Ms Michelle Haar v Cardboard Cartons Pty Ltd

[2013] FWC 1054

[2013] FWC 1054

FAIR WORK COMMISSION

DECISION

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

Ms Michelle Haar
v
Cardboard Cartons Pty Ltd
(U2012/13282)

COMMISSIONER ROE MELBOURNE, 15 FEBRUARY 2013

Termination of employment - genuine redundancy.

[1] The matter arises from an application filed on 14 September 2012 under s 394 of the Fair Work Act 2009 (the Act) by Ms Michelle Haar (the Applicant) for relief in respect to the termination of her employment from Cardboard Cartons Pty Ltd (the Respondent).

[2] Following an unsuccessful conciliation conference the matter proceeded to arbitration. The parties elected to proceed to a hearing on 8 February 2013. I granted permission for the parties to be represented.

[3] It is not in contention and I am satisfied that:

● The Applicant was employed as a full time production assistant from 1 March 2010 until 31 August 2012.
● The Respondent is not a small business employer. In the production area the Respondent employed two casual employees and about 14 full time employees. Approximately 10 staff were employed in the sales and administration area. The Respondent also utilised labour hire employees to deal with fluctuating work requirements.
● The Respondent is a national system employer.
● There are no associated entities of the Respondent.
● The employment of the Applicant was regulated by either the Cardboard Cartons Collective Agreement (2007) or the Manufacturing and Associated Industries and Occupations Award 2010.
● The Applicant was dismissed on the grounds of redundancy at a meeting on 31 August 2012.
● The Applicant was paid the notice (2 weeks) and redundancy (6 weeks) entitlements under the NES.
● The Applicant was not permitted to work her notice period but was directed to immediately leave the premises.
● There was no prior consultation about the redundancy and the Applicant was not advised of the purpose of the meeting or advised that she could have a support person present.
● The Applicant was paid $860 per week plus 9% superannuation.
● There are no allegations of unsatisfactory conduct or performance.

[4] It is also not in contention that during August 2012 the Respondent purchased two new machines which it was agreed had the capacity to significantly reduce the amount of work in the Short Run Department where the Applicant traditionally performed most of her work. The Applicant’s letter of appointment did not restrict her to work on specific machines or in specific departments. The Applicant worked predominantly but not exclusively in the Short Run department. The Applicant also operated a fork lift. The Applicant operated the ASL gluer machine in the main production area.

[5] The Respondent acquired another business in February 2012 which increased the work in the Short Run department. An additional worker, Mr Phuong, was employed in that department from April 2012. The Respondent decided to train Mr Phuong and Mr Beswick on the new machines. The Applicant did not train the Applicant and one or two others who worked in the Short Run Department.

[6] At the meeting on 31 August 2012 the Managing Director, Mr Barry, opened the meeting and advised the Applicant that work requirements had changed due to the purchase of new machines and that he had assessed or investigated the operational needs and determined that the Applicant would be made redundant. He advised that there was no other role for the Applicant. He advised the Applicant of the entitlements that she would be paid and advised that she would not be required during the notice period. He told the Applicant that he understood this would be a shock to her. The Applicant said that it was not entirely a surprise given the new machinery. Mr Barry said words to the effect that there was no point in debating the issue as the decision had been made. The Applicant was required to return equipment and then was escorted off the premises. The Applicant was asked to stay clear of the company to allow the dust to settle.

[7] There are two points of difference about what happened at the meeting on 31 August 2013. Firstly, the Applicant says that she said that she was surprised that she was the person selected for redundancy whilst Mr Barry and Mr Sears, the Manufacturing Manger, say that this was not said. Secondly, Mr Barry and Mr Sears say that it was made clear to the Applicant that she could return to say good bye to her fellow workers in a week’s time after the dust had settled.

[8] The Respondent says that they assessed the four staff in the Short Run Department against the criteria of punctuality, skills, dependability, attitude, and performance. 1 On this basis they selected the Applicant for redundancy.

[9] A few weeks before her dismissal the Applicant had an injury at work which resulted in a couple of days off work. The Applicant suggests that she was encouraged to report the incident and visit her doctor but not to make a worker’s compensation claim. I can see nothing in the evidence to suggest that this minor incident had anything to do with the selection of the Applicant for redundancy.

[10] I am satisfied that the Applicant did not strongly object to being made redundant at the meeting on 31 August 2012. Two days later on 2 September 2012 she wrote an email to Mr Barry in which she explained the hardship she was facing and seeking consideration of an increased payout. She also says that: “I would be willing to come in as a casual for a few months or do some advertising in the display for Cardies anything so that it can still run this year.” 2 In that email the Applicant says that: “I understand that you have paid me out in accordance with the agreement and that you ahve been more than fair but my community is counting on us to carry this through and I couldn’t imagine disappointing them.” This was a reference to “the Christmas display”.3

[11] The Applicant says that on the 5th of September she found out that the Respondent had hired Mr Wells. The Applicant was upset when she found this out and says that this was the motivation for putting in her unfair dismissal claim.

[12] The Respondent employed Mr Wells on a short term temporary basis for 7 weeks commencing on 3 September 2012. The Respondent says that he worked on tasks that would otherwise have been performed by labour hire staff and that he worked for 3 to 4 days per week. Mr Barry says that he was approached by a relative on 4 August 2012 seeking work for a friend for a short period prior to that friend going on an overseas holiday. Mr Barry says that he agreed to the request.

[13] It is not in contention that the operation of various machines requires a degree of physical labour including lifting materials into and off machines. It is also not in contention that machine operation and adjustment is more skilled work than some of the other labouring work required around the factory. It is also not in contention that the labour hire employees generally performed labouring work and did not do the machine operation and adjustment. The Applicant was not trained to operate some of the machines in the main production area (that is outside of the Short Run Area). There was some dispute about the specialty gluer in this area. The Respondent argues that the Applicant declined to finish training on this machine. I am satisfied from the evidence that this was not the case and that it was a management decision not to continue with the training of the Applicant on this machine.

[14] The Applicant argues that she could have done any of the work in the factory with reasonable training. The Applicant gave evidence, which I accept, that she and other shorter employees often used pallets or other aids to be able to access machines. Mr Barry and Mr Sears argue that the Applicant was not physically capable of doing the work performed by Mr Wells or of doing the work on some of the machines in the main production area. Mr Sears identified the main work performed by Mr Wells 4 and said that this work is physically demanding and that the Applicant does not have sufficient height to be able to perform some of this work safely. Mr Sears says that he did not allocate this sort of work to the Applicant because he had observed that it caused her significant physical strain. He gave evidence in respect to an incident which led him to this conclusion. Mr Sears accepts that on that occasion the Applicant had said that she was OK and could do the work. However, he felt that it was not consistent with his duty of care to allow her to continue with this work. Mr Sears argues that doing the physical work which is incidental to machine operation and adjustment is quite different from the work required of Mr Wells and the labour hire workers who are required to do the lifting and stretching work to load and unload machines throughout the shift.

[15] Having heard and considered the evidence I am satisfied that the Respondent did not have reasonable grounds to conclude that the Applicant could not perform any of the production assistant and labouring duties in the factory with appropriate training. However, I accept that the Respondent had reservations based upon the observations of the manager, Mr Sears, about the capacity of the Applicant to perform heavy labouring work for the full shift. I also accept that the Applicant argues that she did have the capacity to do this but I am satisfied that this had not been her normal work.

The threshold issue - genuine redundancy

[16] The threshold issue is whether or not the dismissal was a genuine redundancy. Section 385(d) of the Act provides that if I am satisfied that the dismissal is a genuine redundancy then it cannot be an unfair dismissal. 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.”

[17] It is not in contention that the decision to reduce the number of employees in the Short Run Department by one was a change due to the operational requirements of the enterprise.

[18] I am satisfied that the job performed by the Applicant is no longer required to be performed by anyone.

[19] There is no obligation concerning consultation in these circumstances in the Cardboard Cartons Collective Agreement 2007 (the Agreement). Contrary to the submission of the Applicant the legislation is in my view without ambiguity or uncertainty. If there is no obligation under an Award or Agreement that applied to the employment then the dismissal is a case of genuine redundancy, subject of course to the redeployment issue.

[20] If the Agreement does not apply then the Award applies. The Award has a standard clause as follows:

“9. Consultation regarding major workplace change

9.1 Employer to notify

(a) Where an employer has made a definite decision to introduce major changes in production, program, organization, 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.

9.2 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 9.1, 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 9.1.

(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.”

[21] I am satisfied that in the context of the particular business and circumstances the change is a major change with significant effects and that consultation has not occurred in accordance with Clause 9.2 of the Award. There was no genuine opportunity to discuss the proposed change, to consider measures to avert or mitigate the change or to influence the outcome.

[22] Mr Fischbacher for the Respondent 5 gave evidence that the Agreement had been voted upon by employees and was submitted and received by the Office of the Employment Advocate and its successor the Workplace Authority. He said that the Agreement was investigated as to whether it met the Fairness Test requirements and that “a number of communications passed between my office and the Workplace Authority to satisfy the Workplace Authority on that issue.”6 No evidence was produced of any correspondence from the Workplace Authority advising the outcome of their investigation of the Fairness Test. The Agreement does not appear on the FWC website and I had some concerns as to whether or not the Agreement had been deemed by the Workplace Authority to have passed the Fairness Test requirements. If it had been deemed to have not passed those requirements then the Agreement is not in operation. The parties agreed that I should make inquiries about this matter and in the event that I received information that the Agreement did not apply then I would give the parties an opportunity for further submission.

[23] On 13 February 2013 I advised the parties as follows:

“The Commissioner has sought available information in respect to the Cardboard Cartons Collective Agreement (2007).  The Commissioner has not found any information to contradict the first two sentences of paragraph 5 of the Statement of Mr Fischbacher. The Commissioner has not been advised of any decision by the Workplace Authority that the Agreement passed or did not pass the Fairness Test. In the absence of any decision that the Agreement did not pass the Fairness Test and or any advice to the employer that the Agreement was no longer in operation the Commissioner must act on the basis that the Agreement remains in operation. The Commissioner intends to act on this basis unless a party to U2012/13282 advises that they wish to make a contrary submission by close of business 14 February 2013.”

[24] Although the situation is troubling I must act on the basis that the Agreement is in operation and that therefore there is “no obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.”

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

[25] The Full Bench in Ulan Coal Mines Limited v Honeysett and others 7 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.”

[26] The Full Bench 8 considered what may be relevant in considering whether or not redeployment would be reasonable.

“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.”

[27] I am satisfied that the Applicant was open to all options for redeployment. In the email written by the Applicant to Mr Barry on 2 September 2012 to which I referred earlier, the Applicant said: “I would be willing to come in as a casual for a few months or do some advertising in the display for Cardies anything so that it can still run this year.” 9

[28] Although the lack of any consultation with the Applicant about options strongly suggests the absence of a thorough consideration of the redeployment options, the evidence satisfies me that there was no vacant full or part time position within the company to which the Applicant could be redeployed. This was not seriously disputed by the Applicant.

[29] However, the Applicant contends that she could have been redeployed by either:

● The Respondent reducing its use of labour hire employees to provide an opportunity, probably on a casual basis, for the Applicant; OR
● The Respondent not commencing the casual employment of Mr Wells and instead offering this opportunity to the Applicant.

[30] The Respondent drew my attention to the decision of Commissioner Hampton in James Suridge V Boral Window Systems Pty. 10 The following analysis in that decision is relevant in these proceedings.

“[120] Part of the relevant circumstances is that the business of Dowell is under some trading constraints and this has led to the overall reduction in the production (and maintenance) workforce and the need to retain the flexibility to expand and contract some of the total workforce to meet production fluctuations. These are important considerations. I would also add that this present application does not involve an evaluation of the employer’s employment strategy; this is fundamentally a matter for it. Indeed, the fact that it operates on that basis is itself a consideration. The only question is whether it would have been reasonable in all of the particular circumstances evident here for Dowell to have redeployed the applicant at the time of dismissal.

[121] I accept for present purposes that where an employer had no ongoing or predictable requirements for some direct employment within its operations, it would not generally be required as a reasonable measure to create a position in order to redeploy a redundant employee. However in this case, there is an ongoing and generally predictable level of demand for the supplementary labour including the regular backfilling of on-going permanent positions; the applicant was an existing permanent employee who had been made redundant and Dowell was under an obligation to genuinely consider mitigation of the consequences; the applicant had stated his willingness to undertake a production role in the knowledge that it would be supplementary (but not casual) in nature; and he had stated his willingness to take individual days of annual leave to cover any days when there was no requirement. In that context, I also note that the applicant had in the order of nine weeks of annual leave that could have been used for that purpose.

[122] Importantly, the redeployment of the applicant could have been accommodated at the time without requiring the employer to restructure its approach to staffing and the use of labour hire more generally. I also observe that if, contrary to present indications, the circumstances become such that there was subsequently no need for regular labour that could be performed by the applicant, Dowell could at that point have assessed redundancy and redeployment options.”

[31] I agree with the approach taken by Commissioner Hampton. I accept the argument of the Applicant that there is no reason why the question of whether or not work currently performed by labour hire could be performed by the person being made redundant should not be considered. The work is required to be performed and there are no employees of the Respondent performing that work. It is only if there is an employee of the Respondent doing the work that it is not available for the person being made redundant.

[32] There may be good operational reasons why the work performed by labour hire may or may not be appropriate for consideration. The Applicant did not produce evidence or require evidence from the Respondent or cross examine the evidence of the Respondent sufficiently for me to be in a position to decide that the work is available and if so to what extent. There is insufficient evidence before me to be satisfied that it would have been reasonable in all of the circumstances for the Applicant to have been redeployed to perform work currently performed by labour hire workers. It is possible that if consultation had occurred redeployment of this sort may have been achieved.

[33] The fact that the Respondent decided to employ Mr Wells to perform work usually performed by labour hire workers strongly suggests that there is some ongoing and generally predictable level of demand for the supplementary labour capacity which could be utilised to mitigate the effects of potential redundancy. However, the evidence was not sufficient for me to determine the extent to which this was reasonable and compatible with business imperatives.

[34] In respect to the work performed by Mr Wells I am satisfied by the evidence of the Applicant that she was capable of performing the tasks but I accept that the Applicant had not demonstrated to the Respondent that she could perform those tasks throughout a shift. The evidence of Mr Sears was that Mr Wells was required to do the heavy manual work for the full period of the shift. Mr Sears was of the view that the Applicant could not safely perform this work. The Applicant disputes this judgment. For reasons that will become apparent it is not necessary to determine this issue.

[35] The Respondent argues that Mr Wells was employed by the Respondent prior to the termination even though he did not commence his casual employment until shortly after the termination. The Applicant argues that since casual employment is by its nature precarious there was no barrier to the Respondent telling Mr Wells that because of the redundancy situation the work was no longer available and then redeploying the Applicant to that work.

[36] If there is work which is performed by casual labour which is not employed on a regular and systematic basis then it will often be reasonable to argue that work is available or a vacancy exists and to provide for redeployment by offering a potentially redundant employee the opportunity to do some of that work. If there is a casual employee or employees have been doing work on a regular and systematic basis then it would be unlikely that it could be argued that the work is available for redeployment.

[37] In this particular case the evidence suggests that the work has only been created to fill a particular need for a fixed period and purpose; that is the need of Mr Wells. It is the evidence of Mr Barry that the work had been created prior to the redundancy occurring. On balance I accept the evidence of Mr Barry. I also accept the evidence of Mr Barry that the work was created to meet the needs of Mr Wells. I do not consider it appropriate to determine that the Respondent should have advised Mr Wells that he was no longer employed and that the Respondent was no longer going to honour its commitment to provide work created for Mr Wells for a fixed period and purpose. Again this might have been an appropriate outcome from a consultation process. In the absence of that process I cannot determine that the work performed by Mr Wells was vacant and available for redeployment. I do not accept the argument of the Applicant that because casual employment is by its nature precarious and because Mr Wells had not actually worked any shifts, the work was vacant and available for redeployment. Even though Mr Wells was engaged as a casual employee there was effectively a contract of employment prior to the redundancy of the Applicant.

[38] The fact that it was possible to reduce the use of labour hire for a period of time to create work for Mr Wells suggests that this might also have been able to be done for the Applicant. However, as discussed earlier the evidence is insufficient for me to decide that this was reasonably possible given the operational requirements of the company. Again it is possible that if consultation had occurred that options of this sort may have been achievable.

[39] For these reasons I conclude that if consultation had occurred redeployment opportunities may well have emerged, however, the evidence is insufficient for me to conclude that it would have been reasonable in all the circumstances for the Applicant to be redeployed within the employer’s enterprise.

Conclusion regarding genuine redundancy

[40] The termination was a genuine redundancy because there is “no obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy” and because I have concluded that in the absence of such consultation the evidence is insufficient for me to conclude that it would have been reasonable in all the circumstances for the Applicant to be redeployed within the employer’s enterprise. There are no associated entities.

[41] The Application must therefore be dismissed. An Order to this effect will be issued.

COMMISSIONER

Appearances:

Mr G Dircks appeared for the Applicant.

Ms S Bingham appeared for the Respondent.

Hearing details:

2013

Melbourne

February 8

 1   Exhibit C2, Attachment LB4.

 2   Exhibit C2, Attachment LB7.

 3   Exhibit C2, Attachment LB7.

 4   Exhibit C4 at paragraphs 2 and 3.

 5   Exhibit C1.

 6   Exhibit C1 at paragraph 5.

 7   [2010] FWAFB 7578 at paragraphs 26 to 28.

 8   [2010] FWAFB 7578, paragraph 34.

 9   Exhibit C2, Attachment LB7.

 10   [2012] FWA 3126.

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