Sean Keating v Ausco Engineering Pty Ltd

[2013] FWC 4697

[2013] FWC 4697

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Sean Keating
v
Ausco Engineering Pty Ltd
(U2012/14944)

DEPUTY PRESIDENT MCCARTHY PERTH, 18 JULY 2013

Application for unfair dismissal remedy - jurisdictional objection - genuine redundancy - application dismissed.

Background

[1] Mr Sean Keating (the Applicant) lodged an application for unfair dismissal (the application) from his employment by Ausco Engineering Pty Ltd (the Respondent).

[2] The Applicant was employed by the Respondent in March 2012 as a trades assistant for work on the Karara Mining Project (the project). The Respondent is a labour hire company and was contracted to Karara Mining Ltd (KML) to provide supplementary labour and supervision for the project.

[3] The practice was that KML would instruct the Respondent by advising the numbers and various trades required for the mobilisation and demobilisation of employees. There were also limited accommodation facilities at the time of the Applicant’s dismissal and KML balanced their construction deadlines with the limited accommodation capacity.

[4] The dismissal of the Applicant took effect 26 October 2012. At the time of his dismissal the project was at the construction, commissioning and operation stage.

[5] The Fair Work Act 2009 (The FW Act) provides that a person may be protected from unfair dismissal. Here it is not contested that the Applicant is protected from unfair dismissal.

[6] The FW Act also provides that a person has been unfairly dismissed if the Fair Work Commission is satisfied that the dismissal was not a case of genuine redundancy. 1 Genuine redundancy is defined in s.389.

[7] The Applicant’s employment was covered by the Karara Iron Ore Construction Project (Mine and Other Infrastructure) Ausco Pty Ltd & AMWU & CFMEU Greenfields Agreement 2011 (the agreement).  2

[8] The Applicant was represented by Ms Pearl Lim, of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU). The Respondent was represented by Mr Ian Dixon of Gadens Lawyers. Permission was granted for Mr Dixon to represent the Respondent.

[9] The employer’s response to the application (employer’s response) initially indicated that there were no jurisdictional or other objections to the application. It stated that the reasons for the dismissal were:

“The reason for the dismissal was because of Client operational requirements. Ausco Engineering is a labour hire company contracted to Karara Mining Ltd to provide supplementary labour and Supervision for the Karara Mining Iron Ore Project. The project has limited accommodation facilities and is at present in the construction, commissioning and operations stage. The Client instructs Ausco as to the labour numbers and disciplines required to meet construction and commissioning deadlines, and also balance accommodation requirements.”

[10] Following a conciliation conference the Respondent wrote to Fair Work Australia (FWA) altering their initial response and confirmed that they considered the termination of employment of the Applicant was a redundancy. The Respondent asserts that the dismissal was a genuine redundancy and therefore the Applicant cannot have been unfairly dismissed. They also argue that even if the dismissal was not a genuine redundancy that the Applicant was not unfairly dismissed.

[11] The Applicant asserts that the termination was not a case of genuine redundancy because his job continued to be required to be performed by someone. They also assert that even if the job was not required to be continued to be performed by anyone that the obligations on the Respondent to consult about the redundancy were not satisfied and therefore the termination of employment cannot be classed as a genuine redundancy as the requirements of s.389(1)(b) have not been satisfied. They argue further that the Applicant could have been redeployed within the Respondent’s operations and by application of s.389(2) the termination of employment cannot be classed as a genuine redundancy.

Was there a Genuine Redundancy?

(i) Was the job no longer required to be performed by anyone?

[12] Mr John Smith the project manager for the Respondent gave evidence. Part of Mr Smith’s responsibilities was to plan the manning requirements. He says that the Respondent had been mobilising and demobilising personnel throughout 2012. The labour requirements were determined by the needs of particular areas of work and the numbers required to perform the work. Employees were made redundant as areas of work were finalised or came towards completion and lesser numbers were required. He says this pattern and these practices were common for projects of this nature. He stated that there were two sections involved in the work performed at the time of the Applicant’s dismissal, the conveyor side and the piping side.

[13] Mr Smith was absent from the site from 6 September 2012 until 1 November 2012 but had been in daily contact with the site from 15 September 2012 to assist and be a source of advice to Mr Eugene Van Wyk who was the Acting Manager during Mr Smith’s absence.

[14] The project was going into a stage of the first lot of commissioning but was still under construction. KML were also bringing their operations people onboard. KML required that the contractors man down because there wasn’t enough accommodation for KML operations personnel. KML therefore directed that about 20 employees be dismissed.

[15] Mr Smith stated that the Applicant was informed four weeks prior to his dismissal that there would be coming redundancies. He asserts that Mr Van Wyk had advised Mr Smith that the conveyor construction was nearing completion and KML had indicated to the Respondent that fewer employees were required. Therefore Mr Van Wyk informed the Applicant that he was being demobilised. Mr Smith also says that Mr Van Wyk also had advised that there were no other jobs where he could employ the Applicant.

[16] The practice for terminations was that employees would be told on the morning of their termination and flown out later that day. Mr Smith says this is fairly standard practice for this type of work on a project such as the Karara Project. The decision of which employees were chosen to be dismissed due to reductions in requirements was based on recommendations by the supervisors.

[17] Mr Smith stated that at the time of the Applicant’s dismissal a number of other personnel were dismissed over a range of classifications and trades including other trades assistants. He stated that that KML had instructed the Respondent to reduce the number of trades assistants by two and also to reduce the numbers of employees in other classifications. One trades assistant was dismissed on 15 October 2012 and the Applicant was dismissed on 26 October 2012.

[18] Mr Smith stated that the Respondent had not engaged further trades assistants to work in the work the Applicant was performing and nor could he have been redeployed to work elsewhere. He produced a list of the personnel demobilised from 24 April to 18 December 2012 and a list of personnel by position from 4 October to 6 November 2012 (the labour requirement lists).

[19] The Respondent asserts that there a variety of reasons why the dismissal took place. One was the winding down of the work, another was the commissioning work was going to be done by the operations employees and another was that KML was running short of accommodations and had to make room for other employees, presumably more critical to the project. Each of those reasons in themselves seem to me to be plausible explanations. But even if they were not the Respondent was a labour hire company with a contract to KML to supply labour at KML’s direction as to the time, number and type of labour hired. Even if KML’s assessment of their needs was incorrect it did not detract from the need of the Respondent to reduce the number of employees and to specifically reduce the number of trade’s assistants.

[20] The Applicant gave evidence that on the day of his dismissal he spoke to Mr Van Wyk about another employee’s payments. Later that morning he was requested by his leading hand to go and see Mr Van Wyk. Mr Van Wyk then told him he was being de-mobilised and he was flown off site that evening.

[21] The Applicant had endeavoured on earlier occasions to ascertain when any redundancies might be likely to occur but had been given assurances that there would not be any before Christmas.

[22] The Applicant asserts that at around the time of his dismissal that some new employees had started work for the Respondent and that it was common knowledge that the Respondent was looking for more employees including trades assistants. The Applicant also asserts that there was a lot of work still required to be done and relied on his twenty years experience in the industry to support that view.

[23] The Applicant’s evidence of what he believed to be engagement of further trades assistants at around the time he was dismissed was not as convincing as the evidence and documentary support for that evidence by Mr Smith. Despite the Applicant’s views including his belief that the labour requirement lists to be “rubbish”, I accept those lists as an accurate account of the Respondent’s labour requirements and demobilising experience for the period in question. As a consequence I find that the Respondent was not engaging further employees to perform the work that the Applicant had been engaged in nor work that he could be redeployed to.

[24] The evidence of the Applicant and other employees supported the view of the Applicant in respect of the project’s needs, including the labour requirements. However it is clear that the Respondent was confronted with a direction of KML to reduce the number of trades assistants and other categories of employees it was contracted to supply to KML.

[25] The evidence establishes to my satisfaction that the Applicant was dismissed due to the Respondent no longer requiring his job to be performed by anyone because of changes in the operational requirements of the Respondent and I so find.

(ii) Did the Respondent comply with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy?

[26] The Applicant’s employment was covered by an enterprise agreement. The agreement was a greenfields agreement. I consider that whilst there may have been some discussions about potential timing for mobilisation and demobilisation that the discussions did not constitute what I would regard as consultations about redundancy. Therefore I find that the Respondent did not consult about the redundancy. By not consulting about redundancy I must consider whether there was an obligation to do so in the agreement.

[27] The agreement provides for redundancy and severance payments in the following terms:

“4.10 REDUNDANCY/SEVERANCE

(a) Subject to sub-clauses (c) and (d), an Employee upon ceasing employment on the Project for any reason other than reasons of misconduct shall be paid 2 hours pay at their appropriate all purpose rate of pay for each completed week of service on the Project for the Employees classification, provided always that this is not less than the legislative redundancy standard.

(b) The severance payment shall accrue weekly and be paid out to the Employee at the completion of the Employee’s employment on the Project.

(c) An Employee who terminates their employment before the completion of four (4) weeks continuous service shall not be entitled to the provisions of this clause.

(d) This provision does not apply to apprentice Employees.”

[28] That is the only clause in the agreement that expressly deals with redundancy. There is no requirement in that clause to consult, rather it a clause directed at payments in the event of redundancy. Therefore, unless there is something else in the agreement that creates an obligation to consult about the redundancy the operation of s.389(1)(b) would not render the redundancy to not be a genuine redundancy by failure to comply with a consultation obligation in the agreement.

[29] The agreement does provide for consultation obligations in Clause 2.4.2. The Applicant argues that those obligations apply to redundancy situations. The provisions of Clause 2.4.2 are in the following terms:

“2.4.2 Consultation

(a) The Company acknowledges that some business decisions may have an adverse impact on Employees’ work and personal lives and the Company is committed to minimising adverse effects on its Employees.

(b) Where a business decision by the Company is likely to have a significant effect on Employees, the Company will consult relevant Employees as to how the decision may impact Employees, as early as practicable after a definite decision has been made by the Company. Further, the Company will give prompt consideration to matters raised by Employees in relation to the changes.”

[30] The condition precedent for the consultation is “a business decision” that has been taken with a requirement that the employer must consult relevant employees as soon as practicable after the decision has been taken.

[31] A business decision is not defined nor given any more precise meaning by the agreement. On one view a business decision could include almost any operational decision a business takes. Here the mobilising and demobilising of employees is evidenced by both the Applicant and the Respondent to be a usual and common feature of the nature of the type of operations involved. Here the evidence of the Respondent was essentially that the dismissal of the Applicant was in the context of an ordinary, or customary or usual turnover of labour for work of this type on projects of this nature. In those circumstances I do not consider that the demobilising of employees and the Applicant in particular involved “a business decision” within the meaning of that phrase in Clause 2.4.2.

[32] I also do not consider that compliance with a direction by KML that they did not require certain numbers and types of employees to be supplied to be a business decision by the Respondent. The Applicant must have been aware that the Respondent’s labour requirements were a consequence of the requirements of KML. The obvious consequence of KML having fewer requirements was the Respondent was required to dismiss employee’s excess to KML’s requirements. That does not involve a business decision by the Respondent although arguably it might by KML.

[33] I therefore do not find that the Respondent was required to consult either by operation of Clause 4.10 of the agreement or by Clause 2.4.2 of the agreement.

Conclusion

[34] As I have found that the dismissal of the Applicant was a genuine redundancy he cannot have been unfairly dismissed.

[35] For the sake of completeness even if I had found the Applicant’s termination was not a case of genuine redundancy I find there was a valid reason for termination, namely the demobilising of employees engaged on the work that the Applicant had been performing. There were no conduct or performance issues involved. The circumstances here were such that the termination was not harsh, unjust or unreasonable and hence the dismissal was not unfair.

[36] The application is dismissed.

DEPUTY PRESIDENT

Appearances:

Ms P Lim for the Applicant

Mr I Dixon for the Respondent

Hearing details:

2013.

Perth:

April, 3.

 1 s.385(d) Fair Work Act (2009)

 2   [2011] FWAA 8762

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