Mrs Mary Stephanou v Taffcorp Pty Ltd T/A the Athlete's Foot

[2013] FWC 1993

[2013] FWC 1993

FAIR WORK COMMISSION

DECISION

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

Mrs Mary Stephanou
v
TAFFCORP Pty Ltd T/A The Athlete's Foot
(U2012/14495)

COMMISSIONER LEWIN MELBOURNE, 16 APRIL 2013

Application for unfair dismissal remedy - jurisdictional objection - genuine redundancy case - consultation - Award coverage - redeployment.

Introduction

[1] In this matter Ms Mary Stephanou has applied for relief in relation to the termination of her employment with TAFFCORP Pty Ltd T/A The Athlete’s Foot (Athlete’s Foot) under section 394 of the Fair Work Act 2009 (the Act).

[2] Ms Stephanou’s employment with Athlete’s Foot commenced on 9 August 2010 and was terminated by Athlete’s Foot on 12 October 2012. The reason for the termination of Ms Stephanou’s employment was the redundancy of her position as Group Accountant.

Jurisdictional Objection

[3] The Respondent has objected to the application on the basis that Ms Stephanou was not a person protected from unfair dismissal at the time her employment was terminated, because the termination of her employment was a case of genuine redundancy, within the meaning of the Act.

Preliminary decision required

[4] Section 396 of the Act stipulates that the Fair Work Commission must consider the matters raised by Athlete’s Foot before considering the merits of Ms Stephanou’s application. The relevant provisions are set out below:

396 Initial matters to be considered before merits

The FWC 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.

Relevant Statutory Provisions

[5] Before turning to the statutory definition of a genuine redundancy case, it is informative to first identify what will constitute an unfair dismissal. I set out below the statutory provisions which provide protection from unfair dismissal and what will constitute an unfair dismissal, as provided for by sections 382 and 385 of the Act respectively.

382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

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) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

[6] Section 386(1)(a) of the Act provides that a person has been dismissed when the person’s employment has been terminated on the employer’s initiative. That Ms Stephanou was dismissed by Athlete’s Foot is not disputed in this case.

[7] There is also no dispute that Ms Stephanou is a person within the scope of section 382 who has completed the minimum employment period and who satisfies the description in section 382(b)(iii).

Genuine Redundancy?

[8] The relevant statutory provisions which determine when a dismissal will be a case of genuine redundancy are set out in section 389 of the Act as follows.

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.

[9] As can be seen, for the termination of an employee’s employment to be a case of genuine redundancy, within the meaning of the Act, certain conditions must be met. I will deal with those conditions as follows:

Operational requirements; section 389(1)(a)

[10] On what is before me, I am satisfied that Ms Stephanou’s position as Group Accountant was the subject of restructuring involving the outsourcing of the duties of that position to a contract service provider. The consequence was that the position occupied by Ms Stephanou in the enterprise of the Respondent was no longer necessary for the operational requirements of the enterprise and was therefore redundant. There is no substantial challenge to this aspect of the reason for the termination of Ms Stephanou’s employment. Therefore, the conditional aspects of section 389(1)(a) are satisfied in relation to the termination of Ms Stephanou’s employment.

Matters for determination

[11] There are two issues which must be dealt with in order to determine Athlete’s Foot’s jurisdictional objection.

[12] The first is whether Ms Stephanou’s employment was covered by the Clerks Private Sector Award (2010) (the Award). The need to determine this issue arises from the condition set out in section 389 (1)(b), which requires that any consultation obligation under a Modern Award or an Enterprise Agreement must be complied with in relation to the retrenchment of an employee in order for the dismissal of the employee to be a genuine redundancy case within the meaning of the Act.

[13] The second is whether it would have been reasonable in all the circumstances to redeploy Ms Staphanou in the Respondent’s enterprise or the enterprise of an associated entity of the Respondent, having regard to the provisions of section 389 (2).

Consultation obligations under section 389(1)(b)

[14] Ms Stephanou submits that her employment was covered by the Award and Athlete’s Foot did not comply with the consultation provisions of the Award. The relevant provisions of the Award are set out below.

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 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 representative, if any, the introduction of the changes referred to in clause 0, 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 0.

(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.

[15] It is submitted that, as the obligations of consultation provisions of the Award were not met by Athlete’s Foot in relation to the termination of Ms Stephanou’s employment, the termination of Ms Stephanou’s employment is not a genuine redundancy case, within the meaning of the Act.

[16] It will only be necessary to consider the submission concerning non compliance with the obligations prescribed by the consultation provisions of the Award if the Commission is satisfied that Ms Stephanou’s employment as Group Accountant of Athlete’s Foot was covered by the Award at the time Athlete’s Foot decided to outsource the work of the position and terminate Ms Stephanou’s employment.

[17] In the event that the Commission finds that Ms Stephanou’s employment as Group Accountant was not covered by the Award it will still be necessary to consider whether it would have been reasonable in all the circumstances to redeploy Ms Stephanou within the Respondent’s enterprise or an associated entity.

Award Coverage

[18] The coverage provisions of the Award are set out below:

4. Coverage

4.1 This award covers employers in the private sector throughout Australia with respect to their employees engaged wholly or principally in clerical work, including administrative duties of a clerical nature, and to those employees. However, the award does not cover:

(a) an employer bound by a modern award that contains clerical classifications; or

(b) an employee excluded from award coverage by the Act.

4.2 The award does not cover employees who are covered by a modern enterprise award, or an enterprise instrument (within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)), or employers in relation to those employees.

4.3 The award does not cover employees who are covered by a State reference public sector modern award, or a State reference public sector transitional award (within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)), or employers in relation to those employees.

4.4 This award covers any employer which supplies on-hire employees in classifications set out in Schedule B—Classifications and those on-hire employees, if the employer is not covered by another modern award containing a classification which is more appropriate to the work performed by the employee. This subclause operates subject to the exclusions from coverage in this award.

4.5 This award covers employers which provide group training services for trainees engaged in any of the occupations set out at Schedule B—Classifications and those trainees engaged by a group training service hosted by a company to perform work at a location where the activities described herein are being performed. This subclause operates subject to the exclusions from coverage in this award.

4.6 Without limiting the generality of the foregoing this award does not cover employers covered by the following industry awards with respect to employees covered by the awards:

the Aged Care Award 2010;

the Airline Operations—Ground Staff Award 2010;

the Airport Employees Award 2010;

the Alpine Resorts Award 2010;

the Animal Care and Veterinary Services Award 2010;

the Banking, Finance and Insurance Award 2010;

the Black Coal Mining Industry Award 2010;

the Business Equipment Award 2010;

the Contract Call Centres Award 2010;

the Educational Services (Post-Secondary Education) Award 2010;

the Educational Services (Schools) General Staff Award 2010;

the Fitness Industry Award 2010;

the General Retail Industry Award 2010;

the Health Professionals and Support Services Award 2010;

the Higher Education Industry—General Staff—Award 2010;

the Hospitality Industry (General) Award 2010;

the Legal Services Award 2010;

the Market and Social Research Award 2010;

the Rail Industry Award 2010;

the Restaurant Industry Award 2010;

the Sporting Organisations Award 2010; or

the Telecommunications Services Award 2010.

4.7 Where an employer is covered by more than one award, an employee of that employer is covered by the award classification which is most appropriate to the work performed by the employee and to the environment in which the employee normally performs the work.

[19] In my judgement, the immediate consideration in this respect is whether Ms Stephanou was engaged in “clerical work” or occupied a professional or managerial position. To do so it will be necessary to consider the principal or primary function of Ms Stephanou’s position as Group Accountant.

[20] In the case of Shane Layton v North Goonyella Coal Mines Pty Ltd [2007] 1 the Full Bench of the Australian Industrial Relations Commission (the AIRC) said as follows with regard to the approach to be taken to consideration of whether an employee is covered by an Award and the meaning of “clerical work.”

[25] Various Full Bench decisions have held that the proper approach to determining whether an employee is covered by an award requires an assessment of the principal purpose for which the employee was employed. 2 This test has also been referred to as the primary function test. Indeed, Justice Gray of the Federal Court applied such a test in relation to the interpretation of the term "clerk” in Joyce v Christoffersen 26 FCR 261. In that case, His Honour said at [270-1]:

“The Oxford English Dictionary, 2^nd ed, 1989, defines ‘clerical’ relevantly as ‘of or pertaining to a clerk or penman’. The appropriate definition of ‘clerk’ is ‘one employed in a public or private office, shop, warehouse, etc., to make written entries, keep accounts, make fair copies of documents, do the mechanical work of correspondence and similar ‘clerkly’ work. Among the definitions of ‘clerk’ is ‘of or belonging to an office clerk’.

There are many authorities dealing with rule 2 of the Union’s rules. In a now famous passage, in Re Federated Clerks’ Union of Australia, New South Wales Branch, and Australian Workers’ Union (1971) 71 AR (NSW) 419, at p 421, Sheldon J. said, in reference to the phrase ‘clerical capacity’:

‘This phrase, in my view, must be read against the background of the way industry has developed and is now conducted. Clerical work in industry has long since moved from the Dickensian era of the high stool and the quill pen. The voice and the mind are now part of clerical stock-in-trade. So is the acceptance of responsibility and the exercise of discretion. The conception is fluid and progressive and recourse to a dictionary gives only partial help. It is impossible, and in any event it would be undesirable, to attempt to devise a code as to what in the setting of industry today can fairly be regarded as clerical work. But too fine a toothcomb should not be used in solving this question in particular cases. Obviously all employees in an office are not engaged in a clerical capacity. It is clear that professional employees are not nor are those who are truly and basically executive officers. But an employee does not cease to be employed in a clerical capacity merely because his work includes many administrative and non-recording functions. No doubt there are cases near the border which would be difficult to determine but in general, and subject to some special categories, those who are in a subordinate position but are engaged in the ordinary work of office administration are, in my opinion, prima facie covered by this constitution rule.... But the salient point is that for years clerical work has been regarded for industrial purposes as including more than mere recording and covers work of different kinds which no doubt leads to or results from recording but in fact is part of the general office administration system. That is why I deprecate dividing office functions too strictly by attempting to quantify the recording done by different members of the team and using this as the test’.

That passage has been quoted with approval in this Court in Voigtsberger v. Council of the Shire of Pine Rivers (1980) 49 FLR 391, at pp 398-399, Re Application by Prichard; Re Federated Clerks' Union of Australia (S.A. Branch) (1985) 12 FCR 66, at pp 77-78 and Re Federated Clerks Union of Australia; Ex parte Tanner (1986) 70 ALR 79, at p 84. As Sheldon J. indicated, and was recognised in Prichard's case, a person may be engaged in a clerical capacity or performing clerical work, whilst having other functions as well. In Prichard's case, at p 78, the test applied was whether the primary functions of the person concerned were directed to the recording, processing and disseminating of information. In the case of a person exercising clerical and non-clerical functions, the question will always arise as to which of them are the primary functions.” 3

[26] ... Rather, the task involves a qualitative assessment of the primary purpose of the position. Professional and managerial employees are clearly not clerks. Where the primary purpose of the role is the exercise of skills of a professional or quasi professional nature, the role will not be regarded as clerical - notwithstanding that the role involves various recording and ordinary administrative office functions. 4

[21] The Full Bench of Fair Work Australia in the case of Michelle Gray v Hamilton James and Bruce Pty Ltd [2011] 5 endorsed the use of the “principal purpose” or a “primary function” test when determining if the Award applies to an individual employee. That was a case, like this one, which directly concerned the coverage of the Award.

[27] In our view, a proper reading of his Honour’s decision indicates the Senior Deputy President regarded Layton’s case as establishing that he should use a principal purpose or primary function test to determine whether Ms Gray’s position was covered by the Clerks Award 2010 and used that test in deciding whether Ms Gray was covered by the Clerks Award 2010. His Honour did not rely on the coverage of the NAPSA or the facts in Layton’s case to conclude Ms Gray was not covered by the Clerks Award 2010.

[28] We are not persuaded his Honour made an appealable error in the regard he had to Layton’s case.

[22] Clearly, the Full Bench of what is now the Fair Work Commission applied and I consider endorsed the approach taken to the determination of a similar issue to that before me, in particular the application of the principles in Layton’s Case 6, as an appropriate framework for the consideration of the Coverage provisions of the Award.

[23] On the evidence and material before me, in my judgement, the position of Group Accountant, in which Ms Stephanou was employed at the time of the termination of her employment, was not covered by the Award. The nature of the position and its primary purpose involved the exercise of responsibilities of a professional nature. While no doubt there were tasks of a clerical and administrative nature involved in the work, in order to fulfil the primary purpose of the position, those tasks were a subordinate or incidental aspect of that purpose. It will have been observed that the coverage of the Award is limited to persons “wholly or principally” engaged in clerical work. 7

[24] Therefore, I find that the redundant position of Group Accountant was not covered by the Award at the time Ms Stephanou’s employment was terminated. Accordingly, Athlete’s Foot was not obliged to consult with Ms Stephanou in accordance with the terms of the Award as prescribed by section 389(1)(b) of the Act

Redeployment

[25] As noted, the position of Group Accountant became redundant because of changes in the operational requirements of the Athlete’s Foot’s enterprise, caused by the outsourcing of the work of the Group Accountant. The consequential retrenchment of Ms Stephanou from the employment of the Respondent will not be a case of genuine redundancy, within the meaning of the Act, if it would have been reasonable for Ms Stephanou to have been redeployed within the Athlete’s Foot’s enterprise or an associated entity of the Athlete’s Foot.

[26] On the evidence before me, I am not satisfied that at the time that, the position of Ms Stephanou became redundant, there was a position available to which Ms Stephanou could have been reasonably redeployed.

[27] Ms Stephanou has submitted that there were vacant positions, which were appropriate positions to which she could have been reasonably redeployed at the relevant time. One such position was occupied by a person appointed to perform duties of a less responsible and much lower paid position, designated as Assistant Accountant, who was appointed shortly before the redundancy of Ms Stephanou’s position.

[28] Notwithstanding Ms Stephanou would have been prepared to perform the duties of that position for the much lower salary attached to it, because of her personal economic circumstances, I consider it would not have been reasonable to terminate the employment of the person in the position of Assistant Accountant in order to enable the redeployment of Ms Stephanou.

[29] To consider the proper application of s.389 (2) in this respect, it is informative to refer to the Explanatory Memorandum to the Fair Work Bill 2008 which refer to the provision of s.389 (2). Paragraphs 1551, 1552 and 1553 and the illustrative example shown in the Explanatory Memorandum are relevant and are set out as follows:

“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.

1553. Whether a dismissal is a genuine redundancy does not go to the

process for selecting individual employees for redundancy. However,

if the reason a person is selected for redundancy is one of the

prohibited reasons covered by the general protections in Part 3-1 then

the person will be able to bring an action under that Part in relation

to the dismissal.” 8

“Illustrative example

Cath is one of four chefs at Kat's Bar and Bistro. She has been working at the restaurant for five years. Six months ago a new restaurant opened up across the road and business has been steadily declining. The manager, Kristy, has made the decision to cut the number of chefs from four to two as only two chefs are needed to manage the reduced workload. There are no redeployment opportunities for either of the chefs as Kat's bar and bistro only employs a small number of staff and has no associated entities. Before deciding to make employees redundant, Kristy checks the award that applies to the chefs and finds that there are no obligations to consult about the redundancy. Kristy dismisses Cath and one other chef and provides them with notice of termination under the NES and pays all amounts owing on termination (e.g., untaken annual leave).

Based on these facts, Cath's dismissal would be a case of genuine redundancy and she would not have been unfairly dismissed.

However, Kristy's reason for selecting Cath as one of the employees to be dismissed was that she had recently complained to her union that she was not being paid the correct allowances under the award.

While this would not change a finding that it was a genuine redundancy, it may contravene the general protections as it may involve Kristy taking adverse action (being the dismissal) against Cath because she exercised a workplace right to complain to the union about not receiving her entitlements.” 9

[30] In considering the factual matrix of this case and the proper application of the words “reasonable in all the circumstances for the person to be redeployed,” appearing in section 389(2), the Explanatory Memorandum, in particular the Illustrative Example, would suggest that such circumstances will exist in most, if not all, cases where a vacant position exists or one may reasonably be created within the employer’s enterprise, or an associated entity, to which the redundant employee may reasonably be redeployed. I doubt that the Act envisages the Commission determining, except in unusual or particular circumstances, that an employee who is employed in a fulltime ongoing position, which is not redundant, should be dismissed to make way for an employee whose position has become redundant.

[31] I do not entirely rule out a possibility of this kind in certain circumstances. Such a consideration might apply where casual employees or labour hire employees are filling a vacant position on a temporary basis or an employee is yet to commence employment when a position becomes redundant and redeployment comes under consideration.

[32] However, I consider that to do so in the factual circumstances of this case would not fall within the bounds of what the intention of the legislature would comprehend as reasonable in the relevant circumstances.

[33] While the timing of the recruitment to the position of Assistant Accountant, to which Ms Stephanou submits it would have been reasonable to redeploy, her is problematic when all of the circumstances of the operational requirements of the Respondent’s enterprise are taken into account, including the history of that position and how it became vacant when it did, on balance, I am not persuaded that the termination of the employment of the occupant of that position in order to redeploy Ms Stephanou would have been reasonable in the circumstances. I find accordingly.

[34] Ms Stephanou also gave evidence to support a submission that it would have been reasonable in the circumstances to redeploy her to a position working in the retail operations of Athlete’s Foot’s enterprise. I find that the evidence is insufficiently probative of the existence of any vacancy in the retail operations of Athlete’s Foot at the time of the termination of Ms Stephanou’s employment.

[35] Ms Stephanou’s evidence about the existence of vacant positions to which she could have been redeployed in the retail operations of Athlete’s Foot fails to identify, a vacant position or likely vacancy to which it would have been reasonable to redeploy her. On the contrary, I find that it is more probable than not that there was no such vacancy and no likely vacancy of the kind claimed to exist. Therefore, I find it would not have been reasonable in the circumstances to redeploy Ms Stephanou to the retail operations of Athlete’s Foot at the time of her dismissal.

[36] No other circumstances of redeployment were relied upon by Ms Stephanou.

Decision

[37] It follows from my conclusions above that the termination of Ms Stephanou’s employment was a case of genuine redundancy within the meaning of section 389 of the Act.

[38] The consequence of this finding is that the Commission has no jurisdiction to hear and determine the merits of Ms Stephanou’s application. The application must be dismissed. An Order will issue accordingly.

COMMISSIONER

Appearances:

A McNab on behalf of the Applicant

R Kerkvliet and R Pascoe on behalf of the Respondent

Hearing details:

Before Commissioner Lewin for Programming

2013.

Melbourne:

March 1.

Final written submissions:

Applicant - 6 March 2013.

Respondent - 8 February 2013.

 1   [2007] AIRCFB713

 2   See, eg. Carpenter v Corona Manufacturing Pty Ltd (2002) 122 IR 387, 388-9; Brand v APIR Systems Limited (unreported, AIRC Full Bench, 16 September 2003) [10], Envotec Pty Ltd t/as Australian Envelopes v Goldie [PR974595].

 3   Ibid at 25.

 4   Ibid at 26.

 5   [2011] FWAFB 6884.

 6   [2007] AIRCFB713

 7   Clause 4.1 Clerks Private Sector Award 2010 [MA000002]

 8   Explanatory Memorandum, Fair Work Bill 2008, paras 1551, 1552 and 1553 on p.247.

 9   Ibid.

Printed by authority of the Commonwealth Government Printer

<Price code C , PR535320>