Mr Damian Paradela v Maroochy Neighbourhood Centre Inc

[2014] FWC 2138

[2014] FWC 2138

FAIR WORK COMMISSION

DECISION

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

Mr Damian Paradela
v
Maroochy Neighbourhood Centre Inc.
(U2013/15999)

COMMISSIONER SIMPSON BRISBANE, 15 APRIL 2014

Termination of employment- Jurisdiction - s.389 considered - Position Genuinely redundant- Application dismissed.

[1] The following Decision, now edited, was issued during proceedings on 9 April 2014.

[2] This matter concerns an application under s 394 of the Fair Work Act 2009 (“the Act”) by Mr Damian Paradela (“the Applicant”) who alleges that the termination of his employment with Maroochy Neighbourhood Centre Inc. (“the Respondent”) was unfair in accordance with the definition contained within s 385 of the Act.

[3] Mr Paradela filed an application on 19 November 2013. A conciliation conference was conducted on 15 January 2014 but was not successful in resolving the matter.

[4] The respondent has raised a jurisdictional objection based upon an argument that the applicant was the subject of a genuine redundancy. The matter was listed for hearing on Wednesday 9 April, today. Both parties have represented themselves and I have proceeded on the basis of dealing with both the jurisdictional issue and the substantive issue as to whether the dismissal was unfair together on the basis that I am required to deal with the genuine redundancy issue first because of the provisions of s.396. It is clear that the respondent is a small business within the meaning of the Act in that it had in the order of eight or nine staff, certainly less than 15 at the time of termination.

[5] It is common ground that the Social Community Home Care and Disability Services Industry Award 2010, a modern award of the Commission applied to the employment of Mr Paradela at the time of his termination. Mr Paradela has contended that his dismissal is not a case of genuine redundancy. Effectively, that the job that he was performing at the time of his termination still needs to be performed.

[6] He has also argued that the employer failed to properly consult him about its decision. Although his primary argument is that his position was still there, he also argues he could have been redeployed into another role and that goes to the requirement of s. 389.

[7] The respondent has argued that reduced government funding has required the organisation to put in place significant savings. The respondent has filed submissions in the alternative that the dismissal is not harsh, unjust and reasonable if I was to find against it on the jurisdictional question. There has never been any suggestion that the respondent was unhappy with the performance or the conduct of Mr Paradela. Going to the background itself, I particularly have had regard to the evidence of Mr Henning which hasn’t really been contested about the financial position of the respondent in any significant way. I think the evidence of Mr Paradela has been to largely accept that there were serious financial issues which he was aware of in his role as financial controller for the respondent.

[8] Mr Henning, the manager of the respondent, has provided a statement and given evidence today that the respondent is a small not for profit non-government incorporated community based organisation and that until July of 2012 it had depended for around 95 % of its funding from federal, state and local government grants to operate its programs. He said that 5% to 10 % of self generated income came from things like room hire and child care fees. Mr Henning explained that the governance of the respondent is operated by a volunteer management committee elected annually from the community which meets monthly.

[9] He went through, in his evidence, changes to the funding arrangements for the respondent. The respondent had operated five programs from three different state government funding streams and the value of these programs had totalled $777,097 annually. He said in his written statement and repeated in his oral evidence, that the capacity of the organisation to fund administrative roles such as that of his own as the manager and that of the applicant as a financial controller related directly to the funding grants that were gained in order to provide programs for specific purposes. The greater the size of the grants being obtained, the greater the capacity to support administrative functions within the organisation.

[10] Mr Henning said that in March 2012 the respondent was also advised by the Fair Work Ombudsman that it would be required to pay significant wage increases due to increases in the award in connection with the federal pay equity case which the organisation had to bear largely out of its existing funding in that state government grants did not provide funding to offset wage increases in the federal award. He further said that in July 2012 the respondent was advised that it had lost the funding grant of over $500,000 per year which it had previously received for eight years. In July it was also advised that it would lose another significant grant for child care services. I think it was in the order of $33,550 which would cease to be available from December 2012.

[11] The Respondent also received advice in September that further cuts would occur to its community development family support programs. The uncontested evidence was that from August 2012 the respondent would cease operating five days a week and commenced to operate three days a week. Two staff positions were terminated. The managers, the community development coordinator, the family support coordinator, the financial controller and the administration officer all had reductions in their hours of work. Mr Henning said that the respondent sold its vehicle. It also sold certain furniture and entered discussions with creditors about quitting other expenses.

[12] He said in July 2013 he offered his own resignation to the management committee but ultimately the committee decided to reject his offer of resignation on the basis that it was important that he remain in his role to seek to sustain the organisation. There were further reductions in administration hours at this time. Mr Henning gave evidence that there was further discussions at the management committee level regarding potential staff cuts. There was consultation with Mr Paradela, the applicant, at that time seeking advice as to what was available and what alternative options there were to continual staffing cuts. His evidence was that Mr Paradela provided a proposal that rather than have further cuts to staffing, reductions could be made in staff hours.

[13] Mr Henning also said in his statement he presented the proposal to the management committee for approval and ratification which he said ultimately was given and that was set out in the minutes attached to his statement. Despite the further reduction in working hours to make savings, by September 2013 there was no improvement in the organisations precarious financial situation and that at its meeting on 4 September the committee advised the Treasurer, Laurie Clarke, and the manager to scope how to maintain current non program staff in the current financial circumstances. The findings were presented to the management committee at its scheduled meeting on 16 September. This meeting was cancelled and the findings were tabled at the following meeting on 4 October.

[14] Minutes of that meeting, on 4 October, were attached to the statement of Mr Henning and they record on the second page that a resolution of the meeting was that Mr Paradela be given four weeks’ notice and that Sue and Laurie would meet with Damian Paradela on Thursday 10 October to advise him of such, effectively a decision to terminate the applicant.

[15] Following from that, in the evidence were minutes or notes of a meeting that occurred at 2.30 pm on Thursday 10 October which included Mr Paradela, the applicant, and three members of the management committee. Those notes were put to Mr Paradela by me while he was in the witness box. He acknowledged the fact that the meeting did occur. There was some variance in his views about the recollection of the meeting but certainly he did give evidence to the effect that as the financial controller for the respondent, he was aware of the financial difficulties the respondent was in and had been in.

[16] Mr Paradela’s characterisation of the meeting was to the effect that he was essentially told that his position was being made redundant and that he had little opportunity to raise alternative options to his position being made redundant. The notes themselves do record at paragraph 9 as follows, “When asked to what other options were available Damian advised that he could volunteer his services to maintain his position. Mr Henning advised that this was not an option to employ him in the same role as a volunteer after it had been a paid position.” Further, at point B at paragraph 9 the notes state, “Damian advised that the mock staff could be made redundant as they were costing the organisation. Michael again advised that this was also not an option as we were required by the governments’ licensing regulations that we had to maintain qualified paid staff per age grouping of children.”

[17] Point C records that Damian advised that staff continue with the reduction of hours wages for the longer term than was originally organised. The meeting advised that this was not sustainable as staff had the option of opting out of this if they wanted to and continuation of reduction would create potential loss of staff for higher paid position elsewhere. Those are the key points of evidence. In terms of contemporaneous records, the minutes of 4 October clearly record the decision to make the position redundant. The notes of 10 October record the nature of the discussion between the management committee and the applicant about what occurred. Now, I understand there is some contest about that. I am just noting that that was the version in the notes as have been sworn by Mr Henning today as a record of the meeting.

[18] I now need to turn to the jurisdictional question I need to decide which is whether or not the position has been made genuinely redundant. I have had regard to the statements provided by the applicant and respondent and also the written submissions in reaching the conclusions that I am going to make. There are a number of elements to s.389 that need to be determined. The first is at s.389(1) which says that a persons’ dismissal was a case of genuine redundancy if (a) the persons’ employer no longer required the persons’ job to be performed by anyone because of changes in the operational requirements of the employers’ enterprise. The explanatory memorandum in furtherance to the words in the act itself provides some guidance. At 1547 onwards the explanatory memorandum reads as follows. “Section 389(1)(a) provides that a persons’ 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 employers’ enterprise.”

[19] It goes on to say, “ the following are possible examples of a change in the operational requirements. A machine is now available to do the job performed by the employee. The employers’ 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 restructuring their business to improve efficiency and the task done by a particular employee are distributed between several other employees and therefore the persons’ job no longer exists. It is intended that a dismissal will be a case of genuine redundancy even if the changes in the employers’ operational requirements relate only to a part of the employers’ enterprise as this will still constitute a change in the employers’ enterprise.”

[20] It seems to me in terms of the thrust of this argument Mr Paradela has been of a view that the tasks he was performing essentially still need to be performed. The evidence would indicate to me that the job that was being performed is no longer being performed in that the evidence was it had been reduced I think from 24 hours to 20 and then down to 18. There has been discussion in the evidence today about the possibility of an ongoing role at less hours. That itself is a tacit acknowledgement that the role would be less than the 18 hours that was the role that was being performed prior to termination. On that basis it cannot be said that the job still exists. It seems to me that the evidence has been that this has been some source of frustration for you, Mr Paradela, in that you have put questions to Mr Henning in cross-examination, about what the plan was. The evidence appears to be that the plan was not thoroughly thought out. The plan had not been developed to a point where there was a clear decision about what would happen with those duties.

[21] Mr Henning has given evidence today regarding discussion about the possible amalgamation with another entity. Ultimately, it seems to me what was done was that someone was engaged on a contract basis to fulfil somewhere in the order of 8 hours a week to perform the sorts of bookkeeping roles that Mr Paradela had performed. In any event, the evidence does not satisfy me that the job that you had been performing, Mr Paradela, still exists. So on that basis I am satisfied that the job was no long required to be performed by anyone. I now need to turn to consider s. 389(1)(b) and this appears to be probably the most controversial element of the argument. That is the question to whether the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about redundancy.

[22] For the purposes of satisfaction of the consultation requirement, we need to refer to the language in clause 8 of the modern award, the Social Community Home Care and Disability Services Industry Award. It seems to me the issue here is that I am satisfied on the basis of the evidence a definite decision was taken at the meeting on 4 October to make the job redundant. The question then becomes whether or not what happened from that point satisfied the requirements of the modern award. The employer has given, it might be worthwhile if I read, particularly the provisions of clause 8.1 of the modern award as they stand. Under 8.1(a) it says, “The employer must discuss with the employees effected and their representatives, if any, the introduction of the changes referred to in clause 8.1, the effects the changes are likely to have on employees and the measures to avert or mitigate the adverse effects of such changes on the employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.”

[23] While I acknowledge there is some inconsistency in the evidence about the nature of the meeting that happened on the 10th, the contemporaneous notes provided by Mr Henning are the only notes that I have been provided in evidence to go by. On balance, I am inclined to the view that they are the most reliable source of information that I have got available to me for the purposes of drawing conclusions about that. There was in that some evidence to indicate that Mr Paradela did raise possible alternatives in the course of those discussions and there was evidence there was explanations given in response to that as to why they were not appropriate.

[24] I need to consider also the issue that was raised in the evidence about whether or not the respondent has failed to comply with the requirements of clause 8.1(b) of the award, that is, the words that say, “For the purposes of such discussion the employer must provide in writing to the employees concerned and their representatives, any relevant information about the changes including the nature of the changes proposed.” Now, the contest there is effectively, as I understand it, Mr Paradela has said the employer failed to do that. Mr Henning has given evidence to the effect that because of the role that Mr Paradela fulfilled as the financial controller, he had been intimately involved over a period of time in the financial affairs of the respondent to the extent that he was aware of what those were. Mr Paradela’s own evidence has been today largely consistent with that evidence, that he was aware of the financial position of the respondent.

[25] In effect, the respondent proceeded on the basis that Mr Paradela knew what the financial affairs of the respondent were and to that extent, it had provided to him in writing what the situation was, which was effectively the basis for reaching the decision to make his position redundant. I am satisfied on the basis of the material before me that the respondent, by proceeding the way that it did, having regard to the role that Mr Paradela fulfilled as the financial controller, was not in breach of the terms of clause 8.1(b) on the basis that it is reasonable to proceed in the knowledge that Mr Paradela was aware of the financial reasons behind the decision. To that extent, it wasn’t failing to comply with the requirements of 8.1(b). I am aware there has also been evidence and some conflict in the evidence about this issue about Mr Paradela saying he wanted the opportunity to raise another alternative which was to look at lesser hours.

[26] It seems to me there is some conflict around that issue. The way the evidence unfolds it would appear to me that the parties were somewhat at cross purposes in the sense that Mr Henning’s evidence was that he was open to have discussions about that issue but that his evidence has been that the issue was never squarely put to him and was not put in writing. It would appear to me from the evidence or I am more inclined to accept on balance, because of the disappointment, I guess, on the part of Mr Paradela at the way the meeting of the 10th was conducted, that the matter was never actually squarely raised with the respondent. I am more inclined to that view. There was some evidence from Mr Henning about attempts to perhaps raise that at a later point and there could have been an opportunity for the relationship to be continuing but on the basis of advice to the respondent that the applicant had decided to contest the termination, I think that those discussions never actually came to fruition.

[27] I still need to consider the issue in relation to s.389(2), the question of re-deployment. The explanatory memorandum 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 employers’ enterprise or within the enterprise of an associated entity”. 1552 says, “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 had suitable qualifications or experience.”

[28] It seems to me that that part of the explanatory memorandum is relevant here. As I said in the course of the hearing today, the possibility of a new position being created or a failure to offer some future position does not constitute a failure to comply with s. 389(2). It seems to me from the evidence that it is clear there was, at the time of termination, no other position that would have been suitable or appropriate for Mr Paradela to be redeployed into. On the basis of my findings in regard to s.389, I do find that this was a genuine redundancy. On that basis, I have no jurisdiction to go on and determine the substantive matter. That is my finding. On that basis the application must be dismissed.

COMMISSIONER

Appearances:

Mr Paradela the Applicant

Mr Henning for the Respondent

Hearing details:

Brisbane

2014

April 9

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