Mr Michael Maurer v S.U.M.M.S T/A Elite Automotive and Engineering

[2013] FWC 1661

[2013] FWC 1661

FAIR WORK COMMISSION

DECISION

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

Mr Michael Maurer
v
S.U.M.M.S T/A Elite Automotive and Engineering
(U2012/14590)

COMMISSIONER SPENCER BRISBANE, 11 APRIL 2013

Application for unfair dismissal remedy - jurisdictional objection - genuine redundancy.

[1] Mr Michael Maurer (the Applicant) made an application under s 394 of the Fair Work Act 2009 (the Act) submitting the termination of his employment was harsh, unjust or unreasonable.

[2] The Applicant was employed as a full-time boilermaker on 20 June 2011 by Elite Automotive & Engineering Pty Ltd T/A S.U.M.M.S (the Respondent). His employment was terminated on 18 October 2012.

[3] The Respondent submitted that the Applicant was notified on 27 September 2012 that his position was to be made redundant, due to the workshop lease expiring on 14 October 2012 and there being no commensurate alternative work available.

Legislative scheme

[4] The provisions of the Act, as they stood at 18 October 2012, that are relevant to this matter are as follows.

[5] Section 394 of the Act provides:

394 Application for unfair dismissal remedy

(1) A person who has been dismissed may apply to FWA for an order under Division 4 granting a remedy.

[6] Section 385 of the Act provides:

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.

[7] Section 389 provides the for the meaning of genuine redundancy:

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.

[8] Section 121 provides for exclusions from the obligation to pay redundancy pay:

121 Exclusions from obligation to pay redundancy pay

(1) Section 119 does not apply to the termination of an employee’s employment if, immediately before the time of the termination, or at the time when the person was given notice of the termination as described in subsection 117(1) (whichever happened first):

...

(b) the employer is a small business employer.

[9] Section 23 provides for the meaning of small business employer as follows:

23 Meaning of small business employer

(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

(2) For the purpose of calculating the number of employees employed by the employer at a particular time:

(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and

(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.

...

(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):

(a) the employee who is being dismissed or whose employment is being terminated; and

(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.

Evidence and submissions

[10] In response to Directions, the Respondent provided a statutory declaration stating the reason for effecting the Applicant’s redundancy was due to the expiration of the term of the workshop lease, being 3 years, finishing on 14 October 2012.

[11] The Respondent set out that only one casual boilermaker was retained, with no other full-time boilermaker being required. The Respondent stated that a full-time boilermaker was not required to continue the work in the other shed.

[12] Further, in response to the Applicant’s contention that the Applicant had been selected for redundancy due to his age, the Respondent provided a list of the ages of its former and current staff. The Respondent stated that the other boilermaker that remained employed was younger but it was submitted that the younger employee was employed on a casual basis. The Respondent had offered the Applicant casual work, but he had not accepted such.

[13] The statutory declaration of Ms Turnbull, the Director of the Respondent, confirmed that no other full-time boilermaker had, since the Applicant’s dismissal, been employed in the Applicant’s job.

[14] It is noted that the Applicant has made submissions regarding whether or not he was eligible for a redundancy payment in accordance with the modern award or the Act. This jurisdictional objection as to whether it was a genuine redundancy does not require a determination as to whether there is an entitlement to a redundancy payment under the Act.

[15] However, for completeness, the Respondent submitted in the Statutory Declaration that at the time of termination it was a small business employer (in line with s.23 of the Act) and it employed fewer than 15 employees. The Respondent submitted they employed 9 full-time employees and 23 casual employees not employed on a regular and systemic basis. Accordingly, the Respondent in accordance with s.121(b) of the Act, is excluded from redundancy pay.

[16] As stated, the Respondent further stated they had offered the Applicant alternative casual employment, but the Applicant had refused and resigned. However, the Respondent stated that they had paid the Applicant the correct wages in lieu of notice.

Considerations

[17] The relevant matters for determination, in relation to whether the Applicant’s employment was terminated as a result of a genuine redundancy, are specified in s.389 of the Act. Stated briefly, this requires a consideration of three matters, namely: did the employer no longer require the employee’s job to be done by anyone because of changes in the operational requirements of the employer’s enterprise; has the employer consulted in accordance with the consultation provisions of a relevant modern award or enterprise agreement, if any; and, finally, was it reasonable in all the circumstances for the employee to be redeployed in the employer’s enterprise.

[18] Some of the Applicant’s submissions relate to matters regarding whether the Respondent was a small business employer or not. That question is relevant to a determination regarding redundancy payment, but not whether the matter was a genuine redundancy within the meaning of s.389 of the Act. The Respondent has provided detailed information regarding the number and status of its employees in so far as any determination concerning s.383(1)(a) of the Act.

[19] On the basis of the evidence provided, the Respondent no longer required the job of the Applicant to be done by anyone. The evidence submitted by the Respondent was that the Applicant’s position was terminated due to “operational changes”. Further clarified, those changes were that the lease, for the workshop within which the Applicant worked, had expired and was not renewed by the Respondent. The lease expired on 14 October 2012.

[20] The Explanatory Memorandum to the Fair Work Bill 2008 provides the following detail regarding s.389(1)(a):

1547. Paragraph 389(1)(a) provides that a 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, activity, project or undertaking.

1548. The following are possible examples of a change in the operational requirements of an enterprise:

● a machine is now available to do the job performed by the employee;

● 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.

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.

[21] In this regard it is well settled that the phrase “no longer required the person’s job to be performed by anyone” is not absolute. It does not refer to the fact that the employer no longer required the person’s work or duties to be done by anyone else — it refers to the job.

[22] Further clarification of the differing concepts of work related duties and job is provided by Spender, Dowsett and Allsop JJ in Dibbs v Commissioner of Taxation (2004) 136 FCR 388 at 404-405, where their Honours observed that:

it is more accurate to say that an employee becomes redundant when his or her job (described by reference to the duties attached to it) is no longer to be performed by any employee of the employer, though this may not be the only circumstance where it could be said that the employee becomes redundant. Reallocation of duties within an organisation will often lead the employer to consider whether an employee, previously employed to perform specific functions assigned to a particular “job”, will be able to perform any available “job” existing after such reallocation. 1

[23] In appropriate circumstances a reduction in full-time employees, for example, may fit the description “no longer required the person’s job to be performed by anyone” even where the employer still employs casual employees, for instance, who are performing the same work or duties. The redundant “job” is the full-time position.

[24] In regards to the job no longer being required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise, the term operational requirements is a term not defined in the Act. However, Lee J in Nettleford v Kym Smoker Pty Ltd (1996) 69 IR 370, at 373, provides the following guidance:

Obviously it is a broad term that permits consideration of many matters including past and present performance of the [employer’s] undertaking, the state of the market in which it operates, steps that may be taken to improve the efficiency of the undertaking by installing new processes, equipment or skills, or by arranging for labour to be used more productively, and the application of good management to the undertaking. In general terms it may be said that a termination of employment will be shown to be based on the operational requirements of an undertaking if the action of the employer is necessary to advance the undertaking and is consistent with management of the undertaking that meets the employer's obligations to employees.”

[25] I am satisfied that the material submitted by the Respondent shows that there has been a reduction in the Respondent’s workforce including the job that the Applicant was performing, being that of a full-time boilermaker because of operational changes, namely the ending of the lease. The evidence is that the Applicant’s job has not been replaced by another full-time boilermaker.

[26] In relation to s.389(1)(b) and the consultation obligations, the Respondent submitted, and the Applicant did not challenge that the Applicant was covered by the Elite Automotive & Engineering Pty Ltd Employee Collective Agreement. This Agreement appears to be an agreement approved by the Workplace Authority as it then was. The nominal expiry date of the Agreement was 5 years from the operative date. 2 There is no specific information before the Commission about these dates. It was however not contended that this Agreement has been terminated. It seems that it is still in operation and was at the time of the termination.

[27] The Explanatory Memorandum to the Fair Work Bill 2008 provides the following regarding s.389(1)(b):

1550. Paragraph 389(1)(b) provides that it will not be 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.

[28] There are no consultation obligations in this Agreement in relation to redundancy. So far as s.389(1)(b) of the Act requires the Respondent was not required strictly to consult with the Applicant in relation to his prospective redundancy. However the Respondent submitted a letter addressed to the Applicant, dated, 18 September 2012, regarding a change to his employment status for “operational reasons”.

[29] Further the Respondent has submitted that it did offer alternative work to the Applicant. But this was declined by the Applicant and, as the Respondent submitted, he resigned.

[30] While the Applicant has submitted that his employment was terminated, in part, because of his age there is no evidence before the Commission upon which such a finding could be based. Further this is a determination in relation to a jurisdictional objection regarding whether or not the Applicant’s employment was terminated as a result of a genuine redundancy. An application pursuant to s.394 of the Act is not an application strictly in relation to discrimination, although it may be considered.

Decision

[31] On the material provided it is determined that, pursuant to s.389, the termination of the Applicant’s employment was a genuine redundancy. The jurisdictional objection to the application for unfair dismissal remedy is therefore upheld. The application, made pursuant to s.394, must therefore be dismissed due to the dismissal being a genuine redundancy. I Order accordingly.

COMMISSIONER

 1   Dibbs v Commissioner of Taxation (2004) 136 FCR 388 at 404-405.

 2   Elite Automotive & Engineering Pty Ltd Employee Collective Agreement clause 1.

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