Ms Erika Laudeman v John Crane Australia Pty Ltd

[2016] FWC 3157

[2016] FWC 3157

FAIR WORK COMMISSION

DECISION

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

Ms Erika Laudeman
v
John Crane Australia Pty Ltd
(U2015/15701)

DEPUTY PRESIDENT BULL SYDNEY, 20 MAY 2016

Application for relief from unfair dismissal - jurisdictional objection – genuine redundancy – jurisdictional objection upheld – application dismissed.

[1] In this matter the applicant, Ms Erica Laudeman, claims she has been unfairly dismissed from employment with John Crane Australia Pty Ltd (John Crane). Ms Laudeman’s employment ended on 30 November 2015. Ms Laudeman had not obtained alternative employment since her termination, which she attributes to a restraint of trade clause in her employment contract.

[2] The employer claims that there can be no unfair dismissal as Ms Laudeman’s employment ended by way of a genuine redundancy, which pursuant to the various provisions of the Fair Work Act 2009 (the Act) provides a complete defence to a claim of unfair dismissal. The matter proceeded on the basis that the jurisdictional objection would be dealt with in the first instance and only if unsuccessful would the merits of the unfair dismissal claim be dealt with.

[3] Mr Hardy, a solicitor from Baker & McKenzie sought leave to appear on behalf of the respondent on the basis that the jurisdictional objection had a degree of complexity and that one of the respondent’s key witnesses, Mr Bolle, the Senior HR Manager Delivery Lead ANZ, would otherwise be required to conduct the advocacy with there being no other suitable employee employed by the respondent to undertake this task.

[4] Ms Laudeman opposed the respondent’s use of a solicitor on the basis that the matter was not complicated and that she would be disadvantaged if the respondent was able to engage a solicitor. Ms Laudeman was of the view that the jurisdictional issue could be dealt with quickly.

[5] The application and material filed by both parties’ contained detailed statements together with a significant amount of supporting documentation demonstrating that the jurisdictional issue is far from a straightforward matter. Further, the applicant’s application and submissions demonstrates that she has an adequate grasp of the issues required to be dealt with.

[6] I was satisfied that the issues raised by the parties have a degree of complexity which would be more efficiently dealt with by the use of a solicitor. Having regard for documentation presented by the applicant to date, I was also satisfied that Ms Laudeman was able to represent herself effectively.

[7] Where a key witness is also required to be an advocate, it is preferable in my view, where possible, that they undertake only one of these roles. 1 Having considered what was put by both parties, permission for the respondent to be represented by a solicitor was granted as per s.596(2)(a) of the Act.

Background

[8] John Crane manufactures and supplies engineering sealing systems, solutions and associated products to a variety of industries. Ms Laudeman commenced employment in the position of Strategic Technical Sales in January 2007. In 2009 Ms Laudeman was requested to perform work as a Reliability Engineer at the Kurnell Caltex refinery in New South Wales. Reliability Engineers are provided at customers’ workplaces to ensure John Crane’s products are appropriately used, serviced and maintained during a supply and service contract. In July 2012, Caltex advised that it would be closing its Kurnell site, at which time Ms Laudeman was also advised that this work would come to an end.

[9] Following the final closure of the site in late 2014, the respondent ensured over a period of 3 months that the appropriate demobilisation work was completed. At the end of 2014, John Crane reviewed Ms Laudeman’s role to determine whether there were any further opportunities for her as a Reliability Engineer within its business. An opportunity at a company known as Refining New Zealand (NZ) located in Whangarei NZ arose during this period.

[10] The applicant was offered and accepted the assignment to Refining NZ for a period of six months commencing in March 2015. At the conclusion of the six month period, John Crane considered other possible employment opportunities for Ms Laudeman including whether she wished to stay for a longer period in NZ, however, this was not suitable to her requirements.

[11] Ms Laudeman returned to Sydney and following a number of discussions it was concluded that there was no position available for her and she was made redundant with the payment of 14 weeks redundancy pay, plus all accrued entitlements. Ms Laudeman’s final pay was a gross figure of $102,659.71. 2

Submissions of the Applicant

[12] Ms Laudeman gave evidence on her own behalf and called no witnesses in support of her application.

[13] Ms Laudeman acknowledges that she was advised that her position was identified as a Reliability Engineer and that it had become redundant following a management review in August 2015. Ms Laudeman states that her actual position was that of Strategic Technical Sales as this was the position stated on her 2007 employment contract. She had not received any written advice advising that her position had changed. This was supported by her monthly payslips which referred to her position as Strategic Technical Sales.

[14] On 10 August 2015 Ms Laudeman send an email to an Andrew Nicolin the respondent’s Reliability Engineering Manager stating that she could not extend her temporary assignment and stay in NZ. On return from her temporary assignment to NZ she understood that she would return to the position of Strategic Technical Sales as the temporary contract advice letter referred to her continuing to perform work in Australia in accordance with her contract at the end of her temporary assignment in NZ.

[15] Ms Laudeman submitted that the search for an alternative position was not genuinely undertaken by John Crane and that she had been promised a position of Strategic Technical Sales on return from NZ. Ms Laudeman also submitted that the required consultation was conducted in a perfunctory manner. She was advised that the position of Reliability Engineer was to be made redundant due to a business review and the earlier closure of Caltex at Kurnell, which in her submission was irrelevant as the Caltex Kurnell site closed in October 2014, 11 months before the consultation took place.

[16] Ms Laudeman argued that the two redeployment opportunities put forward by John Crane were not suited to her skills and experience and suggested that the employer was not serious about continuing to employ her.

[17] Ms Laudeman also submitted that the consultation process was not correctly followed as she was not advised that her redundancy would result in her not being eligible for consideration of a bonus payment.

[18] In cross examination Ms Laudeman conceded that on return from NZ there were no positions either as a Reliability Engineer or a Strategic Technical Sales position or any other suitable position for her skills and experience within the business of John Crane and its associated entities.

Submissions of the Respondent

[19] The respondent states that on 17 September 2015, Ms Laudeman was notified that her position as Reliability Engineer was redundant. As per the applicant’s employment contract Ms Laudeman was provided with three months’ notice which would have resulted in her last day of employment being 16 December 2015. Prior to the notification, the employer met and consulted with Ms Laudeman. John Crane considered whether there were suitable alternative positions available, and unfortunately this exercise did not identify any suitable alternative positions. As a consequence, the applicant’s redundancy was confirmed.

[20] On 25 November 2015, the respondent advised the applicant by email that her employment would cease on 30 November 2015 as her replacement in NZ had arrived and she would be paid out in lieu for the remaining period of notice.

[21] The employer submitted that the applicant’s position was no longer required to be performed by the applicant or anybody else and this continues to be the position.

[22] In support of its defence that the termination was the result of a genuine redundancy the employer called Mr Bolle the Senior HR Manager Delivery Lead ANZ and Mr Coulston the General Manager Oceania. Both witnesses gave evidence of the process involving the identification of the applicant for redundancy and the process of consultation that occurred once that decision had been made. Both witnesses were cross-examined by the applicant.

[23] The respondent submitted that the search for an alternative position for Ms Laudeman was genuine, despite no suitable position having been identified. It was denied that the respondent had ever promised the applicant a position of Strategic Technical Sales following her temporary assignment in NZ as alleged by the applicant. The respondent stated that the position of Strategic Technical Sales has not existed at least since 2009.

[24] It was the respondent’s position that Ms Laudeman’s role had changed to that of Reliability Engineer in August 2009 and had been since that date. This is said to be evidenced by the applicant working as a Reliability Engineer for Caltex at its Kurnell NSW refinery and subsequently as a Reliability Engineer at Refining NZ.

[25] In respect to the applicant’s pay slips stating her position as Strategic Technical Sales, this was an oversight that had occurred for a number of other positions within the company where incorrect titles had remained on payslips.

[26] The employer produced a number of documents that confirmed that the applicant’s position was that of Reliability Engineer had been since her employment at the Caltex site in Kurnell NSW. One such document was the applicant’s 2013/14 Performance Self Evaluation form where Ms Laudeman describes her position as a Reliability Engineer as ending on 31 August 2014 and that a new role had not been determined. She describes as a Goal/Action – “transitioning from a Reliability Engineering role to a new role to be determined”. Ms Laudeman’s new role became Reliability Engineer on a temporary basis located in NZ. 3

[27] During December 2014, John Crane offered Ms Laudeman the position of Reliability Engineer on a permanent basis in NZ to which Ms Laudeman responded that she may be interested in a temporary assignment as a Reliability Engineer to NZ. A temporary position of 12 months was offered, however Ms Laudeman requested a period of six months only. 4 The temporary assignment commenced on 3 March 2015 and was due to finish on 3 September 2015. During this period Ms Laudeman was asked whether she wished to stay in NZ at the conclusion of the temporary assignment, which she declined.

[28] The temporary assignment was reflected in correspondence to Ms Laudeman from Mr Coulston dated 19 February 2015. The correspondence stated that at the completion of the temporary assignment and in the event that John Crane is unable to provide ongoing employment in accordance with her contract, John Crane would seek to find suitable alternative employment within its business or associated entity in Australia. 5

[29] As Ms Laudeman’s temporary contract in NZ was to conclude on 3 September 2015, the employer conducted a review of its business structure and needs during August 2015 and concluded, given the current economic climate, that on return from NZ, Ms Laudeman’s position could not be absorbed, as it would no longer be a cost recovery position.

[30] When Ms Laudeman returned to Sydney and following a period of annual leave, John Crane commenced consultation with Ms Laudeman in respect to the decision to make the position of Reliability Engineer redundant. Meetings were conducted on 15 and 17 September 2015, at which Ms Laudeman was invited to attend with a support person.

[31] Following the consultation meeting on 15 September 2015, John Crane issued Ms Laudeman with an email and summary document setting out the details of what was discussed and details of vacancies within the organisation. The email was sent at the request of Ms Laudeman and provided details of an approximate amount payable to Ms Laudeman should the redundancy proceed. During the 15 September 2015, meeting Ms Laudeman sought to be placed in her pre-2009 role of Strategic Technical Sales and was advised there were no Strategic Technical Sales roles available within the business as that role had changed to Reliability Engineer during the 2008/09 year.

[32] At the 17 September 2015, consultation meeting Ms Laudeman was informed that the position of Reliability Engineer was to be made redundant as there were no customer sites to redeploy her into. Ms Laudeman advised John Crane that she had no feedback to provide in regard to their conclusion. 6

[33] On 17 September 2015, Ms Laudeman was provided with three months’ notice of termination during which she would be required to continue to work. Ms Laudeman was requested to perform ad hoc work in NZ prior to her replacement commencing employment, to which she agreed. During the notice period John Crane continued to review its organisational structure regarding any possible redeployment opportunities for Ms Laudeman.

[34] Once Ms Laudeman’s replacement arrived in NZ it was clear there were no further tasks which she could be provided with and her remaining notice period was paid out.

[35] John Crane submits that the position of Reliability Engineer or any role of Strategic Technical Sales has not been filled since Ms Laudeman’s redundancy. John Crane submits that the provisions of the Act in respect of genuine redundancy have been met and that the applicant’s unfair dismissal application must be dismissed as it is without jurisdiction.

Relevant Legislation

[36] In considering the respondent's jurisdictional objection it is first necessary to examine the relevant legislation. Section 394(1) the Act provides that a person who has been dismissed may apply to the Fair Work Commission (the Commission) for an order granting a remedy under Part 3-2 - Unfair Dismissal, Division 4 - Remedies for unfair dismissal.

[37] Section 385 of the Act provides a definition of what an unfair dismissal is:

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

and relevantly in this case:

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

(My emphasis)

[38] Section 396 requires the Commission to decide a number of threshold matters before considering the merits of an application for unfair dismissal. The relevant matter in this case is found at s.396 which states:

“Section 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:

...

(d) whether the dismissal was a case of genuine redundancy.”

[39] Section 389 of the Act sets out the meaning of “genuine redundancy” which is wider than simply whether the employee's job is no longer required. Section 389(1) states:

“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.”

(My emphasis)

[40] The reference at s.389(1)(b) is to whether the employer has complied with any obligation to “consult” about the redundancy as opposed to any other obligation under a modern award in relation to redundancy i.e. Job Search Entitlement, which the applicant states she did not receive.

[41] Section 389(2) of the Act goes on to say:

“(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.”

[42] The combined effect of these provisions is that if a dismissal is a result of a genuine redundancy which is what is put by the John Crane, then the Commission need not determine and does not have jurisdiction to determine whether the dismissal was harsh, unjust or unreasonable (see UES (Int’L) Pty Ltd v Harvey). 7

[43] The parties submitted that the Professional Employees Award 2010 (the Award) applies to the Applicant. Like other modern awards, it prescribes employer obligations to consult employees who the employer has decided to terminate due to redundancy. These requirements are found at clause 9 of the Award and are in the following form.

“9 Consultation

9.1 Consultation regarding major workplace change

(a) Employer to notify

(i) 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.

(ii) 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.

(b) Employer to discuss change

(i) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 9.1(a), 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.

(ii) 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 9.1(a).

(iii) 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.”

Conclusion

[44] It is noted that if accepting the Applicant’s argument that her position at the time of termination was “Strategic Technical Sales” and not “Reliability Engineer” the Professional Employees Award 2010 may not be the appropriate modern award.

[45] The Award obligations in respect to consultation can be summarised as being to:

● discuss with the applicant the changes and their effect;
● discuss with the applicant measures to avert or mitigate the adverse effects of such changes; and,
● provide in writing to the applicant all relevant information about the changes, including the nature of the changes proposed, the expected effects of the changes on the applicant and any other matters likely to affect the applicant prior to making the decision to terminate her employment.

[46] In my view the evidence demonstrates a bona fide opportunity was provided to Ms Laudeman to influence John Crane’s decision making process following the review it had undertaken.

[47] The respondent met and conferred with Ms Laudeman:

● when advised that the Caltex Kurnell site was to close it held discussions about her future employment opportunities; 8
● on 15 and 17 September 2015 to discuss redeployment opportunities and any suggestions from Ms Laudeman on how to minimise the adverse effects of a redundancy following the end of her temporary assignment in NZ; and,
● provided written advice about relevant information concerning the redundancy.

[48] Mr Bolle and Mr Coulston's evidence was that the Applicant was provided with every opportunity to respond to any matters in relation to the proposed redundancy and that it had made every effort to minimise, avert or mitigate the adverse effects of the redundancy.

[49] John Crane considered what was put by Ms Laudeman and made a decision, while unfavourable to Ms Laudeman’s interests, it did not diminish the fact that the consultation process required to be undertaken had occurred. There was nothing perfunctory about the consultation process undertaken by the employer.

[50] The evidence in my view clearly demonstrates that the employer has:

● notified Ms Laudeman as soon as practicable of the decision to make her position redundant;
● conducted discussions with Ms Laudeman which it commenced as soon as practicable following its decision;
● provided in writing the relevant information to Ms Laudeman;
● undertaken activities to avoid, minimise or mitigate the adverse effects of the redundancy on Ms Laudeman; and,
● concluded it was not reasonable, to redeploy Ms Laudeman elsewhere in the business or an associated entity.

[51] Much of Ms Laudeman’s argument related to maintaining that her initial position of Strategic Technical Sales had not been made redundant but rather, that the position of Reliability Engineer had been made redundant which she did not occupy.

[52] While I do not accept this to be the case as the evidence clearly demonstrates that Ms Laudeman’s position had converted from Strategic Technical Sales to Reliability Engineer since 2009, the applicant’s argument if accepted, does not advance her case. The evidence also demonstrated that there was no longer a position of Strategic Technical Sales in existence in the employer’s business. This much was conceded by Ms Laudeman in cross-examination.

[53] Ms Laudeman also argued that there was some form of conspiracy to terminate her employment. Unfortunately, little of this was put to the respondent’s witnesses in cross-examination and there was no evidence to suggest that the redundancy was anything other than a genuine exercise.

[54] I do not accept, as submitted by Ms Laudeman, that the consultation process was flawed as she was not advised that she would no longer be eligible for the bonus scheme due to her notice of redundancy having been given. The bonus scheme is entirely at the discretion of the employer and its eligibility criteria are made known to all employees. 9

[55] Had I found that John Crane had not met its consultation obligations under the Award, it would not have automatically followed that the termination was unfair. Although this point was not argued in full before the Commission and no decision is required to be made, the comments of the Watson VP in Maswan, v Escada Textilvertrieb T/A ESCADA 10, at [39] are noted:

“[39] In my view a decision to dismiss on account of redundancy will only be harsh, unjust or unreasonable if the rationale for the decision is seriously undermined or if there is a serious error in procedure such that renders the termination unfair in the circumstances. Here the decision appears open to the employer to make. The failure to consult is not a trivial matter. But as it is clear that consultation was highly unlikely to have negated the operational reasons for the dismissal or lead to any other substantive change, I do not believe that the failure to consult prior to the date of termination rendered the dismissal unfair. Given the evidence in relation to the operational need to restructure, I am of the view that it is likely that Mr Maswan would have been dismissed in any event, even if timely consultation had occurred.”

[56] In all respects the requirements of s.389 of the Act were met by John Crane and as such, a complete defence to the claim of unfair dismissal has been made out. Based on this conclusion, I am not required or able to consider the substantive application under s.387, as the termination is a genuine redundancy pursuant to s.389 of the Act and thus the termination is excluded from the Act’s definition of an unfair dismissal.

[57] The application is dismissed for want of jurisdiction.

DEPUTY PRESIDENT

Appearances:

Ms E. Laudeman, on her own behalf.

Mr S. Hardy, Solicitor for the Respondent.

Hearing details:

Sydney.

2016,

16 May.

 1   This was not available to the applicant who represented herself

 2   DP31 of Exhibit R3

 3   Exhibit R15

 4   Exhibit R2 Witness Statement of Mr. Coulston 21 March 2016 at [27]

 5   Exhibit R3 Witness Statement of Mr Bolle 21 March 2016 at DB20

 6   See Mr. Bolle’s witness statement Exhibit R3 at [69]

 7   [2012] FWAFB 5241

 8  Exhibit R2 Witness statement of Mr. Coulston 21 March 2016 at [17]

 9   See exhibits R9 and R10

 10   [2011] FWA 4239.

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