Mr Leslie Horn v Mastermyne Engineering Pty Ltd
[2012] FWA 10846
•24 DECEMBER 2012
[2012] FWA 10846 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Leslie Horn
v
Mastermyne Engineering Pty Ltd
(U2012/14017)
SENIOR DEPUTY PRESIDENT RICHARDS | BRISBANE, 24 DECEMBER 2012 |
Summary: jurisdictional objection relation to s.389 of the Act – whether obligation on employer to retrain employee whose position was made redundant - whether discrete consultation requirements of Modern Award discharged.
[1] On 9 October 2012, Mr Leslie Horn (“the Applicant”) lodged an application under s.394 of the Fair Work Act 2009 (“the Act”), seeking an unfair dismissal remedy. The Applicant claims that he was unfairly dismissed from his position as a Mechanical Fitter with (“CSO”) with Mastermyne Engineering Pty Ltd (“the Respondent”) on 5 October 2012. The Applicant had held the position as Mechanical Fitter with the Respondent since February 2012.
[2] The application was listed for conciliation on 9 November 2012, which did not result in the resolution of the issues in dispute. The file was then allocated to me for purposes of determination. At the parties’ request, the matter was heard and oral evidence was taken from the various witnesses in Rockhampton, on 20 December 2012.
[3] The Respondent contends that the Applicant’s application under s.394 of the Act cannot be heard by the tribunal. The reason the Respondent so claims is because the Applicant (according to the Respondent) was made genuinely redundant for purposes of s.389 of the Act and cannot, pursuant to s.385(d) of the Act, therefore have been unfairly dismissed.
[4] Section 389 of the Act provides 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.
[5] The Explanatory Memorandum to the Fair Work Bill 2008 provides as follows in relation to s.389 of the Act:
- a machine is now available to do the job performed by the employees;
- the employer’s business is experiencing a downturn and therefore the employer only needs three people to do a particular task or duty instead of five; or
- the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.
“Clause 389 – Meaning of genuine redundancy
1546. This clause sets out what will and will not constitute a genuine redundancy. If a dismissal is a genuine redundancy it will not be an unfair dismissal.
1547. Paragraph 389 (1)(a) provides that person's dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. Enterprise is defined in clause 12 to mean a business, project or undertaking.
1548. The following are possible examples of a change in the operational requirements of an enterprise:
1549. It is intended that a dismissal will be a case of genuine redundancy even if the changes in the employer’s operational requirements relate only to a part of the employer’s enterprise, as this will still constitute a change to the employer’s enterprise.
1550. Paragraph 389 (1)(b) provides that it will not be a case of genuine redundancy if an employer does not comply with any relevant obligation in a modern award or enterprise agreement to consult about the redundancy. This does not impose an absolute obligation on an employer to consult about the redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.
1551. Sub clause 389 (2) provides that dismissal is not a case of genuine redundancy if it would have been reasonable in all circumstances for the person to be redeployed within the employer’s enterprise, or within the enterprise of an associated entity of the employer (as defined in clause 12).
1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for redeployment or there may be no positions available for which the employee has suitable qualifications or experience.
1553. Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy. However, if the reason a person is selected for redundancy is one of the prohibited reasons covered by the general protections in Part 3-1 then the person will be able to bring an action under that Part in relation to the dismissal.” (My emphasis)
Whether the Applicant was made genuinely redundant
[6] The Applicant appeared to argue that he had fallen foul of his immediate Supervisor, Mr Jason Lewis. From late August 2012 the Applicant contended that Mr Leis had micro managed his work. He gave as examples of this: a warning Mr Lewis had given him in August 2012 about his performance; Mr Lewis appearing indifferent to the Applicant's observation of faults in other employees’ work; and “being accused [by Mr Lewis] of not completing a job, which was completed”.
[7] In all, the Applicant complained of being discriminated against because of Mr Lewis’ conduct.
[8] The Applicant argues also that on the morning of 3 October 2012 he attended a morning meeting with all employees. Mr David Fitzpatrick (the Manager - Engineering) was said to have read out a letter to all employees about the Company downsizing and that on Friday “we will let you know who stays and goes”. By that comment, the Applicant claims that there was no further discussion with employees about the circumstances of the downsizing initiative launched by the Respondent, no consultation about the redundancy situation, and no demonstrated effort by the Respondent to identify any alternative positions in the Respondent's business to which he might have been deployed or re-assigned by agreement, to consult them about the same.
[9] Some two days later, on 5 October 2012, the Applicant was called into Mr Fitzpatrick's office. Mr Fitzpatrick was said to have explained to the Applicant that his position would be absorbed into a number of other positions in his own position would be made redundant.
[10] The Applicant claims there were no other persons qualified to perform his duties and his various duties responsibilities could not possibly have been redistributed or otherwise allocated amongst other employees of the Respondent.
[11] The Applicant contended further that after such time as his position was made redundant, advertisements were placed in the media by the Respondent seeking qualified fitters; positions he was qualified to fill.
[12] Mr Fitzpatrick contended that he was required to reassess its staffing levels from the time of the unexpected, significant slowdown the black coal sector from August 2012.
[13] The downturn it was claimed brought about a significant reduction in work for the Respondent which triggered a review of its operations.
[14] The Respondent claims that it advised all the engineering employees that fell under his scope of responsibilities on 3 October 2012 of its intention to right size the business.
[15] To this end it issued a memorandum headed “Review and Adjustment of Business Operations”. The document stated in part as follows:
As you would all be sensing and observing by now we have seen a dramatic turnaround in the coal mining sector from the boom market to a much more subdued operating environment. Whilst [the business] has performed reasonably through this initial slowdown we feel it is prudent to undertake a detailed review of our operations and right size the business for the immediate future [...] We will advise everyone of the results of this review later this week [...] To assist us with the view (sic) we ask that if anyone has any suggestions that will help us reducing our operating costs without adversely impacting on ongoing operations and please pass on your suggestions.
Whilst the immediate slowdown has impacted our current prospects I'm confident that the Mastermyne Group will continue to be successful and deliver strong safety and operational performance but it is critical that we react to the immediate market to ensure the long-term future of the business. I appreciate your support as we move through this process and remind people that we have our employee assistance program available to everyone if they feel they need access to it.
Please don't hesitate to contact me if you wish to discuss the above.
[16] There is a discussion of the wider context of this memorandum below.
[17] The review ultimately found (amongst other things) that the Applicant was the only person filling a Leading Hand – Mechanical Fitter role and that this position was no longer required in the business. The Respondent was also of the view that the various tasks and duties performed by the Applicant in that role could be absorbed by other roles in the business including the person who had previously performed the role until his promotion.
[18] The Respondent also claimed that it did not intend to engage any other above ground-qualified fitters or to undertake any work that the Applicant had previously performed.
[19] The Applicant accepted that there were other employees made redundant as a consequence of the business right sizing review, and not just him. In actuality, the Respondent made some 10 employees redundant in the Engineering Group under Mr Fitzpatrick, and some 200 across the Group as a whole.
[20] The Respondent also contends that it conducted a review of the Mastermyne Group to establish whether any alternative duties were available to the Applicant. It was unable to identify any such suitable, alternative duties.
[21] The letter of termination given to the Applicant on 5 October 2012 read relevantly as follows:
As you are aware, due to the tightening in the sector Mastermyne Engineering has been unable to secure an ongoing pipeline of work. As a result of reduced work Mastermyne Engineering has needed to review and adjust the business structure.
We have made every effort to rearrange duty so we can retain all existing employees. Despite every attempt however, the current market gives us no alternative but to make the position of leading hand fitter redundant. The duties performed as part of this role will now be absorbed by other roles in the business.
As the role you filled has been made redundant and as there is no suitable alternative duties available, your employment with Mastermyne will unfortunately come to an end as of 5 October 2012.
[22] The letter of termination went on to extend access to the Respondent’s employee assistance program for a period of three months and to provide for the payment of notice. The Applicant was also offered a positive reference to assist in finding alternative employment.
Consideration
[23] I do not question the Respondent's evidence as it related to the requirements of s.389(1)(a) of the Act or s.389(2) of the Act.
[24] The evidence as led demonstrated that the Respondent no longer required the Applicant's job to be performed by anyone because of changes in the operational requirements of the enterprise that arose because of the contraction brought on by the downturn in the coal industry. The memorandum cited above was not solely issued in respect of the Engineering Group for which Mr Fitzpatrick held responsibility; it was issued across the entirety of the Mastermyne Group.
[25] The Applicant for his part gave evidence that he appreciated the circumstances that had developed because he was familiar as the Leading Hand with the volume of booked work and he had observed that it was diminishing.
[26] The Applicant's job, to the extent that its tasks were any longer required at all, were redistributed within the existing workforce. It is not material to the question before me that the Applicant claims that those to whom his duties were reallocated were qualified or not. That is a matter for which the Respondent bears responsibility. What is central to the question before me is whether or not the Respondent dismissed the Applicant for an operational reason pursuant to s.389(1) of the Act.
[27] The Respondent's chain of decision making and the factors that drove it were quite separate from the various personalised interactions with Mr Lewis, which led the Applicant to believe he was targeted for dismissal by way of the redundancy process. In my view, the evidence as led demonstrates that had it not been for the financial circumstances that led to the right sizing review the Applicant would in all likelihood have remained an employee of the Respondent. Again, I reach this view because the Respondent's decision making in relation to the redundancies appears to have been unrelated to any issues whatsoever of the Applicant's performance of his duties or his conduct or capacity. Instead, as Mr Fitzpatrick said, the Applicant found himself in the unfortunate position of being responsible for a field of engineering activity that accounted for a low volume (some 5%) of the total work.
[28] I add that the Applicant was one of some 10 engineering employees who were made redundant consequent of the right sizing review (and some 200 were made redundant across the Group).
[29] The evidence as led also demonstrates also that the Respondent took steps to investigate the availability of alternative position in the Mastermyne Group at large, but was unsuccessful in identifying any positions for purposes of the redeployment of the Applicant.
[30] In this respect, the evidence of Ms Gayton a- the HR Manager) and Mr Fitzpatrick was that the workgroups into which the Applicant himself considered he might have been able to be redeployed (the Engineering workgroup and the Consumables workgroup as had the Rockhampton workshop) had all been downsized and no vacancies were at hand.
[31] The Applicant did contend that subsequent to his redundancy he was informed that the Respondent had advertised fitter positions. But was made clear in the evidence, these were underground positions and the Applicant did not meet the regulatory requirements and otherwise for work of this kind (as his experience and qualifications were above-ground only). The Explanatory Memorandum to the Act states in this regard:
1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for redeployment or there may be no positions available for which the employee has suitable qualifications or experience. [My emphasis]
[32] I do not take the s.389(2) of Act as indicating that an employer should retrain a redundant employee to any alternative position for which they are not immediately qualified or experienced. The Explanatory Memorandum to the Act does not indicate that any such broad obligation falls upon an employer (though an employer may do so as a matter of discretion or agreement).
[33] However, in some cases, the redeployment of an employee into a new field of work may only require a modest retraining requirement to reorient or supplement the employee’s skill set to a new position. Such measures would ordinarily, in my view, fall with the notion of redeployment. This is because redeployment is not always in respect of like for like positions as such, but between positions where the underlying skills set are largely comparable or transferrable.
[34] I do not consider this view to be inconsistent with the Full Bench observations (only) in Re: Ulan: 1
It may be appropriate to make some concluding remarks about the operation of s.389(2). It is an essential part of the concept of redeployment under s.389(2)(a) that a redundant employee be placed in another job in the employer’s enterprise as an alternative to termination of employment. 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. 2
[35] In the current case, there is a significant difference in the coal industry between those who hold underground qualifications and experience and those who do not and there was no obligation on the part of the Respondent to overcome that very appreciable gap in skills and experience by way of retraining. It would therefore not have been reasonable in the circumstances for the Respondent to redeploy the Applicant to such a position as was to become available. Ms Gayton put the matter this way whilst being cross examined by the Applicant:
Anyway, don't you think it would be advantageous to have the person who built the machines to maintain them regardless of a bit of training for an underground instance?---Are you referring, Mr Horn, to the fact that - sorry, can you expand your question?
You don't think it would be advantageous to your company to have the person who built and assembled all the hydraulics systems to be the maintenance person on them for your projects?---I think you're referring to the fact that it should be a lot easier to transition a surface fitter who is workshop based into the underground environment to actually support and service the equipment that they've worked on in the workshop. Is that what - yes?
Yes?---If that's the question you're asking, absolutely, I agree with you. It does make commonsense. However, unfortunately, with the highly regulated sector of underground mining, it is certainly not that easy. Like I said, for a fitter to actually be even allowed to work with Mastermyne at a client site - for example, Rio Tinto, the coordinator, the maintenance coordinator of Rio Tinto, needs to approve their site access, so they need to go through an interview with Rio Tinto themselves. At that point in time, like I mentioned previously, Mr Horn, there is about a - between a, you know, an eight-plus month, you know, skilling program that enables them to, after that time, work independently. So there can be - it's not as simple as a surface fitter arriving at site and being allowed to actually transition underground - and being a contracting company we're only able to engage so many cleanskins with approval from the client, and, as I mentioned, there was an absolute hold on all cleanskins or inexperienced personnel being introduced to site since the downturn in the sector. So whilst what you say absolutely makes sense, it was absolutely impossible and couldn't have been achieved. Transcript of Proceedings 20 December 2012 PNS 372 - 374
[36] Section 389(1)(b) of the Act states that a redundancy cannot be a “genuine redundancy” for purposes of jurisdiction unless the relevant employer gives effect to any consultation obligation in a modern award or enterprise agreement that applied to the Applicant's work.
[37] The consultation requirements of the Manufacturing and Associated Industries and Occupations Modern Award (“the Modern Award”) - which applies to the Applicant's work - makes provision for consultation as follows:
9. Consultation regarding major workplace change
9.1 Employer to notify
(a) Where an employer has made a definite decision to introduce major changes in production, program, organization, 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.9.2 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 9.1, 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 9.1.
(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.
[38] The factual matrix relevant to whether the requirement of s.389(1)(b) of the Act is satisfied is a follows.
[39] On 3 October 2012 the General Manager, Engineering (Mr David Fitzpatrick) read aloud to employees at a pre-start meeting the above memorandum (from the Chief Executive Officer of the Mastermyne Group (Mr Tony Caruso) regarding the review of the Respondent's operations. The relevant information is contained in the Memorandum set out above.
[40] The Applicant was in attendance at the pre-start meeting that morning.
[41] Having been so read out, the memorandum was then placed on the crib hut notice board.
[42] The minutes of the pre-start meeting were also made publicly available in the same way.
[43] The evidence before me is that the Applicant well understood that the memorandum concerned the reduction in staffing numbers and that certain positions may no longer be required.
[44] The evidence as led also demonstrates that the Applicant was informed of the right sizing review the Respondent had embarked upon before it was completed, and he was invited to proffer any suggestions he may have to reduce costs so that the operations need not be restructured. He was given two days to proffer such advice or information. The Applicant acted on this request, but he did so by raising issues with a co-worker that he believed might be able to communicate his views to more senior personnel.
[45] On the facts in evidence, the various requirements of clause 9.1 of the Modern award were satisfied by the Respondent’s conduct in notifying the employees verbally of the pending review, explaining the reasons for that review, and then causing the relevant memorandum to be published on the crib but notice board.
[46] Clause 9.2(a) of the Modern Award requires that the employer to discuss:
● The introduction of the changes;
● The affect of the changes on the employees; and
● Measures to avert the changes.
[47] The employer must also give prompt consideration to any other issues (should any arise) raised by employees or their representatives.
[48] The Respondent notified the prospective changes with the employees affected on 3 October 2012, outlined the causes, and made it known that the effects of those changes would result in the reduction of staffing levels in the Engineering section of the business. It also advised of a means by which the effects of those mooted changes might be offset, averted or mitigated. This was by way of receipt of any alternative proposals from employees.
[49] In my view, these steps discharge the obligation under clause 9.2 (a) of the Modern Award.
[50] The obligation under clause 9.2 (b) of the Modern Award is to commence discussions s early as practicable after a definite decision has been made to make the necessary changes in structure and employment profile:
(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 9.1.
[51] In this regard the evidence was that in September 2012 the Respondent evaluated its book value and the demand trend from its narrow set of clients and acted to restructure the business. On 3 October 2012 it made its announcement about its prospective plans to its workforce. There appears to have been no discernible delay in bringing to the relevant issues to the attention of the affected employees for purposes of the award obligation.
[52] The obligation under clause 9.2 (c) of the Modern Award is to:
● 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; along with
● the expected effects of the changes on employees and any other matters likely to affect employees
[53] As I have set out above, the Respondent provided notice in writing on 3 October 2012 by way of causing Mr Caruso’s memorandum to be published on the crib room notice board.
[54] That memorandum, as read out and as published, gave reasons for the review and indicated that a right sizing exercise would be embarked upon. There was no confusion between the Applicant and the Respondent as to what was meant by this.
That's all right. We'll get there. So on 3 October Mr Fitzpatrick read out the memorandum and said that, "We're going to right size", and someone said, "Well, does this mean redundancies?" and he said, "Well, very likely", and everyone knew what was going to happen. Is that right?---Well, your Honour, when Mr Fitzpatrick had finished reading the letter he got from Tony Caruso someone actually had to ask him, "Does this mean we're getting sacked?" to which point he said, "Well, we will be rightsizing", and that is when someone made the comment, "So rightsizing, is that terminology for sacking?"
And that's when he replied?---Well, that's when Mr Fitzpatrick, he just said they had to right size the company.
His evidence, as you've heard, was that he then said, "Very likely"?---Yes.
Do you agree with that?---Yes. 3
[55] In all, the evidence supports a conclusion that on 3 October 2012 the Engineering workforce was informed in writing that a right sizing review was afoot and the reasons for the review. It was understood that this written information (and the reference therein to right sizing) meant that the exercise very likely would lead to redundancies. On the evidence before me, the Respondent therefore discharged the requirements of clause 9.2 of the Modern Award.
[56] I add also that the Applicant’s written evidence was that when Mr Fitzpatrick read out the notice he knew it concerned “”Who stays and who goes”. The Applicant’s further oral evidence also knew that his position as Leading Hand would be at risk within the right sizing exercise.
CONCLUSION
[57] Because of my findings above, it is apparent from the evidence that the Applicant was made “genuinely redundant” for the purposes of s.389 of the Act. His application under s.394 of the Act must therefore be dismissed as the tribunal has no jurisdiction to hear and determine the request for relief as sought because of the operation of s.385(d) of the Act.
SENIOR DEPUTY PRESIDENT
Appearances:
Mr L. Horn, for the Applicant.
Ms R. Taumalolo, of Herbert Smith Freehills, for the Respondent.
Hearing details:
2012
20 December
Rockhampton
1 [2010] FWAFB 7578.
2 [2010] FWAFB 7578 at para [34].
3 Transcript PNS 396-9
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