Richard Dean v Victoria Cold Storage Pty Ltd

[2020] FWC 4073

[2020] FWC 4073

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Richard Dean
v
Victoria Cold Storage Pty Ltd
(U2020/4266)

DEPUTY PRESIDENT COLMAN MELBOURNE, 4 AUGUST 2020

Application for an unfair dismissal remedy – redundancy – whether genuine redundancy – employer’s failure to pay notice and redundancy entitlements

[1] This decision concerns an application made by Mr Richard Dean under s 394 of the Fair Work Act 2009 (Cth) (Act) for an unfair dismissal remedy. Mr Dean worked for Victoria Cold Storage Pty Ltd (company) from 3 March 2003 until his dismissal on 27 March 2020.

[2] Mr Dean says that his dismissal was unfair because his position was made redundant when there were many other positions that he could have filled. He says that he was not consulted about his redundancy but was simply told that his employment was ending because of a downturn in business. Mr Dean also says that he did not receive payment in lieu of notice or any redundancy pay. He seeks an order for compensation.

[3] The company contends that Mr Dean was not redundant but was dismissed because of a ‘shortage of work’. It also submits that the Commission has no jurisdiction to hear the application because the company complied with the Small Business Fair Dismissal Code (Code). As I explain below, both of these contentions are misconceived. However, there is another jurisdictional question that I must consider, namely whether Mr Dean’s dismissal was a case of ‘genuine redundancy’ for the purposes of the Act. If it was, I must dismiss the unfair dismissal application.

[4] On 29 June 2020, I advised the parties that I would arrange for a member-assisted conciliation. On 30 June 2020, my chambers received correspondence from Mr David Wedlake, the company’s managing director, in which he stated that there would be no attendance by the company because it had ‘nothing to answer for’.

[5] On 14 July 2020, my associate sent an email to Mr Wedlake, stating that Mr Dean’s application was listed for hearing on 16 July 2020, and that if the company did not attend the hearing, the application would be determined in its absence. The company failed to appear at the hearing on 16 July 2020. I proceeded to hear the application. Mr Dean appeared and gave evidence.

The evidence and submissions of the parties

[6] Mr Dean gave evidence that he was employed as the operations manager of the company’s Colbert Road facility. He said that he did not disagree with the company’s description of his role as ‘assistant manager’. He reported to the branch manager, Mr David Adams. Mr Dean’s role involved managing operational staff and allocating work. He also undertook client and clerical work. Mr Dean said that the client work was shared between himself and Mr Adams, and also Mr Matthew Ross, a more junior employee whom Mr Dean described as a clerk. Each of them would look after different customers. As far as Mr Dean knows, all client work is now performed by Mr Adams and Mr Ross.

[7] On 26 March 2020, Mr Wedlake told Mr Dean that his employment would end the next day because of a business downturn and that he would be paid his accrued annual and long service leave. Mr Dean’s last day of work was 27 March 2020. His accrued leave was paid on 31 March 2020. Mr Dean said that he did not receive payment in lieu of notice of termination of employment, or any redundancy payment. The company’s written materials do not contradict Mr Dean’s evidence on these matters. I accept his evidence.

[8] Mr Dean submitted that his dismissal was unfair because there were other positions that he could have filled. He said that at the time of his dismissal he was the only full-time employee to be made redundant, although others have since been made redundant. He said that many other employees had been employed by the company for only a short time and in lower level positions, but they were not dismissed. He suggests that he ought not to have been chosen for redundancy, given his length of service and seniority. However, there is no reason why length of service or employment status have any necessary bearing on the positions that an employer should make redundant.

[9] Mr Dean further submitted that his dismissal was unfair because he was not consulted about his redundancy and did not receive his redundancy entitlements.

[10] The company’s position in relation to the application is set out in its F3 employer response, in a letter dated 14 April 2020 from Mr Wedlake to the Commission, and in an email submission dated 12 June 2020. The company said that in mid-March 2020 it lost a major client, whose meat business had closed, and that this resulted in a loss of $1 million in annual revenue. It said that, as a consequence, the company was forced to reduce staff numbers, and that Mr Dean was the first office staff ‘reduction’ due to the ‘massive revenue loss’. The company also stated that its workforce reduced from sixty employees to forty.

[11] Mr Dean did not dispute these facts. However, he said that customers come and go and that there had been downturns in the past.

[12] There are numerous statements in the company’s materials pointing clearly to a conclusion that Mr Dean’s position was redundant. In addition to the company submissions cited above, I note that, in his letter dated 14 April 2020, Mr Wedlake stated that ‘there was just no work for [Mr Dean] to perform’. Further, the company submission of 14 June 2020 stated that Mr Dean and others at the facility ‘had to be terminated because of the loss of business of a major client’, and that this ‘forced management to cut employees to try and save the company.’ Despite these statements, the company contended that in fact Mr Dean was not redundant, and that he had instead been dismissed due to a ‘shortage of work’. The company based this contention on the fact that Centrelink’s employment separation certificate, which asks employers to indicate the reason for dismissal, makes reference both to ‘shortage of work’ and ‘redundancy’. The company said that the distinction between these two reasons for dismissal must be a legitimate one, as it is reflected on a government form, and that the company’s reason for dismissing Mr Dean was the former, not the latter.

[13] The company misunderstands the meaning of redundancy. The company had concluded that there was no work for Mr Dean to do. It dismissed him for this reason. This was a situation of redundancy. The fact that the employment separation certificate distinguishes between ‘redundancy’ and ‘shortage of work’ is irrelevant. It is not necessary to reflect on why the form makes such a distinction, but one obvious reason would be to cover the situation of casual employees whom an employer ceases to engage because of a ‘shortage of work’. One would not speak of a casual employee being made redundant, because each engagement of work usually stands alone. A casual is simply not re-engaged, rather than made redundant. But Mr Dean was not a casual. He was a permanent employee with 17 years’ service. His position was made redundant for financial reasons. He was, as the company said, ‘one of many laid off.’

[14] From the company’s own materials, it is clear that Mr Dean’s position was made redundant. Before considering Mr Dean’s contention that his dismissal was unfair, s 396 requires that I first determine whether the dismissal was a ‘genuine redundancy’ for the purposes of the Act. I must determine this question regardless of the fact that the company did not object to the application on this basis. It is a jurisdictional question. A dismissal cannot be unfair if it was a case of genuine redundancy (s 385).

‘Genuine redundancy’?

[15] ‘Genuine redundancy’ is defined in s 389 of the Act as follows:

“(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.”

[16] I have concluded above that Mr Dean’s position was made redundant. Specifically, for the purposes of s 389(1)(a), I consider that the company did not want the job performed by Mr Dean to be performed by anyone. This was because of changes in the operational requirements of its enterprise, namely that a staff reduction was required because of the loss of a major customer and revenue source. In addition, the company’s changed operational requirements were constituted by its new assessment of those requirements, 1 in light of the business downturn that the company was experiencing at the time.

[17] I note that, although it was Mr Dean’s position that he was made redundant, and should be paid his redundancy entitlements, he said that the work that he used to do still exists. He said that as far as he knew, Mr Adams and Mr Ross were now doing all of this work. Mr Dean made this submission in support of his contention that his redundancy was not ‘genuine’. However, s 389 focuses on the ‘job’ of the former employee. There is no basis in the evidence to conclude that Mr Dean’s job is still being performed. Rather, Mr Dean believes that the work that he used to do is now being performed by two people rather than three. It is often the case that a job will be made redundant because its constitutive tasks can be absorbed by others. This does not suggest that the redundancy is not a genuine one.

[18] Mr Dean also said that the meat business that closed and caused the loss of revenue for the company was not one of the clients that he looked after. But this is not relevant. The loss of this client created financial pressure that led the company to reduce the number of employees. Mr Dean was the assistant manager. This job was made redundant. There is now a branch manager and a clerk doing the client work that was formerly done by three. This is consistent with a situation of genuine redundancy for the purpose of s 389.

[19] As to the changes in the company’s operational requirements, I note Mr Dean’s evidence that customers come and go and that, in his opinion, there are always a lot of inquiries for storage services. But this general view does not negate the specific information provided by the company, which Mr Dean does not dispute, about its financial situation and its need to reduce staff. I consider that this information establishes an operational requirement that led the company to make Mr Dean’s job redundant.

[20] Next it is necessary to consider whether the company complied with any obligation in a modern award or enterprise agreement that applied to Mr Dean’s employment to consult about the redundancy. Mr Dean said that he was not aware of his employment having been covered by an award. I have considered whether he may have been covered by the Storage Services and Wholesale Award 2020 (Award) but have concluded that this was not the case. The only potentially applicable classification that might have covered Mr Dean is that of Wholesale Employee Level 4. However, clause 1.8.3 of Schedule A of the Award states that this classification level shall not apply to employees principally engaged in managerial work. On Mr Dean’s evidence, he was so engaged, because he was the assistant manager of the site. Therefore, for the purposes of s 389(1)(b), there was no relevant award, and there is no suggestion of an enterprise agreement applying to Mr Dean’s employment. Accordingly, there was no relevant consultation obligation that the employer was required to meet in relation to Mr Dean’s dismissal.

[21] This brings me to the question of whether it would have been reasonable in all the circumstances for Mr Dean to be redeployed within the company’s enterprise or the enterprise of an associated entity. There was no evidence of any associated entity or of redeployment opportunities within any such entity. As to redeployment within the company, Mr Dean said that, given his lengthy history with the company, and his knowledge and experience, there were some twenty positions that he could have filled. I asked Mr Dean to explain which positions or work he had in mind. He stated that he could do the work of most employees. Mr Dean said that, for example, there are employees who undertake scanning and generate reports, many of whom he had trained. He said that, aside from driving a truck, he could undertake any role on site.

[22] It is clear that Mr Dean was talking about positions and work that he had the ability to perform, rather than any position or work that was available and to which he could reasonably be redeployed. Mr Dean said that, if the company had chosen to make other employees redundant, he could have been redeployed to those roles. However, these roles would not have been available, because they would have been redundant. Based on Mr Dean’s evidence, and the relevant written material provided by the company with which Mr Dean does not disagree, there is an insufficient basis for me to conclude that it would have been reasonable in all the circumstances for Mr Dean to be redeployed.

[23] I therefore conclude that Mr Dean’s dismissal was a case of genuine redundancy. The company no longer required Mr Dean’s job to be performed by anyone because of changes in the operational requirements of its enterprise associated with the downturn and financial pressure brought about by the loss of a major client. The company had no obligations under a modern award or enterprise agreement that applied to the employment to consult about the redundancy of Mr Dean. And I do not consider that it would have been reasonable in all the circumstances for Mr Dean to be redeployed within the company’s enterprise or the enterprise of an associated entity.

[24] While it is unnecessary for me to consider the company’s contention that it complied with the Small Business Fair Dismissal Code, I note that the contention is plainly wrong, because the company has 51 employees, whereas a small business for the purposes of the Act is one that has fewer than 15 employees at the time of dismissal (see s 23).

Conclusion

[25] Because Mr Dean’s dismissal was a case of genuine redundancy, the Commission has no jurisdiction to consider the merits of his unfair dismissal application. I will however make some concluding observations.

[26] Mr Dean has been treated very badly. He was given one day’s notice of dismissal after 17 years’ service. The evidence indicates that he had earlier been encouraged to retire. He did not receive payment in lieu of notice under s 117 of the Act, which, given his period of service and age, amounted to five weeks’ pay. He was not paid his redundancy entitlements under s 119, which amounted to ten weeks’ pay. Mr Dean is clearly entitled to these amounts. I say this not in the exercise of power, but as a statement of the obvious.

[27] Mr Dean sought an order that the company pay these entitlements. I explained at the hearing that the Commission has no jurisdiction to make such an order, and that any legal proceedings to recover these amounts would need to be brought in a court. The Fair Work Ombudsman may be able to assist Mr Dean in that regard. However, in my opinion, the company should make these payments to Mr Dean immediately. I have put the company on notice about what I consider to be its clear legal obligations.

[28] If the company does not now pay Mr Dean his redundancy entitlements and payment in lieu of notice, and Mr Dean is put to the trouble of bringing proceedings in a court to recover them, a court may take judicial notice of the company’s conduct in considering the quantum of any penalties for breach of the Act.

DEPUTY PRESIDENT

Appearances:

R. Dean for himself

No appearance for Victoria Cold Storage Pty Ltd

Hearing details:

2020

Melbourne

16 July

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 1   See Shachar v Electrical Home Aids Pty Ltd t/a Godfreys[2018] FWC 4892 at [27] – [30]