Sarah Devitt v Cheeki Holdings P/L T/A Cheeki

[2016] FWC 2673

[2016] FWC 2673

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Sarah Devitt
v
Cheeki Holdings P/L T/A Cheeki
(U2016/4019)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 2 MAY 2016

Application for relief from unfair dismissal – genuine redundancy.

[1] On 25 January 2016 Ms Devitt lodged an application pursuant to s.394 of the Fair Work Act 2009 (the FW Act) in relation to the termination of her employment with Cheeki Holdings Pty Ltd T/A Cheeki (Cheeki). Ms Devitt’s application was the subject of a determinative conference on 28 April 2016.

[2] Following a directions conference on 7 April 2016 I confirmed that the 28 April 2016 conference would enable consideration of the Cheeki jurisdictional objections to the application and the merits of the application. Both parties provided material relative to these issues. I have taken this material and all of the witness evidence provided to me into account in reaching a conclusion.

[3] Ms Devitt’s position is that, despite being advised that she was being made redundant, her position was subsequently advertised. Furthermore, Ms Devitt asserted that she was dismissed for reasons which included the extent to which she was on a graduated return to work plan following a workers compensation accident. Ms Devitt also asserted that she was dismissed because of alleged concerns about her work performance which were not fairly raised with her.

[4] The Cheeki position is that Ms Devitt was its only South Australian employee and the limited and erratic hours she worked each week on a return to work plan meant that it was unable to properly service its customers or to hire a replacement for her. Cheeki asserts that a progressive downturn in national and South Australian sales required it to restructure its sales function generally, and that in South Australia, it subsequently engaged a commission only sales agency, which itself engages staff to undertake the function previously undertaken by Ms Devitt. Cheeki assert that it properly followed the necessary steps to consult with Ms Devitt about her impending redundancy. Cheeki also asserts that, at the time of the termination of Ms Devitt’s employment, it engaged a total of six employees and that the termination of Ms Devitt’s employment was consistent with the Small Business Fair Dismissal Code. Additionally, Cheeki asserts that the termination of Ms Devitt’s employment was not harsh or unjust nor was it unreasonable.

[5] Ms Devitt’s evidence went to her employment history, the circumstances of her workers compensation claim and the nature of her return to work programme. She gave evidence about the extent to which she had not been properly consulted about the termination of her employment and how she considered that she had been bullied and threatened in her employment because of the return to work programme which she was on. Ms Devitt’s evidence was that the redundancy was a sham in that Cheeki was simply seeking to force her out of employment. Ms Devitt asserted that her job was still being performed by a person who purported to be a Cheeki employee.

[6] Mr Karlik is the Director of Cheeki. His evidence went to the number of employees engaged by Cheeki and the circumstances of the decision to make Ms Devitt redundant. Mr Karlik detailed the various concerns which he had with respect to the viability of the South Australian sales operation and the arrangement subsequently entered into with a marketing agency to undertake the functions which she had previously fulfilled.

Findings

[7] Section 396 of the FW Act requires that I reach conclusions with respect to various initial or jurisdictional matters before addressing the merits of an application. As a matter of convenience I have initially considered the genuine redundancy objection to the application.

[8] Section 385 states:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC 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.”

[9] A genuine redundancy is defined in s.389 in the following terms:

“389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.”

[10] Ms Devitt was the South Australian sales representative. Mr Karlik’s evidence was that Cheeki required additional sales representative functions to be undertaken in South Australia and was concerned that Ms Devitt was unable to undertake that additional work as her return to work hours were variable and inherently limited. Mr Karlik’s evidence was that Cheeki contracted with an agency, Purcell Hooper Brokers, to undertake the sales representative function. His evidence was that this was a contractual arrangement which did not involve employment by Cheeki. Mr Karlik’s evidence was that, under the terms of the agreement reached with Purcell Hooper Brokers, Cheeki provided that agency with a monthly sales report for South Australia and subsequently received an invoice reflecting the agreed percentage of the sales reached. Further, that Cheeki did not directly employ anyone to undertake the work that had previously been done by Ms Devitt and that it relied solely on the sales efforts of this agency. He understood that agency undertook sales functions for eight other entities.

[11] Mr Karlik provided a copy of his correspondence to Ms Devitt of 8 December 2015 which confirmed Cheeki’s intention to restructure its operations. This correspondence referred to a number of staff reductions and a decrease in company sales. It relevantly stated:

“Regrettably, as part of this overall restructure, we propose to terminate your role of South Australian Sales Representative. Our South Australian customers will be serviced by phone from our Sydney office, perhaps with an occasional visit from our NSW or Victorian representative or myself. This decision has nothing to do with your injury, or is a reflection on your performance, but is merely based on sales numbers and economic downturn coming from each region. Further there are currently no redeployment opportunities within Cheeki. 1

[12] This letter clearly envisages a different manner of addressing the sales representative function in South Australia. However, I do not consider that Cheeki was obligated to implement the proposal detailed in this letter. The significant change relative to Ms Devitt’s employment is that Cheeki resolved to restructure its operations so as to not directly employ a sales representative in South Australia.

[13] Mr Karlik’s evidence confirmed that Cheeki does not pay wages or make any other employment related payments to the staff engaged by the sales agency business.

[14] Ms Devitt’s position is that the redundancy was a sham and that her job is being performed by another person. Ms Devitt provided an array of information in support of her position. I have considered this material. Ms Devitt asserts that she was bullied and treated differentially by Cheeki after she returned to work on a limited basis following an accident which was recognised as a compensible injury. On the evidence before me, I am not able to conclude that Ms Devitt’s injury circumstances meant that the Cheeki decision to restructure its operations was a sham. The advice provided by Mr Karlik is that the decision to restructure the Cheeki sales operation was driven by financial imperatives and it is clear that, at around the same time, Cheeki was also restructuring other aspects of its sales operations.

[15] Whilst it may be the case that Ms Devitt felt that she was being treated improperly following her return to work, I note that there is no indication that these concerns were raised as a formal complaint. Further, it appears to me that performance concerns on the part of Cheeki were also apparent. I am not satisfied that these issues make the restructuring of the Cheeki sales function in South Australia a sham.

[16] Ms Devitt asserts that a replacement employee is now performing her job. I am not satisfied, on the evidence before me, that this is the case. The evidence indicates that Purcell Hooper Brokers was engaged to undertake the sales function and that Cheeki advised its South Australian customers that it was seeking a commission agent or agency to replace her. 2 Further, Purcell Hooper Brokers was introduced to the Cheeki customers as a sales contact rather than an employee.3 The fact that Purcell Hooper Brokers personnel described themselves as being from Cheeki does not establish those persons as employees of Cheeki.

[17] Ms Devitt asserts that the sales agents are being paid directly by Cheeki. This is in direct conflict with the evidence of Mr Karlik, and, absent evidence to the contrary, I am not satisfied that a replacement employment relationship has been established.

[18] Ms Devitt asserts that her redundancy was a sham because Cheeki wrongly claimed that there was a downturn in sales. I am not satisfied that the evidence actually establishes this but, in any event, the sales figures are not determinative of the genuineness of the redundancy. The critical issue in this respect is simply whether Cheeki restructured its operations so as to not require Ms Devitt’s job to be undertaken by any other employee. I am satisfied that this first requirement of the definition of a genuine redundancy has been made out.

[19] I have considered whether the necessary consultation requirements were met so as to satisfy s.389(1)(b) of the FW Act. In this respect it is common ground that Ms Devitt was provided with the written advice 4 of 8 December 2015 which advised her of planned restructuring to meet reduced sales and the proposed termination of her employment. This letter concluded with a request that Ms Devitt provide a written response by 11 December 2015 if she wished to raise any matters in relation to the proposal to terminate her employment. There is no agreement about Ms Devitt’s response to this request but it does appear that she and Mr Kalik had some further discussions which included canvassing the possibility that she could work on a commission only basis. That possibility was not further pursued. Consequently, I have concluded that the requisite consultation requirements were met in this instance irrespective of which of the various awards could conceivably apply to her employment.

[20] Finally, I have considered whether reasonable redeployment opportunities existed within Cheeki. The termination of employment correspondence of 14 December 2015 stated:

“We have considered redeployment options available for you within the organisation, however there were no suitable redeployment options available. Your final day of employment will be Friday, 8th January, 2016.”

[21] The evidence before me indicates that Cheeki is indeed a small business and that, at the time of the termination of Ms Devitt’s employment, it was undergoing significant staffing changes. I am satisfied that reasonable redeployment opportunities for Ms Devitt were not available. In this regard, I have noted the preliminary discussion about possible commission only work. However, once the decision to effectively contract out the sales function to the sales agency was made, that somewhat dubious redeployment option was no longer available.

[22] Consequently, I have concluded that the termination of Ms Devitt’s employment met the definition of a genuine redundancy. In these circumstances s.385 precludes that dismissal from being regarded as unfair and the application must therefore be dismissed.

[23] Because of this conclusion I have not found it necessary to consider the remaining jurisdictional argument founded on the Small Business Fair Dismissal Code.

Conclusion

[24] Ms Devitt’s unfair dismissal application must be dismissed because I have concluded that the termination of her employment met the definition of a genuine redundancy. An Order (PR579668) to this effect will be issued. Notwithstanding this conclusion, I note that the parties may well be in dispute over the extent to which Workcover was appropriately advised of this redundancy. It is neither necessary nor appropriate that I reach a conclusion about this matter as it is an issue between Ms Devitt, Cheeki and the relevant workers compensation authority.

Appearances:

S Devitt on her own behalf

S Karlik for the Respondent.

Hearing (Determinative Conference) details:

2016.

Adelaide (and video-link to Sydney):

April 28.

 1   Exhibit R2, para 7

 2   Exhibit A1, Attachment H

 3   Exhibit A1, Attachment I

 4   Exhibit R2

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