Mr Angelo Librio v Engineering Plastics Pty Ltd
[2011] FWA 6193
•9 SEPTEMBER 2011
[2011] FWA 6193 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Angelo Librio
v
Engineering Plastics Pty Ltd
(U2011/8398)
COMMISSIONER SMITH | MELBOURNE, 9 SEPTEMBER 2011 |
Application for unfair dismissal remedy - whether termination was a genuine redundancy - obligation to consult - failure to consult - whether termination harsh, unjust or unreasonable
Introduction
[1] On 3 June 20011, Mr Angelo Librio made an application pursuant to s.394 of the Fair Work Act 2009 (the Act) alleging that his employment with Engineering Plastics Pty Ltd was terminated harshly, unjustly or unreasonably. I should add at this stage that the company is engaged in the manufacture of custom engineered plastic components and comprises two working directors (owners) together with five skilled operators and one sales representative (Mr Librio).
[2] In accordance with s.396 of the Act I find that the application was made within the period required. However, Engineering Plastics argue that the termination was a case of genuine redundancy. This is a matter which I am required to decide before considering the merits.
[3] At the commencement of the matter before me on 8 September 2011, I conferred with the parties in accordance with ss.398 and 399 of the Act. As a result of that consultation it was agreed that I would firstly see if the matter could be resolved by way of a conference which explored options. Regrettably this did not produce an agreed outcome and it was decided that a hearing would be the most effective and efficient way to resolve the matter.
[4] With permission, Mr McKenney, of counsel, appeared for Mr Librio and Mr Watson, paid agent, appeared for Engineering Plastics.
The Jurisdictional Argument.
[5] As there was little difference in the factual matrix of the circumstances leading to the dismissal as it relates to the question of whether or not a genuine redundancy occurred, it was agreed that reliance could be placed on the written submissions and supplemented by brief oral submissions.
[6] It was the submission of Engineering Plastics that a major client, which represented 60% of total company sales, advised that it would be bringing its work back in-house. Engineering Plastics submitted that consideration had to be given to reducing its cost base and therefore it was considered that the work of Mr Librio could be spread amongst other employees and as a consequence he would be made redundant.
[7] On behalf of Mr Librio it was argued that Engineering Plastics had not complied with s.389 (1) or (2) of the Act.
[8] It is to those matters that I now turn.
[9] Again, the factual circumstances are uncontroversial. On 17 May 2011 Mr Librio was handed a letter which advised all staff that the company had lost a major customer and correspondingly a substantial amount of business. It went on to say:
“The company has been reviewing all possible ways of reducing operating costs in this very difficult situation and can see no real alternative to reducing staff levels
We are therefore in the unfortunate position of having to look at redundancies. An announcement on this matter will be made shortly.” 1
[10] It was also uncontested that other employees got this notice on 3 May 2011 but Mr Librio was on sick leave at the time and the company thought it better not to bother him.
[11] On 18 May 2011 Mr Librio was advised that he would be made redundant and on 20 May 2011 he was given a letter terminating his employment. It is not contested that there was no discussion with Mr Librio about the proposed redundancy. There was some discussion about him having the ability to work out his notice.
The Act and Award
[12] Section 389 of the Act provides:
“389 Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.”
[13] To use the language of Ulan Coal Mines Ltd v Honeysett 2 it can be seen that the provision contains both an inclusionary aspect [s.389(1)] and exclusionary aspect [s.389(2)]. It is argued by Mr McKenney that s389(1)(a) of the Act is not satisfied because Mr Librio’s job is still required to be performed. In relation to the conjunctive provision, it is argued that the obligation which arises under the Manufacturing and Associated Industries and Occupations Award 2010 (the award) [MA000010]3 had not been fulfilled.
[14] The award relevantly provides:
“9.2 Employer to discuss change
(a) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 9.1, the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.
(b) The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in clause 9.1
(c) For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, 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 no employer is required to disclose confidential information the disclosure of which would be contrary to the employer’s interests.”
[15] Mr Watson argued that Mr Librio did not raise issue or propose any solutions after he was handed the letter on 17 May 2011.
[16] Mr McKenney also submitted that there was no opportunity for Mr Librio to consider redeployment.
Consideration of Jurisdictional Argument
[17] Dealing firstly with the argument advanced by Mr McKenney that the job is still required to be done. He, of course, referred to the concepts adumbrated in the Termination Change and Redundancy Case 4 and, in particular, the decision of then Chief Justice of the South Australian Supreme Court, Justice Bray in The Queen v The Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Co-Operative Limited and others5.
[18] It is perhaps not as clear as Mr McKenney submits as there has been consideration of circumstances where nearly all of the functions of a job may remain but that it is split up, distributed amongst other employees, and modified. In those circumstances this may give rise to the conclusion that the single job no longer remains. That is, the employer no longer wants that particular combination of functions or job performed by anyone. However, given my conclusion on the second aspect, I do not need to reach a final conclusion as both elements of section 389 (1) of the Act need to be satisfied.
[19] In relation to s.389(1)(b) of the Act, on the facts presented, it appears clear that the employer did not discuss with Mr Librio any of the matters contained in the award at clause 9.1(a). It is not an answer to say that the employee did not raise anything. The facts around the work of the organisation and the impact of the stated economic loss are matters which are largely in the knowledge of the employer. The terms of the clause in the award reflect the reality of this special knowledge and that is why the clause begins with the words: the employer must...
[20] I find that Engineering Plastics did not comply with s. 389 (1) and therefore the termination of the employment of Mr Librio was not a case of genuine redundancy as defined by the Act.
Harsh, Unjust or Unreasonable?
[21] I now turn to consider whether or not the termination was otherwise harsh, unjust or unreasonable.
[22] Section 387 of the Act provides:
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that FWA considers relevant.”
[23] The first question that must be considered is whether or not there was a valid reason relating to the persons capacity or conduct. Nothing has been put, and indeed it is submitted by Mr Watson, that this was not a consideration. It follows that ss. 387(b), (c), (d) and (e), have no relevance. I note that the employer is a small business but that it had at its disposal a human resource management specialist - Mr Watson.
[24] Finally, I turn to (h) - any other matters that FWA considers relevant.
[25] To begin, it appears that it is not open to simply conclude that a redundancy occurred and use that as the basis for considering whether or not the termination was harsh, unjust or unreasonable. To do so would be to go against the scheme of the Act which provides a specific test for a genuine redundancy. The specific overrides the general 6
[26] It may be that Engineering Plastics considered Mr Librio’s capacity in a relative sense when it selected him for termination given the economic circumstances which faced it, but there is no evidence and indeed there was a submission that conduct and capacity were not relied upon.
[27] It follows that I must find that there was no valid reason for the termination of employment of Mr Librio and I find that the termination of his employment was harsh, unjust and unreasonable.
[28] I do not propose to deal with remedy as no submissions were put. I will provide the parties with a further opportunity to address this issue. In doing so I would be assisted by evidence as to the financial impact upon the company of the loss of its biggest client; the factors which led to the conclusions that a reduction in staffing levels was necessary; and the process by which (and the reasons why) Mr Librio was selected .
[29] Engineering Plastics should file any further submissions or evidence on this point by COB 19 September 2011 and Mr Librio should reply by COB 3 October 2011. A further hearing for brief oral submissions will be at 2:15pm on 11 October 2011.
COMMISSIONER
Appearances:
M McKenney of Counsel on behalf of Applicant.
P Watson, paid agent, on behalf of Respondent
Hearing details:
2011
Melbourne
8 September
1 Document 1 of the respondents materials
2 [2010] FWAFB 7578
3 There is no dispute about the application of this award
4 Print F7262 & F6230
5 [1977] 44 SAIR 1202, 1205
6 Anthony Harden & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia [1932] 47 CLR 1, 7
Printed by authority of the Commonwealth Government Printer
<Price code C, PR514435>
2
0
0