Mrs Suzanne McCarthy v Natures Organics Pty Ltd

[2013] FWC 9720

[2013] FWC 9720

FAIR WORK COMMISSION

DECISION

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

Mrs Suzanne McCarthy
v
Natures Organics Pty Ltd
(U2013/12099)

Mrs Maureen Dixon
v
Natures Organics Pty Ltd
(U2013/12103)

COMMISSIONER ROE MELBOURNE, 18 DECEMBER 2013

Termination of employment - genuine redundancy.

[1] These matters arise from applications filed on 31 July 2013 under s 394 of the Fair Work Act 2009 (the Act) by Maureen Dixon and Suzanne McCarthy (the Applicants) for relief in respect to the termination of their employment from Natures Organics Pty Ltd (the Respondent or Natures Organics).

[2] Following an unsuccessful conciliation conference the matter proceeded to arbitration. The letters of termination are dated 9 July 2013 and the letters advise that the positions are made redundant effective 11 July 2013. The company employs approximately 140 employees and is therefore not a small business. The Applicants were part of the sales team in Victoria for the company and worked as merchandisers. Prior to the termination there were three merchandisers in the Victorian Sales team.

[3] The Applicants were employed for a continuous period in excess of six months. Maureen Dixon was employed from 24 November 2009 until 11 July 2013 as a part time employee working 18 hours per week and earning $360 gross per week plus car allowance of $153.43 per week. Suzanne McCarthy was employed from 21 July 2009 until 11 July 2013 for the same number of hours and at the same rate of pay as Maureen Dixon.

[4] The Respondent and the work of the Applicants is covered by the Commercial Sales Award 2010 (the Award). It is not in contention and I accept that the Applicants were dismissed at the initiative of the employer and are protected from unfair dismissal. However, the Respondent argues that the dismissal was a genuine redundancy. The Respondent does not allege that there are any issues concerning the conduct or performance of the Applicants.

[5] Mr Attalla, National Account and Field Manager for the Respondent, gave evidence that on 20 June 2013 he, in discussion with one other manager, made a decision to restructure the Victorian Sales team by removing two of the three part time merchandiser positions. As a consequence, on 24 June 2013 he undertook a selection process as to which two of the three merchandisers would be offered redeployment or redundancy. Later on 24 June 2013 he telephoned or SMSed the Applicants who were the two affected staff and asked them to come to a meeting on 25 June 2013. The employees were advised that the meeting concerned the restructure of the Victorian Sales team. As it eventuated the meeting took place with Suzanne McCarthy on 24 June 2013 and with Maureen Dixon on 25 June 2013.

[6] It is not suggested that there was any discussion with the Applicants about the proposed changes and the rationale for the changes other than the request on 24 June 2013 that they attend a meeting to discuss restructure and the discussion which took place at the resulting meeting with each of the Applicants.

[7] It was not suggested to the Applicants that they bring a representative or support person to the discussion. The Applicants did not have a support person at the discussion.

[8] The Respondent submits that the company’s sales have plateaued and/or declined in some areas in recent years and that the company is facing stiff competition. However, the Respondent does not submit that there has been any significant reduction in staff in the lead up to or immediately following the termination of the two Applicants.

[9] As a part of the restructure a new part time sales support representative position was created to focus on sales and account management activities. The focus of the new job was on Multi Site Operators such as IGA, Ritchies and Maxi Foods rather than on Coles and Woolworths which were the main focus of the merchandising roles. The witnesses estimated that at least 90% of the work of the Applicants was focused on Coles and Woolworths. The hours of the new job were slightly less than the hours of the jobs of the Applicants combined. The result of the restructure was a reduction of 4 hours per week in the total paid hours. The company has decided to reduce the amount of merchandising activity in Coles and Woolworths stores and increase the focus on direct sales and account management activities in the independent stores. This sales work does include an element of merchandising activity.

[10] Mr Garry Wathen, Human Resource Manager, and Mr Amir Attalla, National Account and Field Manager gave evidence that they explained the new role to the Applicants to ascertain if they were interested in applying for the job. They say that the Applicants said at that time or subsequently they were not interested in applying for the position. Mr Wathen and Mr Attalla gave evidence that they also sought the interest of the Applicants in work at the Head office and manufacturing site located in Ferntree Gully. They say that Mr Attalla advised the Applicants that there were no jobs at the moment but that these jobs come up regularly. They say that the Applicants showed no interest in these positions. They acknowledged that this option was probably not viable for Maureen Dixon as she lived in Rosebud.

[11] The Applicants gave evidence that they were not advised when called to the meeting that the meeting may result in the loss of their job. They gave evidence that in the meeting they were told that the jobs were being made redundant and were handed a redundancy letter dated 25 June 2013. It is not in dispute that the letter was given to Ms McCarthy at her meeting on 24 June 2013 and to Ms Dixon at her meeting on 25 June 2013. The letter was headed “notification of major restructure - Melbourne Sales team”. That letter stated that: “Melbourne will no longer have two of its three merchandising positions”. The letter also stated that the Applicants were “welcome to apply” for the new Sales Support Representative position. The letter advised that the role was a four day per week role (32 hours). The Applicants each worked 18 hours per week prior to termination.

[12] The letter stated that:

“This effectively leaves you with the following alternatives:

• Apply and be successful in securing the new position of Sales Support Representative



• Apply for this position and if unsuccessful - redundancy payment will apply



• Be redeployed to Head Office in Ferntree Gully should a suitable position arise



• Elect to be made redundant. 7 weeks redundancy payment will apply in your case




In regards to time frames we expect this to take effect in July or at the time the person takes up the role of Sales Support Representative role.

Interviews for this position are expected to commence late June/early July.

We are aware this is sensitive issue and we wish to work through this with you and explore all issues ahead of us both. Including support to you should you elect to take the redundancy option. It is very important to remain in contact during this time and we welcome your call to Amir, Maree or myself at any time.”

[13] Suzanne McCarthy gave evidence that Mr Wathen said that the Applicants were capable of performing the duties of the new role expect for the account management role and that the two jobs were being rolled into one and that the job would be advertised and anyone could apply for it. Mr Wathen denied saying that the two jobs were being rolled into one. Mr Wathen said that Ms McCarthy was not guaranteed of being successful. Mr Wathen made it clear that there were no jobs currently available at the factory or head office. Ms McCarthy says that she was never told how she was selected for redundancy or given an opportunity to comment on the criteria. Ms McCarthy gave evidence that she was asked if she had any questions but denies that she was asked if she had any suggestions or proposals. Ms McCarthy says that there were no questions raised nor was there any discussion of substance in the meeting.

[14] Ms McCarthy says that she declined to apply for the role because she was concerned that she did not have account management skills and she was offered no encouragement or opportunity for training. Ms McCarthy gave evidence that she believed that there were no real options. The opportunity to work at Head Office or in the factory was not offered as it was made clear that there were no positions available at that time. Ms McCarthy says that she was handed the letter of redundancy and the calculations of her redundancy entitlements early in the meeting. The redundancy pay was subject to discussion towards the end of the meeting. Ms McCarthy gave evidence that at the end of the meeting she was told that she could think about the options and get back to Mr Wathen or Mr Attalla. However, Ms McCarthy understood that the options were to accept the redundancy pay or take her chances and apply for the new role which she was not guaranteed of getting.

[15] Ms Dixon gave evidence that she was handed the letter of redundancy at the start of her meeting on 25 June 2013. Mr Wathen gave evidence that it was handed to Ms Dixon later in the meeting. Ms Dixon gave evidence that there was no discussion about the restructure in the meeting. In Ms Dixon’s view the work of her current job and the Sales Support Representative job are basically the same. She says that she raised this at the meeting but there was no detailed discussion of the new role. When she was told that the job was for 32 hours she asked whether it could be split between the two Applicants. She says that the only response was to reiterate that it was one 32 hour position. Mr Wathen and Mr Attalla do not recall the splitting of the job being raised in the meeting.

[16] Ms Dixon gave evidence that it was made clear that there were no positions currently available at head office or the factory but that she could apply if any came up. There is no evidence that Ms Dixon was advised of any options subsequent to the meeting. Ms Dixon gave evidence that at the end of the meeting she was told that she could think about the options and get back to Mr Wathen or Mr Attalla and tell them if she was going to accept the redundancy pay or not. Ms Dixon did subsequently advise that she was taking the redundancy pay and was not applying for the new role. Ms Dixon gave evidence that had she been offered a role in the factory or head office she would have been interested. Ms Dixon gave evidence that there was the opportunity to ask questions in the meeting but she was not asked to make suggestions or proposals and that it was clear that there was no possibility of her existing job continuing.

[17] Mr Wathen and Mr Attalla agreed that the Applicants had the necessary sales experience to carry out the new sales support representative role. The only area of the new role where the Applicants may have lacked skills and experience was in account management. They did not reject the proposition that with some support and training the Applicants could successfully perform this aspect of the role. They pointed out this potential shortfall to the Applicants at the meeting, however, they did not suggest at the meeting that the Applicants could be provided with support and training to overcome any perceived shortfall. Mr Wathen gave evidence that internal applicants would have been preferred to external applicants. However, he did not suggest that this was said to the Applicants at the meeting. Mr Wathen and Mr Attalla accept that they did not explain to the Applicants the process by which they were selected for redundancy. In cross examination Mr Wathen and Mr Attalla accepted that the Applicants were asked if they were interested in applying for the role and being considered for the role. They did not suggest that the Applicants were told that they could be redeployed into that role or into other roles in the factory or head office if jobs in those areas were to eventuate.

[18] Mr Wathen and Mr Dixon gave evidence that the reason why they considered that the sales support representative role should be a single job was to provide for continuity in contact with particular companies and their head office representatives. However, they did not explain why this could not equally be achieved if the job was shared with responsibility for certain companies allocated to each job to ensure continuity of contact.

[19] Mr Wathen and Mr Attalla gave evidence that the change in focus from merchandising in Coles and Woolworths to sales and account management in the independent businesses had also occurred in Queensland. They gave evidence that the effective influence that could be achieved in Coles and Woolworths stores had declined over time. However, there continued to be two merchandiser jobs in NSW similar to the roles held by the Applicants. Mr Wathen gave evidence that the reasons for the change were explained at the meetings with the Applicants. The Applicants deny that the reasons were explained. The statements of Mr Wathen and Mr Attalla do not detail the reasons but include the statement that the Applicants were told the reasons.

[20] Mr Attalla described the selection process as follows:

“I undertook the selection process of who was to be offered re deployment and or redundancy. To this end I completed the Selection Criteria matrix on the three Merchandisers in Victoria. Later that day I telephoned the two effected staff in Maureen Dixon and Suzanne McCarthy, asking them to attend a meeting...” 1

[21] During the proceedings it became quite unclear as to what the selection criteria were. At one point it was suggested that it was about suitability for the new role. It was not about suitability to continue in the remaining Merchandiser role as it was not suggested that the third Merchandiser was ever considered for redeployment or redundancy. It was suggested that because the demand to increase focus on the independent stores was greatest in the South East of Melbourne and the Applicants work was focused on that region that was the reason why the Applicants were selected. It was put to Mr Wathen that if the third Merchandiser was judged the superior employee then why wasn’t she selected for the new role and why would the Applicants realistically think that they had a chance for that role given that they were not seen as the best performers. Mr Attallar confirmed that the third Merchandiser continues to do at least some work in Coles and Woolworths stores. Mr Wathen confirmed that the third Merchandiser was not selected for the new role and Mr Wathen did not know if she was considered for that role or not. He confirmed that that the third Merchandiser was considered a superior performer.

The threshold issue - genuine redundancy.

[22] The threshold issue is whether or not the dismissals were genuine redundancies. Section 385(d) of the Act provides that if I am satisfied that the dismissals are genuine redundancies then they cannot be unfair dismissals. Genuine redundancy is defined as follows by the Act:

“389 Meaning of genuine redundancy

(1) A persons 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.”

Operational Requirements.

[23] The third merchandiser job in Victoria is not relevant. That job has not been affected by the restructure and was not considered as part of the restructure despite the earlier Statement of Mr Attalla. I am satisfied that there was no selection process and that it was simply a matter of the Respondent deciding to make the jobs of the Applicants redundant because Mr Attalla wanted to make some changes to the duties they performed.

[24] The jobs performed by the Applicants are no longer required to be performed. There is one job where there used to be two. The total hours are 4 hours per week different. There are some changes in the duties of the new job compared to the old jobs. There is a stronger focus on sales, a lesser focus on merchandising in Coles and Woolworths and a focus on account management.

[25] However, it is less clear that this is because of changes in the operations requirements of the employer’s enterprise. The evidence supports a conclusion that there has been an evolutionary change in the work requirements. In some parts of the business this is being achieved through changes to the role of the existing employee. The third Merchandiser in Victoria has not been made redundant but she does not focus 90% plus of her time in Coles and Woolworths. Similar jobs to the Applicants’ jobs have not been made redundant in NSW. It is not clear that the shift to one job with longer hours rather than two jobs is driven by operational reasons. The only reason given was the need for continuity of contact with head offices. The managers did not explain why this could not be achieved if there was job sharing.

[26] I was not satisfied by the evidence that there had been a selection process for redundancy against identifiable criteria. This increased my doubts that the abolition of the Applicants’ jobs were for operational reasons.

[27] There were no concerns raised about the conduct and/or performance of the Applicants. I was satisfied by the evidence that the Applicants had the necessary sales skills and experience to adjust to the changed focus on independent stores and on sales and that with appropriate support and training they could take on the desired increased account management functions.

[28] It is possible to see the situation as one where there has been a relabeling of the job performed by the Applicants and a desire to achieve evolutionary change in the roles and the focus of the roles. There has been no significant change in the number of employee hours devoted to the sales and related functions of the Respondent in Victoria.

[29] The Respondent has not produced strong and consistent evidence that the redundancies are for operational reasons.

[30] I accept that there are operational reasons for changes to the sales and related roles in Victoria. I have doubts that these undoubted operational changes are the reason for making the Applicants’ jobs redundant as opposed to reprioritising their duties. However, although it might be possible to achieve the operational objectives without the redundancies I cannot dismiss the evidence of the managers that they made a decision that this is the appropriate way to achieve those objectives. There was no strong evidence, only suspicions, that this option was adopted for reasons other than operational reasons. It is also possible that the small reduction in total hours is for operational reasons. There was no evidence which established this one way or another. If this had been established it would show that the jobs were no longer required to be performed for operational reasons. It is also possible with appropriate evidence that the rationale for a single job rather than a shared job could also be established.

[31] It is a fine balance. However, I am satisfied that the positions are no longer required to be performed by anyone for operational reasons. The condition set out in Section 389(1)(a) is met.

Did the employer comply with any obligation to consult?

[32] Clause 8 of the Award provides as follows:

“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.”

[33] I am satisfied that the change is one which meets the requirements in Clause 8.1.

[34] I am not satisfied that the Applicants were provided with a genuine opportunity to influence the decision maker to consider alternatives which would avert the adverse effects; that is, to avoid the positions being made redundant. Mr Wathen conceded that the concept of the Applicants sharing the position was a good suggestion which would have been seriously considered had it been made. Having considered the evidence I am satisfied that the Applicants could probably have done the new job subject to some initial training and support in respect to the account management aspects. It is clear therefore that there were alternatives to redundancy which could have been considered. Having considered all the evidence I am not satisfied that the Applicants were asked to make suggestions or that there was any openness to discuss alternatives to the positions being redundant. In my view the evidence supports a conclusion that the purpose of the meetings was to inform the Applicants of the decision which had been made, to explain the new job role which was being created, and to provide the Applicants with the choice of a redundancy payment or the opportunity to apply for the new role.

[35] The Applicants were provided with an opportunity to consider applying for a new role but they were not guaranteed of the role if they expressed an interest. I found the evidence of the Applicants to be more consistent and convincing than the evidence of Mr Wathen and Mr Attalla concerning the extent to which the meeting was an opportunity for consideration of alternatives to the jobs being made redundant and concerning the extent of questioning and discussion at the meeting. I consider that the letter dated 25 June which was provided to the Applicants in the meetings accurately describes the purpose of the meeting and the options presented at the meeting except that the option “be redeployed to Head Office in Ferntree Gully should a suitable position arise” was more accurately presented in the meeting as “apply for and be considered for a position at Head Office in Ferntree Gully should a suitable position arise.”

[36] I am not satisfied that the Applicants were provided in writing with all relevant information about the changes for the purposes of the discussion. During the discussion the Applicants were provided with the letter dated 25 June 2013 but an opportunity was not provided for a subsequent discussion rather it was provided as the conclusion of the discussion. The consideration available after that time was confined to selection between the options set out in the letter and possible support in the event that the Applicant accepted redundancy payment.

[37] I accept the evidence of Mr Wathen and Mr Attalla that they provided fairly detailed information about the nature of the new position with a particular emphasis on the independent stores and the account management aspects of the role. In a sense this description would have given the Applicants some insight into the rationale for the change in that the new role was an exemplar of the nature of the changed emphasis sought by the business. However, I accept the evidence of the Applicants that Mr Wathen and Mr Attalla did not provide a detailed explanation of the rationale for the change. The letter dated 25 June 2013 again supports this conclusion.

[38] It is important to observe that Mr Wathen and Mr Attalla genuinely believed that they were meeting the requirements in respect to consultation and redeployment. Unfortunately, they fundamentally misunderstood their obligations. They failed to appreciate that the context in which issues are put to persons who face redundancy makes a big difference. Employees in these situations often feel shocked, distressed, powerless, angry, and or undervalued. They may not be in a position to clearly absorb and consider what is put to them in a meeting. Their initial responses may not be a reliable indication of their considered and informed views. In these circumstances it is essential that they be given clear information in writing and that they have time to respond. It is also essential that they be actively encouraged to make alternative proposals to the proposed changes in a context where they are aware of the rationale and objectives of the proposed changes. Part of the consultation should include achieving accurate and comprehensive information about an employee’s skills and experience and their views about retraining and redeployment options. They should also be asked to contribute to and comment upon the options for redeployment. Of course it is reasonable for an employer to assess the suitability of an employee for redeployment options providing it is an informed assessment. This is however fundamentally different from advising an employee that they are required to apply for a job in possible competition with others who do not face the prospect of redundancy.

[39] It is possible that one or both of the Applicants may have refused redeployment if it had been offered to them or that they may have been assessed as unsuitable for a particular redeployment possibility. It is also possible that the alternative to redundancy; the reprioritising of the duties of the current jobs combined with appropriate support and training may have proved inappropriate upon closer assessment by the employer. However, the Award and legislative requirements are to enable such options to be appropriately considered. This did not occur.

[40] I have no hesitation in concluding that the requirements of Section 389(1)(b) have not been met.

Would it have been reasonable in all the circumstances for the Applicant to be redeployed within the employer’s enterprise?

[41] The Full Bench in Ulan Coal Mines Limited v Honeysett and others 2 set out how Section 389(2) should be approached:

“[26] First, s.389(2) must be seen in its full context. It only applies when there has been a dismissal. An employee seeking a remedy for unfair dismissal cannot succeed if the dismissal was a genuine redundancy. In other words, if the dismissal is a case of genuine redundancy the employer has a complete defence to the application. Section 389(2) places a limitation on the employer’s capacity to mount such a defence. The defence is not available if it would have been reasonable to redeploy the employee. The exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances.

[27] Secondly, it is implicit in the terms of s.389(2)(b) that it might be reasonable for an employee dismissed by one employer to be redeployed within the establishment of another employer which is an entity associated with the first employer. It follows that an employer cannot succeed in a submission that redeployment would not have been reasonable merely because it would have involved redeployment to an associated entity. Whether such redeployment would have been reasonable will depend on the circumstances. The degree of managerial integration between the different entities is likely to be a relevant consideration.

[28] Thirdly, the question posed by s.389(2), whether redeployment would have been reasonable, is to be applied at the time of the dismissal. If an employee dismissed for redundancy obtains employment within an associated entity of the employer some time after the termination, that fact may be relevant in deciding whether redeployment would have been reasonable. But it is not determinative. The question remains whether redeployment within the employer’s enterprise or the enterprise of an associated entity would have been reasonable at the time of dismissal. In answering that question a number of matters are capable of being relevant. They include the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job in relation to the employee’s residence and the remuneration which is offered.” 3

[42] The Full Bench considered what may be relevant in considering whether or not redeployment would be reasonable:

“[34] It may be appropriate to make some concluding remarks about the operation of s.389(2). It is an essential part of the concept of redeployment under s.389(2)(a) that a redundant employee be placed in another job in the employer’s enterprise as an alternative to termination of employment. Of course the job must be suitable, in the sense that the employee should have the skills and competence required to perform it to the required standard either immediately or with a reasonable period of retraining. Other considerations may be relevant such as the location of the job and the remuneration attaching to it. Where an employer decides that, rather than fill a vacancy by redeploying an employee into a suitable job in its own enterprise, it will advertise the vacancy and require the employee to compete with other applicants, it might subsequently be found that the resulting dismissal is not a case of genuine redundancy. This is because it would have been reasonable to redeploy the employee into the vacancy. In such a case the exception in s.385(d) would not apply and the dismissed employee would have the opportunity to have their application for a remedy heard. The outcome of that application would depend upon a number of other considerations.” 4

[43] I accept the Applicants’ evidence and submission that they were not offered redeployment to the new job role or to a role in the factory. There were no available roles in the factory being offered and if one arose the Applicants were required to apply for it. No positions were offered after the meeting and before the termination took effect. The Applicants were not being offered redeployment to the new role but rather an opportunity to apply for the job.

[44] The letter of 25 June 2013 states that the Applicants could elect to:

“Apply and be successful in securing the new position of Sales Support Representative” or “Apply for this position and if unsuccessful - redundancy payment will apply”.”

[45] As the Ulan Full Bench found if it would have been reasonable to redeploy the Applicants into the vacancy then the exemption in Section 385(d) would not apply. I am satisfied based upon the evidence that it would have been reasonable to redeploy either or both of the Applicants into the new role. They had the necessary skills and experience, there were no issues of conduct or performance and the gap in the area of account management could have been filled by reasonable training and support given the extensive experience of the Applicants.

[46] I am also satisfied that had redeployment to a position in Head Office or the factory been offered it may have been accepted by one or both of the Applicants. I am satisfied that it was reasonable to assume that such a position may have been identified during an appropriate consultation period.

[47] The exemption in Section 389(2)(a) applies in the circumstances of this case.

Conclusion regarding the threshold issue - genuine redundancy

[48] The terminations in this case are not genuine redundancies for the reasons outlined earlier.

Was the termination unfair?

[49] The legislation requires me to consider the following matters in a situation where the small business code does not apply:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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 FWA considers relevant.

Was there a valid reason? (s.387(a))

[50] The termination was a redundancy but not a genuine redundancy.

[51] The Full Bench in UES (Int'l) Pty Ltd v Ball 5 looked at the issue of redundancy and valid reason for dismissal:

“[42] As we have already indicated, in our view the reasons for the dismissal of Mr Ball 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 Ball’s dismissal was harsh, unjust or unreasonable.”

[52] In my view the Applicants in this case were not dismissed for reasons related to their capacity or conduct. In this case the Applicants’ position may have been redundant. However, it is not a genuine redundancy due to the failure to consult and to redeploy.

[53] In this situation there was no valid reason for the termination related to capacity or conduct. In the circumstances of this case it is a neutral matter with respect to my consideration as to whether the Applicants’ dismissals were harsh, unjust or unreasonable.

Notification and opportunity to respond (ss.387(b) and (c))

[54] The matters in Section 387(b) and (c) of the Act deal with whether there was procedural fairness in respect of a reason for dismissal related to the Applicants’ capacity or conduct. As a matter of fact the Applicants were not notified of or given an opportunity to respond to a reason for their dismissal related to their capacity or conduct. However given the reasons for the dismissals, I regard them as neutral matters with respect to my consideration as to whether the dismissals were harsh, unjust or unreasonable.

Support person (s.387(d))

[55] The Respondent did not advise the Applicants that they could have a support person at the meeting where they were advised of the redundancy. However, they did not prevent a support person being present. The Applicants were aware that the meetings concerned restructuring and might affect their income. I regard this as a neutral matter with respect to my consideration as to whether the dismissals were harsh, unjust or unreasonable.

Unsatisfactory performance (s.387(e))

[56] The dismissals did not relate to unsatisfactory performance, so this matter is not relevant to my consideration and I regard it as a neutral matter as to whether the dismissals were harsh, unjust or unreasonable.

Size of the enterprise and human resource management (s.387(f) and (g))

[57] The Respondent is a medium sized organisation of approximately 140 employees and Mr Wathen, who appeared, is the human resources manager. I regard the requirement to consult about redundancy to be a common sense matter. In other words a reasonable person would not generally regard a termination for reasons of redundancy to be fair in the absence of consultation about the reasons and an opportunity to consider alternatives and measures in mitigation. I therefore do not regard the size of business or the absence of expertise as affecting the lack of consultation. In these particular circumstances I do not regard this as a factor in favour of a finding that the dismissals were fair.

Other matters (s.387(h))

[58] The Respondent failed to consult with the Applicants as required by the consultation clause in the Award. I am also satisfied that it would have been reasonable in all of the circumstances to offer to redeploy the Applicants.

[59] In the circumstances of this case these two matters stand strongly in favour of a conclusion that the termination was unjust and unreasonable.

[60] There were sound, defensible and well-founded reasons for changes to the sales and related roles in Victoria including the positions occupied by the Applicants. This provided a sound operational reason for reprioritising the duties of those working in the sales and related roles. However, the evidence before me did not enable me to easily determine whether or not the jobs had been made redundant for operational reasons. On balance I accepted that this was the case. This factor stands against a finding that the termination was unjust and unreasonable.

Conclusion regarding harsh, unjust or unreasonable

[61] Taking into account the matters referred to above, I am satisfied that the termination of the Applicants by the Respondent was unjust and unreasonable. The failure to consult and redeploy was unreasonable and unjust, notwithstanding that there may have been a valid reason for the dismissals. Namely the fact that the jobs were no longer required to be performed in their current form, and the due weight I have given to that valid reason.

Remedy

[62] The Applicants do not seek reinstatement. The Applicants submit that they have lost trust in the Respondent. The Respondent submits that suitable positions are no longer available.

[63] In all of the circumstances I consider that reinstatement would be inappropriate. I consider that an order for compensation would be appropriate in the circumstances of these cases.

[64] In considering compensation I am required by Section 392(2) to consider the following:

“(2) In determining an amount for the purposes of an order under subsection (1), FWA must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that FWA considers relevant.”

[65] In considering these matters I have not included a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

[66] Nothing was put to me that satisfied me that any order I might make would affect the viability of the enterprise. I take into account the size of the enterprise and the evidence that there has been no significant change in the number of employees engaged in the period immediately prior to and subsequent to the termination of the Applicants.

[67] The length of service with the employer of approximately four years in each case is a neutral factor in this case. It does not suggest that any reduction in compensation would be appropriate for this reason. The significant length of service is a factor which makes it likely that there would have been a longer period of continuing employment but for the terminations.

[68] The evidence and uncontested submissions established that both of the Applicants have made adequate efforts to mitigate their loss and find alternative employment and I make no deduction on this account. Ms McCarthy has not found additional alternative employment but Ms Dixon has found additional alternative casual employment on and from 23 September 2013.

[69] I have also made no deduction for misconduct of the Applicants as I do not consider that any misconduct has been established.

[70] Both the Applicants were employed part time and had another part time job with a separate employer whilst they were employed by the Respondent. Both Applicants have retained this other part time job. The hours of work and the pay in that other job have not changed since the termination. It is not appropriate to take into account the earnings from those pre-existing part time jobs. Ms McCarthy has not earned anything further from employment since the termination. Ms Dixon has worked an average of 13 hours per week for eight weeks at $22.50 per hour in her new job since 23 September 2013. She did not work for three weeks in that period. The total earnings to be taken into account is $2340.

[71] The period between the making of the order for compensation and the actual compensation will be fourteen days. Ms Dixon can be expected to earn $585 from new employment during that period. Ms McCarthy is not likely to earn anything from new employment during that period.

[72] I consider that if the Applicants had not been dismissed they would have been employed for a period of a further twelve months. In making this assessment I take into account the evidence about the state of the business and the business climate, the period they had already been employed, the reasonable likelihood of alternative to redundancy being found, the reasonable likelihood of successful redeployment and the lack of any issues concerning conduct or performance. In estimating the earnings I do not include the car allowance as there is no evidence before me that this is for personal use of the vehicle. If the allowance is for use of the vehicle during work it is of the nature of a reimbursement of expenses. The gross earnings are therefore $360 per week plus superannuation of $33.30 making a total of $393.30 per week. The total earnings for twelve months is therefore $20,451.60.

[73] The Applicants received seven weeks redundancy payment of $2753.10. This should also be taken into account. Payment of other entitlements should not be taken into account.

[74] I consider that I should deduct a contingency of 40% because there is some uncertainty surrounding my estimate as to whether or not an alternative to redundancy would have been found and/or whether or not the Applicants would have accepted redeployment. In the circumstances of this case the contingency applies to both the period between the termination and the making of the order and the period subsequent to it. I do not consider that the increased uncertainty in estimating likely earnings in the period after the hearing materially affects this. The contingency for the period prior to the hearing is somewhat less than 40% and the period after the hearing is somewhat greater than 40% but it would not materially affect the outcome. The total earnings for twelve months less the 40% contingency is $12,270.96. The six month compensation cap is $10,225.80.

[75] The compensation in respect to Ms McCarthy is therefore $12,270.96 less $2753.10. This leaves a compensation amount of $9517.86. The compensation in respect to Ms Dixon is therefore $12,270.96 less $2753.10 less $585 less $2340. This leaves a compensation amount of $7300.80.

[76] Orders will be issued requiring the payment of this compensation less appropriate taxation within 14 days. Two separate Orders will be issued one in respect of each of the Applicants. I will provide the Respondent with liberty to apply to vary the time period.

COMMISSIONER

Appearances:

Mr G Dircks appeared for the Applicants.

Mr G Wathen and Mr Amir Attaar appeared for the Respondent.

Hearing details:

2013

Melbourne

December 6

 1   Exhibit N4, at paras 2 and 3.

 2   [2010] FWAFB 7578.

 3   [2010] FWAFB 7578, at paras 26 to 28

 4   [2010] FWAFB 7578, at para 34.

 5   [2012] FWAFB 5241.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR545568>