Mr Josua Wessels v Midwest Vanadium Pty Ltd

[2014] FWC 4514

[2014] FWC 4514 [Note: An appeal pursuant to s.604 (C2014/5508) was lodged against this decision - refer to Full Bench decision dated 1 October 2014 [[2014] FWCFB 6873] for result of appeal.]

FAIR WORK COMMISSION

DECISION

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

Mr Josua Wessels
v
Midwest Vanadium Pty Ltd
(U2014/1035)

COMMISSIONER CLOGHAN PERTH, 10 JULY 2014

Unfair dismissal.

[1] On 31 March 2014, Mr Josua Wessels (Mr Wessels or Applicant) made application to the Fair Work Commission (Commission) seeking a remedy for alleged unfair dismissal from Midwest Vanadium Pty Ltd (Employer).

[2] The application is made pursuant to s.394 of the Fair Work Act 2009 (FW Act).

[3] The application was unable to be resolved at conciliation and was referred to me for arbitration on 20 May 2014.

[4] In response to the application, the Employer asserts that the Applicant is not protected from the unfair dismissal provisions in the FW Act because Mr Wessels’ dismissal was a case of genuine redundancy.

[5] To assist in the resolution of the Employer’s jurisdictional objection, I issued procedural directions on 22 May 2014 and advised the parties that the matter would be determined following written submissions.

[6] Having received the written submissions, this is my decision and reasons for decision as to whether the Applicant’s dismissal was a case of genuine redundancy, and therefore, not protected from the unfair dismissal provisions of the FW Act.

RELEVANT LEGISLATIVE FRAMEWORK

[7] Section 385 of the FW Act sets out the meaning of unfair dismissal as follows:

“(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

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

[8] The meaning of genuine redundancy is contained in s.389 of the FW Act as follows:

“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.”

[9] Shortly put, where it is found that a dismissal is a genuine redundancy, it is not an unfair dismissal.

RELEVANT BACKGROUND

[10] The Employer is the owner and operator of the Windimurra vanadium and iron ore operation near Mount Magnet in Western Australia.

[11] On 4 February 2014, the operation suffered a serious fire in its beneficiation plant. The beneficiation plant was not operating at the time of the fire as it was undergoing planned maintenance. The fire caused the cessation of the planned recommencement of production.

[12] Production of vanadium and iron ore at the plant in February 2014 was nil.

[13] The Employer is a subsidiary of Atlantic Ltd (Atlantic).

[14] On 4 February 2014, Atlantic advised the Australian Stock Exchange (ASX) that it could take approximately nine (9) months to rebuild the beneficiation plant. Further, it was estimated that the insurance claim could be in the order of $100m.

[15] A condition of the Employer’s business interruption insurance policy is that the Employer must minimise its expenses during the interruption period. This condition is monitored by the Insurer and was a significant “driver” behind the Employer’s reduction of contractors and employee workforce.

[16] On 26 February 2014, the Employer began to stand down employees because there was no work for them to undertake at the plant. At this time, the Employer was determining what actions could be undertaken and obtaining funds to carry out those actions.

[17] On 21 March 2014, Atlantic advised the ASX that approximately “90 employees had been made redundant in view of the anticipated time before the rebuild of the beneficiation plant will be complete and normal production can resume”.

[18] The Applicant was “formally stood down on 26th February on full pay as production at the site had to stop”.

[19] The Applicant was one of approximately 90 employees of the Employer’s 213 employees made redundant.

[20] Further, the Applicant was one of 16 Mechanical Fitters who were made redundant. The Employer employed 27 Mechanical Fitters.

[21] The Applicant had been employed by the Employer as a Mechanical Fitter since 23 July 2012. For four (4) months prior to commencing as an employee, Mr Wessels was engaged by the Employer as a contractor.

[22] On 17 March 2014, the Applicant met with the Maintenance Manager and was advised that the Employer had “a budget to work to and it could not keep everybody on”. Mr Wessels was provided with a letter of termination of employment for reasons of redundancy due to the fire at the beneficiation plant.

APPLICANT’S CASE

[23] The Applicant challenges the Employer’s contention that Mr Wessels’ dismissal was a case of genuine redundancy on the following grounds:

“There was no consultation by the employer as required by the Mining Industry Award 2010 (Modern Award). As a consequence the respondent cannot say (nor does it attempt to do so) that it had discharged its obligations set out in s.389(1)(b) of the Act.

There is sufficient evidence to support the contention that it would have been reasonable to re-deploy the applicant into work which was allocated to others at the mine site. We therefore also rely [on] s.389(2)(b) of the Act to support the applicant’s contention that there was no genuine redundancy within the meaning of that term as set out in the Act.”

[24] In conclusion, the Applicant submits that, “there is an almost irresistible conclusion that this is not a case of a genuine redundancy”.

CONSIDERATION

[25] The object of Part 3-2 Unfair dismissal provisions of the FW Act is to establish a framework which balances the needs of employers and employees. In the words of s.381(2) of the FW Act, a “fair go all round” is to be assigned to both employers and employees (Objects of the Act).

[26] The causes of redundancies are many and varied. Adjusting employee requirements to meet business circumstances is common.

[27] An employer has a right to manage its business subject to legislative requirements and relevant awards/agreements. In this application, there is no contest that the Modern Award is applicable.

[28] The meaning of “genuine redundancy” is set out in paragraphs 389(1)(a) and (b) of the FW Act.

[29] The Applicant does not challenge that his dismissal has met the requirements of paragraph 389(1)(a) of the FW Act. As a record of finding, I find that the Employer no longer required Mr Wessels’ job to be carried out by anyone because of the operational requirements following the fire.

[30] I now turn to the question of whether the Employer complied with any obligation in the Modern Award. The only obligation the Applicant referred to is that relating to “consultation”.

[31] It would be inconceivable for Mr Wessels to think that employee requirements would not change after the fire and production ceasing at the beneficiation plant. On 26 February 2014, Mr Wessels received correspondence in which he was required to return home from site before the end of his usual roster and was paid as if he had worked the roster. On 27 February 2014, correspondence from the Employer confirmed that he was stood down on full pay and that this was not a reflection of his work but because the Employer was trying to manage the consequences of the fire.

[32] On being stood down, Mr Wessels had a discussion with the then Maintenance Manager, who allegedly said if “everything proceeded I would have a position in maintenance”. I have no reason to dispute what Mr Wessels states, however, in the context of the fire, the insurance claim and the entire uncertainty over when the plant would become operational again, it is unlikely that Maintenance Manager was in a position to give such an assurance, even if he had the authority, to give such an assurance.

[33] From the Applicant’s material, he states that, “following the fire, I had to wait a month for my pay. There were several meetings held on site during February 2014 where I was told on several occasions that our pay would come through with the insurance claim”. In my view, uncertainty, conjecture and instability were the likely business environment more so than concrete assurances about who would or who would not have a job.

[34] Mr Wessels claims that “not once during at any meeting was I told that my position may be made redundant”. Given the business environment, that was most probably a fair reflection of the situation he was working within.

[35] The consultation provisions in the Modern Award are reproduced below:

“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) ...

(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 0, 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 0.

(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.”

[36] The circumstances in which the Employer is required to discuss with affected employees changes are those when it “has made a definite decision to introduce major change in production”.

[37] From the material I have received as a result of submissions, I can say with certainty that the Employer did not make a “definite decision to introduce changes in production” - the changes in production was caused by the fire. This was a ruinous event forced on the Employer rather than the Employer being the architect of the change in production.

[38] Even if I am wrong in relation to the meaning of paragraph 8.1(a)(i) of the Modern Award, I have documents submitted by the Employer that it did consult with employees and by Mr Wessels’ own statement, discussions were held with employees, albeit the discussion did not specifically relate to his position being made redundant.

[39] The Applicant’s submission in relation to paragraph 389(2)(b) of the FW Act (which properly should read paragraph 389(2)(a)) states “that it would be reasonable to re-deploy the applicant into work which was allocated to others at the mine site.”

[40] The basis of the Applicant’s contention is linked to “sufficient evidence”. I am unable to discern any evidence. However, if the Applicant is referring to the fact that, of the 27 Mechanical Fitters at the plant, 16 were made redundant and he could have been redeployed into one of the 11 remaining positions, that is another issue completely.

[41] Paragraph 1553 of the Explanatory Memorandum to the Fair Work Bill 2008 states:

“Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy...”

[42] From the Applicant’s submission he appears to be aggrieved that he was not one of the 11 remaining Mechanical Fitters in employment. However, that does not disturb the Employer’s assertion that Mr Wessels was dismissed for reasons of a genuine redundancy as the process for selecting redundant employees does not undermine the redundancy.

[43] Secondly, in view of the fact that the Employer reduced its entire workforce by approximately 47%, it is open to conclude that there were no positions into which Mr Wessels could be reasonably redeployed. If redeployment was to occur, it would mean displacing a person who was retained by the Employer after the fire.

[44] I am satisfied that it would not have been reasonable, in all the circumstances, for Mr Wessels to have been redeployed into work that was allocated to others at the mine site.

CONCLUSION

[45] Having considered the submissions and for the reasons outlined above, I am not satisfied that the dismissal was not a case of genuine redundancy in accordance with s.385(d) of the FW Act. Accordingly, the dismissal was not unfair. In such circumstances, the application must be dismissed. An order to this effect will be issued conjointly with this Decision.

COMMISSIONER

Final written submissions:

Applicant: 23 June 2014.

Respondent: 9 and 26 June 2014.

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