TG v SF Pty Ltd
[2010] FWA 2650
•13 MAY 2010
[2010] FWA 2650 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
TG
v
SF Pty Ltd
(U2009/14619)
COMMISSIONER HAMPTON | ADELAIDE, 13 MAY 2010 |
Alleged unfair dismissal - Preliminary jurisdictional matter - Whether genuine redundancy.
Introduction and case outline
[1] Mr TG (the applicant) has made an application to Fair Work Australia claiming that his dismissal on 1 December 2009 by SF Pty Ltd (the employer) was unfair.
[2] The employer contends that the dismissal was a genuine redundancy within the meaning of s.389 of the Fair Work Act 2009 (the Act). That is, the dismissal was said to be for genuine operational reasons and occurred in the context of a reduction in the size of the employer’s workforce. Further, the relevant industrial instrument did not contain a consultation requirement. As a result, the employer argues that the applicant’s dismissal cannot be an unfair dismissal within the meaning of s.385 of the Act.
[3] The applicant contends that the dismissal was not a genuine redundancy and that in any event the applicant was wrongly selected as a result of his refusal to work on a Rostered Day Off (RDO). Further, the applicant argues that the circumstances applying at the time, the alleged availability of alternative work, the fact that the work performed by the applicant is being undertaken by others, and the fact that some additional employees were said to have been engaged around the time of the dismissal, meant that s.389 would not operate to exclude the application.
[4] Section 396 of the Act requires that I deal with this matter before considering the merits of the application.
[5] As this matter involves contested facts, I was required by s.397 of the Act to either conduct a conference or a hearing. After consultation with the parties as contemplated by s.398 of the Act, I determined that this preliminary matter would be subject to a determinative conference. Given the confidential nature of the conference I have used only initials in this decision. 1
[6] Mr Earls from the Master Builders Association of SA Inc represented the employer and Mr Roberts from the Construction, Forestry, Mining and Energy Union represented the applicant. Evidence was provided in the form of witnesses statements from the following:
- Mr HE – Managing Director of the employer;
- Mr RB – A Director of the employer; and
- Mr TG – the applicant.
[7] Mr HE and the applicant were sworn in at the commencement of proceedings and were subject to examination by all parties and myself at relevant points in the conference. Mr RB’s evidence was received by consent without the need to be present and be subject to cross-examination.
The statutory context
[8] Section 385(d) establishes that a person will not be “unfairly dismissed” within the meaning of the Act if the dismissal was the result of a “genuine redundancy”. Section 385 of the Act provides as follows:
“385 What is an unfair dismissal
(1) A person has been unfairly dismissed if FWA 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.”
[9] Section 389 of the Act establishes the meaning of a genuine redundancy 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] The Explanatory Memorandum 2 provides some indication of the apparent intention of the Parliament and provides relevantly as follows:
“Clause 389 – Meaning of genuine redundancy
1546. This clause sets out what will and will not constitute a genuine redundancy. If a dismissal is a genuine redundancy it will not be an unfair dismissal.
1547. Paragraph 389(1)(a) provides that a person’s dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.
1548. The following are possible examples of a change in the operational requirements of an enterprise:
• a machine is now available to do the job performed by the employee;
• the employer’s business is experiencing a downturn and therefore the employer only needs three people to do a particular task or duty instead of five; or
• the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.
1549. It is intended that a dismissal will be a case of genuine redundancy even if the changes in the employer’s operational requirements relate only to a part of the employer’s enterprise, as this will still constitute a change to the employer’s enterprise.
1550. Paragraph 389(1)(b) provides that it will not be a case of genuine redundancy if an employer does not comply with any relevant obligation in a modern award or enterprise agreement to consult about the redundancy. This does not impose an absolute obligation on an employer to consult about the redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.
1551. Subclause 389(2) provides that a dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or within the enterprise of an associated entity of the employer (as defined in clause 12).
1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for redeployment or there may be no positions available for which the employee has suitable qualifications or experience.
1553. Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy. However, if the reason a person is selected for redundancy is one of the prohibited reasons covered by the general protections in Part 3-1 then the person will be able to bring an action under that Part in relation to the dismissal.”
The facts of the matter
[11] I have drawn the facts of this matter from the evidence provided by both parties. I accept the evidence of the applicant on those matters that he directly knew or observed on his own account. In terms of Mr HE, I found that he did have a consistent tendency to underplay the nature of the applicant’s skills and contribution. I do however accept his evidence as to the circumstances operating within the business associated with dismissal of the applicant.
[12] The employer conducts a formwork business servicing the construction industry. It employs staff with varying skills including those relevant to operating and dogging cranes, forklift operations, rigging, formwork and general labouring, and related functions.
[13] The nature of the business is such that the levels of employment are dependent upon a range of factors but principally, the number and size of contracts that it undertakes from time to time. Employment levels are also contingent upon construction schedules, particularly on more significant jobs and the employment levels within the business have fluctuated significantly from time to time.
[14] The applicant most recently commenced employment with the employer in April 2007. He had previously worked for the employer for some years prior to June 2006 when he was dismissed and worked for a time in other employment.
[15] At the time of his dismissal, the applicant was engaged in relation to the “World Park” project at Keswick and I accept that this was the major contract for the employer at the time. The applicant was performing a range of functions at that worksite including formwork labouring, scaffolding, dogging of cranes, and general labouring. The applicant was also representing the employer on the Occupational Health and Safety (OHS) Committee operating on that worksite and also acted as a senior labourer who would oversight small areas of the operation from time to time, particularly where these involved attending to safety related issues.
[16] The employment of the applicant was subject to the System Formwork Pty Ltd Employee Collective Agreement 3(the collective agreement). Clause 3.10 Redundancy, of the collective agreement provides as follows:
“3.10.1 Definition
Redundancy occurs when the company has made a definite decision that the company no longer wishes the job the employee has been doing done by anyone and that decision leads to the termination of employment of the employee, except where this is due to the ordinary and customary turnover of labour
3.10.2 Criteria for Termination
When considering redundancies due to work availability consideration will be given to the following matters:
• The specific skills required to perform the work in hand and for the future, particularly, having regard to reduced number of employees;
• The employee’s past performance including efficiency and productivity;
• The employee’s attitude to Occupational Health, Safety and Welfare, particularly in regard to the Company’s Health and Safety Policy (as amended);
• The employee’s attitude to training;
• The employee’s co-operation with fellow workers and management;
• The employee’s length of service, where all the above factors are equal.”
[17] Clause 3.10 of the collective agreement also establishes redundancy payments and other arrangements including the employer’s participation in the Building Industry Redundancy Scheme Trust Fund (BIRST).
[18] The collective agreement also contains provisions in part 2 – Communication, Consultation and Disputes Resolution, and this recognises the establishment of a Single Bargaining Unit for the purposes of negotiations for the agreement and a grievance/dispute procedure.
[19] Clause 2.2 of the collective agreement provides as follows:
“2.2 INFORMATION FLOW
The parties agree to develop an information flow in order to support the principles of co-operation and communication which underpin this Agreement.
Areas of information to be shared will include:
• Company performance indicators;
• Work under tender;
• Company objectives and milestones.”
[20] Work on the World Park project has been disjointed and delayed from time to time for a variety of reasons. The work for the employer did however require at times regular overtime by employees and long working hours, including regularly on Saturdays. In November 2009, the employer was required to assist the builder to complete a particular floor. This was necessary as part of the construction schedule as then set by the builder and meant considerable overtime, including work on the RDO scheduled for Monday 30 November 2009.
[21] All employees were requested to work on that RDO, however under the collective agreement such was optional and the applicant and some five other employees did not do so. I add that the applicant had regularly declined to work on RDO’s in the past, working only one of the past nine RDO’s. He was not sanctioned by the employer for doing so.
[22] The employer was also advised in November 2009 that there would be no pre-cast panels, required for further construction of additional floors at World Park, produced in December 2009 and only a limited number produced in January. This and the general state of work requirements within the business meant that the staffing levels within the business were not sustainable in the short or medium terms and a decision to reduce the employee numbers was made. Although changes in employment levels is a regular feature of construction related companies, the decision that led to the applicant’s dismissal was a deliberate decision to reduce the level of ongoing employment within the employer’s business.
[23] At the time of the applicant’s dismissal, the employer engaged 27 or 26 employees.
[24] On 1 December 2009, the applicant and three other employees were dismissed.
[25] The applicant was apparently selected to be one of the redundant employees mainly on the basis that he not as “productive” as he once was and Mr HE’s view that his skills were adequately covered within the remaining workforce. I will return to the selection of the applicant for dismissal as part of my consideration of this matter.
[26] Further business activity related dismissals within the employer’s business have taken place since then, and when combined with the non-replacement of employees who have left of their own volition, employee numbers by mid March 2010 had further declined to 16.
[27] There were two employees who did commence work for the employer around the time of the applicant’s dismissal. Both of these employees are or were University students that had earlier been promised some holiday work. One of these is the son of a Director of the business and they had previously undertaken such holiday work for the employer. These employees did not have the skills, training or qualifications of the applicant and only worked for a short period doing very basis labouring functions. I will return to the significance of their engagement in due course.
Was the applicant’s dismissal a genuine redundancy within the meaning of the Act?
[28] The employer has the onus to demonstrate that the dismissal was a genuine redundancy within the meaning of the Act.
[29] I have set out earlier the terms of s.389 of the Act, and this requires that I determine whether the dismissal involved the employer no longer requiring the applicant’s job to be performed by anyone and that this is because of changes in the operational requirements of the employer’s enterprise (s.389(1)(a)).
[30] The concept of a job no longer being required to be performed in the context of alleged redundancy has been considered in a number of authorities. 4 The term is also used as part of the formulation of the definition for the purposes of redundancy payments in s.119 of the Act.
[31] In my view, care needs to be taken in the application of these concepts in relation to the construction industry. Given the nature of the industry and the utilisation of daily hire 5 broadly across this sector, not every change in employment levels associated with changes in business activity will be such as to meet the requirements of s.389(1) of the Act. That is, in cases where the changes in work and/or employment levels are short-term and transitional in nature, it may be more difficult for an employer to demonstrate that the job in fact is no longer required. In that regard I also note that the particular circumstances within the construction industry are recognised within the Act in relation to termination of employment related obligations.6
[32] In this case, I accept that there were changes to the operational requirements of the employer’s business that led to the decision to reduce the number of employees in a structured manner. Although the staffing requirements had been high, including the need to operate on the RDO scheduled for 30 November 2009, the advice as to the availability of the pre-cast panels and the implications for ongoing work scheduling and labour, do provide an objective basis for that decision. There was in that light, a genuine basis to reduce the staffing within the business.
[33] However, in order to be a genuine redundancy for present purposes, the employer must also demonstrate firstly, that it no longer required the applicant’s job to be performed by anyone. Secondly, that this is because of the operational reasons. I leave aside the issues raised by s.389(1)(b) and s.389(2) for the moment.
[34] Mr Roberts for the applicant contended, correctly in my view, that the various elements of the job as performed by the applicant were still being undertaken within the employer’s business. That is, the labouring, rigging and OHS related functions were clearly still being performed, at least to some extent. However, as it clear from the authorities 7, the test is not whether the duties survived in some form. Rather, it is a question as to whether the previous job has survived the restructure or downsizing. It is clear on the evidence that the various elements of the applicant’s job have been split amongst the remaining employees (including Mr HE). Importantly, the number of employees doing the range of functions performed by the applicant was reduced.
[35] Further, the applicant had a distinct job involving certain additional aspects associated with the OHS role and related functions and these aspects have been taken over by Mr HE and others but not as part of the same job undertaken by the applicant. On this basis, the applicant’s job has disappeared and the first element of the immediate issue has been satisfied.
[36] The second aspect is whether the decision (to reduce the staffing and no longer have the applicant’s job performed) was because of the operational reasons. The applicant contends that he was selected for the redundancy on the basis of his refusal to work the RDO and I accept that this is his genuine belief. 8 However, whilst the employer’s reliance upon the concept of productivity of the applicant was somewhat vague, the RDO was not the reason for the decision to do away with the applicant’s job. I am satisfied that the operational reasons created the need to reduce staffing and that this is the context in which the applicant was dismissed.
[37] It is also the case that it is by no means clear that the employer correctly applied the selection criteria under the collective agreement. Although I do not have comparative evidence relating to other workers, the applicant’s attitude to OHS and training were excellent and these were part of the considerations cited in clause 3.10.2 of the Collective Agreement. This aspect, if a case of non-compliance could be made out, may be relevant to the fairness of his dismissal, however it is not a relevant consideration for present purposes. This is also made clear by the Act and the authorities cited above.
[38] On that basis, the requirements of s.389(1)(a) have also been met.
[39] Section 389(1)(b) requires me to consider whether there is a relevant obligation established by a modern award or an enterprise agreement to consult about the redundancy and if so, whether the employer has complied. The relevant modern award did not operate at the time of the dismissal 9 however this matter has proceeded on the basis that the collective agreement is an enterprise agreement for present purposes.
[40] There is no consultation obligation regarding redundancy (or any other matter) in clause 3.10 of the collective agreement and the general consultation obligation in clause 2.2 as relied upon by the applicant does not establish such a requirement. It is clear from the terms of the Act and confirmed in the Explanatory Memorandum that this provision does not of itself attempt to otherwise establish a consultation obligation in relation to redundancy.
[41] As alluded to earlier, there are questions as to whether the employer sufficiently considered the selection criteria in clause 3.10.2 of the collective agreement, however this does not provide a consultation obligation in that or any other regard.
[42] Accordingly, the requirements of s.389(1)(b) do not operate so as to mean that the applicant’s dismissal was not a genuine redundancy within the meaning of the Act.
[43] I turn now to s.389(2) of the Act and as to whether it would have been reasonable in all of the circumstances for the applicant to have been redeployed within the employer’s enterprise. I note that there are no associated entities as contemplated by ss.(2)(b). The employer contended that it would not have been reasonable to redeploy the applicant and points to the subsequent further reduction in its workforce. The applicant contends two alternatives. Firstly, that there was alternative work that could have been undertaken as was done during earlier periods when a hold-up in construction was evident. Secondly, that the work undertaken by other employees, including the “University” students, could have been utilised to some extent, as redeployment work.
[44] There is evidence that during other slowdowns in the flow of work, the employer did utilise some employees in maintenance and yard work. In some cases, the availability of these options may in my view need to be considered in this context. However, in this case, in the context of the lack of work that was otherwise available and the prospect of a projected decline in the amount of work in the New Year (which did ultimately lead to further significant reductions in employment) it would not have been reasonable to redeploy the applicant into other positions – even assuming that other positions of that nature existed. I would add that to the extent that the applicant implies that others should have been let go, this is more about the selection process adopted by the employer than whether redeployment was reasonable.
[45] Having considered all of the circumstances, I do not consider that it was reasonable for the employer to have redeployed the applicant.
[46] In reaching this and indeed all of my conclusions in this matter, I have carefully considered the impact of the two “University” students. There are particular circumstances surrounding their employment as outlined earlier. Whilst in other circumstances this development could have cast serious doubt upon the bona fides of the decision made by the employer, this does not undermine the objective evidence as to the change in operational circumstances or the link between those circumstances and the downsizing of the workforce, including the dismissal of the applicant. That is, whilst some of their work could have sustained some employment for the applicant for a very short period, this employment was not of the same nature as that of the applicant and it is clear that a net reduction in staffing applied as a result of the redundancies. In these particular circumstances, the fact of the two University students returning to do some holiday work is not sufficient to undermine the objective evidence supporting the decision to reduce employment levels and do away with the applicant’s (and others’) jobs. Further, the circumstances of their employment did not represent a reasonable redeployment option for the applicant in this case.
Conclusion
[47] I am satisfied that the dismissal of the applicant was a genuine redundancy within the meaning of s.389 of the Act. As a result, s.385 provides that the dismissal does not fall within the unfair dismissal jurisdiction of Fair Work Australia.
[48] To the extent that the circumstances surrounding the applicant’s dismissal give rise to concerns about compliance with the collective agreement (and I make no findings about that beyond those set out above), as the Explanatory Memorandum makes clear, there are other alternatives that may be open to the applicant.
[49] Accordingly, the s.394 unfair dismissal application must be dismissed and an order to that effect has been issued 10.
COMMISSIONER
Appearances:
D Roberts of the Construction, Forestry, Mining and Energy Union for the applicant
T Earls of the Master Builders Association of SA Inc for the respondent
Hearing details:
2010
Adelaide
1 April
1 The conference was conducted in private as required by s.398(2) of the Act, and although the parties consented to the publication of any decision by FWA concerning this matter I consider that the private nature of the conference should be reflected into the decision.
2 Explanatory Memorandum in relation to the Fair Work Bill 2008.
3 This was approved pursuant to the Workplace Relations Act 1996 in 2006.
4 R v Industrial Commission of SA; Ex parte:Adelaide Milk Supply Cooperative (1977) 16 SASR 6; Termination, Change & Redundancy Cases (1984) 8 IR 34 and (1984) 9 IR 115; and Short v Hercus (1993) 40 FCR 511.
5 The concept of daily hire is spelt out in the Building and Construction Industry General On-site Award 2010 and its predecessors.
6 The minimum period of notice and the severance pay entitlements otherwise operating under the Act are modified in the case of the construction industry. See ss.123(3) and 123(4) of the Act.
7 A consistent approach on this issue has been taken in decisions by Fair Work Australia including in M v LD Pty Ltd[2009] FWA 1676, 22 December 2009 per O’Callaghan SDP and on appeal in [2010] FWAFB 979, 10 February 2010 per Boulton J, Ives DP and Gay C; McAlister v Bradken Limited[2010] FWA 203, 22 January 2010, per Richards SDP; Kekeris v A Hartrodt Australia Pty Ltd[2010] FWA 674, 19 February 2010 per Hamberger SDP; Manoor and Prasad v United Petroleum Pty Ltd[2010] FWA 2571, 31 March 2010 per Smith C; and as confirmed in the Explanatory Memorandum at par 1553. This approach to the meaning of a genuine redundancy has also recently been confirmed by the Full Bench in Ulan Coal Mines Limited v Henry Jon Howarth and others[2010] FWAFB 3488, 10 May 2010 per Boulton J, Drake SDP and McKenna C.
8 The applicant was apparently told by a fellow employee that the RDO was the reason for his dismissal. However in the absence of any capacity to test the basis or validity of that assertion, I have placed no weight on that aspect of the applicant’s evidence. There is also objective and convincing evidence from Mr HE on the issue.
9 The Building and Construction Industry General On-site Award 2010 operated from 1 January 2010 and whilst it does contain provisions that may be relevant to the consultation requirements of s.389(1)(b) for a dismissal occurring after that date, they are not relevant in this matter due to the timing of the decision.
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