Paul McNamara v Stream Group Australia Pty Ltd T/A Stream Buildassist

[2010] FWA 8121

[2010] FWA 8121

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Paul McNamara
v
Stream Group Australia Pty Ltd T/A Stream Buildassist
(U2010/9191)

COMMISSIONER ROBERTS SYDNEY, 15 DECEMBER 2010

Application for unfair dismissal remedy - jurisdiction – genuine redundancy.

[1] This decision concerns an application lodged on 28 May 2010 by Mr McNamara pursuant to s.394 of the Fair Work Act 2009 (the Act) in respect of the alleged unfair termination of his employment by Stream Group Australia Pty Ltd T/A Stream Buildassist (Stream or the Company).

[2] The application was dealt with by a Fair Work Australia conciliator on 18 June 2010 but the conciliation was unsuccessful.

[3] The Company raised a jurisdictional issue, claiming that Mr McNamara’s dismissal was a case of genuine redundancy within the meaning of section 389 of the Act.

[4] The matter was set down for hearing in Sydney on 9 and 10 September 2010. Directions were issued for the filing of written submissions and both parties filed their materials. That hearing was cancelled when the parties requested that I make my decision on the jurisdictional motion on the papers. After reviewing the submissions of the parties, it became clear that there was a significant contest between them as to the facts of this matter and therefore a hearing would be required.

[5] Further directions were issued on 3 September 2010 and the matter was heard by me in Sydney on 16 November 2010. Mr McNamara represented himself and the Company was represented by Mr S Burke, solicitor. Mr D McKenzie, Chief Executive Officer and a Director of Stream, gave sworn evidence for the Company.

Background

[6] Mr McNamara was employed by Stream as a building consultant. His employment commenced on 22 April 2009 and his duties were to inspect and report on small insurance claims. Despite the use of the term ‘consultant’, such persons are employees of Stream. On 25 May 2010, Mr McNamara was advised in writing by the Company of its intention to make his position redundant due to an allegedly significant downturn in incoming claim volumes in the Sydney region. He was invited to discuss the matter with Ms J Button, the Human Resources Manager, within 48 hours of the notice. Following correspondence between Mr McNamara and the Company, he was formally advised that his position was to be made redundant effective from 27 May 2010. Mr McNamara then filed his application for relief on 28 May 2010 and the Company subsequently filed its jurisdictional motion.

Legislative Framework

[7] Section 385 of the Act provides:

“385 What is an unfair dismissal

(1) A person has been unfairly dismissed if FWA 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.”

[8] Section 389 of the Act provides:

“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.”

Evidence of Mr McKenzie

[9] Mr McKenzie gave sworn evidence and submitted a witness statement. 1 It was his witness statement, in summary, that:

• He is a Director of Stream and also occupies the positions of Secretary and Chief Executive Officer.



• “Stream manages insurance related building repair claims for Australia-wide insurers. The co-ordination of the assessments, scope, costing and reinstatement process of the properties and the claims is done through the use of the Stream’s proprietary software.”



• “Stream’s principal software, BuildAssist uses technology to provide claims assessors with evidence of claims using video, photography and 360 degree tours of a site. BuildAssist manages the claim from instruction to conclusion, ensuring repairs are completed to the customer’s satisfaction, while lessening the variance of scope and cost. Buildassist has a panel of repairers who are subject to stringent service level agreements, all are appropriately licensed, skilled and experienced in insurance repairs.”



• “Stream employs building consultants who inspect the building, provide a report regarding the claim and assess the cost of repairs. Where an insurer admits liability for a claim Stream is then engaged to oversee the completion of the repairs.”



• Stream’s business has peaks of activities following events which give rise to a significant number of insurance claims. Work flow arising from such events is difficult to predict.



• At the time of the termination of Mr McNamara’s employment, Stream had 54 staff, including 24 building consultants.



• “The bulk of Stream’s work, and therefore building consultants, are based in Queensland. Stream also has building consultants located in places South Australia, Victoria and Newcastle. The building consultants employed by Stream are all qualified and licensed builders with past building experience.”



• Stream’s building consultants commonly attend work in states other than the one in which they are based.



• Mr McNamara was required to work in the eastern suburbs of Sydney, the north and north western suburbs of Sydney and occasionally up to Gosford. He was the only building consultant employed by Stream in those areas.



• “After the applicant joined Stream it began a trial with Insurance Australia Group (IAG) which lasted for approx 6 months. IAG did not continue using Stream as they were dissatisfied with the work it undertook for them. The applicant was the prominent provider of this work for IAG in New South Wales.”



• “From the beginning of March 2010, Stream’s only provider of work in the area serviced by the applicant, CommInsure, began to significantly reduce the flow of claims work undertaken by Stream. Even though the claims had started to decrease Stream utilised the applicant on short term weather events such as the Perth storm and Cyclone Ului but these were only short term requirements and the claims from these weather events soon dried up.”



• On 13 April 2010 Stream was informed “that CommInsure was moving to a model where it employed their own assessors in major regions and therefore would not use external providers such as Stream.”



• “I was very concerned about CommInsure’s decision. ... I immediately canvassed other insurers who engaged Stream (in other areas) to determine whether they would provide Stream with work in the Sydney region, however no opportunities presented themselves. Additionally, Stream had already lost IAG support in the region due to poor KPI performance and there were no other clients on the horizon that Stream could obtain work from in the immediate future.”



• The flow of work from CommInsure continued to reduce during the period April to May 2010.

[10] In late May 2010, Mr McKenzie decided that it was necessary to make changes in the operational requirements for Stream’s work in the Sydney region. He directed Ms Button “to write to the applicant to notify him of the significant downturn in the upcoming claims volume and that this meant that Stream no longer need a full-time building consultant to service work in the Sydney region.” Correspondence ensued between Stream and Mr McNamara which ended in Mr McNamara’s employment being terminated with effect from 27 May 2010 on the ground of redundancy.

[11] “Stream has not appointed a building consultant since 27 May 2010 to service the Sydney region previously covered by the Applicant.”

[12] “Stream has:

(a) received 7 jobs from CommInsure in Sydney region since 27 May 2010; and

(b) not secured work from any other insurance company in the Sydney region since 27 May 2010.”

[13] Mr McKenzie went on to say that Stream is not withdrawing from the Sydney region but “it does not have sufficient work in that region to justify the maintenance of the role of a full-time building consultant …” In February 2010 Stream advertised a role for a building consultant to be based in Newcastle. On 15 March 2010 Stream appointed Mr B Passfield as a full time employee based in Newcastle. “Mr Passfield was offered employment to replace another building consultant that had left the employment of the respondent, who worked in the Newcastle region.” Mr Passfield has worked in the Sydney region on seven occasions since 27 May 2010 of which four jobs were re-inspections on past uncompleted claims.

[14] In cross-examination, Mr McKenzie was questioned extensively about the appointments attended by the Applicant during his employment with Stream. 2 Mr McKenzie went on to say that he believed Mr McNamara had rejected an offer of work in the Mackay area of Queensland.3

Submisions

[15] Both parties filed written submissions and put brief supporting oral arguments.

Stream

[16] Stream’s written submissions 4 argued:

“The applicant was employed by the respondent as a building consultant to inspect and report on insurance claims in Sydney’s northern suburbs and occasionally up to Gosford on the Central Coast.

The applicant was the only building consultant employed by the respondent to perform building consultancy work in this region.

The respondent’s clients in the region of the respondent’s business that the applicant worked are insurance companies.

From the beginning of March 2010 the respondent’s only provider of work in the Sydney region, Comminsure, began to significantly reduce the flow of claims work undertaken by the respondent.

As a result, the respondent considered what clients if could market to however no opportunities presented at the time. The respondent had already lost IAG support in the region due to poor KPI performance and there were no other potential clients that the respondent could obtain work from the immediate future.

A meeting between the respondent and Comminsure was held on 13 April 2010. The respondent was advised by Comminsure at the meeting that it was looking to utilise other models and it would be likely that work may cease to be allocated in various regions, including the region in which the applicant worked.

Following the meeting the flow of claims work from Comminsure continued to reduce over the months of April 2010 and May 2010.

As a result of the significant reduction in the flow of claims from Comminsure, the respondent determined that it needed to make changes to its operational requirements for servicing work in the region in which the applicant worked.

The respondent complied with its obligations to consult with the applicant regarding the redundancy of his role.

It was not reasonable in the circumstances for the applicant to be redeployed within the respondent’s enterprise or the enterprise of an associated entity of the respondent.

A dismissal which is a genuine redundancy is not an unfair dismissal because of the combined effects of sections 385 and 389 of the Act.

It is clear from the facts above that:

(a) the respondent no longer required the role of building consultant (to inspect and report on insurance claims in Sydney’s northern suburbs and occasionally on the Central Coast) occupied by the applicant to be performed by anyone as a result of changes in the respondent’s operational requirements namely a significant reduction in the flow of claims from Comminsure;

(b) the reduction in the flow of claims from Comminsure was an objective matter outside of the control of the respondent;

(c) further, the reduction in the flow of claims from Comminsure was the baiss upon which the respondent determined to make the position of the applicant redundant as set out in the letter from the respondent to the applicant dated 25 May 2010;

(d) the respondent complied with its obligations to consult with the applicant regarding the potential redundancy of his role;

(e) It was not reasonable in the circumstances for the applicant to be redeployed within the respondent’s enterprise or the enterprise of an associated entity of the respondent; and

(f) the respondent complied with, and therefore was not in breach of, the requirements of subsection 389(2) of the Act.”

[17] I have also paid regard to the oral argument put by Stream.

Mr McNamara

[18] Mr McNamara filed written submissions. 5 Much of the written submissions from Mr McNamara concerns financial claims he has against Stream and the alleged unfairness of his dismissal and are not relevant to my consideration of the redundancy issue. Relevantly, Mr McNamara submitted that:

• “After I made a complaint to the Fair Work Ombudsman regarding unpaid wages, Stream advertised my position on an employment website and appointed a new Building Consultant to fill my role.”



• “Stream employed a new consultant to take my place, allocated all my work to that new consultant and then declared my position redundant.”



• “On 25 May 2010 Stream notified me that the Building Consultant Role in Sydney is redundant. The initial notification was by telephone by Robert Boehmer who said words to the effect ‘You have an email from Jacqui [Button] that the Sydney Building Consultant role is redundant.’ I said ‘Is Stream abandoning the Sydney market?’ Robert said ‘I don’t know if it is or isn’t’ I said, ‘You should know that, what is Stream doing’ RB ‘I won’t say’.”



• “I was not surprised to receive the notification because since the time the advertised role for a replacement building consultant was filled that consultant was allocated all work in my region except for one day when he was required north of Newcastle and therefore could not travel to Sydney.”



• “On 9 June 2009 I had a conversation with a current Queensland based Stream Building Consultant during which I said ‘Have you looked at the website to see who is doing the Sydney work for Stream’ to which he replied ‘The Sydney and Gosford work is all being done by Brad Passfield, there appears to be a steady stream of work’. Brad Passfield is the consultant who was employed to replace me.”



• “Stream Group Australia Pty Limited employed a new building consultant to replace me prior to declaring my position redundant. The new building consultant was employed under a contract which was less favourable to the new employee.”

[19] In summary, Mr McNamara claims that the work he was performing is still available and is now carried out by a building consultant based in Newcastle.

[20] I have also paid regard to the oral argument put by Mr McNamara.

Documentary evidence

Letter from Mr McKenzie to Mr McNamara dated 25 May 2010

“Redundancy of your Role

It is with regret that we write to you to advise due to a significant downturn in incoming claim volumes in your area we no longer require a full time consultant in the Sydney region.

Before we take this step, we would like to consult with you, particularly in relation to any measures that you can suggest might be taken to avert or mitigate the possibility of this redundancy.

We therefore request that you contact Jacqueline Button on [phone number] or at [email address] within 48 hours of receipt of this notice to discuss these matters.

One opportunity that exists at present is the role of Building Consultant at Mackay. Should you wish to apply for this role please advise us by 12noon on Thursday 27 May 2010.

Should you not contact us within the timeframe set out above we will presume that you do not wish to be consulted in relation to the proposed redundancy.”

Letter from Mr McNamara to Stream dated 26 May 2010

“Dear Sir,

Further to correspondence dated 25 May 2010, I will respond to all issues in due course however initially with relation to your second paragraph I offer an alternate solution.

Robert Boehmer could neither confirm nor deny that Stream’s intention is to abandon the Sydney market. Please state your intentions. Documentation and history indicates that Stream’s intention is to remain in Sydney and that the redundancy is therefore improper.

If Stream is to maintain a presence in the Sydney and Central Coast market and it does not believe the projected workflow requires a full time employee, I suggest a contract arrangement similar to that adopted by other building consultancies whereby the Consultant is paid for work performed as a sub-contractor. The benefits are obvious. I look forward to discussing this option.

Relocation within Stream to Mackay is an attractive option however it will be disruptive and necessitate retraining and considerable expense which I would require Stream to pay. If Stream is unable to maintain a role in the most densely populated region of Australia what guarantee is there that the position in Mackay is long-term. Will Stream guarantee tenure and for what period?

It is critical that you make your intentions clear regarding abandoning the Sydney and Central Coast markets so that I can consider my options. Please also forward my reference as soon as possible.”

Letter to Mr McNamara from Mr McKenzie dated 27 May 2010

“Redundancy of your Role

We refer to our letter (via email) to you dated 25th May 2010, and subsequent telephone call from Robert Boehmer.

As we outlined in that letter and over the telephone, due to a significant downturn in incoming claim volumes in your area we no longer require a full time consultant in the Sydney region.

We invited you to contact us within 48 hours of the date of our letter to discuss any measures that you could suggest might be taken to avert or mitigate the possibility of the redundancies.

You contacted us on via email on 26th May 2010 and suggested the following measure:-

A) You suggested a Contract arrangement on a Consultancy basis (sub-contractor).

We have considered the measure suggested by you. Unfortunately this is not viable.

You did not express a willingness to take up our offer of the role of Building Consultant at Mackay.

Your comments below:-

Relocation within Stream to Mackay is an attractive option however it will be disruptive and necessitate retraining and considerable expense which I would require Stream to pay. If Stream is unable to maintain a role in the most densely populated region of Australia what guarantee is there that the position in Mackay is long-term. Will Stream guarantee tenure and for what period?

It is my unfortunate duty to inform you that your position as Building Consultant has been made redundant. The redundancy is effective from the date of this letter. You will receive in due course your termination entitlements. For the avoidance of doubt, you remain welcome to apply for the role of Building Consultant at Mackay.

We would be grateful if you could please now arrange for the immediate return of our property that is in your possession or under your control.

Upon receipt of the return of our property any accrued entitlements along with 2 weeks pay equal to your notice period and 4 weeks redundancy pay in line with the NES, will be paid to you next week and you will receive a print out of our calculations.

We wish to take this opportunity to wish you the best in your future endeavours.”

Conclusions and Findings

[21] On the totality of the evidence and materials available to me, I accept the argument put forward by Stream that work in the Sydney area had declined to such an extent that it was reasonable for Stream to no longer employ a Sydney based building consultant in the role formerly filled by Mr McNamara. I note here that Mr McNamara was the only employee of the Respondent in that region. I further accept that the reduction in available work arose from factors outside the control of Stream. In summary, I find that the evidence of Mr McKenzie can be safely relied upon as to the factual circumstances giving rise to the termination of Mr McNamara’s employment. The replacement of a Newcastle based employee in March 2010 was not a factor in the ending of Mr McNamara’s employment.

[22] Stream appears to have met its obligation to consult Mr McNamara and also provided him with a possible alternative position in Mackay (where most of the Company’s activities are centred). Mr McNamara did not accept that position for his own reasons. I am satisfied that the Sydney based position formerly held by Mr McNamara remains vacant with some possibility that it may be needed in the future. That factor does not detract from the genuineness of the Company’s reason for dispensing with Mr McNamara’s services on 27 May 2010. The Sydney area work performed by the Newcastle based employee is not significant.

[23] All in all, I find that the termination of Mr McNamara’s employment was a genuine redundancy within the meaning of s.389 of the Act and therefore it follows that the Company’s jurisdictional objection is made out. Accordingly, the substantive application for relief is dismissed.

COMMISSIONER

Appearances:

P McNamara, self-represented.

S Burke, for Stream Group Australia Pty Ltd T/A Stream Buildassist.

Hearing details:

2010.

Sydney:

November 16.

 1   Exhibit Stream 2.

 2   Transcript PN140 and following and attachment A to Exhibit Stream 2.

 3   Transcript PNs243-246.

 4   Exhibit Stream 1.

 5   Exhibit McNamara 1.

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