Ms Penelope Behan v Risk Strategies Pty Ltd

[2014] FWC 7176

[2014] FWC 7176

FAIR WORK COMMISSION

DECISION

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

Ms Penelope Behan
v
Risk Strategies Pty Ltd
(U2014/1677)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 16 OCTOBER 2014

Summary: unfair dismissal application - whether Applicant made genuinely redundant - operational requirements - process for selection.

[1] Ms Penelope Behan has made an application under s.394 of the Fair Work Act 2009 (“the Act”) seeking an unfair dismissal remedy in relation to her dismissal by Risk Strategies Pty Ltd (“the employer”) effective 13 May 2014.

[2] At the time of her dismissal, the Applicant was engaged as a senior consultant with the employer, whose enterprise concerns the provision of safety and risk-related solutions and services to businesses.

[3] The employer contends, however, that the dismissal of the Applicant was a genuine redundancy for the Act’s purposes and that the application must be dismissed as a consequence.

[4] In respect of this claim, s.385 of the Act provides as follows:

385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

[...]

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

[5] There is no argument that the Applicant was not dismissed from her employment (with notice) on 1 April 2014. But it is contended, as I stated above, that the Applicant’s dismissal was a case of genuine redundancy.

[6] In this regard, s.389 of the Act provides as follows:

389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.

[7] The Explanatory Memorandum to the Fair Work Bill 2008 provides some insight into the scope of meaning of a redundancy as contemplated under the Act:

Clause 389 – Meaning of genuine redundancy

1546. This clause sets out what will and will not constitute a genuine redundancy. If a dismissal is a genuine redundancy it will not be an unfair dismissal.

1547. Paragraph 389(1)(a) provides that a person’s dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.

1548. The following are possible examples of a change in the operational requirements of an enterprise:

a machine is now available to do the job performed by the employee;

the employer’s business is experiencing a downturn and therefore the employer only needs three people to do a particular task or duty instead of five; or

the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.

1549. It is intended that a dismissal will be a case of genuine redundancy even if the changes in the employer’s operational requirements relate only to a part of the employer’s enterprise, as this will still constitute a change to the employer’s enterprise.

1550. Paragraph 389(1)(b) provides that it will not be a case of genuine redundancy if an employer does not comply with any relevant obligation in a modern award or enterprise agreement to consult about the redundancy. This does not impose an absolute obligation on an employer to consult about the redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.

1551. Subclause 389(2) provides that a dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or within the enterprise of an associated entity of the employer (as defined in clause 12).

1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for redeployment or there may be no positions available for which the employee has suitable qualifications or experience.

1553. Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy. However, if the reason a person is selected for redundancy is one of the prohibited reasons covered by the general protections in Part 3-1 then the person will be able to bring an action under that Part in relation to the dismissal. [...] [My emphasis]

Consideration

[8] On 1 April 2014 the director of the employer, Mr Peter Bishop, provided notice to the Applicant in the following terms:

Risk Strategies has had ongoing concerns regarding supply of the necessary volume of work for you to be engaged in a meaningful and useful way, for your benefit, and that of our clients and Risk Strategies.

With the continued lack of work available and in accordance with Section 2.2 of your employment contract, Risk Strategies has conducted a review of operational requirements in line with the commercial challenges of the business.

I regret to inform you that as a result of the review and based on operational and commercial requirements, the business longer requires or can justify the continuation of your role.

To this effect, your employment will cease on Tuesday 13 May 2014.

The provisions of Section 60 of the National Employment Standards do not apply to your circumstances given that Risk Strategies employs 13 employees. (sic) We will pay you for the six (6) weeks of your notice period in accordance with your current working arrangements (38 hours per week) however will not require you to attend our offices or otherwise engage in employment activity once all current work is satisfactorily completed and invoiced.

[...]

This decision has not been easy. We thank you for the contribution that you have made over the past 3 years and wish you all the best in your future endeavours.

Risk Strategies and/or its employees are authorised to provide you with such references as you need to assist you in job seeking.

[9] The employer, principally through the evidence of Mr Peter Bishop, contended that its income or revenue from its Queensland operations had fallen from November 2013 onwards, and fell very sharply between November and December of 2013. A recovery of sorts is evident - on the evidence - between January and April 2014 (though on the basis of a NSW and not a Queensland revenue stream). Income dropped again very suddenly from April 2014, and for the successive months.

[10] The change in the market conditions resulted from a decline in insolvency related work (which accounted for some 70% of the Queensland branch income).

[11] The Queensland business carried a taxation liability and a bank overdraft of about $250,000 in total.

[12] The employer contended that it could not provide work for its consultants in the Brisbane office, which was by the end of the first quarter of 2014 28% behind budget. The Queensland operations were funded in part by personal contributions by Mr Bishop (through the Bishop Family Trust).

[13] The employer’s business in NSW and Victoria was affected adversely by the cancellation of a contract with the employer’s largest client on 25 March 2014. The employer had anticipated a tapering of the revenue related to this client after August 2014, but the contract ceased per se well before that. This resulted in overstaffing interstate and a pessimistic prognosis of the work pipeline for the foreseeable future.

[14] On 26 March 2014, Mr Bishop convened a teleconference of the management team to address the developments. In the course of that discussion the Applicant’s position was identified for redundancy in order to manage the revenue decline. The Applicant’s position was identified as it was a higher cost position than that of the other Queensland senior consultant.

[15] The Applicant challenged the proposition that there was a genuine redundancy, for a number of reasons that I will step through below.

The NSW position - Applicant’s view

[16] In February 2014 the Applicant claims to have advised her manager that more work was to be done on an aged care business, and additional work was secured in New South Wales. At that time the manager was said to have indicated to the Applicant that he needed to obtain his own white card so he could do the work. The Applicant stated that she could perform the NSW work as she had a white card and the work was convenient to accommodation that would be available to her. Regardless of this situation, around early March 2014 the manager advised the Applicant that a new consultant had been recruited to undertake the work in New South Wales (rather than redeploying the Applicant).

The marketing initiative - Applicant’s view

[17] The Applicant also contended that as of early March 2014 the employer was in a potentially buoyant business environment for reasons of a new marketing program and that there was a prospect of additional employment opportunities as a result.

The new recruit - Applicant’s view

[18] Around September 2013 the employer employed a consultant, whom it promoted to a senior consultant position in March 2014.

[19] A little less than two weeks following the promotion of the new senior consultant, the Applicant received the redundancy correspondence as set out above.

[20] The Applicant contended - as far as I interpret the Applicant’s submission - that the redundancy could not be genuine redundancy as she was merely shunted aside, as it were, by another consultant promoted into her position. This indicated that the Applicant’s position was never made redundant as such, but it was that a newly promoted employee stepped into her position and she was dismissed.

Employer response to the Applicant’s view of the NSW position

[21] The employer contended that the work opportunity that arose in February 2014 resulted in the Northern Region Manager performing specialised duties relevant to the aged care facility for a transitional period of five weeks. The remainder of the work was then serviced by a local New South Wales consultant for the duration of that contract - some nine months. Recruitment for this local NSW consultant commenced in February 2014 and the job offer was accepted on 11 March 2014. The employer made the point that this was before such time as any decision had been made in relation to the Applicant's employment (on 27 March 2014).

[22] The employer contended that a local resource was necessary because the client was not paying for any travel costs or expenses and it was impractical for the employer to resource the entirety of the project by way of a Queensland-based resource (notwithstanding that the Applicant had private accommodation available to her).

[23] In any event, the employer contended that the initial five-week transitional period required the application of technical resources in implementing a particular risk application which had to be completed by the Northern Region Manager. The Northern Region Manager had designed and developed the relevant software application and his technical competence was required to apply and customise the software for the client.

Employer response to the Applicant’s view of the marketing initiative

[24] The employer agrees that there was a prospect of an expanded market owing to an aggressive marketing program that was launched on or about 20 March 2014. However, the employer contended that it had received no income from that marketing program.

Employer response to the Applicant’s views on the new recruit

[25] The employer accepted that once it was determined that there was only a requirement for one senior consultant, the Applicant’s position was chosen to be made redundant whilst the newly appointed (“reclassified”, as the employer put it) senior consultant was retained. The employer argued candidly - as I set out above - that the Applicant’s costs were greater than those of the other senior consultant and that this was a factor in her selection for redundancy.

[26] The employer also challenged the claim by the Applicant that this other consultant was appointed as a senior consultant on the eve, as it were, of her redundancy being notified and that this newly appointed senior consultant had effectively taken her job.

[27] The employer considered that the appointment of the new senior consultant was not a “new appointment” per se, because the new senior consultant was performing the same work with the same reporting relationships that he had before he was appointed or “reclassified”. The employer explained that this situation arose because the particular person concerned had extensive prior business experience and was on a six-month review period (as a consultant) before being appointed as a senior consultant. The particular employee had been employed at the start of September 2013 and was therefore (following a review) appointed to the senior consultant position in March 2014.

[28] The new senior consultant was appointed some days prior to the loss of the contract as notified to the employer on 25 March 2014; which was the commercial event that triggered the search for immediate cost reductions. That is, the new senior consultant had been appointed to his position before such time as the employer had cause to turn its mind to making the Applicant’s position redundant.

Consideration

Section 389(1)(a) of the Act

[29] Section 389(1)(a) of the Act provides:

(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

[...]

[30] The evidence in this matter as provided by Mr Bishop was compelling in respect of the commercial circumstances which befell the business over 2013 - 2014. This evidence was not challenged, and the Applicant’s reference to the prospective business development from the marketing initiative did not bear upon these matters.

[31] I am left with no doubt from Mr Bishop’s evidence and the information provided therein about the employer’s monthly income streams over 2013 and 2014 that there was a genuine change in the market environment experienced by the employer (particularly so because of the lost contract from a major client in March 2014) and that this gave rise to a requirement to reduce costs and alter the employment profile of the business to that end.

[32] The Applicant’s position was identified for redundancy in this context. Her position was made redundant whilst the position of another senior consultant was retained. The redundancy of the Applicant’s position was a result of the operational requirements of the employer’s business or enterprise.

[33] As the Explanatory Memorandum (cited above) makes clear, s.389 of the Act does not extend to an examination of the reasons for the selection of the Applicant’s position for redundancy:

1553. Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy. However, if the reason a person is selected for redundancy is one of the prohibited reasons covered by the general protections in Part 3-1 then the person will be able to bring an action under that Part in relation to the dismissal. [...]

[34] The Applicant may have another avenue for a remedy if she had been selected for redundancy because of her gender or family responsibilities, and so forth. Such grounds may support an application under Part 3-1 of the Act. But no such argument was made here, and this application would not have been an appropriate forum for such concerns to be agitated.

[35] In the end, the employer was facing declining income in Queensland, had kept the business at current staffing levels by an investment of private funds, but suddenly in late March 2014 it lost a major client (and another major income stream). It took the steps a business might reasonably take to address those circumstances, which was to reduce staffing levels in a manner that best met its perceived operational requirements (by making the Applicant’s position redundant). It chose to reduce the number of senior consultants and in so doing selected between the Applicant and a person newly appointed to the role (though far from inexperienced). This was the state of the evidence before me.

[36] In the circumstances here, the process of selection of the Applicant’s position for redundancy (vis a vis the other senior consultant in the Brisbane office) is not a relevant consideration for the determination of the jurisdictional question.

Section 389(1)(b) of the Act

[37] Section 389(1)(b) of the Act provides:

(1) A person’s dismissal was a case of genuine redundancy if:

[...]

(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.

[38] Neither the Applicant nor the employer contended that the Applicant’s work was covered by a modern award or enterprise agreement. Both parties expressly agreed that the Applicant’s work was award free and that there was no enterprise agreement as defined under the Act that covered the Applicant.

[39] Therefore, there was no obligation under a modern award or enterprise agreement which obliges the employer to consult with the Applicant in a prescribed manner.

Section 389(2) of the Act

[40] Section 389(2) of the Act provides:

(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.

[41] The Full Bench in Technical and Further Education Commission T/A TAFE NSW v L. Pykett[2014] FWCFB 714 (“Re: Pykett”) considered the basis on which the Commission can reach a finding in relation to s.389(2) of the Act. In so doing the Full Bench (which I take to having been referring to s.389(2) of the Act rather than s.389(2)(a) of the Act) found as follows:

[35] As we have mentioned, the use of the past tense in the expression ‘would have been reasonable in all the circumstances for the person to be redeployed ...’ in section 389 (2)(a) directs attention to the circumstances which pertained when the person was dismissed. As noted in Honeysett, [T]’he exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances’.  The question is whether redeployment within the employer’s enterprise or an associated entity would have been reasonable at the time of dismissal. In answering that question the Full Bench in Honeysett observed that 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”. 

[36] [...] For the purposes of s.389(2) the Commission must find, on the balance of probabilities, that there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. There must also be an appropriate evidentiary basis for such a finding. Such an interpretation is consistent with the ordinary and natural meaning of the words in the subsection; the Explanatory Memorandum and Full Bench authority. We acknowledge that the facts relevant to such a finding will usually be peculiarly within the knowledge of the employer respondent, not the dismissed employee. If an employer wishes to rely on the ‘genuine redundancy’ exclusion then it would ordinarily be expected to adduce evidence as to the following matters:

(i) that the employer no longer required the dismissed employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;

(ii) whether there was any obligation in an applicable modern award or enterprise agreement to consult about the redundancy and whether the employer complied with that obligation; and

(iii) whether there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employer.

[42] Mr Bishop’s evidence set out the circumstances which made the redeployment of the Applicant an unreasonable proposition. An employee had already been recruited to fill the (relatively short term) work in New South Wales (that appointment was made before the Applicant’s position was made redundant). It was not otherwise practical or cost effective for the Applicant to perform the duties from an interstate location, as Mr Bishop’s evidence made clear.

[43] It appears that in the context of the small establishment of the Brisbane office there was no other position that was available or vacant to which the Applicant could have been reasonably redeployed. The Applicant herself identified no such position or asserted otherwise (which was understandable to a point, given her principal submission that her position was still required). More generally, there is no evidence before me that there was another position available to which the Applicant could have been reasonably re-deployed. Given the market circumstances facing the employer’s Brisbane market, the size of the Brisbane operations, and its objective to reduce its labour costs, it is a reasonable supposition that the employer had no redeployment opportunities available at the time.

Conclusion

[44] On the basis of the evidence led in this matter I conclude that the Applicant was made genuinely redundant for purposes of s.389 of the Act. The Applicant’s application for an unfair dismissal remedy under s.394 of the Act is therefore dismissed as the Applicant is not a person who is protected from unfair dismissal for the Act’s purposes.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr P. Copeland, Solicitor, for the Applicant

Mr D. Stinson, of the Respondent

Hearing details:

Brisbane, with video link to Melbourne

2014

9 October

Printed by authority of the Commonwealth Government Printer

<Price code C, PR556478>