Robert Digby Pagey v Myer Pty Ltd
[2009] FWA 419
•12 OCTOBER 2009
[2009] FWA 419 |
|
DECISION |
Workplace Relations Act 1996
s.643—Termination of employment
(U2009/10358)
Vincent Alphonse Hoppe v Myer Pty Ltd
(U2009/10361)
Sharon Judith Laytham v Myer Pty Ltd
(U2009/10365)
Leonie Slee v Myer Pty Ltd
(U2009/10415)
Christine Gray v Myer Pty Ltd
(U2009/10419)
Colleen Therese Mills v Myer Pty Ltd
(U2009/10421)
Joanne Morgan v Myer Pty Ltd
(U2009/10422)
COMMISSIONER LARKIN | SYDNEY, 12 OCTOBER 2009 |
Termination of employment – operational reasons.
[1] This matter concerns a jurisdictional objection pursuant to s.645 of the Workplace Relations Act 1996 (the Act) raised by Myer Pty Ltd (Myer) in relation to seven applications lodged under s.643(1) of the Act. Myer’s jurisdictional objection is based on the grounds that the termination of employment of the seven employees was for genuine operational reasons or reasons that include genuine operational reasons (ss.643(8) and (9)).
[2] Those former employees made application on 15 July 2009 to Fair Work Australia (FWA) in relation to their termination of employment on 24 June 2009 by Myer. The grounds of their applications were under ss.643(1)(a) (harsh, unjust or unreasonable), ss.659(2)(a) (temporary absence from work because of illness or injury) and ss.659(2)(f)(the discrimination grounds).
[3] The applicants to the substantive matters were employed at the Charlestown store of Myer. The applicants are:
- Mr Robert Pagey commenced with Myer on 19 May 1999. At the time of termination Mr Pagey was 40 years of age. Mr Pagey was employed at Team Member Level 1.
- Ms Joanne Morgan commenced with Myer on 1 August 1989. At the time of termination Ms Morgan was 55 years of age. Ms Morgan was employed in the position of Sales Assistant.
- Ms Sharon Laytham commenced with Myer on 16 January 1989. At the time of termination Ms Laytham was 64 years of age. Ms Laytham was employed at Team Member Level 1.
- Mr Vincent Hoppe commenced with Myer on 19 October 1976. At the time of termination Mr Hoppe was 50 years of age. Mr Hoppe was employed at Team Member Level 2.
- Ms Colleen Mills commenced with Myer on 6 December 1983. At the time of termination Ms Mills was 58 years of age. Ms Mills was employed in the position of Retails Sales/Customer Service.
- Ms Leonie Slee commenced with Myer on 30 January 1989. At the time of termination Ms Slee was 44 years of age. Ms Slee was employed at Team Member Level 3.
- Ms Christine Gray commenced with Myer on 19 January 1989. At the time of termination Ms Gray was 61 years of age. Ms Gray was employed at Team Member Level 1.
[4] Myer’s jurisdictional objection was listed for hearing in Toronto on 2 and 3 September 2009. Mr West, solicitor, appeared with permission of FWA, for Myer with Ms Evans, solicitor, and Ms McEvoy, Human Resources Manager, Myer. Mr Ryan, Shop Distributors Association (SDA) appeared for the applicants in the substantive matter with Mr Bliss, SDA.
[5] The SDA filed a number of witness statements, 1 however, not all witnesses were required for cross examination. The following witnesses gave both written and oral evidence during the proceedings:
Mr Garry Quinn 2 Store Manager, Myer Charlestown Store.
Ms Slee 3 Applicant in the substantive matter.
Ms Mills 4 Applicant in the substantive matter.
Ms Morgan 5 Applicant in the substantive matter.
THE EVIDENCE
[6] In his witness statement, Mr Quinn stated that he had worked for the Myer organisation for approximately 30 years. Mr Quinn has been the Store Manager of the Myer Charlestown store for approximately 12 years and responsible for, amongst other things, leading change implementation, managing overall profitability, including managing costs, which includes labour costs, and managing day to day issues at the store.
[7] Mr Quinn outlined the Myer operations generally in relation to its major review of the business and measures implemented to improve performance of the business, which included some store closures and refurbishment of other stores in growth areas. Mr Quinn stated that other measures involved focusing on cost control and labour use, which resulted in some redundancies. The measures taken by Myer, Mr Quinn stated, had “maintained its turnover levels and raised its profitability over the last 3 financial years in what has been a very tough retail market”. 6
[8] Mr Quinn stated that the Myer Charlestown store, however, had consistently underperformed over the last two/three years in comparison to other stores within the Myer group. Mr Quinn stated that the Charlestown store is located in one of the largest shopping centres in the Hunter region. In his evidence Mr Quinn listed Myer’s competitors in the surrounding areas to the Charlestown store.
[9] In relation to the Charlestown store, Mr Quinn stated that aggregate sales had declined by approximately 12% during the financial year July 2008 to June 2009, and by approximately 16% in the previous financial year. 7 Mr Quinn suggested the following reasons for the Charlestown store’s poor performance:
- The area in which the shopping centre is situation has been significantly affected by the current economic downturn. The customer traffic survey figures for the shopping centre and the store have reduced. 8
- Since February 2008 the shopping centre has undergone substantial refurbishment/renovation/expansion works, which is scheduled for completion in approximately October 2010. As a result, the shopping centre had lost 40% of its car parking, traffic conditions were congested and surrounding roads had closed. Coles and Big W were to close from January 2010 to July 2010 for a period of six months, which would reduce the number of customers attending the centre and the Charlestown store.
[10] Mr Quinn stated that the impact on the Charlestown store’s trading was not temporary and would have an effect during the next financial year. Further, the shopping centre had recently commenced charging customers for car parking, which had previously been free. Mr Quinn stated that, from his understanding, other stores in the region do not charge customers for parking. Mr Quinn stated that it was unlikely that any real improvement in the sales figures would be seen until at least October 2010.
[11] In his witness statement, 9 Mr Quinn outlined a number of strategies he implemented to reduce costs and improve the store’s profitability. Mr Quinn stated:
“I have introduced several measures to reduce aggregate labour hours across the workforce at the Store, including:
(a) a reduction in part-time hours in line with the Myer Stores Agreement 2007 in October 2008;
(b) a reduction in the use of casual employees;
(c) encouraging employees to take any accrued but untaken annual leave and long service leave;
(d) considering redeployment opportunities for employees at other Myer stores; and
(e) eventually, identifying positions for redundancies.
I was hoping that we could avoid implementing some of these strategies because I thought that the Green Hills Store would open in 2010. However, I was told that the Green Hills Store would not open until mid 2013 because of the timing of the construction program described in paragraph 17.” 10
[12] Mr Quinn stated the reason for the redundancies, as follows:
“I made the decision to terminate the employment of each of the applicants solely because of the operational reasons described above, being that:
(a) there was a significant decline in sales in the Store (approximately 15% decline from 2008 sales);
(b) there was a reduction in foot traffic in the Store;
(c) the other steps taken to reduce labour costs and increase the Store’s profitability were not sufficient to address the issue;
(d) the reduction in permanent hours was necessitated largely because of the rosters for the Store were overstaffed and not in sync with the reduction in sales and actual labour requirements; and
(e) the poor sales performance of the Store was unlikely to improve in the near future.” 11
CONSIDERATIONS
[13] As stated earlier in this decision, the applicants in the substantive matters have applied to FWA for relief in respect to their termination of employment by Myer pursuant to s.643(1) of the Act alleging that their termination of employment was harsh, unjust or unreasonable and unlawful. Myer has moved for the dismissal of the substantive applications on the grounds that the terminations were for genuine operational reasons or for reasons that include genuine operational reasons.
[14] The relevant sections of the Act are:
“643 Application to Commission to deal with termination under this Subdivision
…
(8) An application under subsection (1) must not be made on the ground referred to in paragraph (1)(a), or on grounds that include that ground, if the employee’s employment was terminated for genuine operational reasons or for reasons that include genuine operational reasons.
(9) For the purposes of subsection (8), operational reasons are reasons of an economic, technological, structural or similar nature relating to the employer’s undertaking, establishment, service or business, or to a part of the employer’s undertaking, establishment, service or business.”
[15] For present purposes, s.649 states:
“649 Dismissal of application relating to termination for operational reasons
(1) If:
(a) an application is made, or is purported to have been made, under subsection 643(1):
(i) on the ground referred to in paragraph 643(1)(a); or
(ii) on grounds that include that ground; and
(b) either:
(i) the respondent has moved for the dismissal of the application on the ground that the application is outside the jurisdiction of the Commission because the employee’s employment was terminated for genuine operational reasons or for reasons that include genuine operational reasons; or
(ii) it appears to the Commission, on the face of all the materials before it, that the employee’s employment may have been terminated for genuine operational reasons or for reasons that include genuine operational reasons;
the Commission must hold a hearing to deal with the operational reasons issue before taking any further action in relation to the application, other than dealing with a matter on the papers as provided by section 645, 646, 647 or 648.
(2) If, as a result of the hearing, the Commission is satisfied that the operational reasons relied on by the respondent were genuine, the Commission must:
(a) if subparagraph (1)(a)(i) applies—make an order dismissing the application; or
(b) if subparagraph (1)(a)(ii) applies—make an order dismissing the application to the extent that it is made on the ground referred to in paragraph 643(1)(a).”
[16] If I am satisfied that the operational reasons relied on by Myer, in relation to each of the substantive applications, were genuine, then I must make an order under s.649(2)(b) dismissing each application for relief to the extent that the application relied upon the grounds under s.643(1)(a).
[17] In A Cruickshank v Priceline Pty Ltd 12(Priceline)the Full Bench considered the requirements of s.649 and stated:
“Where the procedure in s.649 applies, therefore, the question is whether the Commission is “satisfied” that any operational reasons advanced by the employer for the termination are genuine reasons. While there is no presumption to the contrary, unless the employer produces evidence of the reasons for the termination and persuades the Commission they are or include genuine operational reasons, the jurisdictional objection will fail. Questions of onus may arise but they are unlikely to play a large part in the decision-making process. The question ultimately is whether the Commission is satisfied, on the evidence and material presented to it by the parties, that there were genuine operational reasons.
Speaking generally the reasons for termination of employment are the reasons of the decision-maker. In many cases the decision-maker will be easily identifiable. In other cases the situation may not be straight forward. For example the decision may have been taken by a group such as a committee. In any event the evidence of the decision-maker, or decision-makers if there are more than one, will be pivotal.” 13 (citations omitted)
[18] The Full Bench outlined the approach to be taken in considering the test required by ss.643(8) and (9) as follows:
“It is clear that there were conflicts in the evidence which required to be resolved by the exercise of judgment and by the apportionment of relative weight to the evidence and material before the Commission. While the Commissioner made some findings he made no intermediate findings. He moved directly to the overall conclusion that the termination of employment was not a sham and that the appellant was not targeted inappropriately. Assuming that the Commissioner decided to accept Mr Stapleton’s evidence, despite the contrary indications to which we have referred, the appellant was entitled to know why. Furthermore, in the absence of intermediate findings we are unable to be confident that the Commissioner approached the application of the test in ss.643(8) and (9) in the correct way. It is accepted that the decision of the Full Bench in Village Cinemas properly sets out the nature of that test, but it is not clear that the Commissioner in fact applied it. Whether or not a termination of employment is for genuine operational reasons, or for reasons which include such reasons, is to be ascertained by an examination of the reasons for the termination of employment in question, rather than by identifying a generalised operational need to reduce employment.” 14 (citations omitted)
[19] The Full Bench in Village Cinemas Australia Pty Ltd v Carter 15(Village Cinemas) considered s.643(8) of the Act and stated:
“We agree with Mr Ginnane that the operational reason relied upon by the employer need only be a ground or cause for the termination of the employment of an employee. It need not be something that demands or brings about an obligation to terminate the employment of a particular employee. The termination of employment of the particular employee does not have to be an unavoidable consequence of the operational reason for the limitation in s.643(8) to operate. Consequently, whether the employer could have done something other than terminating the employee’s employment will generally be irrelevant in deciding whether the termination was for genuine operational reasons, or reasons that include genuine operational reasons. To pose the question whether the termination was “a logical response to” the employer’s operational requirements will also not necessarily assist in determining whether the termination was for genuine operational reasons. This may also be an appropriate question to pose in a consideration as to whether or not the operational reason advanced by the employer for the termination of employment of the particular employee was a sham or not. However, that question does not arise in this application.” 16 (citations omitted)
[20] Further in the decision, the Full Bench stated:
“An applicant for relief bears the onus of proving all the elements necessary to establish his claim. This includes satisfying the Commission that it has jurisdiction to deal with the matter. Where, as in this case, the respondent asserts that the application is precluded by operation of s.643(8), the respondent bears the evidentiary onus of persuading the Commission that the termination of employment of a particular employee was for genuine operational reasons or for reasons that include genuine operational reasons. It is in that context that a mere assertion by an employer to that effect will usually not be sufficient to discharge the evidentiary onus. What evidence will suffice will vary from case to case depending on the circumstances.” 17
[21] On authority, I must be satisfied, on the evidence and material presented, that there were genuine operational reasons for the termination of the employees’ employment. Myer is required to produce the evidence to persuade me that the employees’ termination of employment was for genuine operational reasons. The evidence of Mr Quinn, the decision maker, is “pivotal” to my satisfaction that there were genuine operational reasons for the termination of the employment.
[22] The Full Bench in Boeing Australia Limited v B Acworth 18(Boeing) outlined the approach to be taken in the exercise required by s.649(2) of the Act as follows:
“When a respondent employer moves for the dismissal of an application pursuant to s.649(1)(b)(i), s.649(2) requires the Commission to examine the operational reasons relied on by the respondent employer and to decide whether those reasons were genuine. It follows that the focus of the inquiry is two-fold. It requires the identification of the reasons relied upon by the employer and an evaluation of their genuineness. In a forensic sense reasons relied on by the employer might not be genuine because they were not real reasons for the termination or, while being genuine reasons, they may not be operational ones.” 19
[23] As was said in Boeing “the employer’s reasons for dismissal are the critical consideration”. 20The employer’s reasons for the termination are those advanced by the decision maker and/or decision-makers, if more than one. On authority, I must first identify the reasons relied upon by the employer and then evaluate those reasons for genuineness.
[24] Mr Quinn, as the decision maker, stated his reasons for the terminations, outlined previously in this decision, as due to a significant decline in sales of approximately 15%, the steps taken to reduce labour costs and increase profitability were not sufficient and the sales performance of the Charlestown store was unlikely to improve in the near future. Mr Quinn’s evidence in support of his decision, both written and oral was extensive and provided a logical rationale for the decisions he took to address the store’s trading performance. Mr Quinn, in my view, gave his evidence in the proceedings in a forthright manner and, some times, an extensive reply to questions put to him. I found him a truthful and persuasive witness.
[25] In cross examination, Mr Ryan put a number of questions to Mr Quinn in relation to a Myer media release in June 2009, 21 which quoted Mr Brookes, Myer’s Chief Executive Officer, as follows:
“[A]s Bernie Brooks is saying, it’s going well?
Yes. But as explained before, the reasons for the Charlestown current situation is, initially started with Kotara, then the economic downturn, but the majority of it is the Kotara refurb and the current refurb that’s happening at Charlestown Square. If you lose 40 per cent of your current car park spaces and you have a 25 per cent decline in traffic and transactions it leads to say that something’s got to give, and sales were the ones that gave.
But in the picture at Myer the retention of the workers who were terminated was not going to break Myer, nor would it have forced Mr Brooks to come out with a gloomy prediction about Myer would it?
Well, my accountability is for Myer Charlestown, Bernie’s is for the company. He’d be better equipped to answer that. I can only talk to Myer Charlestown, and at that point in time that’s the reason we made the decision, was because we’d explored every other avenue from a cost point of view… My accountability is for Charlestown. My accountability is for the individuals that work in Charlestown as well.” 22
[26] The substantive matters, which have attracted the jurisdictional objection presently before me, concerns employees of Myers who worked at the Charlestown Myer store and not the overall Myer Group of companies. Whether or not Myer Pty Ltd was holding their own and would not be impacted by the retention of the employees concerned in this matter is not to the point. The matter before me concerns my satisfaction that their existed a genuine operational reason for the termination of employment of the employees from the Charlestown Myer store.
[27] In his evidence, Mr Quinn had stated that the Charlestown store was the only Myer store in the Hunter region. Mr Quinn’s reference above to the Kotara refurbishment had been outlined in his witness statement as follows:
“The other large shopping centre in the Hunter region is the Westfield Kotara Shopping Centre (Kotara Westfield) which is approximately 5 kilometres or 5 minutes drive by car from the Store. Kotara Westfield was refurbished and substantially expanded in December 2007. The ‘anchor’ tenant in Kotara Westfield is David Jones. There is also a David Jones store in the Newcastle CBD.” 23
[28] Attached to Mr Quinn’s witness statement was a yearly sales graph outlining the Charlestown store’s sales figures from 2004/2005 to 2008/2009. 24 The graph shows that in the financial year 2006/2007 the Charlestown store’s sales were higher than in the other years reflected on the graph, which would suggest the positive effect on the Charlestown store of the refurbishment disruption occurring at the Kotara shopping centre. In the financial year 2007/2008 there is a significant drop in sales of 15.70 per cent and a drop of 11.54 per cent in the 2008/2009, which suggests a negative effect on the Charlestown store due to the completion of the work at Kotara. Clearly, on the evidence, the Myer Charlestown store has experienced a downturn in its business from previous years.
[29] On the authority of Village Cinema, where “it can be clearly established that the termination of employment was for operational reasons it is not necessary to have regard” to other matters that may alleviate the necessity to terminate a particular employee “in order to ascertain whether the reasons relied on by the employer for the termination of the employee were genuine”. 25
[30] Mr Ryan put a number of questions to Mr Quinn in cross examination in relation to the selection for redundancy of the particular employees, as opposed to other employees and other categories of employee, and why Mr Quinn had not considered the conversion of full time to part time hours for some of the selected individuals. An analysis of the selection process does not necessarily assist in determining whether the termination/s was for genuine operational reasons.
[31] Mr Quinn has been the Manager of the Charlestown store for approximately 12 years. In relation to the factors considered in the selection of the particular employees terminated, Mr Quinn, in cross examination, stated:
“The areas that they were working, the performance of those areas, not necessarily the areas that they were working, the roles that were to remain and the roles that were to go. Like logistics was in Leonie Slee’s case, that role was made redundant because that role doesn’t exist any more, the electrical was the sales fall out, as I said, versus the hours used, as was intimate apparel, personal care. So in theory it was just sales fall out or the non performance of those areas, the roles whether they remained or not and the hours used.
When you say roles whether they remained or not, what do you mean by role in that sense?
Well, the logistical role that Leonie played was to be put into the selling floor so we wouldn’t have that function to perform. We’d still certainly have to receive the trucks and that sort of thing so it was a matter of who was most suitable for that particular position and that’s where from those logistical roles two people were made redundant and we only now have one full timer on the dock who I determined more suitable for those duties than the other two.” 26
[32] A number of the witness statements tendered by the SDA in the proceedings raised issues of the usage of casual employees performing the duties of the employees who had been made redundant. Mr Quinn addressed a number of the points raised in both his evidence in chief 27 and under cross examination.28 While casual employees were and are employed from time to time their hours of work are more susceptible to variation to accommodate any change in the Charlestown store’s trading situation.
[33] In Village Cinema the Full Bench considered the arguments put as to the interpretation of s.643(8) and the meaning of genuine operational reasons. Relevant to the argument before me is the following extract from the Full Bench decision:
“Nor do we accept Mr Bromberg’s submission that whilst a position redundancy may constitute a proximate reason for a termination it will be an operative reason for the termination where the position is redundant but the worker is not. To accept such an interpretation would, it our view, require an inquiry into the circumstances of the termination such that the Commission is required to determine the appropriateness of the termination rather than ascertaining whether the termination of the employment of the particular employee was for genuine operational reasons or reasons that included genuine operational reasons. This, it seems to us, is precisely the type of inquiry that the Parliament sought to avoid when it created the statutory bar to bringing applications for relief in s.643(8).” 29
[34] Whether or not there were other avenues open to Mr Quinn to reduce costs in relation to labour resources to avoid terminations does not mean that the operational reasons advanced were not genuine operational reasons. Mr Quinn’s evidence of the attempts he had made over a period of time to improve the Charlestown store’s profitability and alternatives he considered to avoid terminations was persuasive and I accept that evidence.
[35] I have read and considered each statement filed in this matter by the employees who were terminated from their employment at the Myer Charlestown store. I accept their evidence of the distress, frustration and anger they felt in relation to their termination of employment, especially given their length of tenure with Myer. I can also appreciate their feelings and the difficulties some alluded to in their respective statements.
[36] As unfortunate as the redundancies were, the legislation in these types of cases is clear, as is authority on the point. I am not persuaded that the terminations were a sham in the sense that they were contrived. I accept Mr Quinn’s evidence that to achieve an acceptable level of profitability he had to reduce the aggregate number of employee hours and that:
“The first initial step that I took was to work out what hours, as it says there, what hours needed to be reduced, then we looked at the businesses that were performing and the businesses that weren’t performing and the contracted hours or the hours that were allocated to each of those businesses. That was where the decision started.” 30
[37] Mr Quinn’s reference to businesses related to the particular departments within the Charlestown store. Mr Quinn assessed the sales performance of the departments within his responsibility and control and made a decision as to the resources required in those areas of the business. As Mr Quinn stated “My focus was on reducing costs because the sales decline warranted reducing costs”. 31
[38] In this decision I have not necessarily made comment or outlined all of the evidence and submissions presented during the proceedings. I have nonetheless had regard to that material and considered its content where relevant to the issue for decision in this matter.
CONCLUSION
[39] In conclusion, I am persuaded that Myer has satisfied the evidentiary burden required of it to establish genuine operational reasons for the termination of employment of the employees selected for redundancy from the Myer Charlestown store.
[40] In accordance with ss.649(2) of the Act I am satisfied that the terminations were for genuine operational reasons as outlined in the evidence before me. The applications for relief to the extent that they are made on the ground referred to in paragraph (a) of s.643(1) are dismissed.
[41] An order (s.649(2)(b)) reflecting this decision will issue separately. The employees’ applications as they rely upon the grounds under s.643(1)(b) of the Act will be listed for the purpose of conciliation in due course.
COMMISSIONER
Appearances:
J. Ryan and D. Bliss, Shop, Distributive and Allied Employees Association for the Applicants in the substantive matter.
R. West and E. Evans, Minter Ellison, with V. McEvoy for Myer Pty Ltd.
Hearing details:
2009.
Toronto, NSW:
September, 2 & 3.
1 SDA 1 Statement of Mr Owen, SDA 2 Statement of Ms Page, SDA 3 Statement of Mr Hoppe, SDA 4 Statement of Mr Laytham, SDA5 Statement of Ms Gray, SDA6 Statement of Mr Nebart, SDA7 Statement of Kathryn Morgan, SDA8 Statement of Mr Bliss, SDA9 Statement of Mr Pagey, SDA10 Statement of Ms Slee, SDA11 Statement of Ms Mills, SDA12 Statement of Ms Joanne Morgan.
2 Exhibit M1
3 Exhibit SDA10
4 Exhibit SDA11
5 Exhibit SDA12
6 Exhibit M1 at 7; see also Myer press release at attachment GQ01
7 Exhibit M1 at GQ02, Sales graph for period 2004 to 2009
8 Exhibit M1 at 15 (a); GQ03
9 Exhibit M1 at 24 and 25
10 Exhibit M1 at 24 and 25 (the Green Hills store is a new Myer store to be opened in East Maitland)
11 Exhibit M1 at 45
12 [2007] AIRCFB 513
13 Ibid. at [9] and [10].
14 Ibid. at [30].
15 [2007] AIRCFB 35.
16 Ibid. at [28].
17 Ibid. at [40].
18 [2007] AIRCFB 730
19 Ibid. at [6]
20 Ibid. at [7]
21 Exhibit M1 at GQ01
22 PN171 to PN173
23 Exhibit M1 at 10
24 Ibid. at GQ02
25 [2007] AIRCFB 35 at [41]
26 PN285; PN286
27 For example see PN79 to PN137
28 For example see PN154 to PN164
29 [2007] AIRCFB 35 at [36]
30 PN222
31 PN423
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