Mr David Evered v AHG Services (Vic) Pty Ltd T/A Coffey Ford

[2013] FWC 9609

[2013] FWC 9609

The attached document replaces the document previously issued with the above code on 12 December 2013.

The Decision has been refiled to fix a reference in the footnotes.

Melissa Nassios

Associate to Commissioner Roe

Dated 12 December 2013

[2013] FWC 9609

FAIR WORK COMMISSION

DECISION

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

Mr David Evered
v
AHG Services (Vic) Pty Ltd T/A Coffey Ford
(U2013/2601)

COMMISSIONER ROE MELBOURNE, 12 DECEMBER 2013

Termination of employment - genuine redundancy.

[1] The matter arises from an application filed on 5 August 2013 under s 394 of the Fair Work Act 2009 (the Act) by Mr David Evered (the Applicant) for relief in respect to the termination of his employment from AHG Services (Vic) Pty Ltd T/A Coffey Ford (the Respondent or Coffey Ford or AHG). The application and the file originally referred to the Respondent as CFD (2012) Pty Ltd (Automotive Holdings Group Limited) T/A Coffey Ford. The parties agreed that the Respondent should be correctly identified.

[2] There is no dispute, and I am satisfied that, the Applicant had more than 14 years continuous service, that the Respondent is a national system employer, that the Respondent is not a small business employer, and that the Applicant was dismissed at the initiative of the employer. The Applicant’s employment was covered by the Vehicle Manufacturing Repair Services and Retail Award 2010.

[3] The Applicant is protected from unfair dismissal however the Respondent argues that the termination was for reasons of genuine redundancy. The Applicant was paid his severance, notice, and leave entitlements under the Award and the NES.

[4] The main issue in contention in this matter is whether or not the termination was a genuine redundancy. 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.”

[5] The Respondent’s business includes 8 dealerships in Victoria one of which is the Coffey Ford dealership in Dandenong. 1 The Applicant was employed by the Respondent or the predecessor company Mincof at this location since March 1999. When the ownership of the business changed in 2012 there was a transfer of employment. The Applicant was engaged in a variety of sales roles during the period of his employment. The Applicant was advised in writing that upon the transfer of business his current position, work location and duties would not be affected.2 There was a change to the payroll system. The Applicant was engaged as a parts sales representative following the transfer of business. The position involved canvassing prospective clients to increase the customer base and also servicing the existing customer base.

[6] Between 2006 and 2009 the Applicant was employed at Coffey Ford Dandenong. It is not clear whether this period of service is counted as continuous service with the Respondent. During his period of employment in the business over 16 years the Applicant worked in fleet sales, new vehicle retail sales and used car sales. The longest period of time was in fleet sales and as a spare parts representative. Prior to employment with the business the Applicant had more than two years experience as a new vehicle sales person at Etheridge Ford.

[7] The spare parts division had a budgeted profit target for the 2012/13 financial year of approximately $500,000 and the profit which was being achieved was approximately half this amount. There were other parts of the business which were similarly not meeting budgeted targets.

[8] If I am satisfied that the termination was a genuine redundancy then that is the end of the matter. If I find that the termination was not a genuine redundancy then I have to consider if the termination was harsh, unjust or unreasonable.

The evidence

[9] The Applicant provided witness statements from Karen Evered, Allan Small and Darren Treweek. The Respondent did not require these witnesses for cross examination. The evidence of these persons was to the effect that the Applicant was a sincere and trustworthy person and that the Applicant had been distressed about his treatment at work during the later period of his employment. The evidence of Mr Treweek, a former employee of Coffey Ford, was that he had been told on or about 20 June 2013 by a current Coffey Ford employee that the Applicant was next to be pushed out at Coffey Ford. Mr Treweek advised the Applicant of this conversation.

[10] The Applicant provided extensive witness statements and documentary evidence. The Applicant believes that two particular factors contributed to his termination.

[11] Firstly, the Applicant gave unchallenged evidence that he was pressured to enter into a new arrangement concerning his work vehicle in May 2011. He was told that if he continued to use a company vehicle he would be required to pay fringe benefit tax costs which would reduce his pay by approximately $70 per week. This was not acceptable to the Applicant. As an alternative he was told he could buy a new company vehicle and he would receive a weekly car allowance and per kilometre compensation for every work kilometre travelled. The Applicant still owed $23,000 on the vehicle at the time of the termination but the resale value of the vehicle was between $10,000 and $12,000. The Applicant gave evidence that this situation created particular hardship for him upon termination of his employment. The cost of the car allowance and the per kilometre allowance added to the cost of his position. The Applicant believed that the relevant managers were concerned about this cost but there was no discussion about this or alternatives with him prior to the dismissal meeting. The evidence of Mr Hoffman and Mr Baker for the Respondent confirmed that the additional vehicle costs associated with the Applicant’s position were of concern and were a factor in the decision to make the Applicant’s position redundant. However, Mr Hoffman and Mr Baker gave evidence that there were also other factors which led them to the conclusion that the position should be removed.

[12] Secondly, the Applicant gave evidence of the extensive efforts he had made to win more customers for the spare parts business. The Applicant was concerned that his initiatives were not adequately followed up. The Applicant was concerned that he was being blamed for the lack of new business and that additional business was achievable if his initiatives were followed up. The Applicant felt that the failure to assist him to win new business meant that he was being “managed out”. The evidence of the Applicant of the efforts he made to win new business was unchallenged. 3 Mr Hoffman and Mr Baker gave evidence that there was no criticism of the conduct or performance of the Applicant and that this was not a factor which contributed to the termination. The Applicant’s view that building the business was an alternative to making the position redundant is a matter which is relevant to the consultation requirements.

[13] The Applicant gave evidence that he was aware of the loss of some customers and of the redundancies which occurred in April and May 2013. He was aware that the business was under pressure to reduce costs and increase sales but he was not privy to any particular financial information, objectives or plans.

[14] The Applicant gave uncontested evidence about the lead up to the termination meeting on 18 July 2013. The Applicant says that in June and July 2013 he was aware that something was going on and that there was concern about the cost of his car arrangement. He had been warned of impending changes by Mr Treweek. He suspected that it might lead to him facing significant additional costs due to changes to his car arrangement or that it might involve changes to his employment from being a travelling representative to sales work at the office/showroom. He was very anxious about this and tried to speak to his managers on 17 July 2013 about this matter on a number of occasions. However, the managers would not engage in conversation on that date. On that day he was also advised by another employee that part of his role which involved working one day a week at Wignall Ford in Frankston was going to come to an end. He had very little sleep on the night of 17 July 2013. The Applicant met with Mr Baker on 18 July 2013. Mr Baker kept the Applicant waiting for approximately 20 minutes prior to the commencement of the meeting.

[15] The Applicant says that he turned on the record feature on his mobile phone at the meeting on 18 July 2013 because he wanted to be able to go over what was said in the meeting after the meeting to make sure he fully understood what was said to him. The Applicant says that he had no intention of providing anyone else with access to the recording. A transcript of the recording was made available for these proceedings. Mr Baker agrees that it is generally an accurate account of the meeting. There was a one hour break in the meeting. In the second part of the meeting Mr Hoffman was also present and he agrees that the transcript is generally an accurate account of that part of the meeting.

[16] The Respondent makes no adverse allegation concerning the conduct or performance of the Applicant prior to the termination meeting of 18 July 2013. However, the Respondent submits that the actions of the Applicant in recording the conversation of 18 July 2013 without advising the other participants should be taken into account in determining whether or not the termination was harsh, unjust or unreasonable.

[17] Mr Hoffman the Spare Parts Manager for the Respondent at Coffey Ford Dandenong gave evidence that in the period prior to his termination the Applicant was working one day a week as a sales representative for Wignall Ford (another of the Respondent’s dealerships). Mr Hoffman gave evidence that the Applicant’s position as a spare parts representative was the only position of its type for the Respondent. The other seven dealerships do not employ a spare parts representative. However, the only wholesale dealership is Coffey Ford Dandenong.

[18] Mr Hoffman gave evidence that due to a significant drop in profits and customer demand for spare parts and servicing, Coffey Ford Dandenong closed its Noble Park Service Branch in April 2013. There were 7 redundancies as a result. Two delivery driver positions were also made redundant. One of these employees was redeployed. Mr Hoffman gave evidence that he began a review of the Applicant’s position in June 2013. In early July 2013 Wignall Ford notified Mr Hoffman that they no longer required the Applicant’s services. Mr Hoffman did not tell the Applicant of this decision and the Applicant found out about this on 17 July 2013, the day before his termination. The decision of Wignall Ford meant that Coffey Ford Dandenong would bear the full cost of the Applicant. For a few months prior to the decision Wignall Ford met the vehicle costs of the Applicant on one day a week. Wignall Ford did not meet any wages costs.

[19] Mr Hoffman discussed the future of the Applicant’s position with Mr Baker and also with the Financial Officer during June 2013. On 10 July 2013 Mr Hoffman gave evidence that he recommended that the position be made redundant. On the same day his recommendation was accepted by AHG Head Office. On the same day Mr Hoffman raised the possibility of the Applicant being redeployed to a sales position at another dealership. He asked Mr Baker, Dealer Principal for Coffey Ford, to explore opportunities but Mr Hoffman says none were found. Mr Hoffman did not explore any opportunities for redeployment himself. He was satisfied that there were no other opportunities in the spare parts section at Dandenong.

[20] Mr Hoffman reported to Mr Baker who was the Dealer Principal at Coffey Ford. Mr Baker gave evidence that since he commenced his role in May 2013 some 10 positions out of approximately 50 positions at Coffey Ford have been made redundant. Mr Baker gave evidence that the spare parts department was significantly behind budget in the 2012-2013 financial year. He was required to take reasonable action to reduce costs and increase profits. As part of this action he discussed cost reduction strategies with Mr Hoffman twice during June 2013. Mr Hoffman reported that the Applicant had not brought in new customers for a significant period and Mr Baker believed that Mr Hoffman could take over existing clients. Mr Baker gave evidence that in late June 2013 Mr Hoffman told him that he was considering making the Applicant’s role redundant. Mr Baker agreed that the option should now be discussed with AHG Head Office. Following this discussion in late June Mr Baker gave evidence that he spoke to the Human Resources manager and the Operations Manager at AHG Head Office and they both agreed with the rationale for making the position redundant. In the proceedings Mr Baker agreed that this was the decision to make the position redundant and that this occurred in late June 2013.

[21] Mr Hoffman had an email exchange with AHG Head Office and with Mr Baker on 10 July 2013. At 9.27am he wrote to Mr Butt, General Manager, and stated he was planning to make the Applicant’s position redundant. He said “while the decision has pretty much been made between FC, DP and myself, I just want to check with that there is no problem in doing this from your point of view within the bigger AHG eventual business plan.” Mr Butt replied at 9.46am advising that he had “no issue with this.” At 9.32am Mr Hoffman emailed Mr Grant, Human Resources Manager at AHG, and wrote “as discussed here are the details for the redundancy. David Evered, employee number 18424. Meeting to be called for Tuesday 16th July. Final date of employment to be Tuesday 16 July.” Mr Hoffman also asked Mr Grant if it would be possible to redeploy the Applicant to another dealership. 4 There is no evidence of any response.

[22] Mr Baker says that he telephoned other dealerships to inquire about other sales roles for the Applicant given the Applicant’s previous sales experience. Mr Baker and Mr Hoffman both confirmed in proceedings that they were not aware of the nature of the Applicant’s experience in retail sales. They were only aware of his experience in fleet sales and as a parts representative. Mr Baker gave evidence that he rang two people concerning opportunities for redeployment. They were dealer principal at Ferntree Gully Toyota and the dealer principal at Wignall Frankston. They advised Mr Baker that there were no suitable vacancies. Mr Baker was not certain about the number of dealerships in the AHG network in July 2013. However, he did not dispute the contention of the Applicant that in July 2013 in addition to the dealerships which come under the control of the dealer principals at Ferntree Gully Toyota, Wignall Frankston and Coffey Ford Dandenong there were dealerships in the AHG network for Holden in the city, Hyundai, Hino trucks and for the Lekki group.

[23] Mr Baker gave evidence that he did not wish to discuss the matter with the Applicant on 17 July 2013 because Mr Baker was still exploring redeployment opportunities. He wanted until the following day to complete this process. However, Mr Baker suggested in the meeting on 18 July 2013 that he had not completed the process at that time but then after an hour’s break in the meeting he advised the Applicant that there were no redeployment opportunities. In the proceedings Mr Baker did not give evidence of any specific action in respect to redeployment other than an initial telephone call to the dealer principals referred to earlier.

[24] Mr Baker confirmed that the Applicant was particularly concerned at the financial implications of his termination because of the car arrangements which had been entered into with the Applicant.

[25] Mr Cole is a General Manager of the Respondent and he was responsible for the Jeff Wignall Ford Mornington part of the business prior to July 2013. He has been General Manager at the Mornington Nissan part of the business since July 2013. Mr Cole gave evidence that both Wignall Ford and Mornington Nissan are part of the Respondent’s business and have a spare parts department but there are no spare parts representatives employed. Mr Cole advertised a position of new and used car consultant at Jeff Wignall Ford in Mornington in July 2013. Mr Cole gave evidence that he was advised of the relevant experience of the Applicant by lawyers for the Respondent in preparation for the unfair dismissal proceedings. On the basis of this advice he considers that the Applicant would not have been shortlisted for an interview had he applied or been referred to him. Mr Cole distinguished between the fleet sales experience of the Applicant and the retail sales position advertised. Mr Cole considers that it would be difficult to transition from a spare parts department position to a retail car sales role. However, the advice given to Mr Cole did not include the retail sales experience of the Applicant only his experience in fleet sales and spare parts.

[26] The Jeff Wignall Ford part of the business comes under the dealer principal at Wignall Frankston. Mr Cole confirmed that the dealer principal at Wignall Frankston had not contacted him in June or July 2013 concerning potential redeployment of the Applicant. Mr Cole confirmed that neither Mr Baker nor Mr Hoffman or anyone else from AHG had contacted him concerning potential redeployment. Mr Cole was not aware of the retail sales experience of the Applicant.

[27] During the first part of the meeting on 18 July 2013, Mr Baker advised the Applicant that a decision was likely to be taken to make his position redundant and in general terms advised that this was because profits were not meeting budgeted targets. No particular details were provided of the targets or of the shortfall. There was considerable discussion about the particular difficulties the Applicant faced in his job and his perception of lack of support for his attempts to build new business. The Applicant was assured that there was no problem with his performance or conduct. The issue of the particular car allowance arrangements of the Applicant was discussed. The Applicant was very worried about this and Mr Baker offered to assist with this situation by obtaining the best resale price if the Applicant was made redundant or redeployed to an office sales job. The Applicant was not told it was a definite decision but rather that it was a likely decision. However, towards the end of the first part of the meeting the Applicant asked if he was either going to lose his job or be offered something else. Mr Baker responded “most probably.” Mr Baker said he was still looking at other options.

[28] In the proceedings Mr Baker agreed that the purpose of the first part of the meeting on 18 July 2013 was to advise the Applicant that his position was likely to be made redundant and the reasons for that decision and to advise the Applicant that redeployment options were being considered. Mr Baker agreed that there was no prospect that the decision would or could be changed by anything said at the meeting. Mr Baker agreed that this was the substance of the first part of the meeting. The Applicant says that there was no realistic opportunity to discuss other solutions such as attracting more business. The Applicant was not asked to suggest opportunities for redeployment or about his skills and experience. The Applicant was not offered any alternative positions.

[29] In the second part of the meeting Mr Baker commenced by explaining that the position was now going to be made redundant and that there were no current options available for redeployment. The Applicant was provided with the redundancy letter and the details of his termination payment at the commencement of the second part of the meeting. Mr Baker agreed in the proceedings that the purpose and substance of the second part of the meeting was to advise the Applicant that redundancy was proceeding and that there were no options for redeployment. The Applicant was told that he was to finish up immediately and he was not given the opportunity to work during the notice period.

[30] There was some doubt about who was the decision maker in this case. The Respondent submitted that Mr Hoffman was the decision maker. The evidence is that Mr Hoffman, Mr Baker, the finance manager, and senior AHG managers Darren Grant and Chad Davies were involved in the decision making process. Mr Hoffman reports to Mr Baker and the evidence of Mr Baker and Mr Hoffman both supports a conclusion that the approval of Mr Grant and Mr Davies at AHG head office was required for a decision to make the Applicant’s role redundant. There is no doubt that Mr Hoffman made the recommendation and takes responsibility for that recommendation but I am not satisfied that he was the decision maker.

Operational Requirements.

[31] It is accepted that the job performed by the Applicant no longer exists. Many of the duties performed by the Applicant are now performed by Mr Hoffman. However Mr Hoffman has significant other duties. I am satisfied by the evidence of Mr Hoffman and Mr Baker that there were significant pressures on them to reduce costs in the business and to meet budgeted profit levels. A number of other positions were made redundant or were not filled in the months leading up to the Applicant’s termination. Although the cost of the Applicant’s car arrangements and the failure to attract new business were factors in this decision they were only a part of the decision. The operative reason was “changes in operational requirements” of the business.

[32] The requirement in Section 389(1)(a) of the Act is met.

Did the employer comply with any obligation to consult?

[33] The award provides the following in respect to consultation.

“8. Consultation regarding major workplace change

8.1 Employer to notify

(a) 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.

(b) 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.

8.2 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 8.1, 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 8.1.

(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.”

[34] It was accepted by the Respondent during the proceedings that the change in the business that led to the Applicant’s termination was a major change with significant effects which triggered the obligations to consult specified in Clause 8.2 of the Award.

[35] It is not in contention that the employer did not provide the Applicant with the information required by Clause 8.2(c) of the Award in writing. It is not suggested that the relevant information was of a confidential nature.

[36] It is accepted that a definite decision was made sometime between the end of June and 10 July 2013 and that the Applicant was notified at the dismissal meeting on 18 July 2013. There were no other meetings or consultations with the Applicant. I prefer the evidence of Mr Baker on this point that the definite decision about the change was taken in late June 2013. However, even if I accept the evidence of Mr Hoffman the delay between 10 July 2013 and 18 July 2013 means I am satisfied that discussions did not commence as early as practicable after a definite decision was made.

[37] The Applicant had no reasonable opportunity to consider the proposed change and to suggest alternatives and to have those alternatives considered. Mr Baker confirmed that there was no openness to this occurring. It is clear that the Applicant did have proposals to put forward related to growing the business. It is also clear that there was no consultation about mitigation of the effect of the change on the Applicant. Rather the Applicant was advised that the Respondent was looking at redeployment options and then one hour later was told that none were available. At the very least consultation would have meant that the Respondent was better informed about the skills and experience of the Applicant and about the range of redeployment options which could be explored.

[38] It is well established that the obligation to consult is an obligation to consult before an irrevocable decision has been made and one where there is a genuine opportunity to influence and potentially change the mind of the decision maker. No such opportunity was provided in this case.

[39] The Respondent submits that because Mr Baker responded to the concerns raised by the Applicant about the cost of ending the car arrangements by stating that he would try and get the best price for the car this shows that there was consultation. The Respondent submits that the provision of details of the entitlements upon redundancy in writing at the meeting also shows that there was consultation. These matters fall a long way short of satisfying the consultation requirements under the Award.

[40] I accept that Mr Baker was very uncomfortable with having to tell the Applicant that his position was redundant. This perhaps explains why he delayed discussions with the Applicant and then in the final meeting was not direct with the Applicant and suggested that a final decision had not been made when it is clear that the decision had been made at least a week earlier and probably more than two weeks earlier.

[41] I am satisfied that the Respondent failed to meet its obligations under Clauses 8.2(a), 8.2(b) and 8.2(c) to consult under the Award.

Would it have been reasonable in all the circumstances for the Applicant to be redeployed within the employer’s enterprise?

[42] The Full Bench in Ulan Coal Mines Limited v Honeysett and others 5 set out how Section 389(2) of the Act should be approached:

“[26] First, s.389(2) must be seen in its full context. It only applies when there has been a dismissal. An employee seeking a remedy for unfair dismissal cannot succeed if the dismissal was a genuine redundancy. In other words, if the dismissal is a case of genuine redundancy the employer has a complete defence to the application. Section 389(2) places a limitation on the employer’s capacity to mount such a defence. The defence is not available if it would have been reasonable to redeploy the employee. The exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances.

[27] Secondly, it is implicit in the terms of s.389(2)(b) that it might be reasonable for an employee dismissed by one employer to be redeployed within the establishment of another employer which is an entity associated with the first employer. It follows that an employer cannot succeed in a submission that redeployment would not have been reasonable merely because it would have involved redeployment to an associated entity. Whether such redeployment would have been reasonable will depend on the circumstances. The degree of managerial integration between the different entities is likely to be a relevant consideration.

[28] Thirdly, the question posed by s.389(2), whether redeployment would have been reasonable, is to be applied at the time of the dismissal. If an employee dismissed for redundancy obtains employment within an associated entity of the employer some time after the termination, that fact may be relevant in deciding whether redeployment would have been reasonable. But it is not determinative. The question remains whether redeployment within the employer’s enterprise or the enterprise of an associated entity would have been reasonable at the time of dismissal. In answering that question a number of matters are capable of being relevant. They include the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job in relation to the employee’s residence and the remuneration which is offered.” 6

[43] The Full Bench considered what may be relevant in considering whether or not redeployment would be reasonable:

“Of course the job must be suitable, in the sense that the employee should have the skills and competence required to perform it to the required standard either immediately or with a reasonable period of retraining. Other considerations may be relevant such as the location of the job and the remuneration attaching to it.” 7

[44] I am satisfied that the operations of the various dealerships in AHG have a reasonably high degree of integration and that the various businesses have a degree of commonality. My earlier findings about the involvement of AHG Head Office in the redundancy decision reinforce this conclusion. I am satisfied that given the skills and experience of the Applicant he could have been successfully redeployed to vacant spare parts, fleet sales, new car retail sales and used car sales jobs in any of the dealerships. Of course some of the potential jobs may not be suitable for geographical reasons. I am not satisfied that the Respondent took its obligations to consider redeployment of the Applicant seriously enough. Mr Baker should have contacted all of the dealerships directly and should have followed up initial requests. Mr Baker should have ensured that he was aware of the full range of the Applicant’s skills and experience. The Respondent should not have taken the attitude that it was purely a matter for local managers to determine if the Applicant was suitable for a job. There should be no requirement for a potentially redundant employee to apply for a vacant position in competition with other persons. 8

[45] Options for redeployment should have been the subject of consultation with the Applicant. The range of redeployment options and the opportunities for redeployment could have been greatly enhanced through such consultation.

[46] I am satisfied that there was a vacant position at Jeff Wignall Ford Mornington at the time the Applicant was made redundant. Mr Cole during the proceedings explained that the vacant position was a retail car sales position. It is likely that the Applicant had the skills and experience for that role. The Applicant was not considered for that role. I am satisfied that the Applicant could have been redeployed to that role.

[47] I am satisfied that it would have been reasonable in all the circumstances for the Applicant to be redeployed within the employer’s enterprise.

Conclusion regarding the threshold issue - genuine redundancy

[48] The termination of the Applicant was not a genuine redundancy because there was a requirement to consult about the redundancy pursuant to the Award and this was not complied with.

[49] If that consultation requirement had been met it is possible that the discussions between the parties might have led to alternative solutions. It is possible that the redundancy might have been avoided because the parties agreed upon a productive way for the job to continue without the need for the redundancy. After considering all of the evidence I do not consider this to be a likely outcome but I cannot exclude the possibility. I am satisfied that following the change of ownership and in light of changed business conditions the employer made a decision to reduce costs to seek to achieved budgeted profit outcomes. This led to the number of positions being reduced. The proposal to remove the Applicant’s position was a part of that process. However, it is a clear purpose of the consultation provisions that such possibilities not just probabilities should be explored. It is not uncommon for the genuine consideration of such possibilities to lead to unexpected outcomes. In most cases it would defeat the purpose of the legislative provisions for FWC to conclude that consultation would not have made any difference and that therefore the failure to consult should not be a matter of significant weight when considering whether or not the termination was harsh, unjust or unreasonable.

[50] The Respondent referred to the following observation of DP Sams in Lynette Steel v Coffs Ex-Services Memorial and Sporting Club Ltd: 9

“Thirdly, notwithstanding the above, even if there is a fault/s in the process leading up to, and including the dismissal, it will not, in every case, result in a finding of procedural unfairness. In my opinion, any fault in the process must be of such significance such as to:

(a) have denied the employee natural justice; and/or,

(b) have altered, or likely to have altered, the outcome for the employee; and/or,

(c) outweigh the seriousness of the misconduct proven against the employee.”

[51] DP Sams based this observation on the following passage from the decision in Farquharson v Qantas Airways Limited 10 (references removed):

“Internal disciplinary process

[40] The appellant complains about the manner in which Qantas conducted the disciplinary process that led to the termination of his employment. A provision in the relevant certified agreement provides that the parties shall abide by the “rules of natural justice” in relation to disciplinary proceedings. The appellant was not permitted legal representation on his internal appeal and a manager involved in the initial disciplinary decision was also involved in the internal appeal decision. The appellant contends that her Honour erred in finding that the appellant was not prejudiced by these matters and in failing to find a breach of the rules of natural justice and thus a breach of the certified agreement. Even if it is assumed that these matters involved a breach of the rules of natural justice and, consequently, that there was a breach of the certified agreement, we are not persuaded that her Honour erred in failing to find that these matters rendered the termination harsh, unjust or unreasonable.

[41] The fact of unfairness in the employer’s decision making process, even if it involves a breach of a term in a certified agreement, is but a factor to be taken to account in determining whether a termination of employment was harsh, unjust or unreasonable. In circumstances where, as here, the merits of a termination of employment based on misconduct have been the subject of a full hearing in the Commission (in which the employer must establish the alleged misconduct on the balance of probabilities) and the dismissal has been found to be justified, it will be rare for a defect in an internal disciplinary process that preceded the termination justifying a conclusion that the termination was harsh, unjust or unreasonable. This is so because, almost invariably in such circumstances, it may be inferred that the outcome of the disciplinary process would have been the same even if there had been no such defect.”

[52] In my view a failure to consult is not simply an issue of procedural unfairness. If the termination is a genuine redundancy there cannot be an unfair dismissal. Therefore the issue of whether or not there is a genuine redundancy is quite central to the fairness or otherwise of termination where the employer claims that the dismissal has been for reasons of genuine redundancy. The decision in Farquharson was under a different legislative regime. The present regime requires that Sections 387(b)(c)(d) and (e) must be separately considered in addition to the question of valid reason. This raises serious questions about the continued relevance of the observations Farquharson. However, the finding that unfairness in the employer’s decision making process is but a factor to be taken into account in determining whether a termination of employment was harsh, unjust or unreasonable still holds under the current regime. The observation which follows concerns “a defect in an internal disciplinary process.” In the context of paragraph 40 of the decision quoted above, it is clear that this is not a reference to the matters of procedural fairness specifically dealt with in Sections 387(b)(c)(d) and (e) of the present Act nor is it a reference to the requirements associated with genuine redundancy. The alleged procedural unfairness to which DP Sams was referring was similarly narrow.

[53] I am not satisfied that the observations in these cases are relevant to the failure to consult and the failure to redeploy in cases of alleged genuine redundancy.

[54] The Respondent also referred to a decision concerning genuine redundancy of Vice President Watson in Jamil Maswan v Escada Textilvertrieb T/A Escada. 11 In that case a finding that “consultation was highly unlikely to have negated the operational reason for the dismissal or lead to any other substantive change” was a reason for finding that the dismissal was not unfair. There may be circumstances where the failure to consult does not lead to a finding that the termination was unfair however for the reasons discussed earlier I do not accept that there is a general principle that if the consultation was highly unlikely to have changed the outcome this means that the dismissal was not unfair.

[55] If I am wrong about this matter I am satisfied that in the circumstances of this case the process was a denial of natural justice in that adequate information was not provided and there was inadequate opportunity to respond. I am also satisfied that consultation could well have made a difference to the outcome.

[56] Given the long period of employment of the Applicant and his unquestioned good conduct and performance, the failure to consult is a particularly serious and relevant consideration in the circumstances of this case.

[57] The termination of the Applicant is also not a genuine redundancy because it would have been reasonable in all the circumstances to redeploy the Applicant. It is possible that other redeployment options might have emerged through the consultation process.

Was the termination unfair?

[58] The legislation requires me to consider the following matters in a situation where the small business code does not apply.

“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.”

Was there a valid reason? (s.387(a))

[59] The termination was a redundancy but not a genuine redundancy.

[60] The Full Bench in UES (Int'l) Pty Ltd v Ball 12 looked at the issue of redundancy and valid dismissal.

“[42] As we have already indicated, in our view the reasons for the dismissal of Mr Ball by UES were not related to his capacity or conduct (including its effect on the safety and welfare of other employees). Accordingly, there cannot have been and was not a valid reason for his dismissal related to his capacity or conduct (including its effect on the safety and welfare of other employees). In the circumstances of this case we regard it as a neutral matter with respect to our consideration as to whether Mr Ball’s dismissal was harsh, unjust or unreasonable.”

[61] In my view the Applicant in this case was not dismissed for reasons related to his capacity or conduct. In this case the Applicant’s position was redundant. However, it is not a genuine redundancy due to the failure to consult and the failure to redeploy.

[62] In this situation there was no valid reason for the termination related to capacity or conduct. In the circumstances of this case it is a neutral matter with respect to my consideration as to whether the Applicant’s dismissal was harsh, unjust or unreasonable.

Notification and opportunity to respond (ss.387(b) and (c))

[63] The matters in s.387(b) and (c) of the Act deal with whether there was procedural fairness in respect of a reason for dismissal related to the Applicant’s capacity or conduct. As a matter of fact the Applicant was not notified of or given an opportunity to respond to a reason for his dismissal related to his capacity or conduct. However given the reasons for his dismissal, I regard them as neutral matters with respect to my consideration as to whether the dismissal was harsh, unjust or unreasonable.

Support person (s.387(d))

[64] The Applicant did not have a support person present at the termination meeting. The Applicant was not provided with the opportunity to have a support person. At one point in the meeting the Applicant requested the opportunity to seek advice prior to the matter being finalised but this was not agreed to. It is possible that this amounts to a refusal to have a support person present at discussions relating to the dismissal. However, on balance I consider that the Respondent did not refuse to allow the Applicant to have a support person present at the meeting of 18 July 2013 when he was made redundant. I regard this as a neutral matter with respect to my consideration as to whether the dismissal was harsh, unjust or unreasonable.

Unsatisfactory performance (s.387(e))

[65] The dismissal did not relate to his unsatisfactory performance, so this matter is not relevant to my consideration and I regard it as a neutral matter as to whether dismissal was harsh, unjust or unreasonable.

Size of the enterprise and human resource management (s.387(f) and (g))

[66] The Respondent is a relatively large organisation with human resource management expertise. I regard the requirement to consult about redundancy to be a common sense matter. In other words a reasonable person would not generally regard a termination for reasons of redundancy to be fair in the absence of consultation about the reasons and an opportunity to consider alternatives and measures in mitigation. I therefore do not regard the size of business or the absence of expertise as affecting the lack of consultation. I regard it as a neutral matter as to whether dismissal was harsh, unjust or unreasonable.

Other matters (s.387(h))

[67] There were sound, defensible and well-founded reasons for the dismissal, being that the Respondent no longer required the Applicant’s job to be performed by anyone because of changes in the operational requirements of its enterprise. This is a matter which tells against a finding that the termination was harsh, unjust or unreasonable.

[68] The Respondent failed to consult with the Applicant as required by the consultation clause in the Award. In the circumstances I have no doubt that the failure to so consult was unreasonable. The failure to allow time for the Applicant to get advice and to consider his responses was also unfair and unreasonable.

[69] The conduct of the Respondent in failing to consult the Applicant and to redeploy the Applicant is particularly significant given the length of service of the Applicant and his good conduct and performance up to the point of termination. In the circumstances of this case I regard these as significant factors which tell in favour of a finding that the termination was harsh, unjust and unreasonable.

[70] The car arrangements which the Applicant was encouraged to enter into by the employer meant that termination of employment had particularly harsh consequences for the Applicant. The Respondent was aware of this situation and in these circumstances I consider that this is a factor which stands in favour of a finding that the termination was harsh.

[71] The failure to allow the Applicant, after such a long period of service and in a situation where there were no issues about conduct or performance, to work during the notice period had harsh consequences for the Applicant. This was linked to the failure to allow any reasonable period for active pursuit of redeployment options involving the Applicant. The ability to work during the notice period is particularly important for older workers or those with long service. It provides a period for adjustment to a major trauma. It is commonplace that it is much easier to find a new job when you are still in a job. This is one reason why awards and agreements commonly provide for time off to search for new employment or attend interviews during the notice period. I consider that this is a factor which stands in favour of a finding that the termination was harsh.

[72] The actions of the Applicant in recording the termination meeting were inappropriate. They were damaging of a relationship of trust and confidence between the employer and the employee. I accept that the conduct, although discovered after the termination is relevant to a decision as to whether or not the termination was fair. I consider that this is a factor which stands in favour of a finding that the termination was not harsh, unjust or unreasonable. However, I am satisfied having considered the evidence of the Applicant and observed the Applicant in the witness box and taking into account the other evidence for the Applicant, that this action was out of character and was not intended to harm the employer or the relationship with the employer. I accept the evidence of the Applicant that the recording was to make sure he understood what had been said at the meeting.

[73] In the circumstances of this case I consider that this factor is more relevant to the question of whether or not reinstatement is an appropriate remedy should I find that the termination was unfair. The Respondent drew my attention to a number of decisions where the matter of unauthorised recordings was dealt with. The Respondent particularly referred to the decision of DP Sams in Trevor Thomas v Newland Food Company Pty Ltd. 13 In that decision his Honour considered that the unauthorised recording of conversations was reason why reinstatement was an inappropriate remedy. In my view caution should be exercised in establishing any general rule about what impact unauthorised recordings should have on decisions of FWC about unfair dismissal and remedies. It is a serious matter but the conclusions to be drawn depend upon the circumstances of the particular case.

[74] In the circumstances of this case this isolated incident is a factor but not a major factor in favour of a finding that the termination was not harsh, unjust or unreasonable.

Conclusion regarding harsh, unjust or unreasonable

[75] Taking into account the matters referred to above, I am satisfied that the Applicant’s termination by the Respondent was harsh, unjust and unreasonable.

Remedy

[76] The Applicant does not seek reinstatement. I accept that the Applicant feels so upset and betrayed at the manner of his termination that he does not feel that the relationship can be repaired. I accept that the Respondent feels that the action of the Applicant, in recording the termination meeting, has undermined the trust and confidence of the managers of the Respondent. In all of the circumstances I consider that reinstatement would be inappropriate. I consider that an order for compensation would be appropriate in the circumstances of this case.

[77] In considering compensation I am required by Section 392(2) of the Act to consider the following:

“(2) In determining an amount for the purposes of an order under subsection (1), FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that FWC considers relevant.”

[78] In considering these matters I have not included a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

[79] Nothing was put to me which suggests that any order I might make would affect the viability of the enterprise.

[80] The length of service with the employer of more than 14 years is a factor in favour against any discount of compensation in this case.

[81] The Applicant has made adequate efforts to mitigate his loss and find alternative employment and I would make no deduction on this account. This was not contested.

[82] I consider that a deduction for the misconduct of the Applicant in recording the telephone conversation to be appropriate. I will reduce any award of compensation by 15%.

[83] The Applicant did not earn any income from employment during the period between 18 July 2013 and 2 September 2013. The Applicant has had a new job since 2 September 2013. The position is for a fixed term subject to successful completion of a probation period. The weekly income is comparable to the weekly income in the Applicant’s former role. However, the Applicant received monthly commission payments in the former role which he does not receive in the new job.

[84] The earnings from employment between 2 September 2013 and the date of this decision have been $16,233.77 gross not including superannuation.

[85] The period between the making of the order for compensation and the actual compensation will be fourteen days. The likely earnings in this period are $2,319.11 gross not including superannuation.

[86] I consider that if the Applicant had not been dismissed he would have been employed for two further years. The Applicant was earning $1068 per week gross per week at the time of the termination not including 9.25% superannuation, car allowance of $184.70 per week or commission. The earnings for two years would therefore be $110,072 gross not including superannuation, car allowance or commission. It is not appropriate to include car allowance in the calculation. However, it is appropriate to include commission given that during the 2012-13 financial year the commission earnings in each month ranged from a low of $443.52 to a high of $732.20. The average monthly commission was $566.82. 14 The total earnings for two years would therefore be $123,676. In making this estimate I take into account my findings about the capacity for the Applicant to be redeployed, the Applicant’s extensive skills and experience, the Applicant’s long service and his good conduct and performance. I take into account the size and scope of the business including its related entities. I also take into account the general trading conditions and business imperatives as revealed in the evidence before me.

[87] The earnings between 18 July 2013 and the date for payment of compensation would have been 23x$1068 = $24,564 less the earnings and anticipated earnings from alternative employment in the period of $18,552.88 leaving an amount of $6041.12 not including consideration of superannuation, car allowance or commission. With the addition of the commission the amount is $9049.63. The earnings between the date for payment of compensation and the completion of two years would be 81 weeks x $1068 = $86508. With the addition of commission the amount is $97103.17.

[88] I consider that a deduction of 25% for contingencies is appropriate given the uncertainties involved in my estimate of the likely period of further employment if the Applicant had not been dismissed. This leaves an amount of $72827.38 for this period. The total compensation is therefore $72827.38 + $9049.63 = $81877. This amount is greater than 26 weeks pay for the Applicant. Therefore the amount of compensation is 26 weeks pay or $1068x26= $27,768. With the addition of commission this is an amount of $31,168.92. I will deduct 15% for misconduct. This leaves an amount of $26,493.58. Appropriate taxation will need to be deducted.

[89] An Order will be issued requiring the payment of this compensation within 14 days. I will provide the Respondent with liberty to apply to vary the time period.

COMMISSIONER

Appearances:

The Applicant represented himself.

Ms E Reilly appeared for the Respondent.

Hearing details:

2013

Melbourne

December 4

 1   Exhibit AHG 1, at para 3.

 2   Exhibit AHG 1, Attachment DE008.

 3   See for example Exhibit E 4, Attachment DE0030.

 4   Exhibit AHG 3, Attachments RBH 3 and RBH 4.

 5   [2010] FWAFB 7578.

 6   [2010] FWAFB 7578 at paragraphs 26 to 28

 7   [2010] FWAFB 7578 at paragraph 34.

 8   [2010] FWAFB 7578 at paragraph 34.

 9   [2011] FWA 2012 at paragraph 74.

 10   [PR971685] at paragraphs 40 and 41.

 11   [2011] FWA 4239 at paragraph 39.

 12   [2012] FWAFB 5241.

 13   [2013] FWC 8220.

 14   Exhibit E 4, Attachment 18.

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