that he needed to take further steps than those foreshadowed in his letter to employees of 4 December 2009, and that he should reduce the number of drivers employed by Jaston by one. Mr Coxhead said that the decision to reduce the number of drivers by one, would enable him to take on the driving duties previously performed by that employee. Mr Coxhead decided to make Mr Spruyt redundant, and maintained that he selected Mr Spruyt on the basis that Mr Spruyt had more Corrective Action Requests than any of his other employees. Mr Coxhead also said that none of his other employees had ever cost him any money, and only two had Corrective Action Requests, but not to the same extent as Mr Spruyt. Mr Coxhead gave Mr Spruyt a letter of termination stating that:
“It is my unpleasant duty to inform you that due to financial difficulties, I am left with no alternative but to give you two weeks notice of my intention to cease your employment with Jaston Concrete Cartage Pty Ltd, effective from 9/12/09.
Under the Award, you are entitled to two weeks severance as well as two weeks notice. Which will be paid to you in the normal pay run approx 15/12/09 along with any annual leave accrued.
We wish you all the best in your future endeavours and thank you for your loyalty over the past 16 months.”
[17] Mr Coxhead took over the driving of the truck that had previously been driven by Mr Spruyt and was still driving that truck at the time this matter was heard.
[18] Mr Spruyt said in his evidence that prior to working for Jaston, he worked for Hytec as a truck driver and ceased employment with that company after it decided to contract out work. Mr Spruyt maintained that while working for Jaston he was required to work excessive hours and that when he complained he was told to fake log books. Mr Spruyt said he also complained to Mr Coxhead about not being paid overtime when working on Saturdays or when working fourteen hour days. On 30 October 2009, Mr Spruyt complained about his wages and conditions of employment to the Fair Work Ombudsman. Mr Spruyt maintained that he was the only employee who received the letter from Mr Coxhead of 4 December 2009, and that other employees told him that they did not receive this letter.
[19] On 8 December Mr Coxhead told Mr Spruyt to take his tools out of the truck and that he would give him two weeks severance. Later, Mr Spruyt had an altercation with Mr Coxhead and maintained that Mr Coxhead verbally abused him, while Mr Coxhead’s brother Jason looked on and laughed. Mr Spruyt said that he felt intimidated during this altercation. Mr Spruyt pointed to the fact that he had raised this altercation in his application for an unfair dismissal remedy, and Mr Coxhead had stated in his written material filed with FWA that: “I am not responsible for my brother’s actions” indicating that this altercation did occur. In relation to the financial difficulties referred to by Mr Coxhead, Mr Spruyt said that the documents tendered by Mr Coxhead were all dated December 2009 and January 2010, and there was no evidence that these difficulties were ongoing or that they existed before December 2009. Mr Spruyt maintained that he had not previously seen any Corrective Action Requests in relation to his work, and tendered a reference from Hytech indicating that he was a good driver. Mr Spruyt also said that the driveway was damaged by three drivers not just him, and that Mr Coxhead had never raised the issue of paying for the letter box with him.
[20] Under cross-examination, Mr Spruyt agreed that the Fair Work Ombudsman had found that Jaston had complied with its obligations in relation to payment of employees’ wages and record keeping. A letter stating this was tendered by Mr Coxhead and marked as Exhibit 12. Neither Mr Coxhead nor Mr Spruyt called any evidence or made any submissions in relation to the award applicable to Mr Spruyt’s employment. The indirect references in the letters of 4 and 9 December are the only evidence of any industrial instrument having application to Mr Spruyt’s employment.
Conclusions
[21] I am satisfied on the evidence before me, that Jaston was experiencing significant financial difficulties. The uncontested evidence of Mr Coxhead was that he was under pressure from a number of financial institutions in relation to payments under loan agreements relating to the business. I am also satisfied that Mr Coxhead, as the owner of a small business, decided that in order to meet his financial obligations, and to keep all of his trucks operating, it was necessary to dismiss one of the five persons he employed to drive the trucks and to take over the driving duties previously performed by that employee. As a result of that decision, Jaston no longer required five drivers, and this was due to operational requirements. These circumstances are no less a case of genuine redundancy, than would be the case if Mr Coxhead had decided to dismiss one driver and to operate with four instead of five drivers. The critical point is that the work of one driver was no longer to be performed by an employee, but rather by the owner of the company.
[22] There was little evidence about what award or industrial instrument applied to Jaston’s employees. It is clear that a modern award did not apply, at the point of Mr Spruyt’s dismissal on 9 December 2009. There was no evidence of an enterprise agreement applying to Jaston and its employees. I assume from the references to an award in the letters of 4 December and 9 December 2009, under Mr Coxhead’s signature, that the relevant award was the Cement Industry Award - State 2003 (the Award). That Award is an award of the Queensland Industrial Relations Commission, and operated at the relevant time as a common rule. That Award was an award based transitional instrument as defined in the Transitional Act, and any obligation to consult for the purposes of s.389(1)(b) of the FW Act as modified by Part 6, Schedule 3, item 36(a) of the Transitional Act, was derived from that Award.
[23] The Award prescribes consultation in the following terms:
4.11 INTRODUCTION OF CHANGES
4.11.1 Employer’s duty to notify
(a) Where an employer decides to introduce changes in production, program, organisation, structure or technology, that are likely to have significant effects on employees, the employer shall notify the employees who may be affected by the proposed changes and, where relevant, their Union or Unions.
(b) ‘Significant effects’ includes termination of employment, major changes in the composition, operation or size of the employer’s workforce or in the skills required; the elimination or diminution of job opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of employees to other work or locations and the restructuring of jobs:
Provided that where the Award makes provision for alteration of any of the matters referred to herein an alteration shall be deemed not to have significant effect.
4.11.2 Employer’s duty to consult over change
(a) The employer shall consult the employees affected and, where relevant, their Union or Unions about the introduction of the changes, the effects the changes are likely to have on employees (including the number and categories of employees likely to be dismissed, and the time when, or the period over which, the employer intends to carry out the dismissals), and the ways to avoid or minimise the effects of the changes (eg by finding alternative employment).
(b) The consultation must occur as soon as practicable after making the decision referred to in clause 4.11.1.
(c) For the purpose of such consultation the employer shall provide in writing to the employees concerned and, where relevant, their union or unions, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees, and any other matters likely to affect employees, provided that any employer shall not be required to disclose confidential information, the disclosure of which would be adverse to the employer’s interests.
4.12 REDUNDANCY
4.12.1 Consultation before terminations
(a) Where an employer decides that the employer no longer wishes the job the employee has been doing to be done by anyone, and this is not due to the ordinary and customary turnover of labour, and that decision may lead to termination of employment, the employer shall consult the employee directly affected and where relevant, their Union or Unions.
(b) The consultation shall take place as soon as it is practicable after the employer has made a decision, which will invoke the provisions of clause 4.12.1(a) and shall cover the reasons for the proposed terminations, measures to avoid or minimise the terminations and/or their adverse effects on the employees concerned.
(c) For the purpose of the consultation the employer shall, as soon as practicable, provide in writing to the employees concerned and, where relevant, their Union or Unions, all relevant information about the proposed terminations including the reasons for the proposed terminations, the number and categories of employees likely to be affected, the number of workers normally employed and the period over which the terminations are likely to be carried out:
Provided that any employer shall not be required to disclose confidential information, the disclosure of which would be adverse to the employer’s interests.
[24] Clause 4.12.12 of the Award provides an exemption from the provisions of clause 4.12 as follows:
4.12.12 Employers exempted
(a) Subject to an order of the Commission, in a particular redundancy case, clause 4.12 shall not apply to an employer including a company or companies that employ employees working a total of fewer than 550 hours on average per week, excluding overtime, Monday to Sunday. The 550 hours shall be averaged over the previous 12 months.
(b) A ‘company’ shall be defined as:
(i) a company and the entities it controls; or
(ii) a company and its related company or related companies; or
(iii) a company where the company or companies has a common Director or common Directors or a common shareholder or common shareholders with another company or companies.
[25] There is no evidence to suggest that Jaston is not caught by this exemption. On Mr Coxhead’s evidence, which was not contradicted, Jaston employed five persons at the time Mr Spruyt was dismissed, and there is nothing to suggest that those five employees worked more than 550 hours on average per week. Accordingly, the obligation to consult in clause 4.11 was binding on Jaston, but the obligation in clause 4.12 was not.
[26] The consultation engaged in by Mr Coxhead was rudimentary to say the least. The letter of 4 December 2009, indicated that Jaston was suffering a decreasing workload and that financial constraints meant that the hours to be worked by each employee would be required to be reduced. The letter also indicated that Mr Coxhead would be coming back to work at the Maroochydore plant. Further, the letter indicated that there was a possibility that jobs would be lost. Mr Coxhead’s evidence that he gave the letter to all of his employees, including Mr Spruyt was not contradicted, other than by Mr Spruyt claiming that other employees told him that they were not given the letter. In the circumstances where the only contradictory evidence on this point is hearsay, I accept Mr Coxhead’s evidence.
[27] For the purposes of s.389(1)(b), I am satisfied that the letter of 4 December 2009 was sufficient to meet any obligation Mr Coxhead had with respect to consultation, under clause 4.11 of the Award. In reaching this conclusion I have taken into account the fact that Mr Coxhead made an attempt to provide written notice to his employees of the difficulties the business was facing. I have also taken into account the fact that Mr Coxhead operates a small business and that it would not be consistent with a “fair go all round” or the needs of small business, to require Mr Coxhead to engage in consultation at the same level and standards which would be expected of larger businesses.
[28] In all of the circumstances of this case, I am also of the view that it would not have been reasonable for Mr Coxhead to redeploy Mr Spruyt in his enterprise. Mr Coxhead had five employed drivers and he made a decision that his business could sustain only four employed drivers. There was no evidence that there was any redeployment option. Further, there was no evidence of any associated enterprise or entity which Mr Spruyt could have been redeployed within.
[29] I accept that Mr Spruyt disputes the validity of the Corrective Action Requests and complaints about his work performance. However, these issues go to the process used to select Mr Spruyt as the employee to be dismissed, rather than whether his dismissal was a case of genuine redundancy. The fairness of the selection process is not an issue that can be agitated in circumstances where the dismissal is a case of genuine redundancy.
[30] I also accept that Mr Spruyt believes that the real reason for his dismissal was that he made a complaint to the Fair Work Ombudsman about his wages and conditions of employment. It is not in dispute that in or around October 2009, Mr Spruyt did make such a complaint. It is also not in dispute that Mr Coxhead’s brother made some unpleasant comments to Mr Spruyt on the day he was dismissed, which may or may not have related to that complaint. However, whether these matters are sufficient to establish that there has been a contravention of the FW Act with respect to general protections, is not a matter that can be dealt with by way of an unfair dismissal claim, in circumstances where the employer has established that the dismissal was a case of genuine redundancy.
[31] I have determined that Mr Spruyt’s dismissal was a case of genuine redundancy. As a consequence, Mr Spruyt’s dismissal was not unfair, and his application for an unfair dismissal remedy is dismissed. I Order accordingly.
COMMISSIONER
Appearances:
Mr A. Spruyt on his own behalf.
Mr T. Coxhead on behalf of Jaston Concrete Cartage Pty Ltd.
Hearing details:
2010.
Brisbane:
March 3.
1 Fair Work Bill 2008 Explanatory Memorandum paragraph 146.
2 Kenefick v Australian Submarine Corp Pty Ltd (No. 2) (1996) 65 IR at 362.
3 Fair Work Bill 2008 Explanatory Memorandum page 247.
4 Iannello v Motor Solutions Australia Pty Ltd[2010] FWA 3125; [2009] FWA 1676; 2010 FWA 674; [2010] FWA 675; [2010] FWA 2571
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