Nathan Leslie Giblett v Powerstack Australia Pty Limited
[2025] FWC 2208
•30 JULY 2025
| [2025] FWC 2208 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Nathan Leslie Giblett
v
Powerstack Australia Pty Limited
(U2024/14726)
| DEPUTY PRESIDENT DEAN | CANBERRA, 30 JULY 2025 |
Application for an unfair dismissal remedy – whether genuine redundancy – no genuine redundancy – dismissal unfair – compensation ordered.
Mr Nathan Giblett (the Applicant) was employed by Powerstack Australia Pty Ltd (the Respondent or Powerstack) until he was dismissed on 29 October 2024 by reason of redundancy.
The Applicant made an application under s.394 of the Fair Work Act 2009 for a remedy, alleging that he had been unfairly dismissed by the Respondent.
The Respondent objected to the application on the grounds that the dismissal was a case of a genuine redundancy.
The Commission must determine, by virtue of s.396 of the Act, the question of whether the dismissal was a genuine redundancy before considering the merits of the application.
At the hearing the Applicant represented himself and Ms B Sundaraj appeared with permission for the Respondent.
For the reasons set out below, I find that the Applicant’s dismissal was a not a case of genuine redundancy and the Applicant was unfairly dismissed. I have awarded the remedy of compensation.
Background
The Applicant was the co-founder of the Respondent, a business he started with his brother in 2009. He also served as a director of the Respondent from its establishment in 2009 until October 2024.
In 2021, the Applicant secured financial investment from Taronga Group to expand the business. This investment was subject to various conditions, which ultimately resulted in the Applicant and his brother losing control of the company.
Following the initial round of investment by Taronga Group in October 2021, the Applicant entered into an Employment Agreement for the position of Managing Director Australia.
On 1 December 2023 Mr Michael Bragg, formerly Global Head of Sales, was appointed as Chief Executive Officer. Around the same time, the Applicant and his brother stepped down from their respective CEO roles in Australia and the United States and assumed roles involving research and development (R&D).
While there were some inconsistencies in the description of the Applicant’s role over time, it is not disputed that at the time of his dismissal he was primarily engaged in tasks that included research and development.
On 29 October 2024, the Applicant was informed of his redundancy during a meeting. He was subsequently provided with a termination letter, which relevantly stated:
“As discussed with you in our meeting on 29th of October 2024, we regret to inform you that as a result of significant restructuring required in order to remain viable into the future, the position of Joint head of R&D has been made redundant.
Powerstack Australia Pty Ltd ACN 135 088 247 (Company) no longer requires this position to be performed by anyone. We regret that this decision is necessary and is in no way a reflection on you or your performance within the business.
We have been working to identify an alternative role for you elsewhere in the business. Unfortunately, there is no suitable position and your employment will be terminated effective from 29 October 2024.
You are entitled to five weeks’ notice of termination under your employment agreement dated on or about 10 November 2021, as amended from time to time (Employment Agreement). Therefore, your employment will end on 27 November 2024.
…”
Evidence and Submissions
Much of the evidence presented by both parties focused on matters relating to the Taronga Group investment, the shareholder agreement and governance issues, and a dispute relating to the Applicant’s leave entitlements. However, these issues are not relevant to whether the Applicant’s redundancy was genuine and are therefore not canvassed here.
The Applicant
The Applicant contended that his redundancy was not genuine and was instead a targeted effort to remove him and his brother, the founders of the business.
He gave evidence that he was excluded from business operations following the appointment of Mr Bragg as CEO in December 2023. Despite being a Director until September 2024, he was not invited to any discussions, general meetings or Board meetings during 2024. He stated that he was not aware of any cost-cutting measures or redundancy considerations and had not been involved in any discussions regarding investment decisions, operational matters, or staffing, including potential redundancies.
The Applicant further asserted that the Respondent failed to disclose a $165,000 annual dollar-for-dollar funding grant, of which he was the only Australian staff member that could complete the work required by the grant. He claimed this funding would have offset the cost of the research and development function.
The Applicant denied having any discussions with Mr Bragg regarding a business restructure or his potential redundancy. He further stated that the Respondent had produced no documentary evidence to confirm that any such discussions occurred. He disputed that he was ever offered a salary reduction as an alternative to redundancy.
In relation to his role at the time of his dismissal, the Applicant denied holding the title of ‘Joint Head of R&D’. He stated that no employment contract, role description, task list or KPIs had been issued or agreed upon concerning that role.
The Applicant stated that his work involved tasks broadly described as research and development, which included designing, assembling, manufacturing, installing, modifying, testing, fault finding, commissioning, maintaining and servicing Powerstack poles, devices, systems, equipment and controls within the boundaries of the Applicant’s qualifications, skills and experience. He asserted that these tasks were carried out under the advice and direction of the interim CEO and were documented at weekly R&D meetings, with written minutes circulated to relevant parties.
The Applicant claimed that he was covered by the Manufacturing and Associated Industries and Occupations Award 2020 (Award), specifically under the classification of Advanced Engineer Tradesperson Level 2. He claimed that the duties he performed fell within the scope of the Award and his qualifications include a HVAC Trade Certificate, a Class 2B Electrical License and a Diploma in Mechanical Engineering.
The Applicant in his statement set out the responsibilities he undertook during his tenure with the Respondent which included:
·Design of the Powerstack system - panels, aluminium extrusions, battery/energy storage, electronics, foundation systems, auxiliary components, hinge system, drill winch installation system, all electrical testing, performance capacity, mechanical and electrical systems;
·Manufacture processes and assembly of components and training of manufacturing staff;
·Testing to determine vertical peak sun hours and pole capacity and performance for global sites and locations, shading and site-specific requirements;
·Site management, OH&S, Safe Work Method Statements, Job Safety Assessments;
·Installation of poles, foundations, ground scanning, ELV electrical;
·Education of integrators and end users on installation and use cases for product;
·Marketing of products and development of website; including shooting, editing and producing all videos (marketing and instructional) housed and promoted on the Powerstack website, technical specifications, installation guides and other marketing collateral;
·Sales – engaging customers, Set up Sales Department in USA and Australia;
·International exporting and importing;
·Contract negotiations;
·Finance management and capital raising; and
·Trademarks, IP and Legal work
In cross examination, the Applicant acknowledged that he did not hold a supervisor’s license which would be required for electrical contracting work. However, he argued that his trade certificate allowed him to manufacture and install the poles and that no additional electrical qualifications were needed for this work. He noted that previous manufacturing staff also did not hold electrical licences.
The Applicant argued that no evidence was presented by the Respondent demonstrating an assessment for alternative roles or any reason why he was unsuitable for redeployment.
The Applicant maintained that he possessed adequate skills, abilities and qualifications to perform tasks that remain essential to the Respondent’s operations, citing:
·15 years’ experience in core company operations.
·Leadership in designing and manufacturing of the flagship solar pole system.
·Management of key client relationships and revenue generation.
Mr Bragg
Mr Bragg, the CEO of Powerstack, was directly involved in the decision-making process relating to the Applicant’s redundancy.
He stated that the Respondent’s financial performance had failed to improve despite multiple rounds of investment from Taronga Group between 2021 and 2023. As a result, operational changes commenced in November 2023, including the redundancy of five full-time employees - four in Australia and one in the United States, reducing the workforce from 16 to 11.
Mr Bragg stated that he was appointed CEO in December 2023 to “oversee improvements in the business’ financial performance, utilisation of any capital raised and further restructure to the ongoing operations of the Powerstack group”.
He gave evidence that costs-cutting measures were implemented throughout the financial year of 2024. These included reductions in marketing and advertising spend, a hiring freeze, and cuts to expenses such as entertainment and motor vehicle costs. As part of these efforts, the Applicant agreed to a salary reduction from $150,000 to $120,000 per annum, after refusing a pay reduction to $66,000 per annum.
Mr Bragg stated that by October 2024 it became apparent that expenses continued to exceed revenue at an unsustainable level. The Respondent determined that the most effective and sustainable measure was to close the R&D division and focus on manufacturing and selling the existing product that was already in the market and capable of creating further revenue. This led to the termination of the Applicant’s and his brother’s roles across both the Australian and US operations.
Mr Bragg stated that the Applicant was aware of the company’s financial pressures and had participated in discussions about cost-saving measures. Since his appointment as CEO, staff numbers had been significantly reduced and overall wage costs had decreased.
He denied any intention to remove the founders and claimed that he had sought to retain the Applicant for as long as possible. He maintained that the Applicant’s redundancy was solely driven by financial necessity.
Mr Bragg stated that all alternatives were explored prior to the redundancy, but the business lacked sufficient funds to continue with product development. As a consequence, the research and development function could no longer be financially sustained. In terms of the R&D grant, he explained that for the grant to become payable, it required a dollar-for-dollar contribution from the Respondent, which it was unable to afford due to cash flow constraints.
In responding to the Applicant’s assertion that he could perform any role within the business based on his founder status, Mr Bragg asserted that the Applicant’s past performance in management, finance, and operations did not support this claim. In addition, no existing roles matched the Applicant’s skill set or salary expectations.
Mr Bragg stated that since the Applicant’s redundancy, two employees had resigned and been replaced by one licensed electrician, engaged at an annual salary of about $85,000. Mr Bragg confirmed that the R&D roles had been eliminated and that the duties previously performed by the Applicant were no longer required. He also stated that the Applicant lacked the formal qualifications necessary for redeployment. The Respondent’s current workforce consists of six employees in Australia and three in the United States.
Allegations of misconduct discovered post dismissal
The Respondent raised post-dismissal allegations concerning the Applicant’s conduct. It is alleged that photographs stored on the Applicant’s company-issued laptop indicate he may have taken unauthorised personal leave during certain periods. In addition, some of the images found were sexually explicit in nature. The Respondent claims that the employee policy manual prohibits the storage or access of such material on company devices and states that any breach of this policy may constitute serious misconduct and could result in termination of employment.
In response, the Applicant rejected allegations of the misconduct advanced by the Respondent, describing them as “false, fanciful, spiteful, and prejudiced”. He explained that the photographs in question were stored in his personal iCloud account and not on the company-issued laptop. These images were allegedly accessed by Mr Bragg without the Applicant’s consent, and any resulting exposure to staff or breach of policy was a direct result of Mr Bragg’s actions. The Applicant denied ever receiving any employee policy manual or being invited to the “all-hands” meeting purported to have occurred in July 2024.
In relation to the allegation that he took unauthorised leave, the Applicant gave the following explanation:
“The Applicant’s role involved collaboration with the other Co-Founder as well as stakeholders and suppliers interstate and internationally in the USA (-16 hours), India (-5 ½ hours), China (-3 hours), as well as travel to regional and interstate locations for delivery and testing of products. This required work at all hours of the day and night and the Applicant remained contactable 24/7 for the duration of his employment. There was no requirement to report on start and finish times or days of work indicated in the employment contract or any Company policy or procedure.
There was no instruction or procedure in place for recording of, or taking of, time in lieu.
The Applicant undertook tasks under a remote working agreement, that was not bound to a specific location. During his tenure the Applicant has been required to travel and work internationally as required by his role. This agreement is replicated by many Company employees, with the Marketing Manager working offsite 4 days per week and the Sales Manager working remotely from Brisbane. It is also evidenced by way of the interim CEOs requests to adjourn the current proceedings due to work travel commitments.
Whilst the photos provided by the Respondent evidence that the Applicant worked extended and irregular hours, took breaks as required and worked remotely, it does not demonstrate that the Applicant was on leave without authorisation.”
The Applicant’s submissions
The Applicant submits that the dismissal was not a genuine redundancy because:
·The research and development work was ongoing;
·No consultation was undertaken as required by the Award and the Small Business Fair Dismissal Code; and
·No alternative roles were explored.
The Applicant submits that the Respondent has failed to provide the operational reasons why the restructure was required. No evidence has been adduced by the Respondent to support its claim that the duties he performed were not required to be done by anyone.
The Applicant submits that the Respondent has failed to comply with clause 41 of the Award and the Small Business Dismissal Code which require consultation prior to the redundancy. In this regard, the Applicant submits that a ‘principle purpose test’ should be applied when determining award coverage; that is, the nature of the worker’s duties should be considered rather than just their job title.[1]
The Applicant submits that the Respondent produced no evidence of assessment for alternative roles or reason the Applicant was unsuitable to be considered for redeployment within the organisation.
For these reasons, the Applicant claims that his dismissal was not a case of genuine redundancy. The dismissal has had a significant impact on his financial, mental and physical wellbeing. It was unfair when all the circumstances are considered.
The Applicant obtained alternative employment from 13 January 2025. He seeks compensation, claiming that the culture of Powerstack under the current leadership is “oppressive, unstable and toxic” making a return to the workplace untenable.
The Respondent’s submissions
The Respondent submits that the redundancy was both genuine and necessary, arising directly from significant financial distress that threatened the viability of the business. The decision to restructure was not made lightly but was essential to ensure operational sustainability and preserve the business.
The business had experienced financial pressure over two years despite multiple rounds of investment. By late 2024, it became clear that the R&D division could no longer be supported. The company redirected focus to the production, sale, and installation of its existing product, which could generate immediate revenue. The Applicant and his co-founder were made redundant on the basis that the employer no longer required a research and development department for its Australian and US operations.
Mr Bragg, as CEO, made the final decision following ongoing cost-cutting measures and extensive internal discussions. The Applicant, being a founder and former CEO of the Respondent, was involved in those discussions including earlier redundancy processes, and was aware of the financial challenges.
The Respondent submits that the Applicant was not covered by any modern award due to the seniority and nature of his role.
The Respondent further submits that consideration had been given as to whether the Applicant could be redeployed into another role. However, the Applicant did not hold the qualifications or experience necessary to perform the remaining roles, which required specific technical knowledge and training. As such, there were no viable options for redeployment.
In summary, the Respondent submits that its financial statements demonstrate the genuine nature of the redundancy decision, based solely on the business's financial requirements after exhausting all other reasonable options. There was no alternative role available, and the position previously held by the Applicant is not being performed by anyone.
The Respondent also submitted that the conduct discovered post-dismissal strengthened its position and substantiated its decision to dismiss the Applicant.
In its closing submissions, the Respondent said that while the redundancy process lacked complete documentation, any remedy should account only for the consultation period that should have occurred, as the ultimate decision and outcome would have remained unchanged regardless of additional consultation.
Consideration
Under s.385(d) of the Act a person is not protected from unfair dismissal if the dismissal was a case of genuine redundancy. The term ‘genuine redundancy’ is defined in s.389 of the Act:
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.
Therefore, there are three relevant matters for consideration in determining whether the Applicant’s dismissal was a case of genuine redundancy, namely:
1. Did the employer no longer require the employee’s job to be done by anyone because of changes in the operational requirements of the employer’s enterprise?
2. Has the employer consulted in accordance with the consultation provisions of a relevant modern award or enterprise agreement?
3. Was it reasonable in all the circumstances for the employee to be redeployed in the employer’s enterprise?
The Explanatory Memorandum to the Fair Work Bill 2008 provides that a redundancy may be genuine where, for example, the employer only needs three people to do a particular task or duty instead of five, or where the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.[2]
Further, the process for selecting an individual employee for redundancy is not a relevant question as to whether the redundancy is a genuine redundancy.[3]
Did the employer no longer require the employee’s job to be done by anyone because of changes in the operational requirements of the employer’s enterprise?
As noted above, in considering the question of whether an employer ‘no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise’, it is well established that the test can be met when job functions are retained but are redistributed.
An employee’s job may be genuinely made redundant when the employee’s duties, or aspects of them, are still being performed by other employees.[4] The test is whether the job previously performed by the employee has survived the restructure or downsizing, not whether the duties have survived in some form.[5]
The reference to ‘changes in the operational requirements of the employer’s enterprise’ in s 389(1)(a) of the Act includes circumstances where an employer restructures its business to reduce costs or improve efficiency, productivity, sales, revenue or some other aspect of performance.[6] The operational circumstances of a business which may result in a redundancy are in the direct knowledge of the employer. The evidentiary onus is on the employer to provide direct evidence about the nature of the employee’s job and why it is no longer required to be performed as a result of changes in the operational requirements of the employer’s enterprise.[7]
In Ulan Coal Mines Limited v Henry Jon Howarth and others[8], the Full Bench said:
“[17]It is noted that the reference in the statutory expression is to a person’s ‘job’ no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals (1995) 60 IR 304 a job involves ‘a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees’ organisation, to a particular employee’ (at p.308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. In these circumstances, it was said that:
‘What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant…’ (at p.308)
This does not mean that if any aspect of the employee’s duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation (2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the ‘job’ of that employee no longer exists.
[18]In Kekeris v A. Hartrodt Australia Pty Ltd[9], Senior Deputy President Hamberger considered whether a dismissal resulting from the restructure of a supervisory team was a case of genuine redundancy. As a result of the restructure, four supervisory team leader positions were replaced by three team leader positions. The Senior Deputy President said:
‘When one looks at the specific duties performed by the applicant prior to her termination they have much in common with those of two of the new positions in the new structure. The test is not however whether the duties survive. Paragraph 1548 of the explanatory memorandum makes clear that it can still be a ‘genuine redundancy’ where the duties of a previous job persist but are redistributed to other positions. The test is whether the job previously performed by the applicant still exists.’”
In Adams v Blamey Community Group[10], the Full Bench, in relation to s.389(1)(a), said:
“it is necessary to state at the outset that consideration of whether the employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the enterprise does not involve a merits review of the employer’s decision to make the person’s job redundant. It is not to the point that it may have been open to the employer to make a different operational decision which may have allowed the relevant employee’s job to be retained. As was stated in Low v Menzies Property Services Pty Ltd, “Whether it was objectively fair or justifiable to decide to abolish a position is beside the point, as long as the employer acted as it did because of changes in its operational requirements.”[11] What s.389(1)(a) requires is for findings of fact to be made as to whether, firstly, the employer has made the decision that the relevant employee’s job is no longer required to be performed by anyone and, secondly, whether that decision was made because of changes in the operational requirements of the enterprise. If there was an ulterior motive for the decision - that is, if the real reason for the decision did not genuinely relate to any change in operational requirements, whatever the ostensible reason may have been - then it will not be possible to make the second finding of fact. However once these findings of fact are made, the element of the genuine redundancy definition contained in s.389(1)(a) is satisfied and no further inquiry is necessary.”
In Low v Menzies Group of Companies[2014] FWC 7829[12], the Commission stated that:
“It is not the function of the Commission, in determining whether a dismissal is a case of genuine redundancy, to form a view about the merits of the decision to make a position redundant. Whether it was objectively fair or justifiable to decide to abolish a position is beside the point, as long as the employer acted as it did because of changes in its operational requirements”.
Given the evidence set out earlier, I am satisfied that the Respondent no longer required the Applicant’s position to be performed due to its financial circumstances. There was no real dispute that the Respondent was experiencing financial difficulties. There was no suggestion that the Applicant’s role was subsequently filled by another person. I accept that this constituted a change in the operational requirements of the enterprise.
Has the employer consulted in accordance with the consultation provisions of a relevant modern award or enterprise agreement?
If an employee is covered by a modern award or enterprise agreement, the consultation requirement under section 389(1)(b) of the Act applies. In such cases, the employer is required to demonstrate that the employee was consulted about the redundancy in order to rely on the genuine redundancy defence in an unfair dismissal claim.
I find that the Applicant was covered by the Manufacturing and Associated Industries and Occupations Award 2020 at the time of his dismissal.
The Applicant has provided detailed evidence regarding the nature of his duties during his employment. These included tasks such as the design, manufacture, installation, fault-finding, commissioning, and servicing of the Powerstack system and associated components. He also performed hands-on engineering tasks within the scope of his trade qualifications, which include a HVAC Trade Certificate, a Class 2B Electrical License, and a Diploma in Mechanical Engineering. It was the Applicant’s evidence that his duties fell within the classification of an Advanced Engineering Tradesperson Level 2 under the Award.
No evidence was adduced by the Respondent to contradict or clarify the duties performed by the Applicant. In the absence of competing or probative evidence from the Respondent, I accept the Applicant’s description of his duties and find that he was covered by the Award.
The consultation obligations under the Award therefore apply.
Clause 41 of the Award deals with consultation about major workplace change and provides:
“Consultation about major workplace change
41.1If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:
(a)give notice of the changes to all employees who may be affected by them and their representatives (if any); and
(b) discuss with affected employees and their representatives (if any):
(i) the introduction of the changes; and
(ii) their likely effect on employees; and
(iii)measures to avoid or reduce the adverse effects of the changes on employees; and
(c)commence discussions as soon as practicable after a definite decision has been made.
41.2For the purposes of the discussion under clause 41.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:
(a) their nature; and
(b) their expected effect on employees; and
(c) any other matters likely to affect employees.
41.3Clause 41.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.
41.4The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 41.1(b).
41.5 In clause 41 significant effects, on employees, includes any of the following:
(a) termination of employment; or
(b)major changes in the composition, operation or size of the employer’s workforce or in the skills required; or
(c) loss of, or reduction in, job or promotion opportunities; or
(d) loss of, or reduction in, job tenure; or
(e) alteration of hours of work; or
(f)the need for employees to be retrained or transferred to other work or locations; or
(g) job restructuring.
41.6Where this award makes provision for alteration of any of the matters defined at 41.5, such alteration is taken not to have significant effect.
There is no evidence that the Respondent provided the Applicant with written notification of the major change, nor that it gave the Applicant an opportunity to be heard on measures to mitigate the impact of the redundancy. The Respondent’s assertion that the Applicant was aware of cost pressures and prior redundancy process does not satisfy the consultation obligations under the Award.
I accept the Applicant’s evidence that he was excluded from discussions, not invited to meetings, and that no consultation was undertaken prior to his dismissal despite his continued status as a Director until September 2024.
I find that the consultation requirement was not met and as a result, the redundancy cannot be a genuine redundancy for the purposes of s.389 of the Act.
Was it reasonable in all the circumstances for the employee to be redeployed in the employer’s enterprise?
Section 389(2) provides that a person’s 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 an associated entity of the employer.[13]
For the purposes of s.389(2), the Commission must consider 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 employee. There must be an appropriate evidentiary basis for such a finding.[14] The word ‘redeployed’ in s.389(2) should be given its ordinary and natural meaning, which is to ‘transfer to another job, task or function’.[15]
Given the finding above that the consultation requirement was not met, and as a result the redundancy is not genuine, no further findings are required as to redeployment.
Was the dismissal a case of genuine redundancy?
Given my finding that the requirement in s.389(1)(b) was not met, I am satisfied and find that the Applicant’s dismissal was not a case of genuine redundancy.
I now turn to consider the merits of the Applicant’s application.
Was the dismissal harsh, unjust or unreasonable?
Section 387 of the Act provides that, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission 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.
The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd[16] as follows:
‘... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.’
The onus is on the Applicant to prove his dismissal was harsh, unjust and/or unreasonable.
I am required to consider each of these criteria, to the extent they are relevant to the factual circumstances before me.[17]
Valid reason - s.387(a)
In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded”[18] and should not be “capricious, fanciful, spiteful or prejudiced.”[19] However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.[20]
There is no mandate for giving the ‘valid reason’ criterion any greater emphasis or weight than any of the other criteria in s 387. It is well settled that the statutory requirement to ‘have regard to’ or ‘take into account’ requires the Commission to give the matter(s) weight as a fundamental element in the decision-making process. Even if it is found that there was a valid reason for the dismissal, an overall assessment must be made as to whether the dismissal was harsh, unjust or unreasonable.
While the dismissal of the Applicant was not a genuine redundancy, it does not automatically follow that his dismissal was unfair.
I have accepted that the Respondent was experiencing financial difficulties, and the dismissal was because of changes in the operational requirements of the business.
The Respondent also relied on allegations of conduct issues not known by them until after his dismissal. It is well established that an employer may rely upon the misconduct of an employee discovered after dismissal as a valid reason for dismissal.
I am not satisfied the allegations of post-dismissal conduct relied on by the Respondent could be substantiated without proper investigation. This is in part because I accept the evidence of the Applicant that he worked irregular hours and the photos do not conclusively show he took unauthorised leave. As a result, I am not satisfied that the alleged post-dismissal conduct provides a valid reason for the Applicant’s dismissal.
Having been satisfied that the dismissal was because of changes to the operational requirements of the business, this is a neutral consideration in this case.
Notification of the valid reason and opportunity to respond - s.387(b) and (c)
Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made,[21] in explicit terms[22] and in plain and clear terms.[23] In Crozier v Palazzo Corporation Pty Ltd[24] a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:
“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”[25]
An employee protected from unfair dismissal must also be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. Such requirement will be satisfied where the employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern.[26] This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality.[27]
The requirement to notify of the reason, together with the requirement to provide an opportunity to respond to the reason, involves consideration of whether procedural fairness was afforded to the Applicant before his dismissal was effected.
While the Applicant was told of the reason for his dismissal, it is clear in the present case that the Applicant was not given an opportunity to respond and accordingly was not afforded the procedural fairness required by the Act.
Unreasonable refusal by the employer to allow a support person - s.387(d)
Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.
I find that the Applicant was not unreasonably refused a support person.
Warnings regarding unsatisfactory performance - s.387(e)
A warning for the purposes of s.387(e) must clearly identify:
a. the areas of deficiency in the employee’s performance;
b. the assistance or training that might be provided;
c. the standards required; and
d. a reasonable timeframe within which the employee is required to meet such standards.[28]
The warning must also “make it clear that the employee’s employment is at risk unless the performance issue identified is addressed.”[29]
The Applicant was not dismissed because of unsatisfactory performance and as such this is a neutral consideration.
Impact of the size of the Respondent on procedures followed (s.387(f)), and the absence of dedicated human resources management specialist/expertise on procedures followed (s.387(g))
The Respondent was assisted by lawyers throughout the process. There is no evidence that the size of the Respondent and any absence of dedicated human resource expertise impacted on the procedures followed by it in effecting the dismissal.
Other relevant matters - s.387(h)
Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant.
I note the Applicant was the co-founder of the Respondent and had 15 years' service with the Respondent.
Conclusion as to unfairness
Having carefully considered each of the required matters, I am satisfied that the Applicant has discharged his onus of proving that his dismissal was harsh. The lack of consultation meant the Applicant was not given the opportunity to engage in meaningful dialogue and suggest alternatives to his redundancy, or to propose other options for cost cutting.
As a result, I find that his dismissal was unfair.
Remedy
Having found that the Applicant’s dismissal was unfair, it is necessary to consider what, if any, remedy should be granted to him. The Applicant seeks the remedy of compensation.
Under section 390(3) of the Act, I must not order the payment of compensation unless:
a.I am satisfied that reinstatement is inappropriate; and
b.I consider an order for payment of compensation is appropriate in all the circumstances of the case.
In this case, I am satisfied that reinstatement is inappropriate, and an order for payment of compensation is appropriate given the unfairness of the dismissal.
In considering what is appropriate compensation in the circumstances, I must consider the factors which are set out in s.392(2) of the Act and which are set out below.
Remuneration received, or likely to be received (s392(2)(c))
In terms of the remuneration received, or likely to be received (s392(2)(c)), it is difficult to determine how long the Applicant’s employment would have continued. Given the Applicant was the co-founder of the business and had worked in all aspects of the business, it is possible in this case that there could have been an alternative found other than redundancy.
In other words, this is an unusual situation in that the answer is not simply the period of time that would be taken for genuine consultation to occur, with the inevitable outcome being dismissal.
Given the unique circumstances, I consider that it is likely that the Applicant would have remained employed for at least another three months.
Remuneration earned and income likely to be earned (s392(2)(e) and (f))
The Applicant obtained alternative employment on 13 January 2025. He was paid 5 weeks’ pay in lieu of notice. There is no evidence to suggest that he earned income between 27 November 2024 (being the end of his notice period) and 13 January 2025.
Length of service (s392(b))
The Applicant was employed for 15 years, and I consider that this lengthy period supports an increase to the amount of compensation ordered.
Viability (s392(a))
While the Applicant was dismissed as a result of the financial difficulties the Respondent was facing, there is no specific evidence before the Commission as to the effect an order for compensation might have on the viability of the Respondent.
Mitigation efforts (s392(d))
The Applicant had obtained alternative employment which commenced on 13 January 2025. I note the Applicant’s evidence was that his new role provided less remuneration to his role with the Respondent.
Other relevant matters (s392(g))
In terms of other relevant matters (s392(g)), there are no other matters relevant to this consideration. Specifically, I do not consider it necessary to discount or increase the amount for ‘contingencies’.
Shock, distress etc (s392(4))
The amount of compensation does not include a component for shock, humiliation or distress.
Conclusion
Having considered each of these factors, I am satisfied that it is appropriate to order a remedy of compensation in the amount of 7 weeks’ salary, less appropriate taxation. This in effect covers the period between the end of the notice period and the commencement of his alternative employment.
An order to this effect will be issued with this decision.
DEPUTY PRESIDENT
Appearances:
N Giblett on his own behalf.
B Sundaraj of Sundaraj & Ker for Powerstack Australia Pty Limited.
Hearing details:
2025.
By video:
April 10, 11.
[1] Paul Mencev v AB Phillips Pty Ltd[2024] FWC 2122 and Kaufmann v Jones Lang LaSalle (Vic) Pty Ltd T/A JLL[2017] FWC 2623.
[2] See Explanatory Memorandum to the Fair Work Bill 2008 at paragraph 1548.
[3] See ibid at paragraph 1553.
[4] Dibb v Commissioner of Taxation (2004) 136 FCR 388 at 404-5.
[5] Kekeris v A. Hartrodt Australia Pty Ltd[2010] FWA 674 at [27].
[6] Nettlefold v Kym Smoker Pty Ltd [1996] IRCA 496 at p. 373.
[7] Kieselbach v Amity Group Pty Ltd PR973864 at [34].
[8] [2010] FWAFB 3488.
[9] [2010] FWA 674.
[10] [2016] FWCFB 7202.
[11] [2014] FWC 7829 at [16]
[12] [2014] FWC 7829.
[13] Explanatory Memorandum to the Fair Work Bill 2008 at paragraph 1551.
[14] Technical and Further Education Commission T/A TAFE NSW v Pykett [2014] FWCFB 714 at [36].
[15] Ibid at [25].
[16] (1995) 185 CLR 410 at 465 per McHugh and Gummow JJ.
[17] Sayer v Melsteel Pty Ltd[2011] FWAFB 7498, [14]; Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [69].
[18] Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.
[19] Ibid.
[20] Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681, 685.
[21] Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41].
[22] Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.
[23] Previsic v Australian Quarantine Inspection Services Print Q3730.
[24] (2000) 98 IR 137.
[25] Ibid at 151.
[26] Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7.
[27] RMIT v Asher (2010) 194 IR 1, 14-15.
[28] McCarron v Commercial Facilities Management Pty Ltd t/a CFM Air Conditioning Pty Ltd [2013] FWC 3034, [32].
[29] Fastidia Pty Ltd v Goodwin Print S9280 (AIRCFB, Ross VP, Williams SDP, Blair C, 21 August 2000), [43]-[44].
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