Mr Raymond Schroder v Identity One

[2012] FWA 9490

[2012] FWA 9490

FAIR WORK AUSTRALIA

DECISION

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

Mr Raymond Schroder
v
Identity One
(U2012/993)

COMMISSIONER ASBURY BRISBANE, 6 NOVEMBER 2012

Application for unfair dismissal remedy - small business employer - genuine redundancy.

Background

[1] This decision relates to an application for an unfair dismissal remedy by Mr Raymond Schroder under s.394 of the Fair Work Act 2009 (the Act). Mr Schroder was employed by Identity One Pty Ltd from 4 April 2011, as a Biometric Solutions Specialist. Mr Schroder was dismissed on 18 April 2012. Mr Schroder asserts that the dismissal was unfair because he was not given any reason for the dismissal and it was procedurally and substantively unfair. Identity One Pty Ltd asserts it is a small business employer and that Mr Schroeder’s dismissal was not an unfair dismissal on the basis that it was a case of genuine redundancy.

Legislation

[2] By virtue of s.385 of the Act a person has been unfairly dismissed if:

(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.

[3] Section 396 of the Act requires that the following matters are decided before considering the merits of an application under s.394:

(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.

[4] It is not in dispute that Mr Schroder made his application for an unfair dismissal remedy within the period requird in subsection 394(2) and that Mr Schroder is a person protected from unfair dismissal. The Small Business Fair Dismissal Code does not apply to dismissals in circumstances of redundancy. 1 The term “genuine redundancy” is defined in s.389 of the Act 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.”

[5] In relation to s.389 of the Act, the Explanatory Memorandum states:

“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.

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.

1551. Subclause 389(2) provides that a dismissal is not a case of genuine redundancy if it would have been reasonable in all the 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.”

[6] As a Full Bench observed in Ulan Coal Mines Ltd v Honeysett, 2an employee seeking a remedy for unfair dismissal cannot succeed if the dismissal was a genuine redundancy, and in such a case, the employer has a complete defence to the application3. In deciding whether the provisions of s.389(a) are met, it is not necessary to show that the duties of the applicant are no longer required to be performed by anyone. The question is whether the job is still required4, and it is necessary to draw a distinction between the employee’s job and their duties5. The test in s.389(a) is twofold and requires the employer to establish that the job is no longer required and secondly whether that was due to changes in operational requirements6. The employer has the onus of showing that there have been changes in the operational requirements of the employer’s enterprise which caused the job to become redundant.7

[7] In relation to the obligation to consult in s.389(1)(b) of the Act, the Explanatory Memorandum makes it clear that there is not an absolute obligation to consult, and obligations under s.389(1)(b) exist only where there is a modern award or enterprise agreement applicable to the employment of the employee who is said to be redundant. This is reflected in cases where it has been held in relation to s.389(1)(b) that it is only where an award or agreement provides for consultation does the requirement to consult impact on whether a genuine redundancy has occurred 8.

[8] In Shepherdson v Binders Compendiums Menu Covers Pty Ltd trading as John Batman Group 9Deputy President Smith found in relation to s.389(1)(b) of the Act that the applicant was not covered by a modern award or enterprise agreement and that there was no obligation to consult in circumstances where a redundancy was determined.10 On appeal, a Full Bench held it was open to the Deputy President to find that no award applied to the applicant, and did not raise any issue with the proposition that in such circumstances there was no obligation to consult arising under s.389(1)(b)11.

[9] In relation to the requirement with respect to redeployment in s.389(2), what is reasonable will depend on the circumstances of the case. Failure to consult an employee about redundancy may be relevant to the question posed by s.389(2) as to whether it would have been reasonable in all of the circumstances for an employee to be redeployed, even in circumstances where there was no obligation to consult as provided in s.389(1)(b). Where there is a prima facie argument that redeployment options were available at the time a redundancy was effected, failure to consult with the employee about those options may lead to a finding that the employer has not established that redeployment was not reasonable.

[10] The Explanatory Memorandum to the Fair Work Bill 2008 gives instances where it would not be reasonable to redeploy on the basis that the employer could be a small business employer where there is no opportunity for redeployment or that there may be no positions available for which the employee has suitable qualifications or experience 12.

Evidence/submissions

[11] Evidence was given by Mr Schroder on his own behalf. Evidence on behalf of Identity One Pty Ltd was given by Mr Kenneth Angel, the Chairperson and Managing Director of Identity One Pty Ltd. Both Mr Schroder and Mr Angel provided statements of evidence and submissions that were intertwined, and all material was taken into account.

[12] Mr Schroder gave evidence that he was given no warning of the impending dismissal and as at the date of the hearing, had received no written notification. Mr Schroder asserted that he had been “mislead” about the role from the outset and the advertised sales target was unrealistic. He stated that this was acknowledged by David Smith (a company Director) however the commission structure was never amended.

[13] According to Mr Schroder, on the day of the dismissal he was told by Mr Angel that the position was “untenable”. Mr Schroder then asked whether that meant he was redundant. Mr Angel replied with words to the effect that they would not be increasing the size of the team. Mr Schroder also said that Mr Angel stated that he was providing a severance package in excess of what was required.

[14] In his witness statement, Mr Schroder said that Mr Angel walked him to his desk where he packed his belongings and then walked him outside to his car. In his oral evidence, Mr Schroder implied that he was told to pack up his desk and escorted from the building by Mr Angel. Mr Schroder agreed with a proposition from me that his evidence was that he was “marched out” of the office. Mr Schroder maintained that Mr Angel ‘walked him’ to his desk, and then down to his car. He also maintained that Mr Angel told him to pack up his belongings as the company policy was that employees did not work out their notice period. Mr Schroder agreed that he did not include this point in his witness statement.

[15] Under cross-examination, Mr Schroder agreed that he was an experienced salesperson and had been involved in training sales people to sell and take management positions before being employed by Identity One Pty Ltd. In relation to sales targets, Mr Schroder said that the target ‘figure’ was not given at the time of employment, nor were the current sales figures. He stated that the only comment made in relation to the targets was that they “easily achievable”. In response to a number of questions from me, Mr Schroder agreed that he was employed to increase sales, but said that he disagreed with the target.

[16] Mr Schroder said that his dismissal was unfair because he had no warning, there was nothing in writing and he had no opportunity to come to a mutually acceptable solution. Mr Schroder also appended a trail of emails to his submissions in relation to the payment of commission and other entitlements. The emails indicate that Mr Schroder was paid two weeks wages in lieu of notice, and that there was an issue with return of company property resulting in delays in payment of his commission.

[17] There was correspondence from a solicitor on behalf of Mr Schroder, to Mr Angel, stating that Mr Schroder had instructed that on 18 April 2012, Mr Angel had told him that his position “was no longer viable” and that he had been excluded from the workplace. That correspondence also sought confirmation of the current status of Mr Schroder’s employment, and, if Mr Schroder’s employment had been terminated, sought the reasons for the termination.

[18] Mr Angel responded by email stating that Mr Schroder had been informed on 18 April 2012 that his services were no longer required and chose to absent himself from the office to seek legal advice. It was further asserted in that correspondence that Mr Schroder did not return on that day or attend the workplace on subsequent days, to finalise any outstanding matters. The email from Mr Angel went on to assert that Identity One Pty Ltd is a small business employer and that the settlement paid to Mr Schroder complied with legal requirements.

[19] It was accepted by both Mr Angel and Mr Schroder that Mr Schroder’s employment was not subject to a modern award or an enterprise agreement.

[20] Mr Angel said in his evidence that Identity One Pty Ltd is in the business of developing software in utilised biometrics involving identification of persons by fingerprint or iris. Part of the business is government business in operations such as prisons and there is a commercial side of the business in relation to time and attendance. Prior to the employment of Mr Schroder, Identity One Pty Ltd had used an employee who was performing technical work to also undertake sales. Mr Schroder was the first full time sales person employed by the Company.

[21] Mr Angel provided financial information for the business indicating that from 1 July 2010 to 30 June 2011, the sales revenue was $297,867 and that from 1 July 2011 to 30 June 2012 it had dropped to $217,543. Mr Angel said that during the period of Mr Schroder’s employment, sales decreased, at least in part due to the economic environment, and it was decided that a full time dedicated sales position was not viable. The position has not been filled since Mr Schroder’s dismissal. Mr Angel also said that there were no reasonable grounds for redeployment throughout the company as all required positions were filled with existing long term staff.

[22] Mr Angel said that on the day of the dismissal, he did not instruct Mr Schroder to pack up his desk. According to Mr Angel, Mr Schroder asked for time to seek legal advice about his dismissal and Mr Angel understood that he was leaving the office for this purpose and would return later in the day to finalise his employment. Mr Angel said that he had parked his car behind Mr Schroder’s on that day because Mr Schroder had arrived at the office before Mr Angel and it was common practice for the person who arrived later to park behind a person who had arrived earlier. Mr Angel said that he walked Mr Schroder to his car because Mr Schroder would not have been able to move his car unless Mr Angel first moved his car.

[23] Mr Schroder’s remote access to the Company’s computers was removed on 19 April 2012 when Mr Schroder did not return to the office. Mr Angel maintained that he did not march Mr Schroder out of the office.

Conclusions

[24] I have considered all of the evidence and submissions in this matter, and conclude that the dismissal of Mr Schroder was a case of genuine redundancy. I am satisfied in relation to s.389(1)(a) that due to economic downturn and reduction of sales revenue, Mr Angel decided that Identity One Pty Ltd could not sustain the employment of a dedicated full time salesperson. Accordingly, Mr Angel has established that he no longer required Mr Schroder’s role as a dedicated full time sales person to be performed by anyone, and this was because of changes in the operational requirements of the enterprise.

[25] In relation to s.389(1)(b), notwithstanding that there does not appear to have been any real consultation with Mr Schroder in relation to the redundancy, no such obligation arose as there was no modern award or enterprise agreement that applied to Mr Schroder’s employment.

[26] In relation to s.389(2) I am also satisfied that Mr Schroder was the only person employed in the role of full time dedicated salesperson, and employees had technical qualifications and experience that Mr Schroder did not have. Identity One Pty Ltd is a small business, sales revenue had declined and Mr Schroder was the only full time dedicated salesperson. In all of the circumstances, I am satisfied that it would not have been reasonable for Mr Schroder to have been redeployed within the employer’s enterprise. There was no evidence that there was an associated entity into which Mr Schroder could have been redeployed. Accordingly, I am unable to be satisfied that it would have been reasonable to redeploy Mr Schroder.

[27] I find that Mr Schroder’s dismissal was a case of genuine redundancy and was not an unfair dismissal. Mr Schroder’s application under s.394 of the Act cannot succeed and must be dismissed. An Order to that effect will issue with this Decision.

COMMISSIONER

Appearances:

Mr R. Schroder on his own behalf.

Mr K. Angel on behalf of the Respondent.

Hearing details:

2012.

Brisbane:

September 14.

 1   Nalevansky v Thought Equity Motion Inc [2010] FWA 8896 at [9].

 2   [2010] FWAFB 7578.

 3 Ibid at [26].

 4   Margolina v Jenny Craig Weight Loss Centres Pty Ltd [2011] FWA 5215 at [5].

 5   Ulan Coal Mines v Howarth [2010] FWAFB 3488.

 6   TG v SF Pty Ltd [2010] FWA 2650.

 7   Pitceathly v Diona Pty Ltd [2011] FWA 478 at [42].

 8   Luckins v Northrose Holdings Pty Ltd [2012] FWA 3522 at [19]; Morrissey v Transit Australia Pty Ltd [2012] FWA 7988 [41] - [42]; Trembath v Kabi Organic Golf Course [2011] FWA 8346 at [48] - [49].

Hughes v Leerdam Pty Ltd [2010] FWA 6211 [46] - [48]; Harding v Linbo Pty Ltd [2010] FWA 6124 at [14]; Manoor v United Petroleum Pty Ltd [2010] FWA 2571 at [25].

 9   [2012] FWA 4585.

 10 Ibid at [19].

 11   Shepherdson v Binders Compendiums Menu Covers Pty Ltd T/As John Batman Group [2012] FWAFB 7675 at [21].

 12   Explanatory Memorandum to the Fair Work Bill 2008 at 1552.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR531105>