Mr Matthew Macdonald v Central Coast Commercial Properties & Projects Pty Ltd T/A the Willows Motor Inn
[2010] FWA 6626
•27 AUGUST 2010
[2010] FWA 6626 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Matthew Macdonald
v
Central Coast Commercial Properties & Projects Pty Ltd T/A The Willows Motor Inn
(U2010/8521)
COMMISSIONER CAMBRIDGE | SYDNEY, 27 AUGUST 2010 |
Unfair dismissal - alleged genuine redundancy - challenge as to whether employer had complied with obligations of Modern Award - ss. 385, 389, and 396 of Fair Work Act - practical and reasonable determination of time to invoke consultation - Award obligations met - genuine redundancy established - claim dismissed.
[1] This matter involves an application for unfair dismissal remedy made pursuant to section 394 of the Fair Work Act 2009, (the Act). The application was lodged at Sydney on 3 May 2010. The application was made by Matthew Edward Macdonald, (the applicant) and named the respondent employer as Central Coast Commercial Properties and Projects Pty Ltd, (the employer).
[2] The application indicated that the date of the applicant’s dismissal was 27 April 2010. Consequently the application was made within the 14 day time limit prescribed by subsection 394 (2) of the Act. Conciliation of the claim was unsuccessful and the matter proceeded to arbitration before Fair Work Australia (FWA) in a Hearing conducted in Sydney on 2 August 2010.
[3] At the Hearing the applicant was represented by Mr Anton Duc from “Blue Mountains Employment Relations”. The applicant was the only witness called to provide evidence in support of the claim. The employer was in effect, unrepresented as Ms Leanne Sutherland a contract bookkeeper, presented the employer’s case and gave evidence as the only witness called in response to the applicant’s claim.
Factual Background
[4] The applicant had worked for the employer for approximately 1 year and 8 months. The applicant worked as a qualified Chef. The applicant worked at the employer’s motel business which traded as Quality Inn - The Willows, located at 512 Pacific Highway, Wyoming, New South Wales (the Willows). The employer has approximately 12 full-time equivalent employees.
[5] The applicant commenced a period of annual leave on 3 April 2010 and he was due to return to work on 27 April 2010. During this period of leave the applicant and his wife undertook an ocean cruise together with Paul and Sharon Redfern who were the Managers of the Willows. While at sea on the cruise Sharon Redfern told the applicant that the Willows had been sold.
[6] On 17 April the applicant (and the others) returned from the ocean cruise. Although he was not due to return to work at the Willows until 27 April, on the 17th the applicant went to the motel premises to help the Managers (Paul and Sharon Redfern) “move out”. At this time the applicant was informed by representatives of the employer that the Willows had been sold and that the new owners would like to meet with him to discuss potential employment. A meeting was arranged for Tuesday 20 April.
[7] At around this time, 17-18 April, the applicant was informed that while he was on leave all staff had been given a letter dated 12 April from the employer that advised of the sale of the Willows and the potential ramifications regarding employment.
[8] The applicant met with the new owner, Steve Clarke, on 20 April 2010. The applicant was given to believe that he would be offered employment with the new owner and it was anticipated that at some point after his scheduled return from leave on 27 April he would commence to work under the new owner.
[9] Although no evidence was provided by the new owner, Mr Clarke, it appeared that Mr Clarke changed his mind about any offer of employment to the applicant. This change of mind appeared to be connected to; (a) the applicant’s inability to agree to a request from Mr Clarke to return to work earlier on Friday 23 April to help out with a wedding, and; (b) a decision made by Mr Clarke to reduce the operating hours of the restaurant and thus utilise another part-time Chef instead of the applicant.
[10] Mr Clarke advised the employer’s representative, Ms Sutherland, that he did not wish to employ the applicant. Consequently when the applicant arrived for work on 27 April he was informed by Ms Sutherland that the new owner did not wish to employ him and therefore he was dismissed on the basis of redundancy. The applicant was given a letter confirming his termination of employment on the basis of redundancy and he was not required to work during a one week notice period. Payment for this notice period was subsequently corrected to reflect the applicant’s period of service of more than one and less than two years.
The Applicant’s Case
[11] Mr Duc, advocate for the applicant, submitted that for the applicant to succeed he would need to establish that the dismissal was not a case of genuine redundancy as defined by section 389 of the Act. Specifically, Mr Duc said that the respondent employer had not fully exercised its obligations under the relevant Modern Award.
[12] Mr Duc referred to provisions of the Modern Award that applied to the applicant's employment, the Hospitality Industry (General) Award 2010 [MA000009] (the Award). Mr Duc submitted that the provisions of clause 8.2 of the Award established a requirement on the employer to discuss with its employees the likely changes that would occur as a consequence of the decision to sell the Willows. Mr Duc submitted that there could not have been proper consultation with the applicant because he was on annual leave on an ocean cruise at the relevant time.
[13] Mr Duc further submitted that the proper consultation that the employer should have engaged in would have involved discussion of measures to avert or mitigate the adverse effects of the sale of the Willows. In this regard Mr Duc submitted that a true, proper consultation would have involved the employer sitting down with the applicant and stating that the new owner may or may not offer employment. Consequently according to the submissions of Mr Duc the employer did not meet the clear obligations imposed upon it by the Award.
[14] In summary Mr Duc stated that the dismissal of the applicant was not a case of genuine redundancy because the employer had not complied with the Award obligations regarding consultation about redundancy. Further Mr Duc submitted that the underlying and undisclosed reason for the applicant's dismissal involved a perception that he had been a troublemaker because he had earlier raised concerns about pay related issues. In this context, Mr Duc argued that the applicant's dismissal should be found to be unfair.
The Respondent’s Case
[15] Ms Sutherland, who appeared for the employer, submitted that the dismissal of the applicant was simply the result of the sale of the business and as such should not be found to be unfair.
[16] Ms Sutherland stressed that the employer had given all employees written advice of the pending sale of the business by way of letters dated 12 April 2010. The applicant was on leave on a cruise ship and completely unavailable at the time at which all other staff were consulted about the sale of the business. Ms Sutherland mentioned that the applicant had been “unofficially” told of the sale by the Managers on about 9 April, although this advice was not conveyed formerly on behalf of the employer.
[17] Ms Sutherland made further submissions which stressed that the employer had confirmed with the applicant that the Willows had been sold. This confirmation occurred as soon as practicable after the applicant had returned from the ocean cruise. Ms Sutherland said that the employer had taken all reasonable steps to advise the applicant of the sale of the Willows as soon as practicable after a definite decision had been taken and had therefore met the obligations imposed by the Award.
[18] Ms Sutherland also made submissions which referred to clause 8.2 (c) of the Award which mentioned that no employer was required to disclose confidential information, the disclosure of which would be contrary to the employer's interests. According to Ms Sutherland the employer's interests would have been adversely impacted if it had advised staff that the employer had placed the Willows on the market. Ms Sutherland submitted that the appropriate time at which the employer should advise employees and commence the consultation obligations of the Award, was at a point when a firm proposition for the purchase of the business had been obtained. According to Ms Sutherland, the uncertainty that might be created by earlier advice would be detrimental to both the business operation of the employer and to the employees.
[19] In summary Ms Sutherland stated that the evidence of the discussions between the applicant, the employer and the new owner, constituted a discharge of the employer's obligation under clause 8.1 of the Award. Therefore, according to Ms Sutherland the dismissal of the applicant was a genuine redundancy.
Consideration
[20] Section 385 of the Act stipulates that FWA must be satisfied that 4 cumulative elements are met in order to establish an unfair dismissal. These elements are:
(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.
[21] In this case there was no dispute that the claim was primarily founded upon a determination of that element contained in subsection 385 (d) of the Act, specifically whether the dismissal of the applicant was or was not a case of genuine redundancy. Only if the dismissal was found not to be a case of genuine redundancy would then the other elements of section 385 require consideration.
[22] Further, section 396 of the Act establishes that FWA must determine, inter alia, whether the dismissal was a case of genuine redundancy as an initial matter before any consideration of the merits of the application. Consequently the challenge to the alleged genuine redundancy of the applicant has required determination as a pre-requisite to any subsequent considerations.
[23] Section 389 of the Act is entitled “ Meaning of genuine redundancy” and is 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.”
[24] The challenge made by the applicant that his dismissal was not a case of genuine redundancy specifically relied upon subsection 389 (1) (b) of the Act. It was asserted on behalf of the applicant that the employer had not complied with obligations contained in clauses 8.1 and 8.2 of the Award. It is therefore relevant to set out the these Award provisions:
“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 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.
8.2 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 8.1, 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 8.1.
(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.”
[25] The specific complaint advanced on behalf of the applicant related to the time at which the employer discussed with the applicant the likely consequences of the sale of the business. It was submitted by Mr Duc that the “trigger” for consultation was before the sale of the business as the Award provisions speak of “proposed changes”. However when questioned by FWA about the application of clause 8.2 (b) of the Award, Mr Duc said that the time at which a definite decision for the sale of business would have occurred would have been when the contracts for sale were signed. 1
[26] The evidence established that the applicant became aware of the sale of the Willows while on leave at sea on a cruise ship. Shortly after his return from the ocean cruise but before returning to work from leave, the applicant was provided with confirmation of the sale of the Willows from representatives of the employer. The discussions that the applicant had with the employer included the involvement of the new owner and the potential for “ongoing” employment that would have significantly reduced or avoided any detrimental impact on the applicant arising from the sale of the business. Unfortunately these discussions did not lead to the new owner making an offer of employment to the applicant.
[27] In the aftermath of the failure of the discussions to secure employment with the new owner, the applicant has asserted that the employer did not discharge its obligations to consult with the applicant in accordance with the Award provisions. If the employer had breached the Award obligations, the applicant's dismissal would not satisfy the meaning of genuine redundancy as established by subsection 389 (1) (b) of the Act.
[28] Clauses 8.1 and 8.2 of the Award are typical notification and consultation provisions which are similar to those contained in many Modern Awards. On many occasions Tribunals, such as FWA (and its predecessors), have been required to interpret the practical operation of notification and consultation provisions similar to those under examination in this instance. One particular aspect of the practical application of these provisions involves the point in time that establishes any definite decision to introduce major change. This point in time has often been referred to as the “trigger” for the notification and consultation requirements to commence.
[29] There are no fixed rules upon which to establish that a definite decision to introduce major change has been taken. The circumstances of each case must be considered upon the relevant facts and circumstances of the particular matter. It is conceivable that in some circumstances the definite decision to introduce major change might be established at a point where the employer took the decision to offer the business, or part of the business operation, for sale. In other circumstances the point in time that the definite decision to introduce major change may not be fixed until a contract for sale of the business, or part of the business operation, had been duly executed. The “trigger” point could be fixed at any time during a process that might usually involve a series of definite decisions to introduce major change all of which might not be “successful” such that the actual introduction of change was inevitable. In my view, the Award obligations to notify and consult regarding introduction of major change have to be applied in a practical and reasonable method having regard for all of the circumstances of the particular case.
[30] In the circumstances of this case, a small business employer who had made a definite decision to offer the business operation of the Willows for sale, decided not to commence the notification and consultation processes required by the Award until it had received what it believed to be a firm offer for purchase that in all likelihood would complete. Consequently, on about 12 April 2010 the employer provided written notification to all employees of the likely sale of the Willows. Unfortunately, at that time the applicant was on leave and at sea and therefore unable to be provided with the written notification. On about 17 April 2010 the employer commenced discussions with the applicant about the potential ramifications of the anticipated sale of the Willows.
[31] The employer suggested that it had discharged its Award obligations to notify and consult. The employer rejected any suggestion that it should have notified employees earlier about the business operation being for sale. The employer had previously put the Willows on the market and had not secured any contract for sale. The employer returned the business to the market in late 2009 but it was unsure as to whether any buyer interest would ultimately secure the sale of the business. Consequently, the employer contended that to notify the employees of the potential for the sale of the business would only create uncertainty and insecurity for the employees and might lead the employer into operational difficulties if a significant number of employees sought and obtained alternative employment. The employer asserted that the appropriate time to invoke the notification and consultation provisions of the Award was when a firm offer had been made such that there was realistic likelihood that the business would be sold.
[32] Following careful consideration of all of the circumstances of this case I believe that the employer has discharged the Award obligations to notify and consult with employees about the introduction of major change, in this case, the sale of the business. In the case of a small business employer who had previously attempted to sell the business operation, the appropriate point in time upon which to establish that a definite decision to introduce major change was when a firm offer to purchase had been made and would complete on any reasonable expectation. The written notification to all employees dated 12 April 2010 and the subsequent discussions that occurred represented practical and reasonable compliance with the Award provisions.
[33] The applicant did not receive the written notification of 12 April because he was on leave and at sea, and therefore essentially un-contactable. These particular circumstances of the applicant do not provide for any basis to establish that the employer did not comply with the notification and consultation obligations of the Award. The employer took all reasonable steps to notify the applicant and did consult with him about the anticipated changes as soon as practicable after he returned from sea.
Conclusion
[34] The applicant was dismissed because the employer sold the business operation and the new owner decided not to employ the applicant. The position of the applicant was therefore redundant.
[35] The applicant has asserted that his dismissal was not a case of genuine redundancy because the employer did not comply with notification and consultation obligations under the Award. Upon analysis of the particular circumstances of this case, the actions of the employer represented practical and reasonable compliance with the notification and consultation provisions of the Award.
[36] Further, there was no evidence to establish that it would have been reasonable for the applicant to be redeployed within either the employer's enterprise or within any enterprise of an associated entity of the employer. Therefore, having regard for the provisions of section 389 of the Act, the evidence in this case has established that the dismissal of the applicant was a case of genuine redundancy.
[37] Consequently, as the dismissal of the applicant was a case of genuine redundancy, the operation of subsection 385 (d) of the Act renders the application for unfair dismissal remedy as beyond legislative capacity. Therefore the application is dismissed and the proceedings are concluded accordingly.
COMMISSIONER
Appearances:
Mr. A. Duc (Blue Mountains Employment Relations) for the Applicant.
Ms. L. Sutherland for the Respondent.
Hearing details:
Sydney, Monday 2 August 2010.
1 Transcript of proceedings PN 266.
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