Mr Matthew Smith v AWH Pty Ltd

[2016] FWC 6861

[2016] FWC 6861

FAIR WORK COMMISSION

DECISION

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

Mr Matthew Smith
v
AWH Pty Ltd
(U2016/2275)

COMMISSIONER CLOGHAN PERTH, 28 SEPTEMBER 2016

Application for relief from unfair dismissal – jurisdictional objection dismissed - whether dismissal was harsh, unjust or unreasonable.

[1] Mr Matthew Smith (Mr Smith or Applicant) made application to the Fair Work Commission (Commission) seeking a remedy for alleged unfair dismissal from his former employer, AWH Pty Ltd (AWH or Employer).

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

[3] The Employer asserted that Mr Smith was not protected by the unfair dismissal provisions of the FW Act, as his dismissal was a case of genuine redundancy.

[4] On 25 August 2016, in Decision [2016] FWC 5788, I made a finding that the dismissal was not a genuine redundancy pursuant to s.385(d) of the FW Act.

[5] Having dismissed the Employer’s jurisdictional objection, it is now necessary to determine whether the dismissal was “harsh, unjust or unreasonable”, taking into account the criteria in s.387 of the FW Act.

[6] Following a telephone conference on 5 September 2016, the parties agreed that no further evidence was required and that the matter be determined on-the-papers following written submissions.

[7] The parties have provided their written submissions and this is my decision and reasons for decision on whether the dismissal was “harsh, unjust or unreasonable”.

RELEVANT LEGISLATIVE FRAMEWORK

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

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) ...
(d) ...”

[9] The criteria for whether a dismissal was harsh, unjust or unreasonable can be found at s.387 of the FW Act and is as follows:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.”

RELEVANT BACKGROUND

[10] The relevant background is set out in my Decision [2016] FWC 5788 (earlier decision).

CONSIDERATION

[11] AWH submit that the following subsections are not relevant to my consideration of whether Mr Smith’s dismissal was “harsh, unjust or unreasonable”:

• s.387 (a), (b), (c) and (e) as Mr Smith’s dismissal was not due to reasons related to his capacity, conduct or performance;



• s.387(d) as the Employer never unreasonably refused to allow Mr Smith to have a support person present to assist in any discussions relating to the dismissal; and



• s.387(g) as the Employer has a dedicated National Human Resources Manager.

[12] Mr Smith submits that s.387(a), (g) and (h) are relevant. Sections 387(b), (c) and (d) are not relevant. Finally s.387(e) and (f) are neutral.

[13] Consequently, in view of the submissions, it is necessary to consider, in further detail, s.387(a), (g) and (h).

[14] I have considered s.387(b), (c), (d), (e) and (f) and agree with the parties that they are either not relevant or neutral.

[15] I now turn to the remaining criteria which I must take into account in s.387 of the FW Act.

s.387 (a) - whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees

[16] The Applicant submits that:

“Subsection 387(a) plainly disclose that a valid reason must relate to ‘the person’s capacity or conduct’. In the ordinary course, a dismissal for redundancy does not involve any reasons related to an employee’s capacity or conduct”. 1

[17] However, the Applicant refers to UES (Int’l) Pty Ltd v Harvey (UES) [2012] FWAFB 5241 and submits that the facts are dissimilar.

[18] I agree with the Applicant that the facts in this application are different to UES, however, that does not detract from the finding in UES and my earlier decision, that Mr Smith was dismissed because his position had been made redundant.

[19] The majority in UES state:

“…in our view the reasons for the dismissal of Mr Harvey by UES were not related to his capacity or conduct (including its effect on the safety and welfare of other employees). Accordingly, there cannot have been and was not a valid reason for his dismissal related to his capacity or conduct (including its effect on the safety and welfare of other employees). In the circumstances of this case we regard it as a neutral matter with respect to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable.” 2

[20] Kaufman SDP, in a separate decision, states:

“In this case there is no dispute that the respondent’s dismissal was a case of redundancy within the generally understood meaning of that expression. That it was not a genuine redundancy for the purposes of s 385(d), and thus was not excluded from the s 385 definition of ‘unfairly dismissed’, does not detract from the fact that his position was nevertheless redundant.” 3

[21] In my earlier decision, at paragraphs [32] and [83], I stated:

“[32] Having considered the guidance provided by the Explanatory Memorandum, I find, on undisputed evidence, that the condition required in s.389(1)(a) of the FW Act has been met. The Employer no longer required the position occupied by Mr Smith to be performed by a discrete person because of changes in the operational requirements of the business.

[83] I find, on the evidence, that the tasks and responsibilities of the BDE were distributed to other employees including Mr Ward. No discrete position of BDE exists either structurally or as a whole, but as part of Mr Ward’s position of General Manager South West Region and other employees.”

[22] Put shortly, Mr Smith’s dismissal was due to the Employer’s decision (for operational reasons) to abolish the position of Business Development Executive (BDE) and not because of his capacity or conduct.

[23] However, just because Mr Smith’s dismissal was not related to his capacity or conduct, this does not prevent the Commission taking into account whether there was a valid reason for his dismissal, pursuant to s.387(h) of the FW Act.

[24] In view of the fact that Mr Smith’s dismissal was not related to his capacity or conduct, I consider the criteria in s.387(a) of the FW Act not relevant or neutral in my consideration of whether the dismissal was “harsh, unjust or unreasonable”.

s.387(g) – the degree to which the absence of dedicated human resource management specialists or expertise would be likely to impact on the procedures followed in effecting the dismissal.

[25] Before referring to the respective submissions, in my view, the plain and ordinary meaning of the criteria in s.387(g) of the FW Act, is that it has effect, and must be taken into account, if there is an “absence of dedicated human resource specialists or expertise”. Further, for the criteria to take effect, or be operative, is in situations where the lack of human resources expertise would be expected, and most probably did, have an impact on procedures followed in effecting the employee’s dismissal.

[26] I do not think it can be seriously contested that AWH has dedicated human resource specialists or expertise. Consequently, the criteria cannot be taken into account, because the circumstances required for it to take effect, do not exist. There was no absence of human resource specialists or expertise.

[27] In my view, the submissions of both parties, with respect to s.387(g), are more appropriately matters for consideration pursuant to s.387(h) of the FW Act.

[28] For the reasons in paragraphs [25] to [27] above, I consider the criteria not relevant or neutral in my consideration of whether the dismissal was “harsh, unjust or unreasonable”.

s.387(h) – any other matters the Commission considers relevant

[29] Section 387(h) of the FW Act provides the Commission with significant latitude to consider a range of relevant matters not specifically covered in ss.387(a) to (g).

[30] A valid reason for dismissal is one that is “sound, defensible or well founded and not capricious, fanciful or spiteful”. The authority for this approach is found in the often cited case of Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at page 373 which reads as follows:

“In its context in s.170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must ‘be applied in a practical, commonsense way to ensure that the employer and employee are treated fairly’.”

[31] A valid reason for dismissal attempts to balance, in a practical way, the needs of employees and employers.

[32] The decision for the Commission to make is whether the decision was “harsh, unjust or unreasonable”. The interrelationship between the statutory provisions of “valid reason” and “harsh, unjust and unreasonable” is best expressed in the judgement of McHugh and Gummow JJ in Byrne v Australian Airlines Ltd [1995] HCA 24 in the following paragraphs:

“128. ...It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

“130. That is not to say that the steps taken, or not taken, before termination may not in a given case be relevant to consideration of whether the state of affairs that was produced was harsh, unjust or unreasonable. Thus, it has been said that a decision which is the product of unfair procedures may be arbitrary, irrational or unreasonable(168). But the question...is whether, in all the circumstances, the termination of employment disobeyed the injunction that it not be harsh, unjust or unreasonable. That is not answered by imposing a disjunction between procedure and substance. It is important that matters not be decided simply by looking to the first issue before there is seen to be any need to enter upon the second.” (my emphasis)

[33] As I stated in my earlier decision, there was overwhelming and undisputed evidence that AWH no longer needed the position of BDE to be performed by a discrete employee because of changes to the business. Accordingly, I am satisfied that there was a valid reason for Mr Smith’s dismissal consistent with the meaning in Selvachandran. A valid reason to dismiss an employee is, subject to other matters, demonstrative of a dismissal that is not harsh, unjust or unreasonable.

[34] Further, in my earlier decision I came to the view that Mr Smith was adequately informed about the major change occurring in the AWH business, other positions which had been abolished, the increasing warehouse capacity, the abolition of equivalent positions interstate and why his position was to be made redundant.

[35] The fact that there was a valid reason for Mr Smith’s dismissal and that he was aware of, and informed of, the evolving changes to the operational requirements of the business are matters which I consider relevant, and of significant weight, in considering whether the dismissal was not harsh, unjust or unreasonable.

[36] I now turn to a countervailing factor submitted by Mr Smith of my finding that the Employer, “at the time of abolishing the BDE position” did not pay sufficient attention as to whether [Mr Smith] could be reasonably employed into another position 4.

[37] The Applicant’s submission as to why his dismissal was harsh, unjust or unreasonable is reduced to the following:

• failure of the Employer to discuss whether he could be reasonably redeployed into another position;



• his age, domestic circumstances and financial situation;



• lack of performance issues; and



• “at the time of his employment in March 2015, AWH should have been aware of the downturn in its business and the fact that it may have been left with no alternative but to make redundancies, it should have advised Mr Smith instead of letting him believe that the position to which he applied was secure and long term”.

[38] I now turn to each of these factors, as to why Mr Smith considered his dismissal harsh, unjust and unreasonable.

[39] In my earlier decision, I made a finding that the Employer did not “discuss with Mr Smith measures to avert or mitigate the adverse effect” of his position being abolished. Further, AWH did not diligently apply itself to determine whether there were positions available into which Mr Smith could be redeployed.

[40] While those matters in paragraph [39] above went to the provisions of s.389(2) of the FW Act, my consideration in s.387(h) of the FW Act is less specific, and more broader, when enquiring into whether the dismissal was “harsh, unjust or unreasonable”.

[41] In my earlier decision, I made the following observations:

“[92] Notwithstanding my finding with respect to the Employer not meeting the provisions of s.389(2) of the FW Act, I do not accept entirely the evidence of Mr Smith regarding the reasonableness of being redeployed into the positions he suggested he could be redeployed into.

[93] Mr Smith’s evidence regarding s.389(2) of the FW Act, must take into account self-interest.

[94] Mr Smith’s self-interest was evident with respect to his evidence that he could have fulfilled the role of a number of positions, would have considered an interstate position with a salary of $30,000 less than he was currently earning and was prepared to “job share”. In my view, his evidence was best summarised when he stated that the “could have gone into…anything”.

[95] Rather than be measured with respect to redeployment, his evidence reached a crescendo in cross examination as follows:

“But did you expect us to make somebody else redundant to provide you with a position?---Why not?  You made me redundant” (footnotes omitted).

[42] The context of Mr Smith’s dismissal is that:

• the Employer’s workforce in Western Australia had reduced by over 30% in the 2015/16 financial year as a result of a downturn in business;



• Mr Smith was one of 16 employees whose position has been abolished;



• two (2) comparable BDE interstate positions had been abolished; and



• Mr Smith had been employed for a period of approximately 13 months.

[43] Mr Smith submits that he was “qualified for the position of BDE having worked in the industry for a significant number of years and his qualifications should be taken into account”. 5

[44] Mr Smith is a chef by trade 6. Mr Smith’s experience “in the industry” related to a hospitality supply company’s warehouse where he was, “forced into a role where I was basically operations manager for the warehouse”.7 Mr Smith’s qualifications, apart from being a Chef, were a couple of units at the Australian Institute of Management8.

[45] While Mr Smith gave evidence that he was capable of doing “anything”, I am not persuaded that, even if there were positions where he could be considered for redeployment (which the Employer denies), there was any certainty or possibility of him filling the position.

[46] Mr Smith may have had a desire that he be redeployed, however, the total context evinces the Applicant’s hope rather than sureness.

[47] In my earlier decision, I made a finding that the Employer did not give sufficient attention to redeployment opportunities. That finding related to the genuineness of the redundancy, pursuant to the FW Act. In view of the evidence of both parties and the context Employer’s business, I am not persuaded to reach a conclusion that, even if the Employer gave sufficient attention to redeployment opportunities, speculating on whether Mr Smith could be reasonably redeployed, is the proper way to address whether the dismissal was harsh, unjust or unreasonable.

[48] In my view, objectively assessing the evidence and looking at the Employer’s business situation, I am satisfied that the inferences lead to a conclusion that Mr Smith could not have been reasonably redeployed into a position elsewhere in the business. It was in Mr Smith’s best interests to give evidence that he would accept redeployment into “anything”. However, when the Commission considers all the relevant factors involved in redeployment, Mr Smith’s desire to be redeployed is but one factor and this should not become the overriding factor. In my view, to adopt such a course of action, would result in an injustice or unreasonable outcome when balancing the needs of the employee and employer (s.381(1)(a) and (b) of the FW Act).

[49] In summary, notwithstanding the determining role redeployment plays when considering “genuine redundancy” in s.389 of the FW Act, the relevancy of this matter is not determinative when considering s.387 of the FW Act. Redeployment opportunities (if any) are not conclusive of whether a dismissal is “harsh, unjust or unreasonable” but as the majority of the Full Bench stated in B, C & D v Australian Postal Corporation T/A Australia Post[2013] FWCFB 6191 “involves a weighing process” (p58). It is in the “weighing process” that the Commission considers whether the dismissal was “harsh, unjust or unreasonable”.

[50] I now turn to Mr Smith’s domestic circumstances, age and financial position.

[51] For many, at any age, being dismissed after a position is abolished is never a good situation. For each individual employee, there are numerous factors which may be put to the Commission as to why the dismissal is “harsh”. In Mr Smith’s case, he is 41 years of age. I am unable to say whether 41 years is worse than 31 years or 51 years of age. If Mr Smith was 61 years, it could be argued that his employment opportunities are limited but at the same time, it could be submitted that the employee had enjoyed many years of uninterrupted work.

[52] Being dismissed almost simultaneously with having a new-born child is not an ideal situation. However, the Commission, in assessing this submission, must recognise that a family’s decision to have a child, is not an event which the Employer has any control over. Further, it could be relatively argued that Mr Smith’s situation is less detrimental than, for example, when a child is entering their school years.

[53] With respect to the dismissed employee’s financial circumstances, no details were provided in submissions except to say that Mr Smith is required to pay a mortgage. While obviously difficult, it is a situation faced by many Australians especially in circumstances of a downturn or reshaping of our economy. It is not necessary to enquire into all the details of Mr Smith’s financial circumstances, save to say that a dismissal from employment (for whatever reason) will affect a person’s financial circumstances; however, the precise impact varies from person to person.

[54] I have considered these factors in coming to a determination of whether the dismissal was “harsh, unjust or unreasonable”.

[55] I now turn to the issue of Mr Smith’s performance. The Employer did not allege poor performance but it was notable that the warehouse vacancy which he was required to reduce actually increased between 50% and 100% during his period of employment. This is an observation and not a judgement of Mr Smith’s performance.

[56] In evaluating this submission, I am mindful that this was not a case of the Employer having to choose between two BDEs where performance may be a determining factor. It is a case of one BDE position being abolished. Further, even if poor performance was an issue, does that override a person’s age, financial and domestic circumstance? This question demonstrates the difficulty of the Commission in having to weigh up all the circumstances.

[57] I now turn to the final submission that Mr Smith should not have been led to believe that the BDE position was secure and long term.

[58] In my view, this is a reconstruction of the employment relationship after Mr Smith’s dismissal. The Employer knew it had to create business to decrease its warehouse space and decided to do that through “business development”. Hence the reason for creating the BDE position and employing Mr Smith. I would be surprised if Mr Smith, having worked in the industry, did not understand that demand for your employer’s products or service keeps a warehouse “ticking over” and employees in a job.

CONCLUSION

[59] Having considered the provisions of s.387(a) to (g), the appropriate content of my earlier decision, recent submissions and giving relevant weight to the matters discussed pursuant to s.387(h) of the FW Act, I am not satisfied that Mr Smith’s dismissal, by way of redundancy was harsh, unfair or unreasonable in all the circumstances. Accordingly, the application must be dismissed. An Order to this effect is attached to this Decision.

COMMISSIONER

 1   Applicant’s submission – paragraph 8

 2   UES paragraph 42

 3   UES paragraph 68

 4   [2016] FWC 5788 paragraph [96]

 5   Applicant’s submission - paragraph 24

 6   Transcript PN480

 7   Transcript PN482

 8   Transcript PN481

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