Mr M v LD Pty Ltd

[2009] FWA 1676

Note: An appeal pursuant to s.604 (C2009/11407) was lodged against this decision - refer to Full Bench decision dated 10 February 2010 [[2010] FWAFB 979] for result of appeal.

[2009] FWA 1676

FAIR WORK AUSTRALIA

DECISION

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

Mr M
v
LD Pty Ltd
(U2009/11601)

SENIOR DEPUTY PRESIDENT O'CALLAGHAN ADELAIDE, 22 DECEMBER 2009

termination of employment – jurisdiction – genuine redundancy.

[1] The names of the parties to this matter have not been disclosed in this decision consistent with the requirements of section 398 of the Fair Work Act 2009 (the Act).

[2] On 27 August 2009 Mr M lodged an application pursuant to section 394 of the Act, through which he sought relief with respect to the termination of his employment with LD Pty Ltd (LD).

[3] Mr M’s application was unable to be settled through conciliation and was referred to me for determination on 17 September 2009. It was the subject of a further conference on 1 October 2009. This conference was also directed at achieving an agreed settlement. When this was not possible, the parties agreed that the matter should proceed to a more formal conference before me which would give both parties the opportunity to argue their respective positions.

[4] This more formal conference was convened in Whyalla on 26 November 2009. The conference proceedings were recorded and both parties were advised that a copy of the sound file was available to them on request. Both parties gave sworn evidence and had the opportunity to question each other consistent with normal cross examination practices. Prior to the commencement of the proceedings, both parties confirmed their agreement to this approach. Accordingly, I am satisfied that the approach adopted was consistent with the requirements of section 398 of the Act.

[5] The background to the application is set out below.

[6] LD operate as a labour hire company. It provides labour in Whyalla under contracts to a housing provider and significant manufacturing company. Mr M was initially engaged on a casual basis in June 2007. He undertook work at the manufacturing company site and generally worked on a regular basis, averaging 35 hours per week. Following an incident in June 2008 when Mr M breached the manufacturing company’s occupational health and safety requirements, Mr M was told that he could not work again on that manufacturing company facility for at least three months.

[7] LD subsequently transferred Mr M to work under its housing provider contract. To the extent that it is relevant, I understand this work involved a range of cleaning and repair activities on residential properties. Whilst there is some suggestion that this changed arrangement may have involved a break in Mr M’s employment of some weeks, there is no evidence before me in this respect.

[8] Mr M worked on the same regular casual basis. There is no dispute that he worked an average of 35 hours per week on the basis of daily or weekly advice of future working requirements.

[9] The Leading Hand to whom Mr M reported left LD in June 2009. Around this time, Mr M had a disagreement with another employee. While Mr M asserts that his work hours were halved around this time, there is no definitive evidence to support this and it is disputed by LD.

[10] On 5 August 2009, LD transferred an existing employee from another housing provider work to Mr M’s work function and appointed her as a leading hand.

[11] On 13 August 2009 LD elected not to allocate work to Mr M on the basis of a decline in the work available from the housing provider. Mr K, a Director of LD advised Mr M that he was not required to work and would be called into work when he was next needed.

[12] Mr M subsequently worked for LD on a number of irregular occasions in August and September 2009.

[13] LD asserts that Mr M is not protected from unfair dismissal in that he was not dismissed. In the alternative, I have taken it that LD asserts that the Small Business Fair Dismissal Code has application, and that any termination of Mr M’s employment was a genuine redundancy.

[14] Section 396 states:

“396 Initial matters to be considered before merits

FWA must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.”

[15] The application was made within the period required in section 394(2).

[16] Whilst it may be the case that Mr M was protected from unfair dismissal, if his employment was not terminated at the initiative of LD, he is not able to make an application.

[17] Section 386 states

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.”

[18] Consequently, as an initial issue, I have considered whether the termination of Mr M’s employment was at the initiative of the employer.

[19] Subsection 384(2)(a) relevantly states:

“384 Period of employment

(1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.

(2) However:

(a) a period of service as a casual employee does not count towards the employee’s period of employment unless:

(i) the employment as a casual employee was on a regular and systematic basis; and

(ii) during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis; and

[20] I have concluded that Mr M was, until 13 August 2009, a regular casual employee. He generally worked 35 hours each week and had a reasonable expectation of continuing to do so.

[21] On the material before me, I have concluded that Mr M’s regular casual employment was terminated on 13 August 2009 when he was advised, not merely that he was not required to work on that day, but was not required to work until further notice. I am unable to regard this as anything other than the termination of the regular employment relationship which had existed since 2007.

[22] Whilst I do not consider the advice given to Mr M on 13 August 2009 constituted advice of a demotion from regular to irregular casual employment, even if this was the case, the change was of such a magnitude that it constituted a termination of employment. Mr M’s subsequent irregular work was on a completely different basis to his previous regular employment and was undertaken under an entirely different contractual basis.

[23] I have therefore concluded that Mr M’s employment relationship was terminated by the employer. However, before considering the merits of this application I am required to return to a consideration of the initial matters listed in section 396 of the Act. One of the initial matters I am required to consider is whether the dismissal was consistent with the Small Business Fair Dismissal Code.

[24] The means of determining whether LD was a small-business employer are set out in Schedule 12A of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009. Given the conclusion I have reached later in this decision, it is not necessary that I detail these provisions.

[25] Ms K performs a range of administrative functions within LD. Her advice to me was that she had calculated the full time equivalent number of employees on the basis of advice to her by the Fair Work Australia Advisory Service. Ms K subsequently provided advice of her calculation in this respect. I was not satisfied that these calculations reflected the legislative requirements and subsequently issued directions in the following relevant terms:

“I enclose a copy of Schedule 12A of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, for your information. I will rely on the methodology set out in this Schedule to reach a conclusion about whether LD is a small-business employer.

Consequently, LD is asked to provide:

• a list of each person employed at any time during the period 16 July 2009 to 13 August 2009, inclusive,

• whether each of these employees was a casual or weekly hire employee,

• for each weekly hire employee, the name of the award or agreement which regulates that employment,

• for casual employees, the total number of hours worked over that time,

• whether any of the employees was on leave over this time and, if so, the nature and the duration of that leave, and

• the above information should include Mr M.”

[26] Subsequent to the conference in Whyalla, LD was required to provide Mr M with a copy of this information and Mr M had until 15 December 2009 to provide written comments with respect to it.

[27] I have received further information from LD. In this advice Ms Kneebone concluded that LD had 14.17 full time equivalent employees. In response to this further information, Mr M has stated:

“….

1. the information was written down and could have human error of wilful deceit within them. both of which I believe are relevant.

2. The information supplied is not evidence, and would not be sufficient for any court appearance, so should not be accepted here.

3. two errors already committed by them are: (one of these could have been wilful deceit)

A. not following the correct instructions regarding what dates to count the 4 weeks casual hours from.

B. not adding them up correctly (storms has an extra 8 hours added on, likely from the above worker in the document).

….”

[28] Given this objection, and my concern that the calculations done by Ms K may not have fully covered all of the LD employees, I am not in a position to conclusively determine that the Small Business Fair Dismissal Code has application.

[29] In the circumstances of this matter, I do not consider it essential that I do so. Both the Small-Business Fair Dismissal Code and section 389 of the Act refer to a genuine redundancy.

[30] Section 385 states:

“385 What is an unfair dismissal

A person has been unfairly dismissed if FWA is satisfied that:

(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.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

[31] Consequently, if the termination of Mr M’s employment was a case of a genuine redundancy, I am unable to find that he has been unfairly dismissed.

[32] Mr K’s evidence was that just prior to 13 August 2009 there was a significant reduction in the daily demand for labour from the housing authority. Mr K acknowledged that this reduction in daily demand occurred soon after the replacement Leading Hand was appointed to this work area. Mr K’s advice was that the reduction in daily work demand from the housing provider was the reason why Mr M was advised that there was no work available. Mr K confirmed that this situation was compounded by the appointment of a replacement leading hand. Ms K advised that, prior to 13 August 2009, LD had five employees engaged on the housing authority work over five days of the week, but now only had 2 ½ employees engaged on work over five days of the week. Further, Mr K advised that he considered redeployment opportunities for Mr M, but was unable to place Mr M back with the manufacturing company because he did not have approval to do so from that company.

[33] Mr. M did not dispute the reduction in demand from the housing provider. Mr M’s position was that there were other employees engaged after him who were kept on when he thought these employees should have been dismissed in advance of him. Mr M asserted that the reduction in hours reflected modified work duties offered to one employee. Further, he asserted that he had been advised that alternative employment was available to him at the manufacturing company facility.

[34] Whilst the Small Business Fair Dismissal Code requests information about whether an employee was dismissed because of a genuine redundancy, it does not specifically define a genuine redundancy. However, this concept is defined in section 389 in the following terms:

“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.”

[35] Consequently, irrespective of whether the Small Business Fair Dismissal Code has application, I have applied this same definition of genuine redundancy.

[36] On the information before me I am satisfied that LD no longer required the same number of staff on its housing provider work as a result of the reduced demand on the part of that housing authority. This constitutes a changed operational requirement and meets the requirements for a genuine redundancy. I am not persuaded that Mr M was dismissed because of the appointment of a replacement leading hand.

[37] Consistent with section 389(1)(b) there is no modern award that regulated Mr M’s employment. Neither party has referred me to a particular award or to relevant enterprise agreement obligations relating to consultation. From an abundance of caution I have considered the consultation requirements set out in the Metal Industry (South Australia) Award which is a Notional Preserving State Award that I consider was most likely to have regulated Mr M’s employment. Whilst Mr M initiated the telephone call in which he was advised of the downturn in work, the fact is that LD advised Mr M of this position shortly after it became clear. Consequently, I am satisfied that any award consultation obligation has, in a somewhat rudimentary fashion, been met. There is no capacity for a review of whether Mr. M should have been selected for redundancy in advance of other persons.

[38] I accept the advice provided to me by Mr K, to the effect that he had been advised some three months prior to August 2009 that Mr M was not considered suitable at that time for work at the manufacturing company facility and that, absent advice of a changed position in this regard, LD was unable to place Mr M on that work site. Ms K’s evidence established that LD had only these two clients and that the downturn in housing provider work meant that unless there was a capacity to allocate Mr M to the manufacturing company work, no alternative employment could be offered.

[39] For these reasons I have concluded that the termination of Mr M’s employment reflected a genuine redundancy. As a consequence, I am not able to find that Mr M has been unfairly dismissed and his application must be dismissed. An Order [PR991799] reflecting this decision will be issued.

SENIOR DEPUTY PRESIDENT

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