Mr Craig Ablett v Gemco Rail Pty Ltd

[2011] FWA 1531

[2011] FWA 1531

FAIR WORK AUSTRALIA

DECISION

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

Mr Craig Ablett
v
Gemco Rail Pty Ltd
(U2010/1173)

COMMISSIONER WILLIAMS PERTH, 18 MARCH 2011

s.394 - application for unfair dismissal remedy

[1] This matter involves an application for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (the Act) made by Mr Craig Ablett (the Applicant). The Respondent to the application is Gemco Rail Pty Ltd (Gemco).

[2] A conciliation conference was conducted by a Fair Work Australia conciliator however the matter was not resolved and so it was referred for arbitration. The application has already been the subject of a decision dealing with jurisdictional objections raised by the Respondent and the Applicant’s extension of time application 1.

[3] This decision deals with the substantive application and considers whether the dismissal of the Applicant was unfair. The Respondent has argued that the dismissal of the application was a genuine redundancy and consequently the application should be dismissed.

[4] Gemco is a manufacturer of rail products and provides maintenance services to rail operators across the country.

[5] The Applicant was employed as the Human Resource Manager for Gemco and had been in that role since being employed on 31 March 2008.

[6] On 2 July 2010 the Chief Executive Officer of Gemco Mr Manners advised the Applicant that his position was being made redundant.

The legislation

[7] The circumstances in which a dismissal is unfair are prescribed by section 385 of the Act.

s.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.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.

[8] What is a genuine redundancy is prescribed by section 389 of the Act

s. 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.

[9] Section 396 of the Act requires the Tribunal to decide whether a dismissal was a case of genuine redundancy before considering the merits of the application.

s. 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.

[10] At the hearing Mr Ablett represented himself and Mr Shaw represented Gemco.

[11] Mr Ablett gave evidence, as did Mr Manners, the Chief Executive Officer of Gemco.

The evidence

[12] There is little dispute about how Mr Ablett's employment ended.

[13] Around 2 PM on 2 July 2011 Mr Manners asked Mr Ablett to come into his office.

[14] The evidence of Mr Ablett was that Mr Manners told him that his position was no longer required and was to be made redundant.

[15] Mr Manners said that they did not need a HR department in a company of this size. Mr Manners also said that there were a lot more redundancies happening and that the company was going to make a lot of cuts, probably more than needed.

[16] Mr Ablett says in his submissions that Mr Manners offered him the option of working out four weeks’ notice. Mr Ablett says he believed the conversation demonstrated that the relationship had soured and so he chose not to stay on but rather to leave immediately.

[17] Mr Ablett says that he finished work at 4 PM that day and later requested that he be paid out the next working day and that a letter of redundancy be provided to him.

[18] The evidence of Mr Manners was that ultimately a letter advising Mr Ablett that he had been made redundant was provided to him dated 12 August 2010 and the reason for the delay was that Mr Manners had simply forgotten to do this.

[19] Mr Manners explained in his evidence that the business was and is going through extreme financial difficulty and across the board efforts were made to save costs wherever possible. As part of this a full review was conducted of expenditure, including all expenses and salaries and wages. This resulted in a number of redundancies being made. His evidence was that Mr Ablett was the first of these redundancies which, at the date of hearing, have totalled approximately 15 positions. In addition to this Mr Manners evidence was that in many cases where employees have resigned they have not been replaced.

[20] As part of his review of Gemco with regard to the Human Resources function he decided that the primary responsibility for this function should rest with Line Managers. With this model in mind he decided that the role of Human Resource Manager was no longer required at Gemco.

[21] Some time prior to advising Mr Ablett of his role being made redundant, Mr Manners says he met with Coote Ltd (the owner of Gemco) Managing Director and Company Secretary Don Patterson and they discussed and concluded that there were no other suitable roles within the Coote Ltd and Gemco group for Mr Ablett.

[22] With respect to the meeting with Mr Ablett on 2 July 2010 Mr Manners says that he opened by advising that he regretted the situation but Mr Ablett's position of HR manager was to be made redundant. Mr Manners stressed that this was not a performance related issue but a business decision made to reduce costs and that the size of the business did not warrant carrying a Human Resource Manager role and in his view the responsibility for human resource management largely should fall to individual managers. He reiterated that the decision was a business one to reduce costs and said that there would be more redundancies.

[23] Mr Manners evidence was that he advised Mr Ablett that if he needed longer than four weeks to source a new role Mr Manners was happy to work with him on a timeframe to assist him make the transition.

[24] After some further explanation by Mr Manners that he was willing to assist Mr Ablett by putting him in contact with recruitment specialists and was willing to discuss extended timeframes Mr Ablett told him that he wanted to take the four-weeks pay in lieu of notice and leave straight away.

[25] Mr Manners says he was surprised by this and at that meeting he did not have a termination date fixed in his mind for Mr Ablett to leave.

[26] Mr Manners says the handover was then arranged with another Manager and Mr Ablett left later that day.

[27] Mr Manners says that around 12 July 2010 Ms McCubben was appointed to the position of Human Resources Coordinator.

[28] I note at this point that it is this which Mr Ablett submits demonstrates that his position as Human Resource Manager had not been made redundant because he argues Ms McCubbin continued to do the role he had previously occupied and so he argues what occurred here was not a genuine redundancy.

[29] With respect to what the Respondent submits are fundamental differences between the two positions of Human Resource Manager (which Mr Ablett occupied) and Human Resource Coordinator (which Ms McCubbin now occupies), the evidence of Mr Manners was as follows.

[30] The position descriptions and the details of the duties of the two positions are quite different.

[31] The position of Human Resource Coordinator is a lower level position which does not involve some of the high-level duties and tasks that the Human Resource Manager position involved.

[32] Some of the responsibilities of the Human Resource Manager have been pushed out to now be the responsibility of individual managers.

[33] Mr Manners says some examples of this include short listing and interviewing applicants as part of the recruitment process, ordering clothing for staff, dealing with union officials who visit Gemco's operations, dealing with staff disciplinary matters, termination of employees including redundancies and conducting exit interviews.

[34] Mr Manners in his evidence also identified a number of the responsibilities and tasks set out in the Human Resource Managers list of responsibilities attached to Mr Ablett's employment contract that are not to be undertaken by the Human Resources Coordinator. These include preparing and updating employee job descriptions, managing workers compensation claims, ensuring currency of training qualifications, undertaking salary reviews, Drug and Alcohol testing and doing performance reviews. Mr Manners also says the Human Resource Coordinator will not attend the Managers’ meetings as Mr Ablett had done.

[35] Mr Manners’ evidence was that the Human Resource Manager’s position reported directly to the chief executive officer while the Human Resource Coordinator position reports to the National Corporate Services Manager who in turn reports then to the Chief Executive Officer.

[36] The previous decision in this matter determined that the annual rate of earnings of Mr Ablett in the position of Human Resource Manager was a total of $111,942 made up of a salary of $100,000 and the estimated value of a motor vehicle that was provided to him.

[37] The evidence of Mr Manners was that Ms McCubbin who now occupies the position of Human Resource Coordinator has a salary of $85,000 and does not receive the benefit of a motor vehicle.

[38] As part of Mr Manners’ evidence, copies of the employment contract of Mr Ablett and his position description as Human Resource Manager were provided as was a document listing the responsibilities for the Human Resource Coordinator’s position and also the original handwritten notes of the 2 July meeting made by Mr Manners shortly thereafter.

[39] Whilst Mr Ablett disagrees with some of Mr Manners’ views as to the role he had performed and what his duties were, I accept the evidence of Mr Manners that there are fundamental and numerous differences between the Human Resource Manager position and the Human Resource Coordinator position.

Consideration

[40] The meaning of the words “the person’s employer no longer required the person’s job to be performed by anyone” used in section 389 were considered in the decision of the Full Bench of FWA in Ulan Coal Mines Limited v Henry Jon Howarth and others 2 as follows:

“[15] These were the circumstances in which it was necessary to consider the meaning and application of the relevant statutory provisions and, in particular, the expression “the person’s employer no longer required the person’s job to be performed by anyone” in s.389(1)(a) of the Act. These words have long been used and applied in industrial tribunals and courts as a practical definition of redundancy (see e.g. R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Cooperative Limited (1977) 16 SASR 6; Termination, Change and Redundancy Cases (1984) 8 IR 34 and (1984) 9 IR 115; Short v F.W. Hercus Pty Limited (1993) 40 FCR 511). They have also been adopted in the National Employment Standards provided under the Act in dealing with entitlements to redundancy payments (see s.119).

[16] The Explanatory Memorandum to the Fair Work Bill 2008 provides examples as to when a dismissal will be a case of genuine redundancy:

“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.”

[17] It is noted that the reference in the statutory expression is to a person’s “job” no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals (1995) 60 IR 304 a job involves “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees’ organisation, to a particular employee” (at p. 308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. In these circumstances, it was said that:

“What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant…” (at p.308)

This does not mean that if any aspect of the employee’s duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation (2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the “job” of that employee no longer exists.

[18] In Kekeris v A. Hartrodt Australia Pty Ltd[2010] FWA 674 Hamberger SDP considered whether a dismissal resulting from the restructure of a supervisory team was a case of genuine redundancy. As a result of the restructure, four supervisory team leader positions were replaced by three team leader positions. The Senior Deputy President said:

“When one looks at the specific duties performed by the Applicant prior to her termination they have much in common with those of two of the new positions in the new structure. The test is not however whether the duties survive. Paragraph 1548 of the explanatory memorandum makes clear that it can still be a ‘genuine redundancy’ where the duties of a previous job persist but are redistributed to other positions. The test is whether the job previously performed by the Applicant still exists.” (at par [27])

[41] As explained by the Full Bench above, the question is not whether particular duties continue to be done but whether the job of Mr Ablett, which was that particular collection of functions, duties and responsibilities that attached to the Human Resource Manager position, still exists?

[42] The facts of this matter are that Gemco was restructuring the business to reduce costs and the tasks done by the Human Resource Manager were largely distributed between several other employees, being other managers and the Human Resource Coordinator and therefore it is correct to say that the Human Resource Manager’s job no longer existed.

[43] I am satisfied here that Gemco no longer required Mr Ablett’s job of Human Resource Manager to be performed by anyone. This was done in order to devolve some HR responsibilities to individual line managers and to reduce costs and so was a change in the operational requirements of the enterprise.

[44] There was no modern award or enterprise agreement that was applicable to the Applicant’s employment in this case.

[45] I accept that some consideration of the possibility of redeployment of the Applicant was made by Gemco prior to advising Mr Ablett that his position was redundant. His election to leave immediately rather than stay on for a period of time practically precluded any further consideration by Gemco of the possibility of redeployment. In all the circumstances I am satisfied that it would not have been reasonable to redeploy Mr Ablett within Gemco or any associated entity.

[46] In summary then I find that the dismissal of Mr Ablett was a case of genuine redundancy and therefore was not unfair.

[47] This application consequently must be and is dismissed.

COMMISSIONER

Appearances:

Mr C Ablett, the Applicant, on his own behalf

Mr C Shaw, Business Consultant, Visionary Solutions on behalf of the Respondent

Hearing details:

2010.

Perth:

March 9.

 1   PR502932

 2   (C2010/2789) PR96697

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