O'Donnell v Fluor Daniel Power and Maintenance Services
[1996] IRCA 474
•30 September 1996
DECISION NO. 474/96
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT on the grounds of REDUNDANCY - OPPORTUNITY TO RESPOND - VALID REASON - OPERATIONAL REQUIREMENTS - ONUS OF PROOF
Industrial Relations Act 1988 (Cth) ss 170DC, 170DE, 170EA
Kenefick v Australian Submarine Corporation Pty Ltd (No 1) (1995) 62 IR 107;
Kenefick v Australian Submarine Corporation Pty Ltd (No. 2) (unreported, IRCA, Ryan, Beazley and North JJ, 26 March 1996);
Byrne v Australian Airlines Ltd (1995) 131 ALR 422
O'DONNELL and AUSTRALIAN MANUFACTURING WORKERS UNION v FLUOR DANIEL POWER & MAINTENANCE SERVICES
VI96/1519
Before: MURPHY JR
Place: MOE
Date of hearing: 30 SEPTEMBER 1996
Date of judgment: 30 SEPTEMBER 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI96/1519
BETWEEN:
WILLIAM THOMAS O'DONNELL and
AUSTRALIAN MANUFACTURING WORKERS UNION
Applicants
AND
FLUOR DANIEL POWER & MAINTENANCE SERVICES
Respondent
BEFORE: MURPHY JR
PLACE: MOE
DATE: 30 SEPTEMBER 1996
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The application is dismissed.
Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI96/1519
BETWEEN:
WILLIAM THOMAS O'DONNELL and
AUSTRALIAN MANUFACTURING WORKERS UNION
Applicants
AND
FLUOR DANIEL POWER & MAINTENANCE SERVICES
Respondent
BEFORE: MURPHY JR
PLACE: MOE
DATE: 30 SEPTEMBER 1996
REASONS FOR DECISION
Delivered ex tempore - revised from the transcript
It has been said on a number of occasions that the provisions of the Industrial Relations Act (“the Act”) must be applied in a practical manner in actual work places. It is commonplace that employees are members of unions and in many aspects of the employment relationship the employer, in the first instance, deals with unions. It is against this background that the applicant seeks reinstatement to his position as a trades assistant with the respondent. He commenced with the respondent in October 1993 and remained so employed until 2 February 1996.
The circumstances in which his employment was terminated were not the subject of any real dispute on the evidence. The respondent operates a maintenance contract with a power station. In late 1995 the customer had overrun its budget and sought to reduce its use of the respondent’s services. On 8 January 1996 Mr Thomson, the site manager of the respondent, as he was obliged to do under the relevant Enterprise Agreement (“the Agreement”), advised the three unions that were the signatories to the Agreement that the respondent was reviewing its workforce requirements and that this may lead to compulsory redundancies. He also advised the unions that the respondent was seeking voluntary redundancies among its workforce.
On 19 January Mr Thomson called a meeting of staff employees. It was to advise those employees of the level of redundancies consequent upon advice he had received the previous day of the extent of the reduction in the need for the respondent’s services by the power station. He also called a meeting with the three shop stewards of the three unions. At the latter meeting he advised the shop stewards of the selection criteria that the respondent proposed to use to achieve the reduction of sixteen wages positions that had been imposed on it as a result of the reduced requirements for its services by the customer.
The shop stewards were advised that the respondent would be prepared to review the application of the selection criteria to any individual. A meeting of wages employees was subsequently held at the work site. After that meeting the union representatives rejected the selection criteria and sought the names of the selected retrenchees by 23 January.
The union representatives also raised the position of the applicant. At that stage the applicant was not at work. He had obtained a medical certificate on 2 January for a heart condition and the union representatives wanted to ensure that he was not disadvantaged in the criteria by the fact that he was on sick leave. They were advised that he would not be disadvantaged.
On 21 and 22 January the respondent’s supervisors ranked all trades assistants against eight criteria. The criteria were: quality, quantity, absenteeism, time-keeping , attitude, teamwork, skills, and safety. Each employee was ranked out of five. The first ranking was given by his or her immediate supervisor. Subsequently the rankings and scores were the subject of discussion by the six supervisors present and by Mr Thomson and the Human Relations Manager, Mr Ryan.
After each particular selection criterion was discussed, the scores were removed from a whiteboard and the next criterion discussed. In relation to the absenteeism criterion, it was decided after the intervention by the unions that all employees would be scored with the maximum if they had been off work but with medical certification. The result was that the applicant received the maximum score for that criterion. In relation to the skills criterion, all the employees were ranked equally at a score of three. The applicant was given an additional score of half a point on the basis that he had an additional qualification. At the end of the process the thirteen employees were ranked according to those that had the highest score. The applicant overall ranked ninth out of thirteen employees. The top six employees were retained, and the remaining seven were the subject of retrenchment.
The unions were advised of the names and each employee was notified by Mr Thomson at a group meeting on 24 January. Mr Thomson attended the applicant’s home immediately thereafter. After some pleasantries about the applicant’s ill-health, the applicant was advised that he had been selected by the respondent for retrenchment. He was advised that he had been selected after the application of selection criteria and that he could challenge his score. He was handed a letter advising him that he had been selected for retrenchment. In part the letter states:
“Your union has been consulted about this matter and your union representative is available today for further advice.”
The one area of contested evidence was whether the applicant had been advised by Mr Thomson at this meeting that he could challenge the criteria that led to his selection for retrenchment. The applicant’s evidence was that he had some difficulty recollecting what occurred at the meeting. On this point I accept the evidence of Mr Thomson. He gave evidence that he was advising the applicant, as he had advised the other employees earlier, from a checklist that included advice as to their rights to challenge their selection for retrenchment. It is also significant that one employee did subsequently challenge his selection for retrenchment.
The applicant had no further dealings with the respondent. He contacted his union, however, and on 29 January 1996 an application under s170EA(2) of the Act was issued and signed by himself and by the Amalgamated Metal Workers Union.
Did the employer have a valid reason to terminate the applicant’s employment?
The evidence of Mr Thomson was that the respondent had no choice but to reduce its employees following the reduction in demand for its services by the power station. His evidence meets the criterion set out in Kenefick v Australian Submarine Corporation Pty Ltd (No 1) (1995) 62 IR 107 at 116 that the termination of employment must be a logical response to the employer’s operational requirements. There must be a causal connection between the decision to terminate and the operational requirements of the employer. The employer, however, has to discharge its onus of proof that each individual employee’s employment must be terminated.
The employer sought to meet this by its evidence that it had terminated the applicant’s employment because on an assessment of his relative rank against the other trades assistants, he was selected for termination. Further, the respondent says there were no other positions available in which to place the applicant.
I am satisfied that the respondent has discharged its onus of proof on this issue. The selection criteria were applied in a proper manner. Mr Thomson gave evidence that all the employees were satisfactory and that the whole process was the subject of care and great reluctance on his behalf. The selection criteria indicate that a score of three was regarded as average and, in fact, all employees scored in aggregate greater than the average.
It was put that the respondent had selected the applicant by reason of matters personal to him and that Kenefick v Australian Submarine Corporation Pty Ltd (No. 2) (unreported, IRCA, Ryan, Beazley and North JJ, 26 March 1996) dictated that he should have the opportunity to respond to those matters personal to him. Here, on the one hand, there were matters personal to him to be considered that went to the overall ranking of the applicant as against the other employees. On the other hand, the reason why he was terminated was his place in the overall ranking given the need of the respondent to terminate several trades assistants. If Kenefick (No 2) requires that the employer justify the termination of the individuals who were terminated, then I am satisfied that the employer has discharged its onus of proof.
It was argued that the respondent had breached the Agreement by not consulting with the applicant. I am satisfied that the union was consulted here. I am further satisfied that the applicant on 24 January was given an opportunity by Mr Thomson to review his score. Further, his union was advised of this right at the earlier meetings. I draw an inference against the applicant for the failure to call the union representatives to impugn the respondent’s process in relation to this redundancy. I am satisfied that any breach of the Agreement was minor and does not deprive the respondent’s decision of validity. I refer to Byrne v Australian Airlines Ltd (1995) 131 ALR 422 at 461-2 where it is stated that the distinction between “form and substance is elusive”.
I am further satisfied that the fact that the applicant was not at work was not a factor that prevented the respondent with proceeding with his retrenchment. It was put that the Agreement granted the applicant the right to continuous sick pay with no temporal limit. I am satisfied that this is not a proper interpretation of the Agreement, and that the employer always retained the right to terminate the employment. The termination of the employment contract between the parties had, however, to comply with the Act.
If the decision in Kenefick (No. 2) and the facts in this case obliged the respondent to give the applicant an opportunity to respond to “the allegations made”, then I am satisfied that s170DC has not been breached here. The requirements of s170DC are informal but substantive. They are also subject to paragraph 170DC(b) that they do not apply where the employer could not reasonably be expected to give the employee that opportunity. Here the process of consultation with the unions, the provision of the criteria to the unions and the advice to the unions and the applicant that any employee’s score could be the subject of challenge, met the duties imposed on the employer pursuant to s170DC. It is significant that the application of the absenteeism criterion in the selection criteria was modified by the intervention of the unions. Further, the union knew when it issued these proceedings on behalf of the applicant that the applicant had been offered the opportunity to challenge the selection of any individual. It is a matter of surprise that the applicant was not so advised by the union. In the context of negotiations in which the union has rejected the selection criteria, there was nothing more that the employer was obliged to do to meet its obligations under s170DC of the Act. I am satisfied, therefore, that the respondent has not breached s170DC of the Act.
The applicant has been a loyal employee of the respondent. He has suffered from an illness and the respondent’s decision must have had a significant impact on him. I am not satisfied, however, that the employer has breached any provision of the Act. The application must be dismissed.
I certify that this and the preceding six (6) pages
are a true copy of the reasons for decision of
Judicial Registrar Murphy as recorded in the transcript
and revised by the Judicial Registrar.
Associate: KAREN HALSE
Dated: 30 September 1996
APPEARANCES
Counsel appearing for the applicant: Mr G Burns Solicitors for the first applicant: Simon Parsons & Co The second applicant did not appear Counsel appearing for the respondent:
Mr M McDonald
Solicitors for the respondent: Freehill Hollingdale & Page Date of hearing: 30 September 1996 Date of Judgment: 30 September 1996
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