Mr John Morrissey v Transit Australia Pty Ltd

[2012] FWA 7988

[2012] FWA 7988

FAIR WORK AUSTRALIA

DECISION

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

Mr John Morrissey
v
Transit Australia Pty Ltd
(U2012/8804)

COMMISSIONER ROE MELBOURNE, 14 SEPTEMBER 2012

Termination of employment - genuine redundancy.

[1] The matter arises from an application filed on 12 June 2012 under s 394 of the Fair Work Act 2009 (the Act) by Mr John Morrisey (the Applicant) for relief in respect to the termination of his employment from Transit Australia Group (Transit or the Respondent).

[2] The Respondent opposed conciliation on the grounds that they sought that the issue of whether or not the termination was a genuine redundancy be resolved first. Conciliation did not proceed. At the commencement of the proceedings in this matter on 10 September 2012 I conducted a short conciliation conference at the request of the parties. The matter was not resolved and the parties elected to proceed by way of hearing.

[3] I granted permission for Mr Morrisey to be represented by Ms Willson of counsel. The Respondent was represented by Mr MacDonald from the employer organisation Australian Public Transport Industrial Association.

[4] Mr Morrisey gave evidence, 1 and evidence for the Respondent was given by Ms Mellissa Manley, Group Human Resources Manager2 and Mr Matthew Goebel, General Manager Operations and Service Delivery.3 Mr Morrisey reported directly to Mr Goebel. At the time of the termination Mr Morrisey was Sunshine Coast Manager, Operations and Service Delivery and his salary was $115,000 per annum.

[5] Mr Morrisey was employed by Transit from 26 April 2010 until his termination on 1 June 2012. Transit is not a small business and it is not in dispute and I am satisfied that Mr Morrisey is protected from unfair dismissal. Transit is a major operator of bus services in Queensland and also has a manufacturing arm.

[6] Mr Morrisey was notified of his dismissal in a letter dated 31 May 2012. The letter advised that his position would be made redundant as of Friday 1 June 2012. Mr Morrisey was paid five weeks in lieu of notice and six weeks redundancy pay and accrued leave entitlements.

[7] The issues in this case are well illustrated by the letter of termination signed by Mr Goebel. 4 The letter begins by reference to a meeting held on Friday 25 May 2012. “At this meeting, we advised you about the ongoing concerns we had in regards to your performance in your role as the Sunshine Coast Manager - Operations & Service Delivery.” The performance concerns raised at the meeting were then summarised. They included:

• Issues of management of workcover related issues which Transit say resulted in higher premiums.



• Significant health and safety concerns and the fact that Mr Morrisey was responsible for taking action to achieve improvements.



• Reluctance by Mr Morrisey to provide clear understanding of his responsibilities as a workplace health and safety champion for the Transit group.



• A statement that Managers are clearly accountable for the Key Performance Indicators and have been repeatedly informed of this.

[8] There is some difference of detail in the evidence but essentially Mr Morrisey does not contest that performance concerns of this nature were raised at the 25 May 2012 meeting. Mr Morrisey does contest the validity of the concerns.

[9] The letter states that:

“We have had a number of discussions in regards to your performance most notably in February, March and April 2012.We have also provided you key support, including Head Office resources, to assist you with obtaining improved results with an ultimate goal of sustainable change.”

There is some difference of detail in the evidence but Mr Morrisey does not contest that there were regular discussions in the management team about company performance and issues facing the company. However, Mr Morrisey challenges the extent that these discussions related to alleged problems with his performance.

[10] Mr Goebel also states in the letter that at the 25 May meeting:

“I also discussed that the Company wished to take a different direction as to the management structure across the Sunshine Coast and that until such time as this was determined, Corporate Head Office would be assuming the responsibilities of your role. It was at this time that I explained to you that you would be placed on extended leave until a decision had been finalised and formal negotiation with you about an exit strategy was addressed. As you are aware, we have been undertaking a significant organisational restructure since May 2011, which was also reemphasised through formal internal correspondence from our Managing Director dated 14th December 2011.”

Mr Morrisey denies that changes to management structure across the Sunshine Coast were discussed. Mr Morrisey says that he was told following discussion of performance issues that the company no longer had confidence in him and that he was no longer required and there was discussion about an exit strategy. There is no disagreement that following the meeting Mr Morrisey was still employed and paid but not engaged in normal duties whilst exit options were considered. Mr Goebel immediately following the meeting instructed that Mr Morrisey’s email and computer access be terminated. Mr Morrisey says he was not informed of this but discovered it immediately following the meeting.

[11] The letter then stated that:

“Following from our discussions with you on Friday 25 May 2012, I am now in a position to formally notify you of the Company’s decision to consolidate our Transit Australia operations into a singular overarching senior manager. Therefore, resulting in a lawful redundancy of your substantive position within our organisation. With this restructure, there is no ongoing management role for you or other suitable redeployment options available.”

Mr Morrisey denies that there had been any prior discussion or advice of the proposal to change the management structure in a way that affected his position. The Respondent does not suggest that there was any discussion with Mr Morrisey concerning redeployment options.

[12] Mr Morrisey commenced in the role of Service Delivery Coordinator for the Sunshine Coast operations of Sunbus. It is not in contention that there was a structural review in June 2010 which divided the operations into three regions. In August 2010 Mr Morrisey was promoted to the position of Regional Manager (Central) Sunshine Coast and Rockhampton and also took on the role of Workplace Health and Safety Champion for the entire Transit group.

[13] There was a further restructuring during 2011. The number of managers in the operation was significantly reduced by ten through ongoing restructuring during this period. The restructure was led by Mr Goebel who was appointed General Manager for all operations and service delivery in December 2011. Mr Morrisey became Sunshine Coast Manager, Operations and Service in January 2012 and Rockhampton responsibilities were removed from his job. Mr Morrisey received a significant pay rise at that time. Mr Morrisey had direct input into this restructuring process. In December 2011 he made suggestions about changed structure and put forward a proposed revised organisational chart. 5

[14] Ms Manley gave evidence of further restructure in February 2012 with the creation of new management positions and the elimination of others. Mr Goebel gave evidence that in March 2012 there were management discussions about the impact of the forthcoming budget for the 2012-13 year and the pressures for cost reduction on the company. Mr Morrisey also accepts that there were direct discussions about the particular problems with workcover claims and other management issues in the Sunshine Coast in March. The file note of the meeting involving Mr Morrisey of 8 March 2012 includes the following comment: “Matt (Goebel) advised that it would not end well if things did not improve, and advised he would be forced to act accordingly. Matt advised that the people issues were not being dealt with appropriately. ”

[15] There was a further discussion between Mr Goebel and Mr Morrisey on 20 April at the Sunshine Coast. The participants differ in their recollection about the nature of this meeting. However, there is no doubt that the concerns about workcover performance were discussed. The Respondent gave evidence concerning the impact of changes in Government policy away from the historical cost plus arrangements for bus service contracts.

[16] The organisational structure in place shortly after the departure of Mr Morrisey and which continues at this time was provided to the Tribunal. 6 That structure shows that the management of all Sunbus operations, including Sunshine Coast and North Queensland is now under one Manager. I am satisfied that the structure previously had three managers (North Queensland, Sunshine Coast and Gold Coast) at the level occupied by Mr Morrisey reporting to Mr Goebel and now there are only two managers at that level (Transit or Sunbus Operations and Gold Coast). The evidence of the Respondent is that the managers at the next level are paid significantly less than Mr Morrisey was paid.

[17] The evidence of the Respondent is that there were no vacant management positions at the level below the level occupied by Mr Morrisey. All positions were filled and the number of positions was being progressively reduced. Mr Morrisey only identified three management roles which he could have been considered for redeployment to. I am satisfied that as a senior manager Mr Morrisey was aware of all possible management roles in the organisation. Two of those roles, Operations Manager Sunshine Coast and Safety Training and Rehabilitation Manager Sunshine Coast were both at a lower level in the structure than Mr Morrisey’s position and at a lower pay rate. Moreover Mr Morrisey concedes that both positions were occupied and remained occupied by the same incumbent. The incumbent of one of the positions was on an extended probationary period at the time but the position was not vacant. The third role identified is the new role of Head of Sunbus, Operations and Service Delivery. This is one of the two remaining roles at Mr Morrisey’s level following the abolition of Mr Morrisey’s position. This position has been filled by one of the other two managers who were at the Applicant’s level. The Respondent says that Mr Morrisey was not suitable for this position given the performance concerns previously raised with him. Mr Morrisey suggests that he would have accepted a job as a bus driver if asked. Mr Morrisey is not qualified as a bus driver.

[18] The Applicant gave evidence that his last performance review was in June 2011 when he received a high rating.

[19] Ms Manley created a file note of the meeting of 25 May 2012 7 a few days after the meeting using notes that she had taken during the meeting. Those notes confirm that the meeting began with a discussion of performance issues particularly those around workcover and health and safety management and performance. Following this the note says:

“MG discussed that on review of the aspects of the SSC operation, the Company had decided to take a different path and we needed to discuss an exit strategy with JM. JM asked where this had come from. MG advised that we had just discussed this, and that it was a Board and Senior Mngt decision. JM asked who (ie Luke, Andrea, Megan). MG confirmed that a clear decision had been taken. JM asked what would happen with the Sunshine Coast. MG advised that it would be looked after by Corporate Head Office until such time as a new structure was concluded.”

[20] The note reveals that a little more of the rationale for the decision was raised as follows:

“Discussion on how an exit strategy might be negotiated. JM said that things had turned around and the Company could not justify its decision. MG stated that we had been through some of the reasoning for the decision and were now looking at the structure.....MG said that he had made it clear early in the year that he needed to focus on North Qld and that JM was to focus on his business to move it forward but this had not happened.”

[21] Prior to Mr Goebel departing the meeting the note says:

“MG advised in summary, that the Company was looking to exit John from the business with an exit strategy. Until that was resolved, JM was officially on garden leave, and he was advised by MG that he had a lawful direction not to contact other Sunbus employees during that time. He was also advised that his emails would be redirected until such time as this was resolved.”

[22] Then the discussion continued with just Ms Manley and Mr Morrisey present.

“JM advised that he believes the Company is callous and without morals given what he did last year for us and his personal circumstances. Mel advised JM that we believe the reasons for the decision are sound, it is a matter of whether he negotiates a settlement, which will allow him to resign.”

[23] The file note has a header with the capacity to fill in details. One of the headers is “Specific nature of discussion/ problem (please specify)”. Under this header the words “Performance issues” appear. Ms Manley says that the document is a pro-forma she uses regularly and that she had failed to delete this in error.

Conclusions regarding the evidence.

[24] I have not canvassed in detail all of the evidence. The gap in perception between Ms Manley and Mr Goebel on the one hand and Mr Morrisey on the other could be described as a chasm.

[25] I am satisfied after reviewing the evidence that the file notes of the meetings involving Mr Morrisey of 25 May 2012 8 and 8 March 20129 are reasonably accurate.

[26] I am also satisfied that there was considerable restructuring of the Respondent particularly at a management level in the period of Mr Morrisey’s employment. This was not a single event but an ongoing process. I am satisfied that as a senior manager Mr Morrisey was well aware of this process of ongoing change. I am also satisfied that when Mr Goebel was appointed to his position in December 2011 the employees were advised that: “Matt, in undertaking a review of the Group’s entire operations and service delivery areas, will spend time travelling around our various locations in the coming weeks, and into the New Year.” 10

[27] On 17 January 2012 this resulted in Mr Morrisey’s role being significantly changed and his pay was significantly increased at that time. Mr Goebel says this was not a promotion but, following a request from Mr Morrisey, simply to bring his pay in line with that of the other managers at his level. I accept this evidence.

[28] It is not necessary for me to resolve the differences in the evidence about the level of reassurance given to Mr Morrisey about the future of his position and his employment. Suffice to say that I consider that Mr Morrisey was clearly nervous about the future of his position. Similarly it is not necessary to resolve all the differences about the extent to which performance issues were raised with Mr Morrisey and the extent to which those concerns were justified. Suffice to say that I consider that significant performance issues were raised with Mr Morrisey on a number of occasions prior to the 25 May 2012 meeting.

[29] I am also satisfied that the appointment of Mr Morrisey to the revised role in January 2012 was not the end of Mr Goebel’s review of the Group’s entire operations as it effected the Sunshine Coast and Mr Morrisey’s role. I accept the evidence that in dealing with changing Government policy, the need to reduce costs in the context of developing next year’s budget and dealing with the particular performance issues identified on the Sunshine Coast further restructure was likely and did occur. I am also satisfied that Mr Morrisey as a senior manager was aware of these factors and of the ongoing likelihood of change.

[30] A review of the evidence satisfies me that the meeting of 25 May 2012 can be characterised as a meeting when Mr Morrisey was told that because of performance concerns a decision had been taken that his employment with the Respondent was going to end. The meeting was to advise Mr Morrisey of this and to establish a dialogue about an exit strategy. It is abundantly clear that the objective of this was to provide Mr Morrisey with the opportunity to resign on mutually acceptable terms. The evidence clearly establishes that a number of other managers had negotiated such exit packages and a number of them had been by way of resignation not redundancy. Some had been by way of redundancy.

[31] I am satisfied that the particular restructure which was referred to in the final letter of 31 May 2012 and which has now been implemented was not raised at the 25 May 2012 meeting. In fact I am satisfied that there was no talk of redundancy or restructure at the meeting on 25 May 2012. Mr Goebel says this was because the Chief Executive had not yet approved the new position descriptions and signed off on the new structure. Ms Manley and Mr Goebel say that the proposed change to the structure, involving the abolition of Mr Morrisey’s position was discussed and agreed upon at least a week prior to the meeting of 25 May 2012. Mr Goebel says that: “as a result of this change, Group HR & Training Manager, Mel Manley, created detailed Position Descriptions for two “Head of Operations” roles”. 11 The evidence reveals that the position descriptions were probably not produced until after the meeting of 25 May 2012.

[32] I accept that it is likely that the concept of a restructure which would remove Mr Morrisey’s position was discussed prior to 25 May 2012 but I am not satisfied that it was determined until after that meeting.

[33] However, I am satisfied that prior to 31 May 2012 the restructure which abolished Mr Morrisey’s position was approved and that Mr Morrisey was advised of this in the redundancy letter of 31 May 2012.

The threshold issue - genuine redundancy.

[34] The threshold issue is whether or not the dismissal was a genuine redundancy. Section 385(d) of the Act provides that if I am satisfied that the dismissal is a genuine redundancy then it cannot be an unfair dismissal. Genuine redundancy is defined as follows by the Act:

“389 Meaning of genuine redundancy

(1) A persons 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.”

[35] There is no collective agreement which applies to Mr Morrisey’s employment. Mr Morrisey argues that the Clerks-Private Sector Award 2010
(the Award) applies to Mr Morrisey and the coverage clause of that Award provides that: “This award covers employers in the private sector throughout Australia with respect to their employees engaged wholly or principally in clerical work, including administrative duties of a clerical nature, and to those employees.” That Award contains the following consultation clause:

“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 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 representative, if any, the introduction of the changes referred to in clause 0, 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 0.

(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.”

[36] I am satisfied for the reasons set out earlier that the position of Mr Morrisey is no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. Mr Morrisey clearly implies that the restructure was contrived to get rid of Mr Morrisey rather than being for operational reasons. However, the context of ongoing restructuring has been established. The operational reasons for reduction in the number of managers at the level occupied by Mr Morrisey including the cost pressures has been established. Operational reasons do not have to be the sole reason for the position no longer being required. They were clearly not the sole reason in this case. However, on balance I am satisfied that the operational requirements of the enterprise have changed and this has resulted in the position no longer being required.

[37] I am satisfied that it would not have been reasonable in all the circumstances for the person to be redeployed. There was no suggestion of opportunities in an associated entity. As discussed earlier there were no vacant managerial positions. There were three managers at the Applicant’s level and only two jobs. The remaining job which the Applicant said he should be considered for was responsible for North Queensland and the Sunshine Coast. The manager at the same level as the Applicant who was responsible for North Queensland was appointed to that job. Mr Goebel gave evidence that they considered the Applicant but deemed that that manager was better qualified and more suitable for the job than the Applicant. It is not necessary to reach any judgment about the accuracy or otherwise of the performance concerns in respect of the Applicant. The evidence certainly establishes that there were performance concerns and that they had some objective basis in the workcover and occupational health and safety performance of the area for which the Applicant was responsible. Even if I was to accept the evidence from the Applicant that reduces the Applicant’s responsibility and points to some steps taken to rectify the situation, there was no evidentiary basis on which I could doubt the assessment of the employer that the other candidate was more suitable for the job in this case.

[38] The only other potential vacant position raised by Mr Morrisey was that of bus driver. Mr Morrisey is not trained as a bus driver. The base wage of the position is a fraction of the wage Mr Morrisey earnt in his position. I accept that the employer needs to consider all reasonable positions and this does not exclude lower paid positions. However, in the circumstances of this case I do not regard the failure to consider redeployment to a bus driver position as inappropriate. I am satisfied that in the circumstances of this case the options were easily identifiable by both Mr Morrisey and the Respondent and that the Respondent examined all options and correctly concluded that there were no reasonable options for redeployment.

[39] I am satisfied that the termination was a genuine redundancy provided that the employer has complied with any obligation in a modern award that applied to the employment to consult about the redundancy.

[40] I am satisfied that the change involved in the reduction of management positions at Mr Morrisey’s level from three to two resulting in the abolition of Mr Morrisey’s job is a significant change within the meaning of Clause 8.1 of the Award. The information about the change and its effects was not provided in writing to Mr Morrisey prior to the termination but at the time of the termination. Hence it was not prior to the discussion as required by Clause 8.2(c). There was no discussion of the introduction of the particular change and measures to avert or mitigate the adverse effects of the change and there was no opportunity for consideration by the employer of matters raised as required by Clause 8.2(a). It is true that on 25 May 2012 Mr Morrisey was made aware that the structure would be reviewed and that he would not be part of such a structure but the nature of the change was not revealed and therefore there was no opportunity for input or serious consideration of any alternatives he might wish to propose.

[41] I am not satisfied that the employer has complied with any obligation in the Award that applied to Mr Morrisey’s employment to consult about the redundancy. Hence if the Award does apply to Mr Morrisey’s employment then termination is not a genuine redundancy. If the Award does not apply to Mr Morrisey’s employment then the termination is a genuine redundancy.

[42] On balance I am not satisfied that the position of Mr Morrisey is covered by the Award. It is not primarily a clerical role or a role including administrative duties of a clerical nature. It is a senior management role. The evidence suggests that the management of people is a central element of that role. That is it is primarily an administrative and supervisory role not a clerical role. 12 There is no other Award which appears to cover the work of Mr Morrisey. The Miscellaneous Award does not apply because of the following exclusion in that Award.

“The award does not cover those classes of employees who, because of the nature or seniority of their role, have not traditionally been covered by awards including managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists.”

[43] In the event that I am wrong about this matter I will consider the implications of the failure to consult in the circumstances of this case.

The implications of the failure to consult if the Award did apply.

[44] If the failure to consult could have made a difference then in my view it is likely, depending of course on consideration of all the relevant factors, that such a failure will render the termination unfair. This is particularly the case if there is a possibility that consultation might have led to the identification of redeployment options or if it might have resulted in a different employee being selected or volunteering for redundancy or of alternatives to the restructure which might have avoided the redundancy or reduced its effect on the employee(s).

[45] The majority in the recent Full Bench case UES (Int’l) Pty Ltd v Leevan Harvey 13 dealt with a similar situation:

“On the evidence, therefore, we consider Mr Morrisey’s dismissal was not a case of genuine redundancy within the meaning of s.389. However, this is only because UES did not consult with Mr Morrisey about the redundancy in accordance with its obligation in the modern award that applied to Mr Morrisey’s employment.” 14

[46] If the Award consultation requirement did apply then I would have followed the majority in the UES matter and concluded that due to the failure to consult the dismissal would have been unfair. However, I would have concluded that the employment of Mr Morrisey would only have continued for a further two weeks given that there were no reasonable prospects for redeployment or for the avoidance of the redundancy. In those circumstances I would have awarded two weeks compensation.

Conclusion

[47] I have concluded that the termination of Mr Morrisey was a genuine redundancy. Therefore the termination cannot be an unfair dismissal. An order will therefore be issued dismissing the Application.

COMMISSIONER

Appearances:

Ms Willson of counsel was granted permission to appear for the Applicant.

Mr MacDonald from the employer organisation Australian Public Transport Industrial Association represented the Respondent.

Hearing details:

2012

Brisbane

September 10

 1   Exhibit M1.

 2   Exhibit T2.

 3   Exhibit T4.

 4   Exhibit T4, Attachment B.

 5   Exhibit T1.

 6   Exhibit T3.

 7   Exhibit T2, Attachment D.

 8   Exhibit T2, Attachment D.

 9   Exhibit T4, Attachment D.

 10   Exhibit T2, Attachment C1.

 11   Exhibit T4 at para 14.

 12   Exhibit M1, Attachment 1.

 13   [2012] FWAFB 5241.

 14   UES (Int’l) Pty Ltd v Leevan Harvey[2012] FWAFB 5241 at para 40.

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