Paul Reid v Quayclean
[2013] FWC 31
•3 JANUARY 2013
[2013] FWC 31 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Paul Reid
v
Quayclean
(U2012/765)
COMMISSIONER GREGORY | MELBOURNE, 3 JANUARY 2013 |
Genuine redundancy.
[1] This is an application alleging unfair dismissal brought by the Applicant, Mr Paul Reid, under s.394 of the Fair Work Act 2009 (the Act). The Applicant was employed by Quayclean Australia Pty Ltd (the Respondent) for approximately 19 months from August 2010 until 23 March 2012.
[2] Conciliation of the claim was unsuccessful and the matter proceeded to arbitration in a hearing on 6 September 2012. The Applicant appeared on his own behalf. The Respondent was represented by Mr Mark Piwkowski, the CEO of QuayClean. No witnesses were called and neither party sought to cross examine the other party.
[3] During the hearing the parties agreed to a short adjournment to enable discussion in conference about the appropriate way to deal with the matter. Those discussions canvassed a range of matters, however, it was subsequently agreed the matter proceed by way of a hearing.
The Issue to be Decided
[4] The Respondent claims the Applicant’s dismissal was a case of genuine redundancy due to changes in the operational requirements of the Respondent’s business. The Applicant states in response his dismissal was not a case of genuine redundancy because the work is still required to be performed. He also states he was not consulted about the redundancy and could have been redeployed to work elsewhere in the Respondent’s business.
The Evidence and Submissions
[5] The Applicant commenced work with Quayclean in August 2010 and was employed as a full-time area manager looking after the south east region of Victoria. He indicated he was employed under the terms of an individual employment contract with the Respondent, rather than under the terms of an award or enterprise agreement. He states Mr Trent Pantelli was employed in the role of State Manager in October, 2011 and subsequently he and Mr Pantelli did not get along particularly well. He said there were two other area managers working from the same office where he was located, who were not made redundant, and to the best of his knowledge remain in those positions. The Applicant also indicated he was not consulted about the possibility of being made redundant prior to his dismissal. He stated he had previous extensive experience in stadium and event cleaning that would have enabled him to be redeployed to other roles within the organisation. However, he stated “that at no time was there ever any discussion about change of position or redeployment”. 1
[6] On 19th March, 2012 the Applicant was contacted by Mr Pantelli and asked to attend a meeting the following day. Mr Pantelli and Mr Mark Piwkowski, the Respondent’s CEO, were both present at that meeting. The Applicant was then told he had been made redundant. He subsequently received a letter from the CEO indicating the Respondent had reviewed its business requirements in Victoria and his role as Area Manager had been identified as being redundant. The letter also indicated other roles had been considered within the organisation but none had been considered suitable. The letter concluded by thanking the Applicant for his contribution and wishing him well in the future. On 23 March the Applicant arrived at the office to return company property and receive his last pay advice. Mr Piwkowski gave him a copy of an agreement setting out the terms of his dismissal and asked him to sign it, however, the Applicant refused to do so. He did, however, receive a termination payment which included an amount in excess of the statutory redundancy entitlements.
[7] Mr Piwkowski for the Respondent stated he joined the company in June 2011 as CEO and his initial responsibilities were to review the financial position, business structure and current procedures. As part of the business review he conducted a review of each position within the organisation. In relation to the Applicant’s role three of the existing facilities in his region had indicated they would not be renewing their contracts, leading to a significant reduction in revenue and removing the justification for an Area Manager in that region. The Applicant’s position was instead sub-contracted to a smaller company who had a long standing relationship with the business, and would now report directly to the State Manager. Mr Piwkowski submitted the Applicant’s redundancy was due to:
“1. QuayClean losing customers relevant to Paul’s portfolio in the east.
2. The business needed to increase operational returns in Victoria to remain viable.
3. The area that Paul Reid was responsible for was restructured with services delivered directly by a Subcontractor.
4. His skills were not transferable into the larger more dynamic stadium portfolio.” 2
[8] Mr Piwkowski also stated he looked for options to redeploy the Applicant, particularly as the Respondent required skills in managing cleaning services in large stadiums and sporting venues. The Respondent needed strong contracting experience in the stadium market the business was looking to develop into. However, he came to the view the Applicant would not be suitable for these roles, given his skills and experience.
The Legislation and the law to be applied
[9] Section 385 of the Act states a person has been unfairly dismissed if Fair Work Australia 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.”
[10] In the present matter the Respondent submits the termination was a case of genuine redundancy. The Applicant rejects that submission and states the requirements for genuine redundancy have not been satisfied.
[11] Section 389 of the Act deals with the meaning of genuine redundancy. It states -
“(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.”
[12] The meaning of genuine redundancy, as set out above, was considered by a Full Bench of Fair Work Australia in Ulan Coal Mines Limited v Henry Jon Howarth. 3In that decision, the Full Bench considered whether the retrenchment of a number of mineworkers was one of genuine redundancy. The Full Bench said:
- 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.”
“[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:
[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])
[19] In the present case, the Commissioner appears not to have drawn an appropriate distinction in his reasoning between the “jobs” of the mineworkers who were retrenched and the functions performed by those mineworkers or take proper account of the nature of the restructure at the mine which led to an overall reduction in the size of the non-trades mineworker workforce. The Company restructured its operations in various ways including by outsourcing certain specialised, ancillary and other work and increasing the proportion of trade-qualified mineworkers in underground development and outbye crews. As a result, it was identified that there were 14 non-trades mineworker positions which were surplus to the Company’s requirements. The mineworkers whose employment was to be terminated were determined according to the seniority principle as provided in the Agreement. This did not mean that the functions or duties previously performed by the retrenched mineworkers were no longer required to be performed. It also did not mean that the positions of some of these mineworkers (e.g. in underground crews) did not continue, although those positions might after the restructure be filled by more senior non-trades mineworkers transferred from other parts of the operations or by trade-qualified mineworkers. However fewer non-trades mineworker jobs were required overall at the mine as a result of the operational changes introduced and, for this reason, the jobs of the 14 mineworkers selected for retrenchment could be said to no longer exist.
[20] These circumstances readily fit within the ordinary meaning and customary usage of the expression in s.389(1)(a) of the Act where a job is no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.”
[13] The Full Bench in that matter referred to previous decisions which considered the meaning of ‘job’ and noted a “job involves a collection of functions, duties and responsibilities” 4. A company might terminate an employee by doing away with all of the duties attached to a job or retrench an employee by redistributing all or some of those duties to another employee. In those circumstances there can be a genuine redundancy even though duties once performed by the retrenched employee still exist and are being performed by another or other employees.
[14] The question of what is required of an employer in terms of the obligations imposed by s.398(2) has also been considered by this Tribunal. In Ulan Coal Mines Limited v Honeysett and Others 5 a Full Bench of the Tribunal considered s.389(2) and said:
“The question remains whether redeployment within the employer’s enterprise or the enterprise of an associated entity would have been reasonable at the time of the dismissal. In answering that question a number of matters are capable of being relevant. They include the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job in relation to the employee’s residence and the remuneration which is offered.” 6
[15] The Full Bench in that matter also continued to indicate each case will depend upon what would have been reasonable in the circumstances.
[16] I now turn to consider the present matter against the background of these considerations. It is well established that the question of the redundancy of an employee is linked to the continued utility of the job being performed, rather than to the competence or ability of the employee. Nothing in the present matter has been put that raise issues about the performance or capability of the Applicant. Indeed, in the meeting when he was told of his dismissal the Applicant said he was praised for his dedication during his time with the Company and nothing was put in response to refute this suggestion. However, I am satisfied, firstly, the Applicant’s position has been made redundant. The Respondent has given evidence about the changing client base in the region the Applicant was responsible for and the intention to shift the focus of the business in other directions. Clearly tasks and functions performed by the Applicant continue to be required to be carried out. However, the business has been structured in a different way, including through greater involvement with an existing sub-contractor. I am satisfied these changes can be described as a redundancy in terms of the Full Bench decision in Ulan Coal Mines Limited v Henry Jon Howarth, 7 and in terms of the examples provided in the Explanatory Memorandum to the Fair Work Bill 2008.
[17] The Applicant also denies that there was any consultation with him about the redundancy. He submits this is required under the Fair Work Act for a dismissal to be a case of “genuine redundancy.” He stated,
“ . . . at no time was there any discussion with me. I was only aware of the fact that the redundancy had happened when they first called me into the office to discuss an undisclosed subject.” 8
[18] Section 389(1)(a) of the Act does require in a case of genuine redundancy that the Employer has complied with any obligations in relation to an applicable modern award or enterprise agreement to consult about the redundancy. However, the Act is clear in this regard. The obligation to consult only arises if it is contained in a modern award or enterprise agreement that applies to the Applicant’s employment. In the present matter there is no evidence or any submissions suggesting the Applicant was covered by a modern award or enterprise agreement. Both the Applicant and Respondent indicated the Applicant was covered by an individual employment agreement entered into between the parties setting out the relevant terms and conditions of employment. In addition, the Applicant was employed as Area Manager and there is nothing to suggest his position would be subject to coverage by a modern award. Accordingly, the obligation to consult contained in s.389(1)(b) of the Act is not relevant in the circumstances of this matter.
[19] The Applicant also submits he could have been redeployed within the Respondent’s business. He acknowledged the company was reviewing its operations and changes could result from the process that could impact upon him, regardless of his competence or ability, however, he states “. . . at no time was there ever any discussion about change or redeployment . . .” 9 with him and he seemed to be the sole target of any redundancies being made.
[20] As the Full Bench decision in Ulan Coal Mines Limited v. Honeysett and Others states what is reasonable in all the circumstances in terms of any decision about redeployment will be a question to be considered in all the circumstances. The Respondent’s submissions indicated it went through a lengthy process of investigation and review as part of the process of business restructure. This included facilitated leadership and group wide team meetings in November 2011 which included, “A review of the skills and capabilities of the team that made up the Victorian structure.” 10 The Respondent also indicated it was aware of the Applicant’s work history prior to joining the Company and had taken these considerations into account in coming to the decision it finally made. The Respondent submits it did consider all the options that might be available for the Applicant, but came to the conclusion there were none suitable. Area Managers were in place in other regions and the Company was looking at different skill sets in other parts of its operations.
Given this situation I am not satisfied I am able to come to a conclusion it would have been reasonable in all the circumstances for the Applicant to have been redeployed within the Respondent’s business.
[21] In conclusion, taking into account all the evidence and submissions and each of the considerations contained in s.389 of the Act I am satisfied the Applicant’s dismissal was a case of genuine redundancy. The application is accordingly dismissed.
COMMISSIONER
Appearances:
Mr P. Reid on his own behalf.
Mr M. Piwkowski on behalf of Quayclean.
Hearing details:
2012:
Melbourne
6 September.
1 Transcript PN22
2 Exhibit P2, page 2
3 [2010] FWAFB 3488
4 (1995) 60 IR 304 at p. 308 as cited in [2010] FWAFB 3488 at p. 17
5 [2010] FWAFB 7578
6 [2010] FWAFB 7578 at 28
7 [2010] FWAFB 3488
8 Transcript PN16.
9 Transcript PN22.
10 Exhibit P2, page 2
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