Ms Kym Ireland v Capricornia Newspapers Pty Ltd T/A the Morning Bulletin Rockhampton

[2015] FWC 6565

[2015] FWC 6565

FAIR WORK COMMISSION

DECISION

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

Ms Kym Ireland
v
Capricornia Newspapers Pty Ltd T/A The Morning Bulletin - Rockhampton
(U2015/35)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 25 SEPTEMBER 2015

Summary: application for relief – unfair dismissal alleged – cost reduction/savings – sound, defensible reasons for dismissal arising from operational change.

[1] This decision concerns an application by Ms Kym Marie Ireland under s.394 of the Fair Work Act 2009 (“the Act”). Ms Ireland seeks an unfair dismissal remedy in relation to her dismissal from Capricornia Newspapers Pty Ltd T/A The Morning Bulletin - Rockhampton (“the Company”) (part of the Australian Regional Media group) on 12 December 2014.

[2] The Company contends that Ms Ireland was dismissed as a result of redundancy, and it originally objected to the substantive application being heard on the grounds of s.389 of the Act (in what I will refer to as ‘the prior proceedings’).

The Prior Proceedings

[3] In the course of the prior proceedings, the Company handed up the following (edited) correspondence, which it had given to Ms Ireland on 12 December 2014:

“As you may be aware, APN, Australian Regional Media (the Company) has recently reviewed its operational requirements into the future. Following the review, the Company has identified that it is necessary to restructure the business, resulting in some positions becoming redundant. It has been identified that your position will become redundant, and unfortunately as a consequence, your employment will cease on 12 December 2014.

As discussed with you during a consultation meeting(s) conducted on 12 December 2014, the Company has taken steps to identify any suitable alternative employment in order to avoid the termination of your employment due to redundancy. It has been identified that there are no suitable alternative employment opportunities for you [...]” (sic)

[4] Notwithstanding this, the Company did not provide sufficient evidence to authenticate its operational decision making at the time of the hearing of the jurisdictional objection (in the course of the prior proceedings), as it largely relied on hearsay evidence to make out its case. The relevant decision makers did not lead evidence in the hearing and the relevant factual matrix for a statutorily defined “genuine redundancy” was not adduced. The jurisdictional objection was accordingly dismissed in my previous decision [2015] FWC 5171.

The Substantive Proceedings

[5] Upon the substantive matter being brought on, the Company led evidence through its General Manager, Mr Phill Le Petit. Mr Le Petit was responsible for managing staff and for “the overall operation of the business”, which concerned various publications, specifically “The Morning Bulletin”, “The Capricorn Coast Mirror” and “Rocky Life”.

[6] Mr Le Petit gave evidence to the following effect.

[7] Ms Ireland had been an employee since May 2013. Ms Ireland commenced her employment in the position of business development executive (BDE). Between late 2013 and early 2014, Ms Ireland assumed the position of key accounts executive (KAE) and was required to report to the media advertising manager, Mr Jens Kraeft. The role of a KAE was said to be to source new advertising business and to maintain relationships with existing advertisers.

[8] A KAE was said to sell advertising across all the Company’s publications, but with a particular focus on a specific publication or specific section of the newspaper. Ms Ireland was said to have been required to have a particular focus upon selling advertising for the Rocky Life publication. A KAE who was given such a specific responsibility was said to have been a “champion” for the particular publication. It appears each KAE was a “champion” of a different publication (or section of a publication).

[9] As the champion for Rocky Life - which Mr Le Petit described as a weekly community style publication distributed free via bulk drop in high traffic business locations in Rockhampton - Ms Ireland’s details were published in that publication as being the point of contact for advertising in the publication.

[10] From July 2014 it became apparent that difficulties had arisen in the relationship between Ms Ireland and the Company. In July 2014 Ms Ireland was placed on a performance management plan which required weekly monitoring of her performance and monthly follow-up meetings to evaluate her development. A particularly detailed mid-cycle performance review of Ms Ireland’s performance was tendered in support of this evidence. The performance review demonstrated that Ms Ireland was struggling to achieve her advertising targets and to complete the applicable administrative requirements of her job. The review however was otherwise balanced in its judgement of Ms Ireland’s performance in so far as it made supportive and positive comment about other aspects of her performance as a KAE.

[11] The tone of the review reflected the content of email exchanges between Mr LePetit and Ms Ireland; professional and particularised. Thus Mr Le Petit claimed that Ms Ireland had overcooked, as it were, her accusation (to be discussed later) that he had acted in an intolerant and bullying manner towards her.

[12] Notwithstanding this, from the Company’s perspective by mid-August 2014, Ms Ireland’s advertising outcomes had not improved and in attitudinal terms it was stated that her performance was labouring. Consequently, further discussions were held in September 2014 with Ms Ireland about her development.

Operational changes

[13] In early November 2014 the Company’s executive management team conducted a budget review meeting. In that meeting Mr Le Petit claimed that he submitted a business plan in respect of the status of Rocky Life for the consideration of the chief executive officer of the Company.

[14] Rocky Life was said to have been making a significant loss on a weekly basis and was no longer commercially viable. The business plan as proposed was to discontinue the publication of Rocky Life from 17 December 2014 and to reduce the staffing levels by one full-time employee by the end of 2014. The members of the executive team, including the chief executive officer of the Company, signed off on the business plan on Friday 12 December 2014.

[15] The business plan as submitted to the executive management team was tendered in the course of Mr Le Petit’s evidence. The business plan demonstrated that if Rocky Life was to continue and the staffing levels be maintained, the publication would lose approximately $64,000. The closure of the publication and the reduction in one full-time equivalent employee (“FTE”) would create savings of a little over $125,000.

[16] The business plan demonstrated that most in the KAE team sold advertising into Rocky Life, in varying volumes. The business plan identified one FTE KAE for redundancy as that was the aggregated impact of the loss of the advertising effort across all the KAEs who sold into the product (Rocky Life).

[17] Ms Ireland was not the KAE who sold the most advertising into Rocky Life, notwithstanding that she was its champion. This was a reflection not just of Ms Ireland’s effectiveness as an advertising salesperson (about which there had been some concern expressed) but also of the peculiarities of the client base with which Ms Ireland was required to work.

[18] As stated, the business plan identified that the closure of Rocky Life would require one less FTE KAE in aggregate across the KAE team. In practical terms as a consequence, one of the KAE’s positions was declared to be redundant (given that a proportion of each contributing team member’s work effort cannot be scaled back in lieu).

[19] The business plan provided an assessment of the risks of withdrawing Rocky Life from the market as well as a consideration of the market feedback in relation to advertising in Rocky Life. In this latter regard, a strategy was proposed for diverting positive elements of the publication, including some of its advertising, to The Morning Bulletin.

[20] Ms Ireland’s position was selected by Mr Le Petit as the KAE position that would no longer be required as a consequence of the closure of Rocky Life. Although Ms Ireland worked on other publications such as The Morning Bulletin, the Company considered that Ms Ireland’s position was more expendable than that of the other KAEs, noting particularly that her client base was less readily transferrable to the other mainstream publication.

[21] For her part, Ms Ireland claimed that only a small percentage of her overall work was related to Rocky Life, and that her performance had been compromised by the large client pool she was required to manage. Her employer contended in response that Ms Ireland’s role was most affected by the closure of Rocky Life (as she had been the product’s champion) and her performance had not been detrimentally affected by the size of her client pool for reason that Ms Ireland was only required to identify the active leads from that pool of lapsed advertisers, but not otherwise to manage each of the 376 clients (many of whom would no longer have advertising demands).

[22] Ms Ireland’s main point of disagreement with the Company was that she was not as immersed in the Rocky Life publication as Mr Le Petit claimed and that her involvement in the publication had only demanded some 10% of her productive time, with the remaining time being spent on wider revenue generation as a KAE. Ms Barbara Jones also gave evidence that she was instructed by Mr Jens Kraeft, the Advertising Manager (to whom the KAE’s all report), that as a product champion (of another of the Company’s publications), her duties in that regard would only comprise some 10% of her productive time.

[23] Mr Kraeft gave viva voce evidence to the effect that Ms Ireland was a designated champion of a publication (or section thereof) as were all KAE’s. In Ms Ireland’s case it was Rocky Life. Mr Kraeft indicated that he never advised product champions to spend a specific period of time on the publication for which they were champion. But he did anticipate that the champion would drive around 50% of the advertising revenue for their respective publications (and this would require variable efforts depending on the advertising base).

[24] Generally, Ms Ireland held that all KAE’s had dual tasks in advertising across the business and into the particular product.

[25] On Friday 12 December 2014, Mr Le Petit and Mr Kraeft met with Ms Ireland and informed her that the executive management team had made a decision to cease the publication of Rocky Life and that her position had been declared redundant as a consequence.

[26] Mr Le Petit claimed that he advised Ms Ireland that there were no suitable alternative positions available with the Company to which Ms Ireland could be redeployed (which Mr Le Petit stated he had investigated prior to the meeting by examining the APN ARM jobs board). Mr Le Petit also claimed that he directed Ms Ireland to the jobs board and indicated that she should examine the available positions to identify any jobs that may be of interest to her (notwithstanding his efforts). Notwithstanding this, Ms Ireland’s position was made redundant that day and her employment ceased with the Company as a consequence.

[27] As discussed above, Ms Ireland for her part complained that she was not employed to perform the duties of a “champion” for Rocky Life and that he position was not associated with that publication, though she conceded that she was made the product champion of Rocky Life. Ms Ireland on her own evidence was actively involved in the publication as its champion, consulting with its advertising clients and proposing business strategies to Mr Le Petit and Mr Kraeft.

[28] Ms Ireland otherwise complained that she was ill-treated by Mr Le Petit over the course of her employment and her business suggestions were treated dismissively, and that her sales performance was not seriously managed by her employer. In this latter respect, Ms Ireland contended that she was on a performance review from July – October and on a weekly basis she would discuss her progress. Ms Ireland stated that she was only informed by Mr Kraeft that she was “on track” and the reviews had no further depth to them than this.

[29] Ms Ayden Muir-McBride gave evidence that Ms Ireland was subject to unprofessional conduct by Mr Le Petit, but having heard what she described as “passing comments” by Mr Le Petit to this end, she never made any complaint or advised the Company’s bullying and harassment officer.

[30] In her discussions with Mr Le Petit in which Mr Le Petit conveyed the decision to make her position redundant, Ms Ireland claimed that there was no reference to any jobs whatsoever, despite Mr Le Petit’s evidence (as set out above), and that this exemplified the harsh approach the Company took in effecting the purported redundancy.

[31] Ms Ireland also stated that she was in “shock” upon being informed of the Company’s decision and had to adjourn the meeting to go outside for fresh air. The evidence of Ms Laine Harth also demonstrated that Ms Ireland was “physically shaking” and was “wide eyed” upon being informed she had been made redundant. Ms Harth became a support person in respect of the second stage of the termination meeting and attended the remainder of the meeting with Ms Ireland. Ms Harth also contended that she recalled no mention being made of “jobs” by Mr Le Petit in the course of the (second stage) of the dismissal conversation. But having said as much, Ms Harth conceded that she was only in attendance for the second half of the meeting, and was uncertain in other respects about matters that were mentioned therein.

LEGISLATIVE REQUIREMENTS

[32] The relevant legislative provisions arise under s.387 of the Act, which provides as follows:

387 Criteria for considering harshness etc.

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

CONSIDERATION

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)

[33] The evidence discussed above is sufficient to demonstrate that Ms Ireland’s employment came to an end because her position was declared redundant as a consequence of the employer deciding that for commercial reasons it could not continue to publish Rocky Life.

[34] As I have set out above, the closure of Rocky Life had the consequential effect of one less FTE across the KAE team (all of whom sold advertising into Rocky Life to some degree).

[35] Ms Ireland’s position (which included the role of being a product champion in respect of Rocky Life) was selected to be made redundant by the judgment of the Company as the position most affected by the closure of Rocky Life. It is likely that the Company also did not consider Ms Ireland’s performance as a KAE to be as compelling as that of other KAEs.

[36] The Full Bench in UES (Intl) Pty Ltd v Leevan Harvey [2012] FWAFB 5241 found that a dismissal for an operational reason is not a dismissal related to an employee’s capacity or conduct. That is, a dismissal for an operational reason could not be a valid reason for a dismissal under s.387(a) of the Act.

[37] I have found above that the decision to bring about the dismissal of Ms Ireland was because of an operational reason (that being the decision taken to close Rocky Life). This is not a matter relevant to s.387(a) of the Act. As a consequence, the circumstances bear in neutral terms upon the ultimate finding as to whether or not Ms Ireland was dismissed harshly, unjustly or unreasonably.

Whether the person was notified of that reason

[38] Section 387(b) of the Act refers to Ms Ireland having been notified of “that reason”, being the valid reason for purposes of s.387(a) of the Act.

[39] As there was no definable valid reason for the dismissal the notification of such a reason was not possible. Section 387(b) of the Act is therefore of neutral consequence for my overall deliberation.

Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[40] Section 387(c) of the Act requires me to take into account whether or not Ms Ireland was given an opportunity to respond to the reason for her dismissal as it might relate to her capacity or conduct. As I have indicated above, Ms Ireland’s dismissal did not relate to her capacity or conduct and therefore this subsection of the Act bears in neutral terms upon my overall deliberation.

Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal

[41] Section 387(d) of the Act requires me to take into account any unreasonable refusal by the employer to allow Ms Ireland to have a support person present in the dismissal discussions. There is no evidence such act of refusal took place. Equally, as I will mention below in relation to s.387(h) of the Act, Ms Ireland was given no opportunity to invite a support person to the meeting with Mr Kraeft and Mr Le Petit on 12 December 2014.

If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal

[42] Section 387(e) of the Act does not apply to the circumstances in which Ms Ireland was dismissed from her employment, and therefore bears in neutral terms in respect of my wider deliberations. Ms Ireland was only dismissed because her position was declared redundant for an operational reason. Absent the redundancy and the imperative arising from the operational change, Ms Ireland would have remained in her employment (though for how long is a matter of speculation).

The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal

[43] Section 387(f) of the Act is not a relevant consideration and was not pressed as such.

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

[44] Section 387(g) of the Act is not a relevant consideration for reasons that the employer had access to human resource expertise for purposes of effecting Ms Ireland’s dismissal (albeit staff members based in Brisbane).

Any other matters that the FWC considers relevant

[45] Section 387(h) of the Act requires me to take into account any other relevant considerations.

[46] Ms Ireland’s employment was terminated because her position was made redundant owing to genuine operational circumstances arising from significant changes in her employer’s organisation. The commercial rationale for the decision was set out in the business plan as prepared in October 2014.

[47] There was no challenge to the business plan or its analysis of the risks and opportunities provided by the proposal to close Rocky Life, and the consequent impact of that decision was to reduce the need for an aggregated FTE amongst the Company’s KAEs. The reduction of a FTE KAE was a saving that the business plan identified as an opportunity (along with reduced costs in publication and distribution etc) of closing the publication.

[48] In all, the Company had a reason for the dismissal of Ms Ireland that was sound, defensible and reasonable.

[49] That said, Ms Ireland was dismissed on the day she was notified of the redundancy and its consequent effect upon her employment. There was no prior consultation (though the employer was not bound by a consultation obligation under an industrial instrument) and Ms Ireland had limited opportunity to examine the jobs board as she was allegedly invited to do by Mr Le Petit.

[50] Ms Ireland was also invited to a meeting on 12 December 2014 at which her employment was terminated without notice and was not afforded opportunity to have the support of a third party (at least at the initial stage of the meeting).

[51] These are all matters that suggest to me that there was a measure of some of harshness in the manner in which Ms Ireland was dismissed. Clearly, the circumstances caused very considerable distress to Ms Ireland.

CONCLUSION

[52] The operational change that resulted in Ms Ireland’s dismissal was genuine, and the Company was placed in a position in which the retention of Ms Ireland’s role (as a FTE employee) would not yield a commercially realistic outcome for the business.

[53] Specifically, having made the decision to close Rocky Life, the Company had no business case for the retention of one FTE KAE. Ms Ireland’s position was identified for redundancy as a consequence. The reason given for this was because Ms Ireland’s client base was less able to be transferred into the wider publications (for reason of the type and size of the clients). The Company’s decision in this regard was buttressed by the performance issues - as it saw them - that were set out in Ms Ireland’s mid cycle performance review. But having so observed, absent the closure of Rocky Life, and with a different and more transferrable client base, Ms Ireland would not have been dismissed.

[54] The Company did not close Rocky Life as a ploy to dismiss Ms Ireland. The Company’s business plan for the closure evinced its losses and the publication’s absence of commercial value to the business. The consequential effect of the closure of Rocky Life was that the retention of one of the KAEs fell into question in so far as the employer identified scope for further savings by reducing the number of KAEs by one FTE. This decision was a rational commercial assessment of the business case that the Company faced.

[55] For the reasons given above, the Company selected Ms Ireland’s position for redundancy.

[56] Ms Ireland may protest that her responsibilities in relation to Rocky Life may have been modest in her view and that her more substantive position provided a platform for her continuing employment. But in the end, absent any mischief being demonstrated or reasonably inferred, it is the Company that is entitled to evaluate the extent to which a position creates continuing commercial value for its business. There is nothing in the evidence I have heard that gives me cause to conclude that the employer was improperly motivated or that the redundancy was a sham etc.

[57] Mr Le Petit had investigated the opportunities for redeployment within the Company and had been unable to identify any alternative opportunities for Ms Ireland – and none were put to me in the course of the proceedings. There was no challenge of substance to Mr Le Petit’s claims in this regard.

[58] Notwithstanding the measure of harshness to which I have made reference above, it appears to me that when all the circumstances are considered Ms Ireland’s dismissal was not harsh, unjust or unreasonable.

[59] Because I have so found, Ms Ireland’s application under s.394 of the Act must be dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr A. Grant, solicitor, for the Applicant

Mr M. Procter, solicitor, for the Respondent

Hearing details:

Brisbane and Rockhampton, by video link

2015

21 September

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