Mr Grant Stewart v Amcor Excavations Pty Ltd

[2014] FWC 988

[2014] FWC 988

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 a genuine redundancy - whether consultation clause applies to redundancy of a single employee - TC&R cases - small business exclusion\inclusion.

[1] On 14 October 2013, Mr Grant Stewart made an 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”). The Employer contended that the Applicant had been made genuinely redundant for purposes of s.389 of the Act (the terms of which I set out further below).

[2] At the outset, the Employer made an application, under s.596 of the Act. that it be permitted to be legally represented at the hearing. I advised the parties prior to the hearing that this permission was granted, for the below reasons:

The application for unfair dismissal remedy goes to such matters as the construction of the applicable Modern Award in circumstances where a jurisdictional objection is pressed (under s.389 of the Act). Such matters have scope for complexity and novelty (and particularly so in respect of the argument submitted). The application will require the examination of witness as well. The Respondent does not employ any person with human resources skills or expertise, or legally qualified staff. The Applicant has not formally advised whether or not he will be represented legally, although this is the final working day before the commencement of the proceedings. In such circumstances, I am of the view that the role of a legal representative will assist in the efficient conduct of the proceedings. Should the Applicant advise that he will be represented a lawyer, permission to appear under s.596 of the Act will be afforded to that lawyer as well.

[3] I discuss in [2014] FWC 1031 the reasons why I have come to the view that the Employer is the legal employer of the Applicant. That decision concerns whether the Applicant had been harshly, unjustly or unreasonably dismissed.

[4] The Applicant performed duties as a casual water truck driver and labourer on a labour hire - type arrangement between the Employer and Westside Corporation Ltd (“the client”). The Employer invoiced the client for the Applicant's services on a weekly basis and the Applicant completed, it appears, confirmatory time sheets.

[5] The Applicant performed these duties until such time as the client indicated in writing to the Employer on 26 August 2013 that it no longer required the Applicant’s services. The Applicant performed these services on a rostered basis for a period of some 11 months, on a casual rate of some $45.00 per hour.

[6] The client provided a number of reasons why it no longer sought to have the Applicant on its site. Generally speaking, the client, it is said, found the Applicant to be a less than diligent employee over time and despite counselling, he had not shown improvement. It was further suggested that the Applicant did not fit the skill set required by the client for the position in that various other tickets of competency were required. The Applicant disputed the client’s grounds for forming an adverse view about him and argued that the difficulties in the relationship arose from a personality conflict (as it manifested itself over some time).

[7] The Employer claimed that it had interceded on more than three occasions in order to have the client retain the Applicant on its site. It was successful in all but the last act of intercession, when the client refused to retain the Applicant’s services and expressed a wish that he not return to its site.

[8] Following receipt of that instruction the Employer was not able to further utilise the Applicant on the client’s site.

[9] The Employer was informed that the client would source its labour from another firm.

[10] The Employer’s evidence was that it had no other clients to which it could hire the Applicant, as his skill profile was not in demand. The Employer had also had reason to downsize its workforce by some 10 or 15 or so employees) at the same time owing to the loss of a major client.

[11] The Applicant was redundant as a consequence.

[12] The Employer contends initially that the application is jurisdictionally incompetent because the Applicant was not protected from unfair dismissal for reasons of the operation of s.385 of the Act, which provides relevantly as follows:

385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

[...]

(d) the dismissal was not a case of genuine redundancy.

[13] The definition of a genuine redundancy is set out at s.389 of the Act:

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.

[14] The Employer argues that the Applicant’s dismissal was a case of genuine redundancy as it met the requirements of s.389(1)(a) and s.389(2) of the Act.

[15] The Employer’s evidence was set out above. It had no role for the Applicant within its business and it had no work for the Applicant to perform. That is, operational reasons necessitated making the Applicant redundant.

[16] The Employer argued further that s.389(1)(b) of the Act, which goes to whether or not the Employer has complied with an obligation under the Building and Construction General On-Site Award 2010 (“the Modern Award”) (or alternatively the mirror, standardised clause in the Hydrocarbons Industry (Upstream) Award 2010), was not an applicable consideration. This was because the decision to make the Applicant redundant could not be considered a “major change” under the Modern Award’s consultation provision, which provides as follows:

8.1 Consultation regarding major workplace change

(a) Employer to notify

(i) 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.

(ii) 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.

(b) Employer to discuss change

(i) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 8.1(a), 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.

(ii) 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(a).

(iii) 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.

8.2 Consultation about changes to rosters or hours of work

(a) Where an employer proposes to change an employee’s regular roster or ordinary hours of work, the employer must consult with the employee or employees affected and their representatives, if any, about the proposed change.

(b) The employer must:

(i) provide to the employee or employees affected and their representatives, if any, information about the proposed change (for example, information about the nature of the change to the employee’s regular roster or ordinary hours of work and when that change is proposed to commence);

(ii) invite the employee or employees affected and their representatives, if any, to give their views about the impact of the proposed change (including any impact in relation to their family or caring responsibilities); and

(iii) give consideration to any views about the impact of the proposed change that are given by the employee or employees concerned and/or their representatives.

(c) The requirement to consult under this clause does not apply where an employee has irregular, sporadic or unpredictable working hours.

(d) These provisions are to be read in conjunction with other award provisions concerning the scheduling of work and notice requirements.

[17] The Employer concedes that it did not fulfil all the consultation provisions set out in the Modern Award.

[18] But as cited above, it does not believe that those consultation provisions are relevant. This is because, the Employer claims, the Modern Award’s operation does not extend to the circumstances which it encountered.

[19] One reason for this is that the Employer contends that the redundancy of a single employee alone does not constitute a major change for the purposes of the Modern Award consultation clause.

[20] Section 8.1(a) of the Modern Award applies to “employees”.

[21] Section 23 of the Acts Interpretation Act 1901 provides as follows:

“In any Act, unless the contrary intention appears:

(b) words in the singular number include the plural and words in plural number include the singular.”

[22] Thus, the use of the plural does not negate the application of the clause to the singular “employee”, even though I note that the new Modern Award sub clause in relation to consultation concerning roster changes makes clear that it affects both single and multiple employees.

[23] That aside, there are other conditions that must be made out before an obligation arises for consultation to take place in the manner stipulated under the Modern Award.

[24] I construe the Employer’s argument to proceed along the following lines.

[25] The various consultation requirements set out at clause 8.1(b) of the Modern Award only arise in so far as there have been changes of the kind set out at clause 8.1(a) of the Modern Award. That is, a condition precedent to the consultation obligation under clause 8.1(b) of the Modern Award is that the relevant employer must have introduced a change of the kind set out at clause 8.1(a) of the Modern Award.

[26] A major change is “where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology”.

[27] Consultation in the manner stipulated in the clause occurs when the major change of the type described has significant effects (of a kind as further described).

[28] In the current circumstances, the Applicant was surplus to the Employer’s needs. This had arisen owing to its client exercising its prerogative under a commercial labour hire contract (to request that the Applicant no longer remain on its site).

[29] Subsequently, the Employer found that there was no alternative position for the Applicant as his skill profile was not in demand (and was very different to that of the more qualified workforce). There was, in the view of the Employer, no work for the Applicant to perform.

[30] The Employer contends that these circumstances do not attract the operation of the Modern Award’s consultation clause. The Applicant’s redundancy was not a consequence of (and therefore a significant effect arising from) a major change of the kind set out in the Modern Award. That is, the redundancy of the single employee - the Applicant - did not arise from the Employer making a definite decision to introduce a major change in production, program organisation, structure or technology.

[31] Here, I insinuate the argument to be, there was no decision taken by the Employer to introduce a major change that had any significant effects. The Employer encountered a set of circumstances imposed upon it by an external event, and responded at a discrete level, but this could not amount to a major change of the type the consultation clause envisages.

[32] This argument, on its face, is not without some merit. The consultation provision in Modern Awards (general) could be construed to require a tiered conditionality:

• the employer must have made a definite decision to introduce a change;



• the change about which the definite decision was made must be a “major” change;



• the major change that is to be introduced must concern a major change in production, program, organisation, structure or technology; and



• the major change must have “significant effects”, which 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.

[33] I note that the “significant effects” as set out are not exhaustive. They only “include” the manifestations as cited. Whether a major change has a significant effect is contingent upon the whether the Modern Award makes provision for alteration of the matters subject to the change.

[34] In his decision in Australian Licensed Aircraft Engineers Association v Qantas Airways Limited[2014] FWC 358, Vice President Watson stated as follows in respect of the proper construction of the standardised consultation clause:

[26] In my view the manner in which [the] clause [...] is structured, explained from its origins in a standard award provision, supports an approach to interpretation that encompasses the full expression of “major changes that are likely to have significant effects” rather than breaking it up into discrete elements. The specific reference to organisation and structure implies that any such change will be a major change. However, in my view the better approach to applying the clause is to look at the concepts in a composite manner. I consider that the clause should be interpreted in a practical manner, and not in a narrow technical way, given that it is the trigger for consultation obligations and ought to be interpreted with that context in mind.

[35] The Vice President’s decision suggests that the clause should not be approached by analysing its relevant components and their interactions.

[36] Indeed, the tiered conditionality approach to interpreting the clause may not be entirely helpful, and its construction through the original termination, change and redundancy cases (Termination, Change and Redundancy Cases (1984) 8 IR 34 and (1984) 9 IR 115) (“the Full Benches”) does not suggest that there was intended to be scope for analysis of the interaction of discrete elements of the standard clause. The construction of the clause was by addition of discrete elements, but without regard to interaction or definitional inter-dependency, on which the Employer’s case depends. The decisions of the Full Benches did not disclose any intention to read the structure of the clause in anything other than a prosaic way, and certainly not by exploring the interaction of terms, for example, that were negatively expressed (by reference to exclusions).

[37] There was no discussion (suggesting that there was no intention) to read the words of the standardised clause in a technical manner or with regard to their definitional meanings. That is, there is no discussion at a discrete level as to what a “major change” was, and what role the adjective was to play, let alone a consideration as to where a cut-off or a trigger point might be placed. The Full Benches went about their task in a wholly practical manner devising the basis on which an entitlement to consultation would become available.

[38] The Employer contended, as far as I appreciated the argument, that the trigger point for consultation was a reasonable evaluation based on the size and circumstances of the business and the cause of the redundancy. I doubt this discretionary approach was intended by the Full Benches.

[39] The Full Bench in the Termination, Change and Redundancy Case (Supplementary Decision) (1984) 9 IR 115 intended, on my reading, to capture within the consultation clause all redundancies (bar those relating to businesses with less than 15 employees) for whatever reason, and only to exclude termination of employment “due to the ordinary and customary turnover of labour” (as that phrase may have been construed at the time). The Full Bench intended that there should “not be a fundamental distinction, in principle, based on the causes of redundancy”.

[40] The Full Benches were drafting an award provision in a period prior to the emergence of legislated individual unfair dismissal and general protections jurisdictions, so the scope and intended coverage of the “standard” must be construed in that particular context, as it once was.

[41] The Full Bench in Termination, Change and Redundancy Case (1984) 8 IR 34 stated generally (though small businesses were excluded) that “we believe that it is of fundamental importance to involve employees and their representatives in the problems of redundancy as soon as a firm decision has been taken that retrenchments may be necessary...” 1

[42] Generally, I conclude that the consultation provisions in modern awards (from which small businesses are not excluded) are - in their standardised origins - intended to capture redundancies however they might arise and on whatever scale (despite the conditionality expressed by the adjectives in the phrases “major change” and “significant effects”).

[43] The Full Benches, I think, set out to mitigate the transaction and compliance costs arising from the consultation obligations under the standardised clause by excluding small businesses from its operation (rather than defining the scale of change and the causes of redundancies). That is, redundancies initiated by employers of less than 15 employees did not trigger the consultation clause.

[44] The operative effect, however, of the standardised award clause since 1984 has increased in so far as small business has been brought back within the ambit of the standardised modern award consultation clause (and for the purposes of s.389(1)(b) of the Act as well).

[45] Be that as it may, the provisions are as they are, and I must conclude that the redundancy of a particular employee for reasons of the unavailability of work is a circumstance that attracts the consultation provisions in the Modern Award.

[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.

[53] It appears to me that on the evidence the exclusion from the definition of genuine redundancy as provided for at s.389(2) of the Act does not apply to the Employer in the circumstances (had the requirements of s.389(1)(a) and s.389(1)(b) of the Act been made out).

Conclusion

[54] Generally, therefore, I have found that the Employer dismissed the Applicant for the reason that it did not require his job to be performed by anyone for operational reasons. The Applicant was therefore made redundant from his employment in the conventional sense.

[55] The Employer however did not conform to the consultation requirements that applied because the work the Applicant performed was covered by the Modern Award.

[56] I have also found, immediately above, that the exclusion provided for at s.389(2) of the Act does not apply.

[57] That said, because of the deficiency in relation to s.389(1)(b) of the Act, the Employer is unable to contend that the dismissal of the Applicant was a case of genuine redundancy. The jurisdictional objection is therefore dismissed.

[58] The application must now be considered for the purposes as to whether the dismissal was harsh, unjust or unreasonable. The decision in this regard is set out in [2014] FWC 1031.

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   At page 63.

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