Nicole Newell v Frost Engineers

[2021] FWC 3006

[2021] FWC 3006

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Nicole Newell
v
Frost Engineers
(U2020/14784)

DEPUTY PRESIDENT LAKE BRISBANE, 25 MAY 2021

Application for an unfair dismissal remedy – dismissal is a case of genuine redundancy – application dismissed.

Background

[1] This decision concerns an unfair dismissal application brought by Nicole Newell (the Applicant) made under s 394 of the Fair Work Act 2009 (the Act). Ms Newell was employed as a Senior Cost Controller/Administrator for Frost Engineers (the Respondent). She was employed on 12 June 2017 until his position was made redundant and his employment ended on 22 October 2020.

[2] The Applicant contends that her dismissal was unfair and seeks compensation. She asserts further that the dismissal was not a genuine redundancy.

[3] The Respondent objected to the application on the basis that her dismissal was a genuine redundancy for the purposes of s.389 of the Act, and further, that the Applicant’s dismissal was not unfair.

[4] The parties attended two conferences before me but were unable to resolve the matter through negotiation.

[5] The jurisdictional matter was listed for hearing on 2 April 2021. However, prior to the hearing the parties agreed that the jurisdiction matter could be determined on the papers. Both parties filed written submissions and evidence, with the assistance of their representatives.

[6] The jurisdictional question of whether the Applicant’s dismissal was a case of genuine redundancy must first be determined before considering the merits of an unfair dismissal application. I note that the Applicant made her application within the 21-day period required by s.394(2) of the Act, that she was a person protected from unfair dismissal earning less than the high-income threshold, and that he had undertaken the minimum period of employment (s.382).

[7] Having considered the parties’ submissions and the evidence provided, I have, for the following reasons, determined that the Applicant’s dismissal was a case of genuine redundancy. Thus, the Commission is without the power to hear or determine the Applicant’s claim for unfair dismissal.

Unfair dismissal

[8] Section 385 of the Act provides that a person is unfairly dismissed if the Commission 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.”

Genuine redundancy

[9] The Respondent submits that the Commission has no jurisdiction to hear the Applicant’s unfair dismissal claim because the Respondent has satisfied the requirements of s.389 of the Act as the dismissal was due to a genuine redundancy. The Respondent contends that, in those circumstances, an unfair dismissal application cannot be made.

[10] Section 389 of the Act relevantly provides that:

“(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.”

Was the Applicant’s dismissal a genuine redundancy?

Respondent’s submissions

[11] In summary, the Respondent submits that the redundancy was genuine on the basis that:

a) The Respondent no longer requires the Applicant’s job to be performed by anyone because of changes in the operational requirements of the Respondent’s enterprise, arising out of restructure of its business to improved efficiency and redistribute tasks between employees; and

b) The Respondent complied with any obligation imposed by an applicable modern award or enterprise agreement to consult about the redundancy.

[12] By way of background, the Respondent explained that since 2008, its financial operations were managed by a contractor who was engaged for approximately four hours each fortnight, subject to workload, to manage the company’s bookkeeping responsibilities, which included payroll, superannuation, depreciation and preparing BAS statements (the Contractor). The Respondent’s project planning and cost control activities were managed by Mark Frost, the Respondent’s Director.

[13] That arrangement continued until June 2017, when the Applicant commenced as an administration officer and took over the project planning and cost contract activities. As the Applicant did not have the requisite qualification or experience in financial operations, those responsibilities continued to be undertaken by the Contractor.

[14] The Respondent asserts that its business “grew exponentially”. It went from employing five staff to having 35 employees. The evidence of Leanne Frost, another director of the Respondent, was that revenue had increased by 400% from $1.2 million in 2016/17 to $4.7 million in 2019/20 and payroll had increased by 850% from approximately $300K in 2016/17 to over $2.5 million in 2020.

[15] This growth was due to winning bigger and higher value projects which meant more focus and expertise was needed on project planning and cost control to reduce risk. It also required more efficient and cost-effective methods to manage the business operations as the current practices were outdated and prone to error. The Contractor’s engagement was increased to 10-12 hours a fortnight, with additional calls as required. Mr Frost gave evidence that it became clear to the business that it needed to change the way it managed its financial operations to improve its capability and expertise.   

[16] Ms Frost stated that the catalyst for change occurred on 1 October 2021, when the Contractor announced she would no longer provide her services as she intended to travel.   This was confirmed on 3 October, when the Contractor provided her one month’s notice. The directors considered this to be a good opportunity to restructure their financial operations by combining the duties of the contractor and financial controller (that is, the Applicant’s duties) into a single position, with any remaining duties currently conducted by the Applicant to be allocated to other employees. The new position would require a permanent part-time employee with bookkeeping qualifications and experience, which the Applicant did not have.

[17] On 6 October 2020, Ms Frost emailed their lawyer seeking advice on the proposed restructure and any potential, consequential redundancies. In that email, she summarised the reasons for the proposed redundancy as being a desire to bring the bookkeeper’s role into the business, to better manage the increasing demands on the bookkeeper’s time and expertise as more complicated financial tasks needed to be undertaken, a need to reduce growing business overheads, the fact that business growth and bigger projects meant cost control of budgets and overruns were even more critical now, a need to simplify payroll and invoicing and streamline processes by using one software program and a desire to save costs by reducing the staffing levels.

[18] The Respondent’s witnesses have evidence that a key duty performed by the Applicant was to enter time worked on projects into an Excel spreadsheet. However, that spreadsheet would regularly have glitches and the Respondent proposed to introduce the use of online platforms to improve efficiency. Some of those changes have since been made. The Respondent asserted that making these necessary and overdue operational changes have modernised its business processes to improve efficiency whilst saving the Respondent $40,000 per year in wages.

[19] On 14 October 2020, the Respondent sent the Applicant a meeting request for 19 October 2020. It was there that the Respondent first discussed its decision to restructure the business with the Applicant. The Respondent says that it could not have do so sooner (that is, immediately after the Contractor tended her written resignation) as the directors were on annual leave until 6 October 2020 and the Applicant was then absent on sick leave from 6 to 16 October 2020 inclusive.

[20] At the meeting on 19 October 2020, Mr Frost met with the Applicant and discussed the possibility of her being offered a redundancy in light of the restructure that the Respondent intended to embark upon and in view of the fact that the directors had not been able to identify any other suitable positions for the Applicant. The Respondent submits that the Applicant was invited to suggest any alternative she thought suitable. The Respondent submits that this meeting was held in compliance with any obligation to consult in accordance with any applicable Modern Award.

[21] What had been discussed in the meeting of 19 October 2020 was distilled in a letter sent by the Respondent to the Applicant on 20 October 2020. That letter confirmed that the Applicant’s position would become redundant if no alternative position could be identified, stated that there were no vacant roles within the Respondent suitable for the Applicant and invited her to meet with Mr Frost on 21 October to discuss any suitable role the Applicant had identified as being available.

[22] On 21 October 2021, the Applicant met with Mr Frost and asked whether she could undertake a training court to gain the necessary qualification so that she could fill the new position. Mr Frost says he was surprised by the Applicant’s suggestion as he had asked her previously whether she would be interested in gaining a qualification in bookkeeping, but the Applicant had never enrolled in a course.

[23] Mr Frost explained that the Respondent required the duties of the new position to be provided immediately and it may not be possible to accommodate the Applicant’s request. However, he agreed to consider her request and made a time to meet with the Applicant the following day with his decision.   

[24] At the meeting on 22 October 2020, Mr Frost confirmed that because the Respondent was losing the services of the contractor on 5 November 2020, it would not be practical to appoint the Applicant to the new position while she undertook a training course. The Respondent needed a qualified person immediately. Accordingly, given the lack of any other suitable role within the company, Mr Frost confirmed that the Applicant’s employment would be terminated immediately on the grounds of redundancy.

[25] In respect of the Applicant’s assertion that she “was more than capable of learning to perform the task of payroll”, the Respondent states that she did not have requisite qualifications and experience and, given the resignation of the contractor, the Respondent required someone with those skills immediately. Further, in the past, when it had been suggested that the Applicant learn how to use the software, she had shown no interest. The new bookkeeper gave evidence that she does not believe her key duties could be done by anyone who does not have extensive experience and qualifications in bookkeeping or accounting.

Applicant’s submissions

[26] The Applicant asserts that her dismissal was not a genuine redundancy. Her submissions acknowledge that the Act does not define operational requirements, but she points to the Explanatory Memoranda at paragraph [1548]. Though the Applicant’s submissions express that paragraph differently, the Explanatory Memoranda explains that operational requirements include:

“•  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.”

[27] The Applicant also states that operational requirements may also include a site or business closure, the completion of a project or outsourcing.

[28] The Applicant submits that she was told of the reason for the termination in the letter which was handed to her and dated 22 October 2020 was due to the restructuring of the business operations, due to the economic climate.

[29] The Applicant points to the purported restructure of the Respondent. She asserts that the business was not in a downturn but rather an upswing based on projects being awarded which led to increased revenue. In those circumstances, the Applicant asserts that the decision to restructure and lose a role is even less likely to be genuine, given that it is not unreasonable to assume that as a business grows it would require more staff not less.

[30] The Applicant also challenges Mark Frost’s assertion that during COVID-19 all businesses including theirs were financially vulnerable which made him look at reducing their exposure and better considering their overhead costs, in circumstances where their revenue has increased exponentially.

[31] The Applicant also queries the timing of the decision to restructure. She points specifically to Mr Frost’s statement. In particular, the Applicant claims that in early May 2019, Ms Galbraith had made it known to the Frosts that she was going to leave but this was deferred as she was travelling overseas but still had intentions to go. Had action been taken at that time, there would have been ample time for the Respondent to organise adequate training for Ms Newell to learn some of the tasks required to do this role and to gain the necessary qualifications.

[32] The Applicant asserts that she had been asked by Mr Frost in 2018 if she would be interested in doing payroll. She says she agreed. She says this was confirmed by Mr Frost in the recorded conversation at the meeting of 21 October 2020. The Applicant submits that, at that time, Ms Newell had investigated various bookkeeping courses, but the role of the Cost Controller became consuming, so this idea was pushed aside.

[33] The Applicant further asserts that in her discussion with Mr Frost on 20 October 2020, he was uncertain as to what the new role would look like apart from saying the person needed a bookkeeping qualification. No position description had been drafted. On that basis, she submits that the Respondent did not have any firm idea prior to making the Applicant’s role redundant what the new role combined role would look like. The Applicant was not offered an opportunity to upskill herself or apply for the reconfigured role.

[34] Considering the time it took for the bookkeeper to perform her tasks at half to one day per fortnight as opposed to the Applicant’s tasks in her Cost Controller Senior Administration role that was performed on a full time basis, the Applicant asserts that her role was still required to be done by someone in the organisation. She does not accept the Respondent’s assertion that it now required a full-time bookkeeper, given the limited capacity in which the contractor provided services. She estimates the breakdown of the role to be 90% Cost Controller and 10% bookkeeping. The Applicant also submits that the Respondent’s assertion that the business only became aware of Xero (a new project management technology) after speaking with the new bookkeeper is incorrect, as it had been raised with the Applicant in March 2020.

[35] The Applicant asserts that she is more than capable of fulfilling most of the tasks required of the bookkeeper previously (that is, payroll, superannuation, BAS, payroll tax and payment of invoices and receiving of income, or at least, capable of training to become qualified and competent for those tasks that required a specific qualification.

[36] Further, the Applicant submits that the Respondent did not comply with its obligations under clause 38 of the Private Clerks Award 2010 (the Award) in respect of consultation.

[37] The Applicant was contacted by Ms Frost to arrange a meeting on either 14 or 15 October 2020. That meeting was scheduled to take place on 19 October 2020, “to discuss proposed changes”. Consequently, the Applicant submits that she was first made aware that her role was being considered for redundancy when she attended the meeting on 19 October 2020.

[38] The Applicant also relied on Mr Frost’s statement regarding the decision to restructure the Respondent’s finance team having been influenced by a conversation that occurred on 1-3 November 2020, some two weeks after the Applicant’s employment had been terminated.

[39] The Applicant submits, based on the events detailed above, that there was no genuine attempt to find an appropriate position in which to redeploy the Applicant or look for alternative roles and, on that basis, the Respondent failed to discharge its obligations under the Award.

[40] The Applicant submits that she was not offered the opportunity to apply for the new role, in circumstances where the Applicant is of the view that she could have performed the role, or been able to do so, with the relevant training. The only thing she lacked was the BAS agent accreditation.

[41] Finally, the Applicant also queries why it was her role that was made redundant and not that of Mrs Hart, who also performed administrative functions as – at the time – a casual.

Respondent’s submissions in reply

[42] The Respondent submits that the basis for redundancy was a result of the business being restructured to reduce uncertainties and improve efficiencies as the business has grown. This decision is entirely consistent with the example given in the Explanatory Memoranda to the Fair Work Bill 2008 at para [1548] of changes in the operational requirements that satisfy a person’s dismissal being a case of genuine redundancy.

[43] The Respondent submits that the Applicant has misconstrued, misunderstood or misrepresented their statements through her submissions, namely in respect of the purpose for the restructure and the nature of the new role and the redistribution of duties.

[44] The Respondent also refutes the Applicant’s assertion that it would have known that the contractor intended to leave at an earlier time. Rather, the Respondent asserts that the contractor’s travel plans had been stymied by the pandemic and, until their conversation on 1 October, the Respondent had no reason to believe the contractor would leave her employment during the pandemic.

[45] The Respondent rejects the assertion that the Applicant’s workload prevented her from undertaking a bookkeeper’s course. Further, the Applicant had shown no interest in study opportunities.

[46] The Respondent states it would not have combined the bookkeeper’s part time position with the Applicant’s full-time position to create one part time position if the Applicant’s duties were so “consuming”. It suggested that the Applicant was employed for 40 hours per week, but typically finished her tasks early and spent the remainder of her day either on personal matters or absent from the office.

[47] The Respondent states that the Applicant is not in a position to assert whether the new role required the experience or qualifications of a bookkeeper, given she does not have either. The consultant gave evidence that she did not think the Applicant was suitable or capable of performing those duties.

[48] In respect of the Applicant’s queries as to why it was her position that was made redundant and not that of the casual administration officer, the Respondent states that the administration officer’s position is still required. The Respondent is presently trying to convert that employee’s role from casual to permanent part-time. Had that position been made redundant, the Respondent asserts it would have been open to an unfair dismissal claim as it would not have been a genuine redundancy.

[49] The Respondent further states that the Applicant’s position became redundant when the Respondent decided to merge the Applicant’s project planning and cost control position with the Contractor’s bookkeeping position to create a new part time bookkeeper position. The other duties previously attributable to the Applicant have been reallocated or absorbed by different staff members during the restructure.

[50] The Applicant asserted that she was terminated, not because of a genuine redundancy, but because her fiancé had been dismissed by the Respondent, her ongoing health concerns based on the level for mould spores in the workplace and issues between herself and the administration officer (which included a complaint made by the Applicant regarding bullying and harassment). The Respondent alleges that none of these reasons contributed to its decision to make the Applicant redundant.

[51] As to compliance with the Award, the Respondent states that given its decision to restructure its finance operations would affect one employee, it would not be considered a “major workplace change”. That said, it asserts that it met with the Applicant to discuss the redundancy, restructure and options for her on three occasions. It further asserts that as there were no redeployment opportunities available and the Respondent required someone in the role immediately, making retraining impractical, it decided to make the Applicant redundant.

Consideration

[52] Having considered the submissions made, and evidence provided, by each party in this matter, I consider that following a restructure of its operations, the Respondent no longer required the Applicant. A new position was created for someone to attend to the bookkeeping and some of the Applicant’s administrative functions, with any remaining functions to be redistributed amongst existing staff. The new role required the person who filled it to have bookkeeping qualifications, which the Applicant did not have. There were no alternative administrative roles to redeploy the Applicant into.

[53] The Respondent gave evidence that the Applicant was consulted during the process about the restructure of its operations and the impact on her role. Mr Frost considered the possibility of waiting for the Applicant to receive the requisite training (overnight on 20 October 2020) but ultimately concluded that the business required a bookkeeper immediately. This is understandable given the Contractor was leaving within the month.

[54] On the evidence before me it seems evident that the decision to make this position redundant occurred because the Respondent wished to restructure its financial operations to increase its efficiency, adapt to its rapidly growing business and bring a bookkeeper in house, rather than continuing to contract out the work.

[55] Section 389(a) of the Act indicates that the work must not be required to be performed by “anyone”. Clearly some of the Applicant’s administrative functions were still required to be conducted within the business. In that sense, there was work that was capable of being performed. Under this formulation, the Respondent still required someone to do the job and therefore there is an argument to be made that this could not be considered a genuine redundancy.

[56] Ultimately, however, I prefer the narrower construction which takes a more specific and evidentiary analysis of what constitutes the “job” of the Applicant. In this case, the job the Applicant performed was no longer required to be performed by anyone, due to the restricting of the Respondent’s finance operations. The entirety of the Applicant’s work was either encompassed by the new bookkeeper’s position or otherwise reallocated to other employees. A broader interpretation has the potential to render the scope of s 389 too narrow to perform its practical effect.

[57] I now turn to the matter of whether the company complied with any modern award or agreement obligation to consult about the Applicant’s redundancy under s 389(1)(b) of the Act.

[58] The company acknowledged that the Applicant’s employment was covered by the Award, the relevant clause being clause 38.

[59] The Respondent, as soon as it reasonably could after the Contractor had indicated it would no longer perform her role and the directors had an opportunity to consider the possibility of a restructure, consulted with the Applicant about the need to combine her role with that of a bookkeeper.

[60] The Respondent considered the possibility of waiting until the Applicant could receive the requisite training and accreditation to fulfill the requirements of the new role. However, ultimately decided that it was impractical to do so. Further, there were no other vacancies in respect of administrative roles with the Respondent’s business. I am satisfied that the Respondent followed the appropriate consultation process and, there being no position in which to redeploy the Applicant, proceeded with the redundancy. Accordingly, I find the Respondent complied with its obligations under s 389of the Act.

[61] I conclude that the dismissal of the Applicant was a case of ‘genuine redundancy’.

[62] I order that the application be dismissed.

DEPUTY PRESIDENT

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