Mr Chris Kolozsi v Print Warehouse Pty Ltd

[2015] FWC 7056

[2015] FWC 7056

FAIR WORK COMMISSION

DECISION

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

Mr Chris Kolozsi
v
Print Warehouse Pty Ltd
(U2015/6066)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 19 OCTOBER 2015

Summary: unfair dismissal – whether genuine redundancy – s.389 – defence under s.389 dismissed – consideration of substantive case – employer decision sound and reasonable – commercial and operational circumstances – whether casual employee should have been discharged in lieu of full time position held by Applicant – no requirement to sacrifice flexibility given business context – application under s.394 dismissed.

[1] This decision concerns an application made under section 394 of the Fair Work Act 2009 (“the Act”) by Mr Chris Kolozsi who is seeking an unfair dismissal remedy in relation to the termination of his employment from Print Warehouse Pty Ltd (“the employer”) on 23 June 2015.

[2] Mr Kolozsi had been employed in the role of a press and operator assistant for the employer since 24 January 2014.

[3] Mr Kolozsi claimed that on 9 June 2015 correspondence was provided to him by the Gold Coast site operations manager (Andrew Kelly) on behalf of the employer, Mr Rohan Singh (who appears to be the General Manager for the employer), to the effect that his position was being made redundant and given that there were no other positions to which he could be redeployed, his employment was to cease (on the basis of two weeks’ notice - with a component thereof being paid as notice in lieu).

[4] In essence, Mr Kolozsi argued that:

• the redundancy was not authentic as the termination of his position arose as a result of differences of opinion between him and his employer, one example being in relation to the appropriate rates to be paid for work performed on a Sunday; and



• in any event, there were other roles in the business that were required by the employer to be performed and that recruiting for casual employees was taking place in respect of those positions (into which Mr Kolozsi ought to have been redeployed).

[5] For its part, the employer contended that Mr Kolozsi’s termination arose from a genuine redundancy for purposes of s.389 of the Act, and that the Commission had no jurisdiction to determine the substantive application as a consequence.

[6] I will turn to the jurisdictional question further below. Initially, however, I will set out the relevant evidence as pressed by each respective party.

Mr Kolozsi

[7] Mr Kolozsi contended that the employer’s business had undergone significant changes in the period leading up to his termination. There had been changes in shift patterns and hours of work and a number of redundancies (and resignations) in the business.

[8] On the evidence of Mr Kolozsi the changes referred to above appear to have commenced in the business in November 2014.

[9] On Mr Kolozsi’s evidence, in late February 2015 two bindery workers had been made redundant only to be (Mr Kolozsi claimed) “immediately rehired as full time casuals”. Another two bindery staff were made redundant around the same time and they appear to have been replaced by one casual employee, according to Mr Kolozsi.

[10] In what seems to be early March 2015 Mr Kolozsi was asked by Mr Singh whether he would accept a reduction in his rate of pay (by decreasing his shift allowance from 30% to 10%). Mr Kolozsi did not agree to reduce his allowance in accordance with the request by Mr Singh, and no action was taken by Mr Singh in that respect.

[11] Later in March 2015, Mr Kolozsi claimed that another printer was made redundant, and there appears to have been a reduction in the number of shifts and a reconfiguration of the number of hours employees were required to work.

[12] At around this time, it appears Mr Kolozsi became concerned about anomalies in his wages, and in particular why he was not being paid penalty rates for work performed on a Sunday.

[13] Mr Kolozsi also maintained that though he had been moved from a night shift to a day shift, other managers had given him a verbal undertaking that his take-home pay would not be decreased as a consequence and as such, he would retain his night shift allowance. But Mr Singh had withdrawn the night shift allowance contrary to these undertakings.

[14] In what appears to have been early June 2015, a casual print assistant was put off and the shift patterns were again altered, according to Mr Kolozsi (though this appears to have arisen from local government noise restrictions rather than commercial considerations as such).

[15] As mentioned above, on 9 June 2015, Mr Kolozsi received a letter from Mr Singh indicating that his position was no longer required and as there were no other positions to which Mr Kolozsi could be redeployed, his employment would cease on the basis of two weeks’ notice.

[16] Mr Kolozsi understood that the employer had been advertising at or around the same time to employ new casual employees.

[17] Mr Kolozsi read the letter from Mr Singh and said (to Mr Kelly):

“[H]ow can they say they have looked to put me into other parts of the factory and they have not. Nobody has said anything to me. For f**ks sake they are advertising for full time casuals and im given this sh*t letter …” (sic)

Mr Singh’s evidence

[18] Mr Singh gave evidence that in late 2014 Print Warehouse Pty Ltd - a family owned and operated business - purchased a 10 colour printing press at a total cost approaching $650,000 for the Gold Coast operation. The new machine had twice the productivity of the earlier generation printer.

[19] However, as this machine was brought on line, the largest client - Domino’s Pizza - cancelled its contract with the employer. The Domino’s contract had accounted for 60% of the Queensland turnover. The dollar value of the lost turnover formed part of the employer’s evidence.

[20] No new printing contracts of any substance have been won since this time, according to Mr Singh.

[21] The business took steps to close the operating costs - revenues gap, as a consequence.

[22] Mr Singh gave evidence that an initial tranche of five employees were made redundant in February 2015. Two of these returned as casuals. One of these was on 20 hours per week. The other was initially on what appears to have been closer to full time hours for an initial period, before falling to a smaller number of hours in August 2015 (at which time the incumbent resigned his position in order to secure full time work).

[23] Mr Singh gave evidence (though not without some hesitation) that all staff were consulted by way of one on one meetings with him in February 2015 as to the business circumstances affecting the Queensland operations.

[24] Mr Singh claimed that in so communicating the business circumstances he did not convey expressly to the employees that their positions were at risk.

[25] Mr Singh confirmed the evidence of Mr Kolozsi in so far as Mr Kolozsi had claimed that the business had sought to reduce its wage costs in the months prior to Mr Kolozsi’s position being made redundant.

[26] By early June the employer had also decided to run one shift only.

[27] Mr Singh indicated that further cost savings were necessary to close the gap between the loss of the Domino’s contract and the business’s operational costs, and for this reason Mr Kolozsi’s position was declared redundant.

[28] Mr Singh also confirmed Mr Kolozsi’s claim that an advertisement had been placed for recruitment of casual employees at around the same time as Mr Kolozsi had been made redundant. Mr Singh offered no explanation as to why the advertisement had been initiated by the local operations manager (whose position was also made redundant later in June 2015). Mr Singh claimed that the advertisement was not authorised by him and in any event there had been no recruitment action under the advertisement.

[29] Prior to the loss of the Domino’s contract the number of staff at the Queensland site amounted to 20 persons. That number has now fallen to 8 staff (including what appears to be two casuals, one of whom is the cleaner).

Consideration of jurisdictional objection

[30] As mentioned above, the employer objects to the substantive application being heard on grounds of “genuine redundancy” under s.389 of the Act.

[31] Section 389 of the Act provides as follows:

389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

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

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.

[32] The onus to make out the grounds under s.389 of the Act falls upon the employer.

[33] The Explanatory Memorandum to the Fair Work Bill 2008 provides some insight into the scope of meaning of a redundancy as contemplated under the Act:

Clause 389 – Meaning of genuine redundancy

1546. This clause sets out what will and will not constitute a genuine redundancy. If a dismissal is a genuine redundancy it will not be an unfair dismissal.

1547. Paragraph 389(1)(a) provides that a person’s dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.

1548. The following are possible examples of a change in the operational requirements of an enterprise:

• a machine is now available to do the job performed by the employee;



• the employer’s business is experiencing a downturn and therefore the employer only needs three people to do a particular task or duty instead of five; or



• the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.

1549. It is intended that a dismissal will be a case of genuine redundancy even if the changes in the employer’s operational requirements relate only to a part of the employer’s enterprise, as this will still constitute a change to the employer’s enterprise.

1550. Paragraph 389(1)(b) provides that it will not be a case of genuine redundancy if an employer does not comply with any relevant obligation in a modern award or enterprise agreement to consult about the redundancy. This does not impose an absolute obligation on an employer to consult about the redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.

1551. Subclause 389(2) provides that a dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or within the enterprise of an associated entity of the employer (as defined in clause 12).

1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for redeployment or there may be no positions available for which the employee has suitable qualifications or experience.

1553. Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy. However, if the reason a person is selected for redundancy is one of the prohibited reasons covered by the general protections in Part 3-1 then the person will be able to bring an action under that Part in relation to the dismissal. [...]

[34] In order to attract the defence under s.389 of the Act, the employer must firstly demonstrate that the person’s job or position was not required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.

[35] Mr Kolozsi considers that the fact that the dismissal ostensibly for redundancy occurred in some proximity to the interactions with his employer about his rates of pay must have affected the judgement of his employer in relation to the viability of his position.

[36] Suspicion, however, is not a sufficiently strong basis on which to reach a finding of fact.

[37] Most of the interactions between Mr Kolozsi and his employer about his various pay issues were by way of email.

[38] Having examined the email correspondence between Mr Kolozsi and Mr Singh in relation to the various disputes over the shift allowance and Sunday penalties, I am struck by the absence of overt hostility in the email interactions between the two. The very fact that there may have been disputation regarding Mr Kolozsi’s entitlements does not immediately compel a finding (at least on the basis of the email exchanges between the parties) that Mr Kolozsi’s dismissal was contrived for reasons that Mr Singh took an adverse view of his agitation about two payment issues.

[39] Indeed, the emails demonstrate that some issues were resolved quite quickly upon the facts being elucidated and even Mr Kolozsi himself conceded - when pressed - that the correspondence revealed that the employer’s adverse response to him was conveyed in a “passive” manner.

[40] Taking account of my construction of the emails and the relationships upon which they shed light, and having heard the evidence of Mr Singh, I am satisfied that on the balance of probability the issues on foot regarding the wages situation were most unlikely to have had any bearing upon the employer’s judgement as to the viability of Mr Kolozsi’s position. Similarly, the import of any local council actions in relation to noise appear to be of marginal relevance to the considerations.

[41] Further, the employer appears to me to have been dealing with issues of much more fundamental risk to the business than a single dispute regarding whether Mr Kolozsi was owed a night shift allowance when performing the day shift (or any local council requirements). The evidence of Mr Singh was that the company was attempting to rebalance itself after having lost some 60% of its turnover in Queensland as the result of the unexpected loss of its major client in December 2014 (and at a time at which it had made a major capital investment on the presumption of the continuation of the contract). Further, the employer’s bank had been pressing it to demonstrate its business plan for the coming period in light of the dramatic change in cash flow and the family circumstances were such that it could no longer inject funds into the business.

[42] I note too that the introduction of the new printer brought significant productivity benefits in the context of the sharp decline in printing volumes. This development reasonably strengthens the case for redundancies in the business.

[43] The emails provided by Mr Singh as part of his evidence adduced the underlying narrative to the decision making of the employer in such an environment. The employer sought to maintain its commercial viability and sought to reduce operating costs and, unfortunately for Mr Kolozsi, that led to a conclusion that Mr Kolozsi’s position was no longer required to be performed by anyone, any longer.

[44] On my consideration of the evidence as presented, the employer made Mr Kolozsi’s position redundant because of a change in the operational circumstances of the business that meant Mr Kolozsi’s position was no longer required to be performed.

[45] The requirements of s.389(1) of the Act are therefore made out.

[46] Section 389(2) of the Act requires that an employer must comply with the consultation requirements of a modern award or enterprise agreement that applies to the work of the employee concerned.

[47] There is no dispute between the parties that Mr Kolozsi’s employment was covered by the Graphic Arts, Printing and Publishing Award 2010 (“the Award”).

[48] The consultation provisions of the Award are as follows:

9. Consultation

9.1 Consultation regarding major workplace change

(a) Employer to notify

(i) Where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the employees who may be affected by the proposed changes and their representatives, if any.

(ii) Significant effects include 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, promotion 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 this award makes provision for alteration of any of these matters an alteration is deemed not to have significant effect.

(b) Employer to discuss change

(i) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 9.1(a), 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.

(ii) 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(a).

(iii) 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.
[…]

[49] Mr Singh’s evidence was candid in respect of his consultations with his employees. The five employees who were made redundant in February were informed of their redundancy on the day their employment was terminated. The remaining employees were advised that same day as to the circumstances affecting the business.

[50] As I mentioned above, Mr Singh made it abundantly clear in his evidence that whilst the remaining employees (that is, after the redundancy round of February 2015) were informed of the business circumstances affecting the employer, they were not informed that their own positions were in jeopardy or at risk.

[51] There is no evidence that there was any discussion with Mr Kolozsi of the kind that is contemplated at clause 9.1(b) of the Award. It appears that Mr Singh’s agent (the operations manager at the Gold Coast site) conveyed the employer’s decision to make Mr Kolozsi’s position redundant to Mr Kolozsi and to indicate that his employment was at an end on the basis of the requisite period of notice.

[52] The termination correspondence does indicate that the reason for the employer’s decision to make the second press assistant position redundant was a consequence of the loss of the Domino’s contract, and that there was no work in any of the other areas of the business (such as maintenance, cleaning, or bindery work) to which Mr Kolozsi could have been redeployed.

[53] But there was no reason given by Mr Singh as to why the circumstances of this case warranted communication of the redundancy in such an abbreviated manner.

[54] Further, there was no written communication generated by the employer for the requisite purpose specified at clause 9.1(b)(iii) of the Award.

[55] It does not appear to me, therefore, that the requirements of s.389(1)(b) of the Act were made out.

[56] As a consequence, the defence under s.389 of the Act is not available to the employer.

[57] Because of this, I must now turn to consider the substantive case.

Legislative context

[58] Section 387 of the Act sets out the criteria for considering whether a dismissal was harsh, unjust or unreasonable.

387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC 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 the FWC considers relevant.

Consideration

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)

[59] The evidence discussed above is sufficient to demonstrate that Mr Kolozsi’s employment came to an end because his position was declared redundant as a consequence of the employer’s response to the dramatic change in its commercial circumstances. I have set the circumstances out above.

[60] The Full Bench in UES (Intl) Pty Ltd v Harvey[2012] FWAFB 5241 found that a dismissal for an operational reason is not a dismissal related to an employee’s capacity or conduct. That is, a dismissal for an operational reason could not be a valid reason for a dismissal under s.387(a) of the Act.

[61] I have found above that the decision to bring about the dismissal of Mr Kolozsi was because of an operational reason (the need to close the gap between turnover and operational costs). This is not a matter relevant to s.387(a) of the Act (as the alleged validity of the employer’s reason for dismissing Mr Kolozsi was unrelated to his conduct or capacity as an employee).

[62] As a consequence, the circumstances bear in neutral terms upon the ultimate finding as to whether or not Mr Kolozsi was dismissed harshly, unjustly or unreasonably.

Whether the person was notified of that reason

[63] Section 387(b) of the Act refers to Mr Kolozsi having been notified of “that reason”, being the valid reason for purposes of s.387(a) of the Act.

[64] As there was no definable valid reason for the dismissal the notification of such a reason was not possible. Section 387(b) of the Act is therefore of neutral consequence for my overall deliberation.

Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[65] Section 387(c) of the Act requires me to take into account whether or not Mr Kolozsi was given an opportunity to respond to the reason for his dismissal as it might relate to his capacity or conduct. As I have indicated above, Mr Kolozsi’s dismissal did not relate to his capacity or conduct and therefore this subsection of the Act bears in neutral terms upon my overall deliberation.

Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal

[66] Section 387(d) of the Act requires me to take into account any unreasonable refusal by the employer to allow Mr Kolozsi to have a support person present in the dismissal discussions. There is no evidence such an act of refusal took place. Equally, as I will mention below in relation to s.387(h) of the Act, Mr Kolozsi was given no opportunity to invite a support person to the meeting with the operations manager in June 2015.

If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal

[67] Section 387(e) of the Act does not apply to the circumstances in which Mr Kolozsi was dismissed from his employment, and therefore bears in neutral terms in respect of my wider deliberations. Mr Kolozsi was only dismissed because his position was declared redundant for an operational reason. Absent the redundancy and the imperative arising from the operational change, Mr Kolozsi would have remained in his employment.

The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal

[68] Section 387(f) of the Act is not a relevant consideration and was not pressed as such. The employer’s business had some 70-80 employees across its operations in three states.

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

[69] The task of effecting the dismissal was left to Mr Singh and his local operations manager as part of their generic duties. Mr Singh had no acquired expertise in human resource management. Mr Singh indicated that there was one HR person employed in Sydney, but this person does not appear to have been accessible or else relevant to the proceedings at hand. There was little evidence led on this point. As a consequence, I attribute little weight to this consideration.

Any other matters that the FWC considers relevant

[70] Section 387(h) of the Act requires me to take into account any other relevant considerations.

[71] As I have indicated above, the communication of the decision to make Mr Kolozsi’s position redundant occurred in abrupt terms and without any prior notice, and it took place in the context which caused Mr Kolozsi considerable apprehension as to the underlying motives of his employer.

[72] To some extent, an element of harshness is evident in the process by which Mr Kolozsi’s employment was brought to an end.

Conclusion

[73] I have found above that Mr Kolozsi’s position was made redundant for reasons that the employer was compelled to respond to dramatic changes in its business position. The employer’s Queensland operations had lost a major client and its monthly turnover had decreased by possibly 60% per month (and at a time at which it had made a significant capital investment in new printing machinery to support the now lost contract).

[74] The first half of 2015 appears to have been spent attempting to reconcile the adjusted turnover with the costs and operational structures previously in place. Further adjustments to the staffing profile have taken place subsequent to Mr Kolozsi’s dismissal (and also for reasons of redundancy).

[75] Whilst Mr Kolozsi will be apprehensive as to the role other factors may have played in determining whether his position was made redundant, on the facts available to me the employer has acted on the basis of operational imperatives and these are sound and defensible reasons.

[76] I understand that Mr Kolozsi is aggrieved by the fact that another employee had been made redundant and continued to perform duties as a casual employee at the time he (Mr Kolozsi) was made redundant. Mr Kolozsi appears to have argued that he should have acquired that position as a casual, or else that that casual’s position should have been terminated in order to “save” his full-time position.

[77] It may appear fair to Mr Kolozsi to propose such arrangements, but it may not be so considered by the casual employee whose livelihood would be lost as a consequence. Equally, no reasonable requirement falls upon the employer to sacrifice the genuine flexibility derived from a casual position (in the particular environment in which the business found itself) by retaining a permanent, fixed cost position.

[78] In any event, because of a reduction in his hours, the casual employee in question retained his employment for only a relatively short time after Mr Kolozsi’s employment was terminated.

[79] In all, reflecting on the entirety of the evidence, it does not appear to me that Mr Kolozsi’s termination was harsh, unjust or unreasonable. His employment came to an end for reasons of the unfortunate changes in his employer’s business, which resulted in the loss of over half of the workforce at the Queensland site. No issue arises in my mind that there were any other opportunities for Mr Kolozsi in the business as it was at the time of his dismissal (or from what I understand thereafter given no new printing contracts have been won). No additional discussion about the circumstances of the redundancy would have altered these elemental facts.

[80] Mr Kolozsi’s application for relief under section 394 of the Act is dismissed as a consequence of my finding above.

SENIOR DEPUTY PRESIDENT

Appearances:

C Kolozsi, applicant

R Singh of the respondent

Hearing details:

2015.

Brisbane:

12 October.

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