Shaun Salisbury v McKay Drilling Pty Ltd

[2014] FWC 5275

[2014] FWC 5275

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Shaun Salisbury
v
McKay Drilling Pty Ltd
(U2013/15088)

COMMISSIONER WILLIAMS PERTH, 8 AUGUST 2014

Termination of employment - genuine redundancy.

[1] This decision concerns an application made by Mr Shaun Salisbury (Mr Salisbury or the applicant) under section 394 of the Fair Work Act 2009 (the Act) seeking an unfair dismissal remedy following his termination of employment by McKay Drilling Pty Ltd (the respondent).

[2] The respondent objects to the application on the basis that it asserts the dismissal of Mr Salisbury was a case of genuine redundancy.

Background

[3] Mr Salisbury was first employed by the respondent in January 2012.

[4] The respondent is in the business of providing drilling and related services to the mining industry.

[5] Mr Salisbury was employed as a driller, specifically what is known as an RC driller.

[6] The respondent concedes that Mr Salisbury was covered by the Mining Industry Award 2010 [MA000011] (the Award). I accept that the Award applied to his employment.

The evidence

[7] Mr Salisbury gave evidence that he had worked for approximately 18 months before he was dismissed and put his whole energies and efforts into his job.

[8] He says he was bullied during a period of his employment. He says he did not make a formal complaint about this.

[9] His evidence was that there had been a number of discrepancies in his pay in the past. This arose at times when the respondent did not have work for him as a driller and then directed him to work in the yard which he did. When this occurred the respondent would only pay him at offsider’s rates which were lower than his normal rate. He disputed this and argued with the respondent that he should not be paid less than his full rate as a driller when working in the yard.

[10] Mr Salisbury acknowledged that Mr Hill, the respondent’s Operations Manager, repeatedly said that there was not much work around and that the drillers would have to share the available work.

[11] He says at times other drillers less experienced than himself were given work whilst he was starved of work. He says the respondent did not fairly allocate the available work.

[12] Mr Salisbury’s evidence was that at the time of his dismissal the respondent would have known about future work for its drilling rigs which was coming up and that that he could have been employed on.

[13] His evidence was that he repeatedly asked the respondent to tell him which drilling rigs they had working and would have work for in the future and who was working on them but the respondent would not reply to his emails about this.

[14] Under cross examination he agreed he had told Mr Hill shortly before his dismissal that he was available “...when you have the next RC rig going out”.

[15] Mr Salisbury denies having received any phone calls from Mr Hill between 25 and 27 September 2013.

[16] Mr Salisbury believes that after his dismissal other drillers were employed.

[17] At the time of his dismissal he says that the respondent had approximately 5 rigs working with more work in the pipeline and the respondent never approached or discussed with him different options nor did they offer him alternative work at that time.

[18] His evidence was that he was a senior driller with over 14 years experience in the industry.

[19] When he was dismissed Mr Salisbury says he was not given two weeks’ notice.

[20] After his dismissal he obtained alternative employment as an RC driller on 7 October 2013. He has been employed with a number of different drilling companies as an RC driller since then with gaps of only a few weeks in his employment.

[21] Mr Hill the respondent’s Operations Manager gave evidence for the respondent.

[22] His evidence was that at the beginning of Mr Salisbury’s employment in January 2012 all of the respondent’s drilling rigs were regularly working.

[23] This busy period continued until approximately June 2012. From that point onwards it became harder to find profitable drilling contracts and the respondent had difficulty finding consistent work for the majority of its drilling rigs.

[24] In the second half of 2012 some clients ceased all exploration drilling operations during this time and demand for the respondent’s drilling services fell further.

[25] The respondent suffered a large reduction in revenue which continued into 2013.

[26] Around May 2013 front office staff, workshop staff and Mr Hill himself accepted a pay reduction of between 10 to 20% or reduced their weekly hours in order to reduce operating expenses.

[27] Between May 2013 and August 2013 the number of employees fell from approximately 110 to approximately 60. This reduction was largely achieved by natural attrition, meaning that when staff left they were not replaced. Around this time one position, that of the environment, health and safety officer was made redundant.

[28] In June 2013 Mr Salisbury finished the drilling work on the Degrussa site which he had been engaged on for a period of time. Mr Salisbury then went on a break. The rig used on this site was returned to the respondent’s premises in Perth. The respondent was unable to find further work for that rig. A tender to continue drilling at the Degrussa site was not successful and the respondent was advised of this by the client on 5 September 2013.

[29] In the second half of June 2013 Mr Salisbury returned to work after his break and worked in the respondent’s yard. This work was commonly offered to drillers were there was no drilling work for them so they could continue earning some income until the respondent could find more drilling work for them. The respondent did not pay drillers the full drilling rate when they were working in the yard, but paid only a lesser amount.

[30] Around the middle of 2013 a small proportion of the respondent’s 14 drilling rigs were being used consistently. This left approximately 8 drillers including Mr Salisbury with no drilling work to perform. Some of these drillers were performing yard work and being paid accordingly some were working as offsiders on dual rigs and being paid the lesser rate as an offsider, others were on leave without pay and some were on annual leave.

[31] Mr Salisbury worked in the yard from the middle of June 2013 through to approximately the middle of August 2013.

[32] Mr Salisbury did some drilling on an RC rig in August 2013 at the Cultana site. This rig was subsequently replaced by a diamond drilling rig which Mr Salisbury had no experience in operating. Mr Hill offered Mr Salisbury a position on that rig but there was a subsequent dispute as to whether he should be paid as an offsider or as a driller for that work.

[33] Mr Salisbury started leave on 25 September 2013 when he returned from the Cultana site.

[34] Following a series of emails from Mr Salisbury complaining about his pay, on 26 September 2013 the respondent back paid Mr Salisbury the difference between an offsider’s wages and a driller’s wages for the period that he had worked, from the respondent’s point of view, as an offsider at the Cultana site. Mr Hill says this was done in good faith to avoid any further dispute with Mr Salisbury.

[35] At the same time Mr Hill by email had advised Mr Salisbury there was no drilling work for him but he could perform yard work when he returned from his leave on 2 October 2013.

[36] Mr Hill says it was plain from Mr Salisbury’s email responses on 26 September 2013 that he was not willing to work in the yard and was available only to perform drilling work.

[37] Because there was no drilling work for him to perform Mr Hill tried to contact him by phone between 25 and 27 September 2013 but was unsuccessful.

[38] Consequently on 27 September 2013 Mr Hill sent a letter to Mr Salisbury giving him notice the respondent was terminating his employment by reason of redundancy due to the downturn in demand for the respondent services and because there were no operational rigs for Mr Salisbury to operate as an RC driller 1.

[39] Mr Hill says he did consider redeploying Mr Salisbury but this was not possible because he had explained he would only work as a driller and would not work in the yard unless paid as a driller which was financially unsustainable and there were no other suitable vacant positions for him to be redeployed to.

[40] Mr Salisbury did not return to work from his leave on 2 October 2013 as he was expected to and did not attend for work again.

[41] As at the time of the hearing Mr Hill’s evidence is the respondent currently has between 70 and 80 employees and their 2014 profit and loss statement shows the respondent had an operating loss or over $960 000.

Findings on the evidence

[42] Both Mr Salisbury and Mr Hill were credible witnesses and much of their evidence is consistent.

[43] Under cross examination Mr Hill did concede there were a number of errors in his witness statements. Having reviewed these matters none of those address the central issue that the Commission needs to be concerned with when determining this application.

[44] I am satisfied from the evidence that the respondent’s business suffered a significant downturn beginning from around June 2012. The workforce was significantly reduced from June 2012 through to the end of September 2013 by natural attrition. As a consequence of this reduced demand for the respondent services some staff were working reduced hours and others took a reduction in pay voluntarily. One position other than Mr Salisbury’s was made redundant during this time.

[45] A number of other RC drillers were performing alternative duties other than drilling. Some were working in the respondent’s yard, some were assisting as offsiders when this work was available and some were absent on various forms of leave.

[46] Consistent with this general reduction in demand the respondent did not always have work as an RC driller for Mr Salisbury during 2013 and Mr Salisbury worked for some periods in the yard or on rigs but not as the driller.

[47] I am satisfied on the evidence that from late September 2013 Mr Salisbury was not willing to work in the yard unless he was paid his full rate as if he was working as an RC driller notwithstanding his duties in the yard were not those of RC driller.

[48] At the time of dismissal the evidence is unequivocal that the respondent had a surplus of RC drillers. At this point the respondent had more RC drillers employed than it required to do the reduced amount of drilling work available. I am satisfied that at the date of dismissal the respondent did not require anybody to perform the role of RC driller which Mr Salisbury occupied.

[49] I am satisfied on the evidence that there were no vacant drilling positions available that Mr Salisbury could be redeployed to. The only available work for Mr Salisbury was in the yard or as an offsider. This work would be paid at rates less than Mr Salisbury’s contract entitled him to be paid when he was working as an RC driller.

The legislation

[50] The Act in section 385, set out below, explains that a person will not have been unfairly dismissed if the Commission is satisfied that their dismissal was a genuine redundancy.

“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.”

[51] Section 389 of the Act, set out below, explains in what circumstances a dismissal is a case of genuine redundancy.

“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.”

Submissions

[52] The respondent submits the evidence demonstrates there was a significant downturn in work from June 2013 and through to the time the applicant was dismissed.

[53] The respondent did not have sufficient drilling work for all of its RC drillers they employed including the applicant and as a result a number of other drillers were performing alternative duties or were on leave.

[54] The applicant’s employment was terminated as a result of the redundancy of his position. The respondent did not require a person to perform the applicant’s role and did not replace him.

[55] There were no suitable alternative positions for the applicant to be redeployed to because there were no vacant drilling positions and Mr Salisbury had said he was available only to perform drilling work and would not accept lesser paid work.

[56] Consequently it is submitted the dismissal was a case of genuine redundancy in accordance with section 389 of the Act.

[57] The respondent no longer require the applicant’s job to be performed by anyone because of changed operational requirements caused by a reduced demand for the respondent’s drilling rigs and consequently for drilling personnel.

[58] The consultation obligations in the Award, contained within clause 8.1, as is common for such clauses require an employer to notify where they have made a definite decision “...to introduce major changes in production, program, organisation, structural technology that are likely to have significant effects on employees,...”.

[59] For the respondent it is submitted that this consultation obligation was not triggered because the redundancy of a single position as was the case here does not constitute “...major changes...”.

[60] In this case the applicant’s position did not become redundant as part of a significant restructure of the organisation or as part of a larger redundancy process affecting a group of employees. Instead in this case there was a single redundancy of the applicant’s position in an operation which had at that time approximately 60 employees. It cannot be said that this was a major change in production, program or organisation. Consequently the consultation provisions in the Award are not applicable to the situation.

[61] In terms of redeployment the question posed by section 389 of the Act is whether redeployment within the employer’s enterprise, or an associated entity, would have been reasonable at the time of dismissal. In this case there is no associated entity.

[62] The respondent submits that because there was no vacant drilling position and since Mr Salisbury had made it clear he was available only to perform drilling work and would not work in the yard unless he was paid at driller’s rates there were no suitable alternative positions for the applicant to be redeployed to.

[63] Consequently it is submitted this was a case of genuine redundancy and as such the applicant has not been unfairly dismissed.

[64] For Mr Salisbury it is submitted that the respondent has treated him unfairly. It is argued that there was work available for him and that the respondent had unfairly chosen other drillers to do that work over Mr Salisbury. It is also argued that after his dismissal the respondent did engage other drillers and promoted in their newsletters, such as in January 2014, that the company had had a good year and was doing well.

[65] It is submitted on behalf of the applicant that in making this application he does not seek reinstatement but rather would seek compensation although it is acknowledged that there has been no financial loss because Mr Salisbury gained alternative employment a few days after being dismissed and at the time of dismissal he was paid by the respondent for a period of notice and was also paid four weeks redundancy pay. I also understand from the applicant that a statement from the respondent to the effect that Mr Salisbury was unfairly dismissed is also sought.

[66] I note that the application made by Mr Salisbury is one made under section 394 of the Act. This section provides that a person who has been dismissed may apply to the Commission for an order under Division 4 granting a remedy.

[67] Division 4 - Remedies for Unfair dismissal, section 390 of the Act provides that where the Commission is satisfied that person has been unfairly dismissed the Commission may order “...a person’s reinstatement, or the payment of compensation to a person...”. No other forms of remedy are available for the Commission to order.

[68] In the circumstances here in my view even if the Commission concluded that Mr Salisbury had been unfairly dismissed what he seeks as a remedy cannot be granted. The Commission has no power to require the respondent to provide any formal statement to an applicant. The applicant himself does not wish to be reinstated in this case so the remedy of reinstatement would be inappropriate. Compensation can only be ordered as an amount for the remuneration lost because of the dismissal but in this case Mr Salisbury has not suffered any loss in remuneration because of his dismissal so no amount of compensation could be ordered.

[69] To pursue an application for a remedy which the Commission in the particular circumstances is not empowered to order is obviously futile.

Consideration

[70] In this case there is no doubt the applicant has been dismissed however the respondent argues that this was a case of genuine redundancy and as a consequence under the terms of section 385 of the Act the applicant cannot have been unfairly dismissed.

[71] The question for the Commission to determine is whether the dismissal of Mr Salisbury was a case of genuine redundancy.

[72] There is no doubt on the evidence that leading up to the point when Mr Salisbury was dismissed there had been a period of ongoing downturn in the respondent’s business. This had resulted in negative impacts on other staff in a number of ways including pay cuts and reduced hours of work. As employees left the business through normal turnover they were generally not replaced. There had been a gradual, but significant, reduction in the total number of employees over a period of approximately 15 months. There had also been one redundancy of a health safety and environment position sometime prior to Mr Salisbury’s dismissal.

[73] Mr Salisbury himself had for a period not been offered the work for which he had been employed, that being the work of an RC driller. Instead at times he had been working in the yard because there was no drilling work available for him.

[74] At the time he was dismissed there was a number of other fellow drillers who were not employed on drilling work but instead were employed in the yard or as offsiders and were accepting a consequently lower rate of pay, or who were on leave.

[75] At the point the respondent made the decision to dismiss Mr Salisbury the ongoing changes in the operational requirements of the enterprise, namely the reduced work the respondent had for drillers resulting from the reduction in demand from its clients, meant the respondent no longer required the applicant’s job to be performed by anyone. The respondent had no work for Mr Salisbury to do as an RC driller.

[76] Part of the submissions by the applicant went to whether the applicant should have been given drilling work that was available but which the respondent had given to other drillers. This argument does not detract however from the critical fact that there was not enough drilling work for all of the drillers then employed by the respondent. Faced with this reality the process for selecting employees for redundancy is a matter for the respondent. A Full Bench of the Commission has previously held that the process for selecting employees for redundancy it is not relevant to whether the dismissal was a genuine redundancy 2.

[77] In the circumstances did the respondent have an obligation under the Award or an enterprise agreement to consult about the redundancy?

[78] There is no suggestion that there is any enterprise agreement that applied to the employment of the applicant.

[79] I agree with the submissions for the respondent that as has been decided in previous cases an award term imposes obligations to consult about redundancy in only the circumstances identified in the term itself 3.

[80] The decision to make one driller position redundant was not, for the business, a very important or significant change.

[81] The consultation clause in the Award has application when an employer has made a decision to introduce particular types of major changes that are likely to have significant effects on employees. The change in this case was to make one position redundant. The context relevant at the time the change was made there were approximately 60 employees employed by the respondent. Whether a change has significant effects on particular employees affected is not determinative of whether or not it is a major change. There was not in this case a major change in the respondent’s production, program, organisation, structure or technology. Consequently there was no obligation under the Award for the respondent to consult with Mr Salisbury in these circumstances.

[82] A final question to be determined is whether it would have been reasonable in all the circumstances for Mr Salisbury to have been redeployed within the employer’s enterprise or an associated entity of the respondent. In this case it is not suggested there is any associated entity of the respondent.

[83] Mr Salisbury has not pointed to any positions that were not already occupied by other drillers to which he should have been redeployed. There is no evidence before the Commission that there were indeed positions to which Mr Salisbury could have been redeployed.

[84] In summary then I am satisfied that the dismissal of Mr Salisbury was a case of genuine redundancy. Consequently Mr Salisbury was not unfairly dismissed.

[85] Accordingly this application will be dismissed and an order will be issued to that effect.

COMMISSIONER

Appearances:

A Bevis and S Salisbury jointly for the applicant.

E Moran of DLA Piper Australia for the respondent.

Hearing details:

2014.

Perth:

July 22.

 1   Exhibit R1, Attachment REH10.

 2   UES (Int’l) Pty Ltd v Harvey (2012) 215 IR 263, 275 [26]‒[27].

 3   Lane v Arrowcrest (1990) 99 ALR 45 at 52-53, NTEU v University of Adelaide AIRC 20 October 2000 Print T2282.

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