Mr Grant Stewart v Amcor Excavations Pty Ltd

[2014] FWC 1031

[2014] FWC 1031

FAIR WORK COMMISSION

DECISION

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

Mr Grant Stewart
v
Amcor Excavations Pty Ltd
(U2013/3394)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 14 FEBRUARY 2014

Summary - whether dismissal harsh, unjust or unreasonable - labour hire arrangements - identity of employer.

[1] On 14 October 2013, Mr Grant Stewart made application under s.394 of the Fair Work Act 2009 (“the Act”) seeking an unfair dismissal remedy in relation to his alleged dismissal by Amcor Excavations Pty Ltd (“the Employer”).

[2] I determined, by way of my decision in [2014] FWC 988, that the jurisdictional objection under s.389 of the Act lodged by the Employer in relation to the application was not made out. That objection was dismissed and the matter proceeded to be determined on the basis of whether the Applicant was harshly, unjustly or unreasonably dismissed. In so determining this matter I also rely upon the decision as referred to above as supplementary to my reasoning as follows.

[3] In order to determine whether the Applicant was dismissed harshly unjustly and unreasonably I must take into account the various matters set out at s.387 of the Act.

[4] Section 387 of the Act provides as follows.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

Consideration

Section 387(a): whether there was a valid reason for the dismissal related to the person’s capacity or conduct

[5] The Applicant’s case is largely focused on the probity of the claims made by Westside Corporation Ltd in relation to his performance and conduct.

[6] The Applicant may well have concerns about those matters. But Westside Corporation Ltd was not his legal employer.

[7] The Applicant had entered into no contract of employment with that entity. It may well be the case that the Applicant perceived that he was under the control of Westside Corporation Ltd. That is not unusual in a labour hire-type context in which the Applicant performed his duties, and it may not be determinative of an employment relationship being in existence.

[8] The Full Bench in [2013] FWCFB 9605 surveyed the state of the law of employment in relation to labour hire arrangements relevantly as follows:

[19] The starting point for the consideration of the position here is that the mere existence of an arrangement under which a first company provides labour to a second company does not point to the second company being the employer of the labour so provided.

The general position was stated by Buchanan J in Fair Work Ombudsman v Ramsey Food Processing Pty Ltd as follows: 

“[60] ... arrangements whereby labour is provided by one company to another, without the recipient becoming thereby an employer, are longstanding and unremarkable. There appears no place for an assumption of illegality or illegitimate purpose from the mere fact that a “labour hire” arrangement has been put in place. The Australian cases recognise that, provided the arrangement meets certain objective criteria.

[61] Utilisation in Australia of labour hire arrangements has increased significantly in past decades. There is no doubt that sometimes such arrangements reflect a desire by the proprietors of a business to avoid liability for employment related obligations. That is not illegal as an objective.”

[20] A similar observation was made by Merkel J in Damevski v Guidice:

“[173] In general, the courts have held that the interposition of a labour hiring agency between its clients and the workers it hires out to them does not result in an employee-employer relationship between the client and the worker: see Mason & Cox Pty Ltd v McCann (1999) 74 SASR 438; Skilled Engineering Pty Ltd v Gill (unreported, Full Court of the South Australian Supreme Court, King CJ, Cox and Bollen JJ, 11 July 1991); McMahon Services Pty Ltd v Cox (2001) 78 SASR 540; Swift Placements Pty Limited v Workcover Authority of New South Wales (Inspector May) [2000] NSWIRComm 9; (2000) 96 IR 69; Drake Personnel Ltd v Commissioner of State Revenue [2000] VSCA 122; [2000] 2 VR 635; Construction Industry Training Board v Labour Force Ltd [1970] 3 All ER 220; McMeechan v Secretary of State for Employment [1996] EWCA Civ 1166; [1997] ICR 549; Montgomery v Johnson Underwood Ltd [2001] EWCA Civ 318; [2001] ICR 819.”

[9] The Full Bench went on:

[26] For example, in Accident Compensation Commission v Odco Pty Ltd the High Court analysed the position of Troubleshooters Available (TSA), a labour hire agency which supplied tradespersons to the building industry. The question which the Court had to determine was whether TSA was the “employer” of tradespersons for the purposes of the Accident Compensation Act 1985 (Vic). The Court answered this question in the affirmative. It described how TSA’s labour hire business model worked in the following terms (underlining added):

“When a builder needs a tradesman he contacts TSA and places an order. An employee of TSA then completes an order sheet recording the builder’s name, the person to whom the tradesman should report at the building site, the type of tradesman required and the duration of the work. The employee of TSA then contacts an appropriate tradesman and advises the tradesman of the builder’s requirements. If the proposal is acceptable to the tradesman, he attends at the building site and performs the necessary work at the direction of the builder. Subsequently, the tradesman telephones TSA to advise details of hours worked during the previous seven days. TSA raises an invoice to the builder charging the hours worked by the tradesman at a previously agreed hourly rate (which includes remuneration to TSA for its services to the builder). The tradesman is paid by TSA at the hourly rate or set price agreed between TSA and the tradesman. The tradesman makes no payments to TSA for having placed him. TSA’s reward comes from the difference between the amount it charges the builder and the amount it pays the tradesman.”

[27] The Court went on to say (underlining added):

“Once a tradesman accepts an offer of work and attends at a client's site, he remains at the site working for as long as that client requires or for as long as the tradesman wishes. TSA does not exercise and is not able to exercise any control whatsoever over what the tradesman does at the site or how he does it. The only contact TSA has with the tradesman is in obtaining information of what work he has done. The tradesman contacts TSA by telephone, usually every Tuesday, to advise the details of hours and sites worked for which clients during the previous seven days. From this information, invoices are raised by TSA to the relevant client.”

[28] Therefore in Accident Compensation Commission v Odco Pty Ltd the fact that control over the tradesperson in the performance of work was exercised by the hirer and not TSA did not operate to negative the proposition that the tradesperson contracted with TSA and not the hirer. Similarly in Fair Work Ombudsman v Ramsey Food Processing Pty Ltd it was observed that the exercise of a significant degree of control by the hirer did not necessarily result in the labour hire company being displaced as employer (underlining added):

“[47] ... the common law has long recognised the possibility that an employee of one business entity might be hired, loaned or seconded to another person or business, without any change in employment relationship occurring. That is so even if a good measure of practical control is exercised over the work of the employee by the person to whom the employee’s services are supplied.”

[10] The Applicant’s legal employer is the entity that recruited him (after he presented to it seeking work), offered a consideration in respect of various duties which he accepted, and which remunerated him and provided his other various entitlements, statutory and otherwise. And that is the Employer, in the case of these proceedings.

[11] There was no question of the commercial authenticity of the Employer’s conduct and its processes (though the labour hire arrangements were not typical of its business and were marked by a measure of informality).

[12] That established, the reason for the dismissal was not the performance and conduct issues, as they may have been, as alleged by Westside Corporation Ltd. The reason for the dismissal by the Employer was that there was no longer any work for the Applicant to perform and that as a result his position was no longer required, and no longer required to be performed by anyone.

[13] The reason for the dismissal properly characterised, therefore, was for redundancy.

[14] I have set out my further findings in this regard in relation to s.389(1)(a) of the Act in [2014] FWC 988.

[15] The reason for the dismissal advanced by the Employer therefore is unrelated to whether or not there was a valid reason for the dismissal for the purposes of section 387(a) of the Act. The Applicant’s employment was terminated for reasons other than his capacity or conduct; the reasons related to the operational circumstances of the Employer.

[16] But for the operational circumstances, which resulted in there being a lack of demand for a person with the Applicant’s skill profile, the Applicant would have remained in the Employer’s employment.

[17] The reason for the dismissal, as it was, is a matter I will take into account in respect of the wider discretionary judgement the Act vests in me, but it is not relevant to s.387(a) of the Act (at least on the existing authority - [2012] FWAFB 5241).

Section 387(b) of the Act: whether notified of the reason for dismissal

[18] The decision to dismiss the Applicant for operational reasons was conveyed to the Applicant at the same time as it was communicated that the Applicant’s job was no longer required to be performed by anyone. The Applicant was not notified of the reason for the dismissal in advance of the decision that had been taken to dismiss him. It may well be the case, as the evidence in this matter suggested, that the Applicant was aware of his circumstances before it was communicated to him formally.

Section 387(c) of the Act: whether given an opportunity to respond to the reasons

[19] As is implied above, there was little scope given for the Applicant to respond to the reasons for the dismissal as the decision itself, in the circumstances in which arose, had already been taken. This was not a matter in which more information could have changed or otherwise persuaded the Employer to have adopted a different course. The Applicant’s job was no longer required to be performed by anyone.

Section 387(d) of the Act: whether refusal to allow support person

[20] The circumstances of this matter did not generate an opportunity for the Applicant to consider the role of a support person. There was therefore no point in time at which the Employer can be said to have refused to allow a support person to assist the Applicant in the discussions (as they were) in relation to the dismissal.

Section 387(e) of the Act: whether warned in relation to performance issues

[21] As mentioned above, the Applicant’s employment was terminated for reasons arising from the operational circumstances of the Employer. No issue of the Applicant’s performance arose for the purposes of the reason for the dismissal. The Applicant was strongly of the view that he was dismissed for reasons of performance (and conduct), but his view in this regard was premised on the client having been his employer. But this was not the case, as I have discussed above. His employer encountered a situation in which his (the Applicant’s) job was surplus to its needs. That was not a decision based upon the Applicant’s performance (or conduct).

Section 387(f) of the Act: whether dismissal affected by size of Respondent

[22] The Employer employed some 61 (approximately) employees at the time the Applicant’s employment was terminated. It is not a small business for the purposes of s.23 of the Act. However, the Employer’s business on the evidence before me had been a small business of some 8-10 employees for much of its life until 2012 when it entered a period of rapid expansion. Its business systems do not appear to have been developed to the extent to capture all the human resource issues that arise from such a sharp period of growth. At the time of the Applicant’s dismissal the Employer appears to have been in a business improvement cycle and was developing its policies and procedures to accommodate its more complex human resource environment. The legacy of its longer history as a small business no doubt affected the procedures adopted in respect of the dismissal.

Section 387(g) of the Act: whether dismissal affected by the absence of HR resources

[23] As discussed above, the Employer’s evidence was that it did not possess any dedicated human resource skills with which to manage the dismissal. This was a contributing factor to the manner in which the dismissal was given effect.

Section 387(h) of the Act: whether other matters

[24] In my decision in [2014] FWC 988, I found as follows in relation to the circumstances of the Applicant’s dismissal:

[46] I have previously set out the Employer’s position in relation to the bona fides of the redundancy itself. The position the Employer found itself in was that it had an employee (the Applicant) who was surplus to needs. The Applicant’s skill profile was not in demand at any other site, it was powerless to return the Applicant to the original client and its work site, and the Employer at the same time was reducing its employment levels significantly in other areas in which it had direct employees.

[47] For current purposes it is enough to state that these claims were not challenged in any material way. I must conclude on the evidence that the dismissal was because the Employer no longer required the Applicant’s job to be performed by anyone because of changes in the operational requirements of the Employer’s enterprise, as it is broadly conceived.

[48] Section 389(2) of the Act provides in effect that a dismissal will not be a genuine redundancy if it would have been reasonable in all the circumstances for the employee to have been redeployed within the employer’s enterprise or an enterprise of an associated entity of the employer.

[49] The evidence of the Employer was that it would not have been reasonable to redeploy the Applicant for reason that it had no other clients for which the Applicant’s skill profile was in demand (as the Applicant was largely unskilled for work in areas in which the Respondent carries out its business). The Employer had generally been required to reduce its number of employees owing to a reduction in demand from its clients.

[50] An issue did arise as to whether or not the Applicant could have been trained to develop a skill profile that would have improved his prospect of being redeployed to another client.

[51] In this regard the Employer contends that the Applicant evidenced a disinclination to obtain new qualifications. I make no finding as to whether there is any truth in this claim. In the end it matters not. This is because the Employer contends that the overall demand for labour placement had decreased and was evidenced by its necessity, at around the same time, to cease to employ some 10 to 15 staff, none of whom could be redeployed. The Employer argued that the loss of these employees represented some 18% of its workforce at the time.

[52] Irrespective of the issue as to whether the Applicant was willing to be retrained was relevant or not, it does not appear that it would have been reasonable in the circumstances to extend the opportunity to be retrained to the Applicant in the labour market environment in which the Employer found itself. That is, even if retrained there would have been no position into which the Applicant could have been redeployed.

[25] The evidence from the Employer was unchallenged as to its circumstances and its reasons for the decision. Whilst for apparent statutory definitional purposes the Employer did not have a valid reason for the dismissal it nonetheless had a reason that was sound, defensible and well founded. This was because the Employer no longer required the Applicant’s job to be performed by anyone because of changes in the operational requirements of that enterprise and it was not reasonable in all the circumstances to redeploy the Applicant. Such circumstances are relevant to a determination as to whether or not the Applicant’s dismissal was harsh, unjust or unreasonable. Indeed:

They are matters telling against a conclusion that the dismissal was harsh, unjust or unreasonable. 1

[26] That said, the Applicant was not afforded the opportunity for consultation under the applicable Modern Award. I have discussed this above. But regardless of that fact the absence of consultation did not materially affect the circumstances of the dismissal, including when the dismissal took effect. There was no job for the Applicant to perform, period. His skills were not aligned with the Employer’s wider market and that market had itself diminished at around the same time as the redundancy took effect.

[27] Had consultation been afforded in conformity with the Modern Award it would have had very little material effect on the circumstances of the dismissal including its timing. In some circumstances it may be possible to determine that a period of consultation may have given rise to a delay in the time at which the redundancy took effect. But in this case such a finding or reasonable inference is not available on the evidence or the context.

Conclusion

[28] In my view, the Employer had a reason for the dismissal of the Applicant which was reasonably founded, was not capricious in any manner and did not manifest a mischief. The Employer dismissed the Applicant for reasons of compelling and demonstrated operational reason. The Applicant’s job was no longer required to be performed by anyone else.

[29] There was an element of harshness (or however else construed) in the way in which the Applicant was dismissed. He was not afforded his entitlement to consultation under a Modern Award or otherwise given an opportunity to respond to the circumstances in which he found himself.

[30] But regardless, the result, even if these opportunities have been provided, would have been little if any different.

[31] Taking all these matters into consideration I am satisfied that the Applicant’s dismissal by the Respondent was not harsh, unjust or unreasonable. The application under s.394 of the Act therefore is dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr G. Stewart, Applicant (assisted by Mrs J. Stewart)

Mr S. Hogg, Barrister, instructed by SR Wallace & Wallace Lawyers

Hearing details:

Brisbane

2014

10 February

 1   [2012] FWAFB 5241 at PN47.

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