Mr Conor O'Brien v Ehgc Pty Ltd T/A Exquisite Homes
[2012] FWA 8947
•14 NOVEMBER 2012
[2012] FWA 8947 |
|
DECISION AND REASONS FOR DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Conor O'Brien
v
EHGC Pty Ltd T/A Exquisite Homes
(U2012/12025)
COMMISSIONER CLOGHAN | PERTH, 14 NOVEMBER 2012 |
Unfair dismissal.
[1] This is an application by Mr Conor O’Brien seeking a remedy for alleged unfair dismissal from his employment. The employer denies that Mr O’Brien was unfairly dismissed but rather, alleges he was genuinely made redundant.
PROCEDURAL BACKGROUND
[2] On 2 August 2012, Mr Conor O’Brien (“the Applicant”) made application to Fair Work Australia (FWA) seeking a remedy for alleged unfair dismissal from his employment with EHGC Pty Ltd T/A Exquisite Homes (“the Employer”).
[3] The application was made pursuant to s.394 of the Fair Work Act 2009 (“the FW Act”).
[4] The application was unable to be resolved at conciliation on 22 August 2012 and was referred to me for arbitration on 24 August 2012.
[5] In response to the originating application, the Employer asserted that:
“The Applicant was not unfairly dismissed. The Applicant’s termination of employment was a genuine redundancy as Exquisite Homes is experiencing a downturn and has been since February 2012. The Applicant’s job was not required to be done by any person. As of 14 August 2012, the Applicant’s job was not required to be done by any other employee”. 1
[6] Pursuant to s.396 of the FW Act, it is necessary, before considering the merits of the application, to determine whether Mr O’Brien’s dismissal was a case of genuine redundancy. If Mr O’Brien’s dismissal was a case of genuine redundancy, pursuant to s.385 of the FW Act, he cannot have been unfairly dismissed.
[7] To assist in the efficient and effective determination of whether Mr O’Brien’s dismissal was a case of genuine redundancy, I issued procedural directions on 6 September 2012. The procedural directions provided for the Employer to make its submission by 20 September 2012. The Applicant was required to respond by 4 October 2012. The Employer was able, should it desire, to provide a response to the Applicant’s submission by 11 October 2012. Either party could request to make oral submissions; if so, they were required to advise my Associate by 15 October 2012 for a hearing on 17 October 2012.
[8] The Applicant, after receiving the Employer’s written material, sought an oral hearing which took place on 17 October 2012. At the conclusion of the hearing, I reserved my decision. This is my decision and reasons for decision.
RELEVANT BACKGROUND
[9] Mr O’Brien commenced employment on 17 November 2011.
[10] It is largely uncontested that:
• as at February 2012, the Employer employed a combined total of 127 permanent employees and contractors;
• sales for the month of February 2012 were $646,000;
• after February 2012, the Employer’s workload significantly decreased;
• the Employer addressed its reduced workload by dispensing with contractors in the first instance;
• as at June 2012, the Employer had 36 full-time employees;
• as the Employer’s workload decreased, it also reduced the working day for its full-time employees from 10 hours to 8 hours;
• as at June 2012, the Employer came to the view that it had insufficient work for the 36 full-time employees on an 8 hour day;
• the Employer’s sales for June 2012 was $228,000;
• on 18 June 2012, the Employer conducted a workplace meeting with its full-time employees. The Employer advised its workforce of possible redundancies and a further reduction in the workforce;
• on 19 June 2012, the Employer sent an email to Mr O’Brien and several other employees advising them that there was a reasonable likelihood that he would be made redundant. The email also goes on to state, “However, a decision has not yet been made and I invite you to contact me to discuss the possibility of redundancy and provide us [the Employer] with feedback”;
• the Employer met with Mr O’Brien on 26 June 2012 and discussed his possible redundancy. During the meeting, the Employer referred to Mr O’Brien’s attendance record and its desire to retain longer serving employees with well developed skills in anticipation of a pick-up in work. Mr O’Brien acknowledges that he made no comment in relation to the Employer’s selection procedure nor any suggestions to deal with his possible redundancy;
• the Employer interviewed several employees from 26-29 June 2012 in relation to possible redundancies;
• as a result of the consultation with the workforce, two permanent full-time employees volunteered to take unpaid leave;
• four (4) employees were affected through a reduction in their rate of pay or allowances;
• Mr O’Brien did not suggest a reduction in his remuneration nor volunteer to take unpaid leave;
• the Employer selected two employees to be made redundant including Mr O’Brien;
• the Employer [with the inclusion of those employees who had taken unpaid leave] had reduced its workforce from 36 to 32 by early July 2012;
• Mr O’Brien was given notice of his termination of employment on 2 July 2012;
• Mr O’Brien’s last day of attendance at work was 11 July 2012; and
• Mr O’Brien was not required to attend work but was paid from 12 to 27 July 2012.
[11] While the Employer asserts that following the termination of employment of Mr O’Brien, the work that had previously been done by him was not required to be done by any person; this is disputed by the Applicant. Mr O’Brien contends that in the week following 27 July 2012, the Employer held job interviews for carpenters and a number commenced work a few days later 2.
RELEVANT STATUTORY FRAMEWORK
[12] Section 396 of the FW Act provides initial matters to be considered before the merits of any application:
• 396 Initial matters to be considered before merits
FWA must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
(a) whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;
(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;
(d) whether the dismissal was a case of genuine redundancy.
[13] The meaning of unfair dismissal is contained in s.385 of the FW Act which is as follows:
• 385 What is an unfair dismissal
A person has been unfairly dismissed if FWA is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
CONSIDERATION
[14] Mr O’Brien does not take issue with the Employer’s statement of facts and the written evidence of Mr T Durham, Director, EHGC, that between February and June 2012 the Employer’s sales deteriorated by approximately two thirds.
[15] The Employer’s business involves the construction of pre-fabricated transportable accommodation (such as site offices and “dongas”). The Employee’s work is repetitive and dependent upon sales.
[16] In the absence of any evidence to the contrary, and with Mr O’Brien not taking issue with the deterioration in sales, I find that the requirement for employees to carry out work in the construction of pre-fabricated accommodation had significantly reduced between February and June 2012. As a consequence, it was necessary for the Employer to reduce its workforce to reflect diminishing sales.
[17] As a consequence of a reduction in sales and the need to tailor its workforce to the reduction in sales, I am satisfied that the Employer undertook a series of measures before considering redundancies. These measures included: parting with contractors; reducing daily working hours of full-time employees; letting two employees take unpaid leave and a reduction in wages or allowances for some employees. In addition, Mr Durham gave evidence that he sought from his employees “any suggestions that could either raise income or minimise overheads” 3.
[18] Notwithstanding these series of measures, the Employer came to the conclusion that it was necessary to reduce its full-time workforce through redundancies. Mr Durham gave written evidence that he sought, in the first instance, volunteers for redundancy. Having not received any volunteers, Mr Durham gave evidence that he shortlisted ten staff for involuntary redundancy.
[19] I have no evidence that the Employer established a selection procedure which was applicable to all full-time employees. However, I have evidence that Mr O’Brien was shortlisted for redundancy because of his attendance record and the fact that his service with the Employer was relatively short.
[20] Mr O’Brien commenced employment on 17 November 2011.
[21] Mr O’Brien was absent from work as follows:
• January 31
• February 1, 8, 23 and 27
• March 1, 14, 22 and 23
• April 2, 3, 19 and 20
• May 21, 25, 28, 29, 30 and 31
• June 1, 5, 7, 28 and 29
• July 2.
[22] Both Mr O’Brien and the Employer agree that the dates are correct.
[23] The Employer asserts that Mr O’Brien was absent “without authorisation and without any notice” 4. Mr O’Brien provided a submission asserting that he sent a message to the Employer each day before 7:00 am that he has a “skin disease that causes me severe discomfort”. From 21 May to 2 July 2012, Mr O’Brien contends that he took these 12 days off because he was being “bullied and harassed” at work.
[24] Furthermore, Mr Durham refers to, in Mr O’Brien’s termination of employment letter of 2 July 2012, four (4) written warnings regarding his conduct. The earliest written warning is dated 7 April 2012. The final warning was on 19 June 2012. I am not required to make any findings in relation to Mr O’Brien’s alleged unsatisfactory conduct or performance, however, as it is contained in his termination of employment letter, I am satisfied that it was a factor the Employer took into account in the selection process. For completeness, I should note that Mr O’Brien asserts, in relation to the written warnings, that they were “manufactured by the management of EHGC to get me out of there (sic) company” 5.
[25] Mr O’Brien’s submission contains a number of matters which are contextual to the employment relationship. These matters related to drug testing; WorkSafe; ethnic discrimination, Mr O’Brien’s period of employment while on workers’ compensation and discussions which took place with another employee who was made redundant. Further, Mr O’Brien asserted that the Employer held interviews and commenced employment of carpenters after he had been made redundant.
[26] Mr O’Brien’s employment was terminated by letter dated 2 July 2012. Because Mr O’Brien was on workers’ compensation at the time, the Employer was required to give 28 days notice. The effective date of dismissal as contained in the Notice of Intention to dismiss a worker while on workers’ compensation is 27 July 2012.
[27] Mr Durham’s written evidence, which was tested in cross examination, was that on 1 July 2012, the Employer was unsuccessful in winning a contract for work. On 2 August 2012 Mr Durham was telephoned about the same unsuccessful bid for work and awarded a contract to build 21 of the original 25 units. Mr Durham gave evidence that he withdrew some employees from other sites and advertised for casual employees who commenced employment from 10 August 2012. The casual employees were employed for the duration of the contract.
[28] In cross examination, Mr Durham gave evidence that he has not employed a full-time carpenter since 22 February 2012 6. Further, since Mr O’Brien was made redundant, five full-time employees have left the Employer and not been replaced.
[29] Having considered all of the evidence, I am satisfied that Mr O’Brien’s dismissal can be attributed wholly or mainly to the Employer’s reduction in work in that area for which he was employed. I am also satisfied that the Employer introduced a series of measures, in the first instance, designed to avoid redundancies for full-time employees. Notwithstanding these measures, the Employer found redundancies were unavoidable. In the first instance, the Employer gave notice and consulted with the workforce before subsequently creating a shortlist of 10 employees who were to be considered for redundancy.
[30] While I am not aware of the overall criteria in selecting employees for redundancy, I am satisfied that the reasons for Mr O’Brien being made redundant related to his work performance, attendance, the desire of the Employer to retain longer serving employees and declining work.
[31] In view of the Employer being relatively small, I am satisfied that Mr Durham had direct knowledge of Mr O’Brien and consequently was in a position to make an assessment of his performance and was entitled to make such an assessment of his performance as part of considering who should be made redundant. Further, it was reasonable for Mr Durham to consider the four (4) written warnings given to Mr O’Brien. Finally, while the criterion, “last in, first out”, is a blunt instrument in the selection of employees to be made redundant, it is an objective test often considered by employers during redundancies.
[32] Overall, having considered the evidence, I am satisfied that the reasons for making Mr O’Brien redundant were appropriate. Finally, I am satisfied that the process of giving Mr O’Brien the option of considering alternatives to redundancy; stating the reasons why he was being considered for redundancy and the opportunity to respond, and ultimately receiving correspondence as to why he was made redundant, open and transparent.
[33] In conclusion, I am satisfied that Mr O’Brien was dismissed from his employment for reasons of genuine redundancy. For this reason, s.385 of the FW Act provides that Mr O’Brien could not have been unfairly dismissed. Accordingly, I must dismiss the application and an order to this effect will be issued conjointly with this decision and reasons for decision.
COMMISSIONER
Appearances:
C O’Brien, the Applicant.
S Hicks of counsel for the Respondent.
Hearing details:
2012:
Perth,
17 October.
1 Form F3 Employer’s Response to Application for Unfair Dismissal Remedy
2 Exhibits R4 and A1
3 Exhibit R1
4 Exhibit R4
5 Exhibit A1
6 PN 101
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