Neil Ricketts v Boart Longyear Australia Pty Ltd

[2013] FWC 2144

[2013] FWC 2144

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Neil Ricketts
v
Boart Longyear Australia Pty Ltd
(U2012/16648)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 10 APRIL 2013

Application for unfair dismissal remedy - genuine redundancy - meaning of redundancy.

[1] On 12 December 2012 Mr Ricketts lodged an application pursuant to s.394 of the Fair Work Act 2009 (the FW Act), through which he sought relief with respect to the termination of his employment with Boart Longyear Australia Pty Ltd (Boart Longyear). The application was not settled through the conciliation process and has been referred to me for arbitration. Boart Longyear has objected to the application on the basis that the termination of Mr Ricketts’ employment was a case of genuine redundancy. I convened a determinative conference on 2 April 2013. At this conference Mr Ricketts represented himself and Mr Blewett, the Boart Longyear Regional General Counsel, appeared for Boart Longyear. At this conference Mr Ricketts gave evidence in support of his position and was given the opportunity to question Mr Greco, to whom he directly reported. Mr Downey, the Boart Longyear Regional Chief Financial Officer gave evidence about the process of the termination of Mr Ricketts’ employment.

[2] There is little dispute over the background to this application. Boart Longyear is a multinational business engaged in servicing the mining and mineral exploration industry. Mr Ricketts commenced employment with Boart Longyear in Adelaide on 26 March 2012 as a Credit Manager. On 4 December 2012 Mr Ricketts was advised that his position had been made redundant.

[3] Mr Ricketts’ position is that the termination of his employment was not a case of genuine redundancy because there were no changes to operational requirements with respect to the credit management function, the responsibilities of his job are still required, other credit managers remain employed and there is no reduction in the scope of work. Furthermore, Mr Ricketts asserts that Boart Longyear has not complied with the dispute resolution clause in his employment contract and that he would have considered redeployment. Further, Mr Ricketts asserts that the termination of his employment was unfair in that he joined Boart Longyear in March 2012 on the basis that secure employment was offered to him and that Mr Greco had, in November 2012, given him approval to take annual leave in July 2013 and that he had consequently booked overseas travel arrangements.

[4] Mr Ricketts asserts that he is able to pursue this application because the termination of his employment was not a case of genuine redundancy, and that this termination was harsh, unjust or unreasonable and was put into effect through an unfair process.

[5] The Boart Longyear position is that Mr Ricketts could not be unfairly dismissed as the termination of his employment was a case of genuine redundancy pursuant to the FW Act, but, in the alternative, it was not unfair.

Initial Issues

[6] Section 396 states:

“396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

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

[7] There is no dispute that Mr Ricketts’ application was lodged within time. Boart Longyear is a very large employer and I am satisfied that Mr Ricketts was a person who was protected from unfair dismissal. The critical issue in dispute is whether the termination of Mr Ricketts’ employment was a case of genuine redundancy.

[8] Section 389 states:

“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.”

[9] I have considered whether the termination of Mr Ricketts’ employment was consistent with this definition in the context of the evidence before me. I note that some weeks before the 2 April 2013 conference I put the parties on notice that I sought information about whether there was a relevant modern award.

[10] Mr Ricketts’ evidence went to the circumstances of his employment and his work at Boart Longyear. His evidence was that no performance concerns or reservations about his work had been raised with him prior to 4 December 2012 when he was called to a meeting and advised that, consistent with a Head Office instruction to cut costs by 20%, his position was made redundant with immediate effect.

[11] Mr Ricketts referred to the Boart Longyear financial results for the year ended December 2012 which showed a profitable outcome for that year. The termination of employment letter provided to Mr Ricketts on 4 December 2012 specified that date as the effective date of termination and that four weeks pay in lieu of notice was applicable.

[12] Mr Ricketts was provided with copies of correspondence between Mr Downey and a Mr Oscarson, a senior Human Resources Executive in the Boart Longyear global Head Office which confirmed the requirement for Mr Downey and other senior personnel to finalise a redundancy list to take effect from 4 December 2012. Mr Ricketts argued that this requirement was arbitrary and did not take into account the human cost associated with employment termination decisions of this nature.

[13] The evidence of Mr Downey, the Boart Longyear Regional Chief Financial Officer, Asia Pacific Region, was that he was the decision-maker in this matter. Mr Downey's evidence was that about July 2012 Boart Longyear began experiencing a downturn in its business in Australia in the Asia Pacific region associated with a slowdown in the mining and mineral exploration industry. Mr Downey detailed the extent of that slowdown on the basis of reduction in "second half revenue of approximately $196 million across the Boart Longyear group". 1 Mr Downey's evidence was that, in conjunction with the Boart Longyear Human resource management personnel he then reviewed roles within his Finance Department, in order to determine how cost savings could be achieved. His evidence was that his Global Manager, Mr Reagan, advised him of a 16% cost saving target in September or October 2012 and that this equated to a need to achieve savings in the order of $950,000. Mr Downey's evidence was that the majority of costs related to wages and on-costs and that there was limited scope to achieve savings in other areas. Mr Downey's evidence was that:

“As part of my reviews, and to achieve the cost reductions required by the Respondent and the Boart Longyear group, I identified that the Respondent needed to make 11 roles redundant in the Finance Department, including the role carried out by the Applicant. In all, there were approximately 100 redundancies in the APAC region in December, out of a total of approximately 527 redundancies through the APAC region in the last quarter of 2012.

The actions required to implement the APAC Finance Department redundancies referred to in paragraph 10 above took place on 4 December 2012, and were part of coordinated activities across the Boart Longyear group world-wide on that day. I am informed that the Boart Longyear global group reduced its employee headcount by approximately 2,000 through the last quarter of 2012.” 2

[14] Mr Downey identified two key criteria he used to decide whether a function should be made redundant. These were, firstly, whether a job function was directly affected by the downturn in the Boart Longyear business and, secondly, whether a particular function could be shared amongst other personnel so as to achieve the savings. Mr Downey's evidence is that Mr Ricketts was included in the employees to be made redundant because:

“I formed the view that the Applicant’s role was one of the positions to be made redundant because:

a. There had been a reduction in the amount of business, and therefore the extent of tasks to be carried out as part of the Credit Manager role;

b. The direct reports to the Credit Manager role could report to the Finance Manager role (Tony Greco), removing or reducing the need for the Credit Manager role;

c. Any remaining tasks of the Credit Manager role could be allocated to other people in the Finance Department, resulting in an overall reduction in the number of people required to carry out the functions of the Finance Department; and

d. The Respondent did not have an ongoing requirement for the Credit Manager role in its APAC business.

e. Removal of the Credit Manager role, coupled with the other redundancies taking place, resulted in improved efficiencies of the Finance Department and the Respondent’s business.

The APAC Finance Department located in Adelaide is the regional finance department. Because of the other redundancies happening in the Finance Department at that time, there were no alternative roles available for the Applicant, and in fact no vacancies in the APAC Finance Department at all. Redeployment of the Applicant in another role would have necessitated termination of someone else’s employment, given the cost reduction requirements I was obliged to implement.

The Respondent had no opportunities for redeployment of the Applicant to any other role in the Asia Pacific Region. Leading up to the redundancies implemented in December 2012, I gave due consideration to opportunities for deployment of all Finance Department employees who were ultimately made redundant, because there were a number of valued employees who the Respondent would prefer to keep employed. The cost reductions required, and the “hiring freeze” in place, meant there were no opportunities available.

There were no other opportunities for deployment of the Applicant in any other part of the global Boart Longyear business as:

a. Although I was not aware at the time of the finance department requirements in the Latin America, EMEA or North American regions, I was aware that those regions were also making reductions in staffing numbers, and therefore did not have any positions available for which the Applicant’s skills were suited;

b. the Respondent, or Boart Longyear, would not relocate an employee to an overseas posting, when candidates were likely to be available either from employees recently made redundant, or otherwise locally;

c. Redeployment of the Applicant in another role elsewhere in the global Boart Longyear business would have necessitated termination of someone else’s employment, given the cost reduction requirements those other businesses were obligated to implement; and

d. Boart Longyear posts all its job opportunities online, which was available to the Applicant to pursue should he wish.” 3

[15] Mr Greco’s evidence was that whilst he was aware of the possibility of redundancies from at least September 2012, he only became aware of the names of those people being made redundant some two days before 4 December 2012. Mr Greco confirmed that he had approved annual leave for Mr Ricketts before he became aware that Mr Ricketts was to be made redundant. He also confirmed that, after Mr Ricketts had been told of his redundancy he had discussed with him the business downturn that led to those redundancies. He denied criticising the redundancy decision-making approach.

[16] The concept of a redundancy has been considered at length by numerous courts and tribunals. In Amcor Limited v CFMEU and others 4 the High Court confirmed that the concept of redundancy refers to a dismissal which is not based on a personal act or employee competence or failing but, is because the employer does not wish that job to be undertaken by anyone.

[17] Section 389(1) requires consideration of the concept of redundancy in the context of whether the job is required to be performed by anyone because of changes in the employers operational requirements.

[18] A Full Bench of Fair Work Australia in Ulan Coal Mines Ltd v Howarth and others 5 considered the provisions of s.389(1)(a) in some detail. The following observation is relevant to this matter:

“[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”. 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…”

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 [2010] FWA 674 Hamberger SDP 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.”

(references removed)

[19] The evidence of Mr Downey was clear in establishing that the termination of Mr Ricketts’ employment arose from a requirement that the finance department be substantially reduced in size so as to reflect the downturn in business and subsequent cost saving requirements. The evidence of Mr Greco confirmed this.

[20] On the evidence before me I am satisfied that the downturn in the Boart Longyear business resulted in a need to make savings and that this underpinned a substantial number of redundancies. Changes in the arrangement of job functions previously undertaken by Mr Ricketts and the reallocation of work functions meant that the credit manager position which Mr Ricketts previously held was made redundant. There is no suggestion that this was related to Mr Ricketts’ performance or his personal characteristics. It was simply part of a widespread redundancy process within the business. The fact that various of the functions undertaken by Mr Ricketts were redistributed to other existing employees does not diminish the extent to which his job was made redundant.

[21] Consequently, I am satisfied that Boart Longyear no longer required Mr Ricketts to undertake his Credit Manager duties because of its restructure of that function arising from a downturn in trade. This downturn generated a requirement for an operational change, consistent with s.189(1)(a).

[22] Section 189(1)(b) firstly requires a determination about whether Mr Ricketts’ employment was covered by a modern award or enterprise agreement which included obligation to consult about the redundancy. Prior to the determination of this matter I invited the parties to consider the question of whether Mr Ricketts was covered by a modern award. Both parties put to me that there was no award or enterprise agreement applicable to Mr Ricketts’ employment.

[23] I am satisfied that there is no Enterprise Agreement which has application to Mr Ricketts’ work function. Notwithstanding the position of the parties, I have considered whether the Clerks - Private Sector Award 2010 has application to the Credit Manager function at Boart Longyear. The coverage of that Award is relevantly set out at clause 4.1.

“4.1 This award covers employers in the private sector throughout Australia with respect to their employees engaged wholly or principally in clerical work, including administrative duties of a clerical nature, and to those employees. However, the award does not cover:

(a) an employer bound by a modern award that contains clerical classifications; or

(b) an employee excluded from award coverage by the Act.”

[24] The award defines clerical work in the following terms:

“clerical work includes recording, typing, calculating, invoicing, billing, charging, checking, receiving and answering calls, cash handling, operating a telephone switchboard and attending a reception desk”

[25] Clause 15 relevantly states:

“15.1 All employees covered by this award must be classified according to the structure set out in Schedule B—Classifications and paid the minimum wage in clause 16—Minimum weekly wages. Employers must advise their employees in writing of their classification and of any changes to their classification.

15.2 The classification by the employer must be according to the skill level or levels required to be exercised by the employee in order to carry out the principal functions of the employment as determined by the employer.”

[26] Schedule B - Classifications relevantly states:

“The classification criteria in this schedule provides guidelines to determine the appropriate classification level of persons employed pursuant to this award. In determining the appropriate level, consideration must be given to both the characteristics and typical duties/skills. The characteristics are the primary guide to classification as they indicate the level of basic knowledge, comprehension of issues, problems and procedures required and the level of supervision or accountability of the position. The totality of the characteristics must be read as a whole to obtain a clear understanding of the essential features of any particular level and the competency required. The typical duties/skills are a non-exhaustive list of duties/skills that may be comprehended within the particular level. They are an indicative guide only and at any particular level employees may be expected to undertake duties of any level lower than their own. Employees at any particular level may perform/utilise one such duty/skill, or many of them, depending on the particular work allocated.

The key issue to be looked at in properly classifying an employee is the level of competency and skill that the employee is required to exercise in the work they perform, not the duties they perform per se. It will be noted that some typical duties/skills appear in more than one level, however when assigning a classification to an employee this needs to be done by reference to the specific characteristics of the level. For example, whilst word processing and copy typing are first specifically mentioned at Level 2 in terms of typical duty/skill, it does not mean that as soon as an employee operates a word processor or typewriter they automatically become Level 2. They would achieve a Level 2 classification when they have achieved the level of skill and competency envisaged by the characteristics and the relevant indicative duty(ies)/skill(s) of a Level 2. Level 1 in this structure is to be viewed as the level at which employees learn and gain competence in the basic clerical skills required by the employer, which in most cases would lead to progression through the classification structure as their competency and skills increase and are utilised.”

[27] I have considered Mr Ricketts’ work function against the Level 5 classification definition which states:

“B.6 Level 5

B.6.1 Characteristics

Employees at this level are subject to broad guidance or direction and would report to more senior staff as required.

Such employees will typically have worked or studied in a relevant field and will have achieved a standard of relevant and/or specialist knowledge and experience sufficient to enable them to advise on a range of activities and features and contribute, as required, to the determination of objectives, within the relevant field(s) of their expertise.

They are responsible and accountable for their own work and may have delegated responsibility for the work under their control or supervision, including, scheduling workloads, resolving operations problems, monitoring the quality of work produced and counselling staff for performance and work related matters.

They would also be able to train and to supervise employees in lower levels by means of personal instruction and demonstration. They would also be able to assist in the delivery of training courses. They would often exercise initiative, discretion and judgment in the performance of their duties.

The possession of relevant post secondary qualifications may be appropriate but are not essential.

B.6.2 Typical duties/skills

Indicative typical duties and skills at this level may include:

(i) Apply knowledge of organisation’s objectives, performance, projected areas of growth, product trends and general industry conditions.

(ii) Application of computer software packages within either a micro personal computer or a central computer resource including the integration of complex word processing/desktop publishing, text and data documents.

(iii) Provide reports for management in any or all of the following areas:

• account/financial;



• staffing;



• legislative requirements; and



• other company activities.




(iv) Administer individual executive salary packages, travel expenses, allowances and company transport; administer salary and payroll requirements of the organisation.

(v) Call centre principal customer contact leader is employed to:

• apply a significant range of fundamental principles and complex techniques across a wide and unpredictable variety of contexts in either varied or highly specialised functions;



• co-ordinate the work of a number of teams within a call centre environment; and



• have a number of specialists/supervisors reporting to them.




An employee who holds a Diploma—Front Line Management or equivalent is to be classified at this level when employed to perform the functions defined.”

[28] I have considered and adopted the approach applied by a Full Bench in Michelle Gray v Hamilton Jones and Bruce Pty Ltd. 6 I have concluded that the duties and functions undertaken by Mr Ricketts confirm that the primary purpose of the credit manager function cannot be described as a clerical function, although I acknowledge that significant components of that function fall into a clerical work description. Accordingly, I have concluded that Mr Ricketts was not covered by the Clerks Award 2010. No other Award appears to have application to his employment.

[29] Mr Ricketts’ position that the decision to dismiss him was inconsistent with his letter of appointment does not provide a basis for a conclusion reached pursuant to s.389.

[30] It follows then that s.189(1)(b) is not applicable.

[31] Section 189(2) requires consideration of whether redeployment would have been reasonable. I have already set out the evidence of Mr Downey in this respect and I am satisfied that redeployment options were not reasonably available to Boart Longyear. In this respect I have noted that the downturn was a global one and the evidence indicates that staff reductions were occurring on an across-the-board basis. Mr Downey's evidence was that there were no other available Credit Manager positions within the Boart Longyear Asia Pacific group and that the nearest Credit Manager function was located in Geneva. I do not consider redeployment on this basis to be a reasonable option open to Boart Longyear.

[32] Accordingly, I have concluded that the termination of Mr Ricketts’ employment was a case of genuine redundancy. Whilst this redundancy decision may have financially disadvantaged Mr Ricketts, the provisions of s.385 mean that it cannot be considered to be an unfair dismissal. Section 385 states:

“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

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

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

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

[33] There is no capacity for me to consider the merits of Mr Ricketts’ application in these circumstances. The application must consequently be dismissed. An Order (PR535511) to this effect will be issued.

SENIOR DEPUTY PRESIDENT

Appearances:

N Ricketts on his own behalf.

P Blewett for the Respondent.

Hearing details (Determinative Conference):

2013.

Adelaide:

April 2.

 1   Exhibit B2, paras 6-8

 2   Ibid, paras 10 and 11

 3   Ibid, paras 12, 13, 14 and 15

 4 (2005) 222 CLR 241

 5   [2010] FWAFB 3488

 6   [2011] FWAFB 6884

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