Paul Redfern v Central Coast Commercial Properties & Projects Pty Ltd t/a the Willows Motor Inn
[2010] FWA 7978
•18 OCTOBER 2010
[2010] FWA 7978 |
|
DECISION |
Fair Work Act 2009
s 394 - Application for unfair dismissal remedy
Paul Redfern
v
Central Coast Commercial Properties & Projects Pty Ltd t/a The Willows Motor Inn
(U2010/8340)
Sharon Redfern
V
Central Coast Commercial Properties & Projects Pty Ltd t/a The Willows Motor Inn
(U2010/8342)
DEPUTY PRESIDENT SAMS | SYDNEY, 18 OCTOBER 2010 |
Alleged unfair dismissals - whether terminations of employment were as a result of genuine redundancy.
[1] Mr Paul Redfern and his wife, Sharon (‘the applicants’) were employed as the live in manager/handypersons of the Quality Inn - The Willows Motor Inn (‘the Motel’) at Wyoming, New South Wales. The Motel was owned by Central Coast Commercial Properties & Projects Pty Ltd (‘the respondent’), a company owned by Mr Peter Brand until it was sold to Mr Stephen Clarke on or about 16 April 2010, when Mr Clarke paid a deposit and exchanged contracts for the purchase of the Motel. Both applicants were terminated on 17 April 2010, as a consequence of the sale of the business, having been employed by the respondent since 14 September 2009. In their letters of dismissal, the respondent maintained that their terminations of employment were due to ‘redundancy on sale of the business’ and that, in any event, the respondent was a small business and, as both applicants had been employed for less than 12 months, they were not eligible to lodge claims of unfair dismissal. On 29 April 2010, applications seeking unfair dismissal remedies were lodged by both applicants, pursuant to s 394 of the Fair Work Act 2009 (‘the Act’). Conciliation of the claims proved unsuccessful and the matters were referred to me for hearing as to Fair Work Australia’s (FWA’s) jurisdiction to deal with the claims.
[2] At this juncture, it is also relevant to note that Cambridge C published a decision on 27 August 2010, (after this decision was reserved) concerning the termination of employment of the chef at the Motel at about the same time as the applicants and for allegedly the same reason: See Macdonald v Central Coast Commercial Properties & Projects Pty Ltd T/A the Willows Motor Inn[2010] FWA 6626. It seems to me that the Commissioner’s decision was of some relevance to the outcome of these proceedings (particularly the evidence as to when the applicants were aware of the sale of the Motel). Accordingly, I invited both parties to put further submissions in light of the Commissioner’s decision. Neither chose to do so by the required deadline of 4:00pm, 27 September 2010. I shall return to the evidence before the Commissioner later.
EVIDENCE
For the applicants
[3] The applicants agreed that when they were both hired they had been told by the owners (Mr Peter Brand and his son Mr Phillip Brand) that the Motel was on the market. They claimed they were told that, in the unforeseen event of a sale, they would be looked after - given a bonus and new positions in the respondent’s organisation. The applicants claimed that two months into their employment they were told the Motel was officially ‘off the market’ for at least two years. There had been discussions about refurbishment of the facility.
[4] On 17 April 2010, the applicants returned to work after a 10 day cruise and were informed by Mr Phillip Brand that the Motel had been sold, the new owners intended to run it themselves and they were to vacate the premises immediately.
[5] Mrs Redfern said she was completely shocked and very upset by this news. She said she had been assured by Mr Tim Gunasinghe, Commercial Property Manager, before leaving for the cruise, that the Motel looked like being sold, but their positions were safe as the new owners would keep them on as managers. She relied further on the contents of a letter dated 12 April 2010, in the following terms:
We would like to advise you that the Willows has been sold effective 1st May 2010.
The new owners have a great deal of experience in running motels and we expect that The Willows will have strong growth over the next few years, creating a very exciting time for you all. Our understanding is that the new owners intend to keep the services of most employees and we expect that this will be discussed with you all individually.
Steve and his wife Jenny will be getting hands on experience at The Willows immediately and we appreciate your complete cooperation with them.
We would like to take this opportunity to thank you all for your efforts over the period of your association with The Willows and wish you luck with your future endeavours.
[6] Mrs Redfern said they were told to leave within the hour, but when they said this was not possible it was agreed to arrange for removing their possessions by the next week. The applicant’s son, Nicholas, also worked at the Motel as an apprentice chef and he too had lost his job. Mrs Redfern said that she was escorted off the property as if she was a criminal.
[7] Mrs Redfern said that they would never have gone on holiday if they had known they were to lose their jobs. They had nowhere to live. Arrangements were made for the applicants to be provided with paid accommodation in Terrigal for a week.
[8] Mr Redfern’s evidence largely corroborated that of his wife’s. He said, in addition, that Mr Peter Brand had informed him on numerous occasions that the Motel was not for sale as he wanted to keep it. He said that on the day they were dismissed, Mr Phillip Brand had told him he was very sorry and that it was his sister’s fault because she had wanted to claim her half share of the property now, rather than waiting for her father to pass away, so she could move to Queensland. He had also said that the Motel was a headache as he had other businesses to run and that it was taking up too much time and not making money.
[9] Mr Redfern said that on the morning they were leaving for their cruise, Mr Peter Brand rang him to wish him a good holiday, but he made no mention of the sale of the Motel. Mr Redfern said that on 15 April 2010, the new owners had told his son that his job and that of his parents were safe and that his son emailed them on the ship each day with an update of what was happening at the Motel.
[10] Mr Redfern said that all he could think of when he was told of their dismissals was where they were to live as their daughter was also living with them. He could see his wife was upset and he had tried to calm her down.
[11] In oral evidence, Mrs Redfern gave details of Mr Phillip Brand’s involvement in managing and supervising the Motel. She would speak to him at least once a week about how things were going and he would also carry out maintenance on the property. She said Mr Phillip Brand gave her and her husband most of the directions as to the running of the Motel, as she was not allowed to contact his father due to his ill health. Mrs Redfern said that despite being told that their future services would be discussed with them, and the new owners, no discussion took place.
[12] In cross-examination, Mrs Redfern said she was not aware what companies Mr Phillip Brand was involved with, nor had they discussed the extent of any bonus to be paid to them if they were to be re-employed at one of Mr Phillip Brand’s businesses. Mrs Redfern was referred to the sale of the previous motel where she had worked and said that even though there was no position available at that time, she was offered a consultant’s role.
[13] Mrs Redfern insisted that she had been assured her job was safe before she left to go on holiday. Mrs Redfern agreed she had shown a prospective buyer through the Motel, but was told nothing was going to happen. Mrs Redfern wrote a letter to Mr Peter Brand in which she complained that Ms L Sutherland, Bookkeeper, was making decisions about the running of the Motel and overriding her own decisions. Mrs Redfern believed that Ms Sutherland was a bookkeeper only and that Mr Gunasinghe was the General Manager reporting to Mr Phillip Brand.
[14] Mrs Redfern said that Ms Sutherland informed her on numerous occasions that she was employed by Mr Phillip Brand, reported to him, he signed most of the cheques and attended regular meetings on site. Mrs Redfern denied being told by Mr Gunasinghe that a person had been shown through the property and commented on its poor condition.
[15] In oral evidence, Mr Redfern described the circumstances of his meeting with Mr Phillip Brand, Mr Peter Brand and Mr Gunasinghe when he and his wife were offered the manager/handyperson positions at the Motel. Mr Redfern agreed that when he was interviewed for the position, Mr Phillip Brand told them the Motel was up for sale. Mr Redfern said he had many conversations with Mr Phillip Brand about maintenance, the restaurant and extending the Motel. He believed Mr Phillip Brand was in charge. He did not know whether Mr Peter Brand was in control of the business or owned the property or the Motel. All that was said was that ‘it was Peter’s motel’. Mr Redfern said that the new owners did not approach him and when he saw the new owner and approached him, he ran away and would not speak to him.
Respondent’s Evidence
[16] Ms L Sutherland is the respondent’s bookkeeper and had in early 2009 initially prepared a report and recommendations for Mr Peter Brand on how the business was performing. She said all cheques were signed by Mr Peter Brand. Ms Sutherland said it was she who made the decision to give Mrs Redfern a credit card for the business.
[17] Ms Sutherland became involved in the day to day running of the business in early 2010, in order to facilitate its sale. She said when Mr Clarke was shown through the Motel in February 2010, Mr Gunasinghe had raised with the Redfern’s the poor state of the premises. Ms Sutherland claimed she had limited involvement with Mr Phillip Brand and it was his father who made the decisions and signed the cheques.
[18] In cross-examination, Ms Sutherland said that Mr Phillip Brand would ask her, about once a month, how things were going. They had two meetings of major significance. Ms Sutherland claimed that she probably issued more directions at the Motel than Mr Phillip Brand. She would call and discuss matters with Mr Peter Brand and it was Mr Peter Brand who employed her. She said Mr Phillip Brand was not involved in employee matters and issues of maintenance and repairs were discussed with Mr Gunasinghe. Ms Sutherland said she had no discussions with Mr Phillip Brand about redevelopment or refurbishment of the site.
[19] Ms Sutherland said she had prepared both letters to the applicants on 12 and 17 April 2010, and had put both Peter and Phillips’ names on the letters because she thought Mr Peter Brand would be too ill to sign them.
[20] Ms Sutherland informed the Tribunal that there were 22 employees on the staff - four full-time, two part-time and casuals who were housekeepers or called in for a specific function. A calculation had been done by multiplying the hours worked for each employee over a four week period and dividing it by 152, giving a full-time equivalent of 12.13.
[21] Mr Timothy Gunasinghe is a commercial property manager employed by Mistlake Investments Pty Ltd. He has known Mr Peter Brand as a friend for 15 years. Mr Gunasinghe said the respondent owned the business, but the property was owned by another company of Mr Peter Brand.
[22] Mr Gunasinghe knew Mr Peter Brand’s health was not good and that the Motel was not performing. He offered to ‘pop in’ from time to time and review the books. He would visit about once a month. Mr Gunasinghe said that on numerous occasions, Mrs Redfern would advise that potential purchasers had been through the property. Mr Clarke had expressed an interest for about six months and Mr Gunasinghe had showed him through in early 2010. He told Mrs Redfern he was a potential purchaser. Mr Clarke was concerned that the Motel did not appear to be performing well. Mr Gunasinghe said that prior to the Redferns leaving for their holidays he said to them ‘It does not seem to be trading well. I’m uncertain about it.’
[23] Mr Gunasinghe said that around 12 April 2010, it appeared the purchase was to occur. He assumed the Redferns were not contactable and he did not want to ‘undermine’ their holiday. Mr Gunasinghe said he first knew that Mr Clarke did not want to retain the managers when he told him in the week before they returned from holidays.
[24] When he and Mr Phillip Brand met them to tell them of the sale on 17 April 2010, Mr Gunasinghe said they appeared disappointed, but not surprised. He offered them a week’s accommodation to allow them to find somewhere to live.
[25] Mr Gunasinghe said that in his 25 years experience in the purchase and sale of properties, arrangements for finalisation can sometimes be a few days. This is because exchange and settlement are often ‘abbreviated’. This means the vendor does not know the prospects for sale or future employment of staff until just before sale. Mr Gunasinghe said Mr Phillip Brand is the owner of Mistlake Investments Pty Ltd, a commercial property development which does not own, or operate, any accommodation related facilities. It has a staff of nine.
[26] Mr Gunasinghe said that from time to time Mr Phillip Brand did show some interest in the Motel, but he did not attend monthly meetings he held and would merely pass information or obtain a decision from his father.
[27] In cross-examination, Mr Gunasinghe said he believed Mr Phillip Brand was merely looking after his elderly and sick father’s interests in the Motel. He said Mr Phillip Brand was never interested in redeveloping the site. Mr Gunasinghe took no wages from Mr Peter Brand; his involvement was as a favour to a friend.
[28] Mr Gunasinghe agreed he made no attempt to contact or find out how to contact the Redferns on their cruise.
[29] In reply to Mr Gunasinghe’s evidence, Mr Redfern said they were told in December 2009 that the Motel was off the market for two years. Mrs Redfern denied being told of potential purchasers coming through the Motel and nothing eventuated. Mrs Redfern said that she and her husband were not privy to any meetings between the respondent’s representatives and Mr Clarke, nor was she introduced to him as a potential purchaser when she had served him dinner at the Motel. Mrs Redfern said that Mr Gunasinghe had told her the new owners were going to keep the managers as they were living in Wahroonga and, as far as he knew, their positions were safe. Mrs Redfern denied being uncontactable on their cruise. They were in constant touch with the Motel via email. She restated that she was very disappointed and upset by the news of the sale.
[30] Mrs Redfern believed most decisions in regard to the Motel were made by Mr Phillip Brand. Mr Gunasinghe was the General Manager overseeing things and had discussed matters with him at their weekly meetings. Mrs Redfern claimed that she and her husband were suitable for other positions, other than accommodation manager or handyman.
SUBMISSIONS
[31] Both parties provided a helpful outline of written submissions which I reproduce below.
For the applicant
A. Small business employer
The Respondent bears the onus of proof in jurisdiction objection.
The Respondent will avoid jurisdiction if found to be a small business employer, as defined by s23(3) of the Fair Work Act.
Section 12 of the Fair Work Act defines “associated entity” as being defined in the Corporations Act, s50AAA.
The Corporations Act at s50AAA has 8 sections regarding ‘Associated entities’, subsections (2) to (8) being applicable. While acknowledging that the related bodies corporate has no application on the evidence presented, we submit that Fair Work Australia cannot be certain there are no other related bodies corporate that may be involved. We submit this as Mr Gunisinghe mentions in his evidence about a third company (at [3] of his statement).
The Respondent has only addressed one of those in their submissions (at 1(c)), being control.
An important subsection is (7), which provides that a third entity controls the principal and the associate. We submit Phillip Brand was the third entity, and that this subsection is satisfied. On the evidence, it is clear the Mr Brand was the third party that controlled both the Respondent Company and Mistlakes Investments Pty Ltd.
As the test for associated entities is met, and on our understanding Mistlakes Investments employed 9 staff and the Respondent had at least six full time staff, the 15 employee threshold is met. Jurisdiction is therefore established.
B. Redundancy
It is submitted that there was no proper consultation in terms of the applicable Award.
The Respondent has correctly identified the Award, but in our submission, incorrectly states when the consultation is required. The Award provides:
notify the employees who may be affected by the proposed changes where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees; and
discuss with the employees affected the introduction of the changes, the effects the changes are likely to have on employees and measures to avert or mitigate the adverse affects of such changes on employees and give prompt consideration to matters raised by the employees.
It is submitted that the ‘trigger’ for consultation is before the sale of a business, as the words “proposed changes” in the clause must have some work to do. On the Respondent’s case, “proposed changes” has no work to do as “proposed changes” would mean “actual changes”. In the same vein, “changes are likely to have on employees” would have no work, as on the Respondent’s argument is is past tense.
Secondly, the Applicants had been led to believe their positions were safe, in writing.
The evidence is that the Applicants learned of their termination on arrival back from annual leave. It is submitted that there cannot be adequate consultation if an employee is on annual leave when the ‘definite decision’ has been taken.
For the respondent
1. Is the Respondent a Small Business Employer?
Relevant Law
(a) Section 121(1) of the Fair Work Act provides that the obligation to pay redundancy pay under s 119 of the Fair Work Act does not apply where the employee’s period of continuous service is less than twelve months and the employer is a small business employer.
(b) Sub-clause 2(5), Schedule 12A of the Fair Work (Transitional and Consequential Provisions) Act provides that for the purposes of calculating whether a national system employer constitutes a “small business employer” by reason of it having less than fifteen full-time equivalent employees, a national system employer and its associated entities are taken to be one entity.
(c) Section 50AAA of the Corporations Act 2001 (Cth) provides that one entity (“the associate”) will be an associated entity of another entity (“the principal”) where inter alia, the principal controls the associate.
(d) Section 50AA of the Corporations Act 2001 (Cth) provides that an entity controls a second entity where the first entity has the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.
The Respondent Company and Mistlake Investments Pty Ltd
(e) The shareholding of the Respondent Company is allocated such that Peter Brand holds 99 shares whilst Phillip Brand holds one share. The directors of the Respondent Company are Peter Brand and Phillip Brand.
(f) The shareholding of Mistlake Investments Pty Ltd is allocated such that Phillip John Brand holds 70 shares, Craig Gibbens holds 20 shares and Peter Brand holds 10 shares. The directors of Mistlake Investments Pty Ltd are Phillip Brand, Craig Gibbens and Peter Brand.
(g) Notwithstanding that Peter Brand and Phillip Brand are both shareholders and directors of the Respondent and Mistlake Investments Pty Ltd, these companies are not associated entities because:
(i) Mistlake Investments Pty Ltd does not hold any shares in the Respondent.
(ii) The Respondent does not hold any shares in Mistlake Investments Pty Ltd.
(iii) Mistlake Investments Pty Ltd does not have any capacity to determine the outcome of decisions about the Respondent’s financial and operating policies.
No director or shareholder of Mistlake Investments Pty Ltd has any capacity to determine the outcome of decisions about the Respondent’s financial and operating policies.
The Respondent does not have any capacity to determine the outcome of decisions concerning the financial and operating policies of Mistlake Investments Pty Ltd.
No director or shareholder of the Respondent has any capacity to determine the outcome of decisions concerning the financial and operating policies of Mistlake Investments Pty Ltd.
(h) Mistlake Investments Pty Ltd is of an entirely different nature to the Respondent.
(i) Phillip Brand places his energies solely in Mistlake Investment Pty Ltd. Any communications he had with the supervisory individuals of the Respondent, being Timothy Gunasinghe and Leanne Sutherland, was as a conduit to his father, Peter Brand, who was ill. The supervisory individuals reported to and obtained instructions from Peter Brand. Where Phillip Brand was spoken to, it was as the son of the owner of the Respondent’s business, not a director.
(j) In the event that a finding is made that the Respondent and Mistlake Investments Pty Ltd are found to be associated entities, Mistlake Investments Pty Ltd are not involved in the hospitality industry and accordingly are not able to offer any full-time or part-time positions in the performance of services associated with this industry. It is a small staff and Mistlake Investments Pty Ltd has no vacant positions.
Small Business Employer
(k) The Respondent is a small business employer because they employ fewer than fifteen full-time equivalent employees.
2. Consultation Obligation Under Clause 8 of the Hospitality Industry (General) Award 2010
The Relevant Law
(a) Pursuant to s 389(1)(b) of the Fair Work Act 2009 (Cth), in order for the Respondent to establish that the Applicants’ dismissal was a case of “genuine redundancy”, the Respondent must establish that they have complied with any obligation in a modern award that applied to the employment to consult about redundancy.
(b) The Hospitality Industry (General) Award 2010 [MA000009] (“the Award”) applied to the employment of the Applicants.
(c) Clause 8 of the Award imposes two obligations upon an employer to:
notify the employees who may be affected by the proposed changes where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees; and
discuss with the employees affected the introduction of the changes, the effects the changes are likely to have on employees and measures to avert or mitigate the adverse affects of such changes on employees and give prompt consideration to matters raised by the employees.
Decision to Advertise the Sale of the Business
(d) The Respondent Company owned the motel business, Quality Inn The Willows, from about 2002.
(e) From September 2009 (and more actively from December 2009 when Timothy Gunasinghe commenced with his supervisory services), the Respondent decided to advertise the sale of the motel business but did not have knowledge, nor could it have had knowledge, of whether any prospective purchaser would retain or terminate staff of the motel business. Accordingly, there was no obligation upon the Respondent to directly consult the employees that the motel business was being advertised for sale because:
(i) It was not certain at the time whether the Respondent would sell the business.
(ii) It was not known whether any potential sale would likely result in significant effects on the Applicants.
(f) Notwithstanding, in September 2009, the Respondent first notified the Applicants that they were advertising the sale of the motel business through Raine and Horne in Terrigal but they were unaware of the likely effects that any potential sale would have upon the Applicants’ employment with the Respondent.
Decision to Sell the Business to Stephen Clarke
(g) In February 2010, Tim Gunasinghe of the Respondent and the Applicants were present during an inspection of the motel by Stephen Clarke. Prior to the inspection, Tim notified the Applicants that they had a potential purchaser of the business who would be inspecting the motel.
(h) On or about 6 April 2010, the Respondent notified the Applicants that Stephen Clarke is likely to purchase the motel business but was uncertain as to whether he would retain all current staff as this was a decision for Stephen.
(i) On 16 April 2010, Stephen Clarke made the definite decision to purchase the motel business by paying a deposit into the Respondent’s bank account. It was on this date that the obligation to consult the Applicants arose pursuant to Clause 8 of the Award. Until this date, the Respondent was under no obligation to consult the Applicants or any other employees of the Respondent because it was not certain whether the Respondent’s business would be sold or whether any potential sale would likely result in significant effects on employees of the Respondent.
(j) On 17 April 2010, Tim Gunasinghe of the Respondent notified the Applicants that the motel business is being sold to Stephen Clarke and that he will be terminating the employment of the managers, including the Applicants. This discussion constituted a discharge of the Respondent’s obligation under clause 8.1(a) of the Award to notify the affected employees of the proposed changes. In addition, this discussion also constituted a discharge of the Respondent’s obligation under clause 8.2(a) of the Award to discuss with the affected employees of:
the introduction of changes (i.e. the sale of the motel business);
the effects the changes are likely to have on the affected employees (i.e. the termination of their employment); and
measures to mitigate the adverse effects of such changes (i.e. accommodation for a week to allow the Applicants time to find somewhere to live).
(k) On 17 April 2010, the Respondent informed the Applicants in writing that the motel business was being sold and the purchaser would be terminating the Applicants’ employment. This letter constituted a discharge of the Respondent’s obligation under clause 8.2(c) to provide in writing to the employees concerned all relevant information about the changes, the expected effects of the changes on employees and any other matters likely to affect the employees.
CONSIDERATION
Relevant legislation and principles
[32] Section 385 of the Act defines ‘What is an unfair dismissal’ as:
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.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.
[33] The meaning of dismissal is relevantly found at s 386(1) as follows:
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
[34] There is no doubt that the applicants were dismissed on 17 April 2010, at the initiative of the employer. However, for present purposes, the Act exempts a dismissed employee from seeking relief from unfair dismissal where, firstly, the dismissal is of an employee employed by a small business (defined as one with less than 15 employees, see s 23 of the Act - Meaning of Small Business Employer) and who was employed for less than 12 months (s 383 of the Act) (as is the case here) or secondly, if the dismissal was for reasons of genuine redundancy. The meaning of genuine redundancy is found at s 389 of the Act, in the following terms:
(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.
[35] If either of these two criteria are met, FWA has no jurisdiction to consider whether the dismissal was ‘harsh, unreasonable or unjust’ (s 387) or whether any relief from unfair dismissal should be ordered (s 392). It needs to be emphasised that irrespective of whether the dismissal may have the usual characteristics of substantive and/or procedural unfairness (as was evident in this case) these considerations obviously do not arise if the prerequisite jurisdiction is not established.
[36] The respondent challenges the applicant’s right to bring these applications on both of the above grounds. Mr A Duc, for the applicants, maintained that their dismissals were not a case of genuine redundancy because the respondent had not complied with its obligations in cl 8.1 and cl 8.2 of the Hospitality Industry (General) Award 2010 [MA000009] in accordance with s 389(1)(b) of the Act (see above). Before considering whether the jurisdictional challenge succeeds, I would refer to a recent Full Bench authority which has considered the question of genuine redundancy, as it seems to me, as I will later explain, that the respondent has established that the applicants’ dismissals were for reasons of genuine redundancy. It follows that it will be unnecessary to consider the respondent’s alternative jurisdictional objection, although I will later make some short observations about it. In Ulan Coal Mine Limited v Henry Jon Howarth and others[2010] FWAFB 3488, the Full Bench said at paras [15] to [18]:
[15] These were the circumstances in which it was necessary to consider the meaning and application of the relevant statutory provisions and, in particular, the expression “the person’s employer no longer required the person’s job to be performed by anyone” in s.389(1)(a) of the Act. These words have long been used and applied in industrial tribunals and courts as a practical definition of redundancy (see e.g. R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Cooperative Limited (1977) 16 SASR 6; Termination, Change and Redundancy Cases (1984) 8 IR 34 and (1984) 9 IR 115; Short v F.W. Hercus Pty Limited (1993) 40 FCR 511). They have also been adopted in the National Employment Standards provided under the Act in dealing with entitlements to redundancy payments (see s.119).
[16] The Explanatory Memorandum to the Fair Work Bill 2008 provides examples as to when a dismissal will be a case of genuine redundancy:
“1547 Paragraph 389(1)(a) provides that a person’s dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.
1548 The following are possible examples of a change in the operational requirements of an enterprise:
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.”
[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[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.” (at par [27])
Commissioner Cambridge’s Decision
[37] As earlier mentioned, Cambridge C published a decision on 27 August 2010, concerning the dismissal of another employee, Mr Matthew Macdonald, by the respondent, at about the same time as the Redferns were dismissed. Mr Macdonald was represented by Mr Duc and Ms Sutherland represented the respondent. He had been employed as a chef for one year and eight months and, ironically, had accompanied the Redferns on their overseas cruise in April 2010. Obviously, there was no jurisdictional issue taken as the application of the Small Business Code (the employee having been employed for over 12 months), although I note that the Commissioner made a factual finding that ‘the employer has approximately 12 full-time equivalent employees’. This was the same submission advanced by the respondent in this case as evidenced in a document tendered in the proceedings.
[38] Significantly, the Commissioner also made the following factual finding:
[5] The applicant commenced a period of annual leave on 3 April 2010 and he was due to return to work on 27 April 2010. During this period of leave the applicant and his wife undertook an ocean cruise together with Paul and Sharon Redfern who were the Managers of the Willows. While at sea on the cruise Sharon Redfern told the applicant that the Willows had been sold.
This finding would seem to be at odds with Mrs Redfern’s evidence in this case, that she was shocked and upset when she learnt the Motel had been sold on their return to work on 17 April 2010, after the cruise.
[39] Mr Duc raised substantially the same arguments as he did before me concerning the meaning of the Award provisions and submitted that Mr Macdonald’s dismissal was not a case of a genuine redundancy. The Commissioner made the following observations and findings:
[32] Following careful consideration of all of the circumstances of this case I believe that the employer has discharged the Award obligations to notify and consult with employees about the introduction of major change, in this case, the sale of the business. In the case of a small business employer who had previously attempted to sell the business operation, the appropriate point in time upon which to establish that a definite decision to introduce major change was when a firm offer to purchase had been made and would complete on any reasonable expectation. The written notification to all employees dated 12 April 2010 and the subsequent discussions that occurred represented practical and reasonable compliance with the Award provisions.
[33] The applicant did not receive the written notification of 12 April because he was on leave and at sea, and therefore essentially un-contactable. These particular circumstances of the applicant do not provide for any basis to establish that the employer did not comply with the notification and consultation obligations of the Award. The employer took all reasonable steps to notify the applicant and did consult with him about the anticipated changes as soon as practicable after he returned from sea.
Conclusion
[34] The applicant was dismissed because the employer sold the business operation and the new owner decided not to employ the applicant. The position of the applicant was therefore redundant.
[35] The applicant has asserted that his dismissal was not a case of genuine redundancy because the employer did not comply with notification and consultation obligations under the Award. Upon analysis of the particular circumstances of this case, the actions of the employer represented practical and reasonable compliance with the notification and consultation provisions of the Award.
[36] Further, there was no evidence to establish that it would have been reasonable for the applicant to be redeployed within either the employer's enterprise or within any enterprise of an associated entity of the employer. Therefore, having regard for the provisions of section 389 of the Act, the evidence in this case has established that the dismissal of the applicant was a case of genuine redundancy.
[37] Consequently, as the dismissal of the applicant was a case of genuine redundancy, the operation of subsection 385 (d) of the Act renders the application for unfair dismissal remedy as beyond legislative capacity. Therefore the application is dismissed and the proceedings are concluded accordingly.
[40] In my opinion, the test under the relevant Award provisions is not that the employer is required to find a new job for the redundant employees, particularly in light of the circumstances of the business being sold; nor is the test that the employer held out false hopes to the employees that the new employer would keep them on. In my view, the employer did not, and could not, have given such assurances, on behalf of the new employer. Ultimately, it was the new employer’s prerogative to retain whoever it wished.
[41] The test under the Award is twofold. Firstly, to give notice to the employees that a definite decision had been made and secondly, to consult with employees about the prospect of minimising the impact of the redundancy.
[42] As to the first matter, I agree with the respondent’s submissions that it would be unhelpful, disruptive and unfair to advise the employees of the sale before the exchange of contracts took place; in this case on 16 April 2010. I also accept that negotiations over the sale are a matter for the direct parties involved and could raise false expectations if the employees are advised before the deal has been clinched. In any event, the employees were advised by letter of 12 April 2010, of the pending sale. In my opinion, a definite decision for the purposes of the Award and this case was when the contracts were exchanged. There is no doubt that the employees were informed the next day. I consider that this aspect of the employer’s duty under the Award was complied with. It was unfortunate that Mr and Mrs Redfern were on an overseas cruise, when the letters were prepared on 12 April 2010, advising of the prospective sale. Obviously they did not receive their letters confirming the sale until their return to work. However, that was hardly the employer’s fault. Even so, from the applicants’ own evidence and from what it appeared Mrs Redfern told another employee who was cruising with them, (see par 5 of Cambridge C’s decision) that she was well aware that the business had been sold.
[43] Nevertheless, the real complaint of the applicants is that they were given false hopes that their jobs were secure and that they would never have gone on holiday knowing they would return to no job and with nowhere to live. As I said earlier, it was not for the employer to give guarantees about job security. The letters relied upon by the applicants do not unequivocally state this to be so. The precise words were ‘Our understanding is that the new owners intend to keep the services of most employees and we expect that this will be discussed with you all individually’. I do not accept the applicants’ evidence that they were told by Mr Gunasinghe and Mr Phillip Brand that their positions were positively safe. I think this to be highly unlikely, given that such assurances could not be made and that the sale had been ‘on and off’ over a number of years. Perhaps they were given some hopeful expectations, but it was no more than that. Perhaps, the respondent itself may have been misled by the new owners, although there was no evidence to that effect. Sadly, the applicants were either too trusting and/or naive to have accepted such loose and equivocal statements. Moreover, they had not met the new owners; let alone been given any assurance by them that they would be retained in employment.
[44] Having considered all of the circumstances, I find myself in agreement with the opinions and conclusions of Cambridge C in the matter earlier referred to. The respondent has established that the applicants’ dismissals were for reasons of genuine redundancy and the two applications for relief from unfair dismissal are not competently before FWA. Given this finding, it is unnecessary for me to formally conclude that the respondent was a small business employer and the applicants, having less than 12 months service, are not eligible to bring unfair dismissal claims. That said, I note the apparently uncontested evidence in the proceedings before Cambridge C that the employer had approximately 12 full-time equivalent employees. Moreover, I do not consider that Mr Duc has established a sufficiently compelling evidentiary basis for a conclusion that the employer had ‘associated’ entities which employed more than 15 employees (s 23(3) of the Act). Even if I be wrong about that conclusion, I do not consider that it would have been reasonable for the employer to redeploy the applicants to one of these entities, given the uncontested evidence of Mr Gunasinghe, that Mistlake Investments Pty Ltd does not own or operate accommodation related facilities.
[45] Pursuant to s 385 of the Fair Work Act 2009, I find that the terminations of employment of the applicants on 17 April 2010, were for reasons of genuine redundancy. Accordingly, the applications for relief from alleged unfair dismissal are not competently before FWA. The applications must be dismissed for want of jurisdiction, pursuant to s 587(1)(a) of the Act. Orders to that effect will accompany this decision.
DEPUTY PRESIDENT
Appearances:
Mr A Duc (Blue Mountains Employment Relations) for the applicants
Ms L Sutherland, for the respondent
Hearing details:
2010
SYDNEY
2 July
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