Troy de Haan v Lipa Pharmaceuticals Ltd

[2013] FWC 9928

[2013] FWC 9928 [Note: An appeal pursuant to s.604 (C2014/2589) was lodged against this decision - refer to decision dated 9 January 2014 [[2014] FWC 548] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Troy de Haan
v
Lipa Pharmaceuticals Ltd
(U2013/10567)

DEPUTY PRESIDENT BOOTH SYDNEY, 20 DECEMBER 2013

Termination of employment - unfair dismissal remedy - whether genuine redundancy.

[1] In this matter Mr Troy de Haan (the applicant) makes application pursuant to s.394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy in relation to the termination of his employment from Lipa Pharmaceuticals Ltd (the respondent) on 6 June 2013.

Background

[2] The respondent is a contract manufacturer of complementary medicines regulated by the Therapeutic Goods Administration. It holds a licence to manufacture non-sterile therapeutic goods in the form of tablets, capsules, powders, liquids and creams.

[3] The applicant was employed by the respondent on 27 June 2012 as a casual process operator in the Compressing Department working Monday to Friday from 3pm to 11.10pm each day.

[4] A conciliation was conducted between the parties by telephone with Conciliator Terpstra on 26 July 2013 but this did not resolve the matter.

[5] The matter was listed for 11 October 2013 for the hearing of a jurisdictional objection by the respondent on the grounds that the applicant was a casual and had not been employed for the minimum employment period. The respondent is not a small business employer pursuant to s.23 of the Act and so the minimum employment period in this case is 6 months.

[6] The respondent was directed to provide its submission in support of its jurisdictional objection 14 days prior to the hearing. The respondent did not comply with these directions and no submissions were received prior to the hearing.

[7] The matter came on before me on 11 October 2013. The applicant did not appear and attempts to contact him were unsuccessful. The respondent was represented by Mr Muhammad Khayum, Human Resources Manager for the respondent.

[8] On this occasion I directed that the respondent file an outline of submissions and any other evidence upon which it relies with regard to the jurisdictional objection by 5pm on 25 October 2013 and that the applicant file an outline of submissions and any other evidence upon which it relies in response to the jurisdictional objection by 5pm on 8 November 2013. I did not further list the matter on that occasion on the basis that the matter may have been able to have been determined on the papers with the agreement of the parties.

[9] On 19 October 2013 I received correspondence from Mr Khayum indicating that the respondent makes its application under s.394(2)(b) of the Act. Section 394(2)(b) of the Act concerns an application for an extension of time to lodge an application. The applicant was dismissed on 6 June 2013 and lodged his application on 17 June 2013, well within the 21 day time limit provided by the Act. It was apparent to me from a reading of the submission that the respondent did not contend that the application was out of time but rather that the applicant was dismissed because of his unacceptably high unplanned absence record and due to a downturn in work load. The respondent contended that the applicant’s dismissal was a case of genuine redundancy and the “case should not proceed any further”. 1

[10] The applicant provided a response to the respondent’s correspondence on 28 October 2013. The response largely replied to the respondent’s submissions in relation to his unplanned absence record and contended that he had “a very strong case for my unfair dismissal claim” which I took to mean he believed he had been unfairly dismissed. He added that operational reasons had not been given to him as a reason for his dismissal and that his area was as busy as it had ever been.

[11] In the circumstances I decided that a hearing of the matter would be required to determine the matter and that I would address the respondent’s jurisdictional objection along with the applicant’s merit case, if necessary, together. The matter came on before me on 18 November 2013. The applicant was self represented and the respondent was represented by Mr Khayum. I gave the applicant and the respondent the opportunity to give evidence however both chose only to make submissions from the bar table.

Initial matters to be considered

[12] Section 396 of the Act requires the following initial matters to be considered.

(a) whether the application was made within the period required in subsection 394(2)

[13] I have already indicated that this was the case and there is no barrier to the application proceeding on this ground.

(b) whether the person was protected from unfair dismissal

[14] Section 382 of the Act provides that a person is protected from unfair dismissal at a time if, at that time, the person is an employee who has completed at least the minimum employment period of, in this case, 6 months and is covered by an award or enterprise agreement or earns less than the high income threshold.

[15] It is agreed that the applicant was engaged as a casual employee who was employed on a regular and systematic basis with a reasonable expectation of continuing employment on a regular and systematic basis from 27 June 2012 to 6 June 2013. It was agreed that he was covered by the Lipa Pharmaceuticals Ltd Employee Collective Agreement 2008-2013 (the Agreement) and earned $22.63 per hour for a standard working week. This equates to $44,716.88 per annum which is less than the high income threshold of $129,300 per annum as at 6 June 2013. There is no barrier to the application proceeding on this ground.

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code

[16] The respondent employed 346 employees at the time the applicant was dismissed. 2 The respondent was, therefore, not a small business pursuant to s.23 of the Act and compliance with the Small Business Fair Dismissal Code does not arise.

(d) whether the dismissal was a case of genuine redundancy

[17] As already indicated above the respondent has submitted that the applicant was not unfairly dismissed because the termination of his employment was a case of genuine redundancy.

[18] The respondent has a complete defence to the application if it is found that the termination of employment was a case of genuine redundancy. 3 If I so find, the application must be dismissed. On the other hand, if I find that his termination of employment was a not case of genuine redundancy then the applicant’s case must be considered on its merits.

Jurisdictional objection

[19] The assessment of whether a person’s dismissal was a case of genuine redundancy must be undertaken against the requirements of s.389 of the Act which reads as follows:

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.

[20] The onus is on the respondent to establish, on the balance of probabilities, that:

• The applicant’s job was no longer required to be performed by anyone because of changes in the operational requirements of the respondent and,



• The respondent has complied with any obligation in a modern award or enterprise agreement that applied to the applicant’s employment to consult about the redundancy and,



• It would not have been reasonable in all the circumstances for the applicant to be redeployed within the respondent or the enterprise of an associated entity of the respondent.

[21] I will address each requirement in turn

The applicant’s job was no longer required to be performed by anyone because of changes in the operational requirements of the respondent

[22] The case generally regarded as being of assistance in understanding the meaning of the phrase “no longer required the person’s job to be performed by anyone” is the decision of the Full Bench in Ulan Coal Mines Limited v Howarth (Ulan Coal Mines). 4

[23] This was an appeal against a decision at first instance by a Commissioner in which the Commissioner found that the dismissals before him were not cases of genuine redundancy as defined in s.389 of the Act because, amongst other things, it was not the case that the Company no longer wanted the jobs of the applicants to be performed by anyone.

[24] The Full Bench at paragraph 9 explained the circumstances of Ulan Coal Mines as follows:

“The evidence before the Commissioner was that in the first half of 2009 the Company conducted a review of operations at its underground coal mine near Mudgee in New South Wales. The object of the review was to improve the productivity and efficiency of the enterprise. As a result of the review, various changes were decided upon, including ‘reducing the number of employees, outsourcing ancillary and intermittent functions, increasing the proportion of employees with trades qualifications in underground crews and redistribution of labour.’ In consequence some 38 mineworker positions (19 fixed term positions and 19 permanent positions), 6 staff positions and 75 contractor positions were determined to be surplus to requirements. As a result of the desire of the Company to increase the proportion of mineworkers with trades qualifications on some underground work crews, there was a need to increase the trade-qualified mineworker positions at the mine by 11.”

[25] The Full Bench considered the words in the Explanatory Memorandum to the Act and came to a conclusion about their meaning. The Full Bench stated at paragraphs 16 and 17:

“The Explanatory Memorandum to the Fair Work Bill 2008 provides examples as to when a dismissal will be a case of genuine redundancy:

‘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.’

It is noted that the reference in the statutory expression is to a person’s ‘job’ no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals (1995) 60 IR 304 a job involves ‘a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees’ organisation, to a particular employee’ (at p. 308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. In these circumstances, it was said that:

‘What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant…’ (at p.308)

This does not mean that if any aspect of the employee’s duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation (2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the ‘job’ of that employee no longer exists.”

[26] At paragraph 20 the Full Bench concluded that the circumstances of Ulan Coal Mine “readily fit within the ordinary meaning and customary usage of the expression in s.389(1) of the Act where a job is no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.”

[27] Mr Khayum submitted that notwithstanding an uptick in production in early 2013 by June 2013 customers’ orders to the respondent were reducing due to the falling of consumer demand for the product and placing manufacturing orders with offshore suppliers. He provided a series of messages to staff to substantiate this experience. Relevant to the period around the dismissal of the applicant were communications on 4 April 2013 and 21 June 2013. On 4 April 2013 the Chief Executive Officer wrote to staff to advise them of the substantial increase in work over the last few weeks but also that “June is looking quite slow.” On 21 June 2013, after the applicant was dismissed, the Chief Executive Officer again wrote to staff advising of a late July-early August plant shut-down, a circumstance that Mr Khayum said corroborated his explanation of the downturn. In this communication he said:

“Considering the above - we are not looking to reduce casual numbers or letting people go in various support departments - but - we also have to manage our work versus people numbers versus customer service versus being able to respond when customers need us in order to remain competitive and viable.” 5

[28] He submitted that the number of employees employed by the respondent was reducing. He provided the Commission with a table showing employment numbers from 20 January 2013 to 20 October 2013 by department. The applicant was employed in the Compressing Department and in that department there were 44 employees on 20 January 2013, 36 employees on 26 May 2013 and 34 employees on 23 June 2013, subsequent to the applicant’s dismissal. Mr Khayum submitted that one employee resigned and the applicant was dismissed and they were the two employee reductions in that department between May and June. In that same window there were employment reductions in Coating - 21 to 20; Mixing - 26 to 25; Soft Gel - 37 to 36; an overall reduction from 348 to 343. Mr Khayum did not submit that these reductions had been by way of redundancy.

[29] The applicant on the other hand submitted that he was not told his dismissal was due to operational reasons and he regarded his area as being “as busy as it usually was” at the time of his dismissal. At the hearing he indicated that he had not been provided with a letter of termination. He said he was told by a supervisor to hand in his security card and leave the premises with no reason given at all. However Mr Khayum contended that a letter of termination had been sent to his home. It was not available on the day of hearing and was later supplied to the Commission. It was dated 7 June 2013 and, amongst other things, stated:

“On 6th June we had formally informed you of your termination of employment with Lipa Pharmaceuticals based on operations reasons.”

[30] The circumstances of the respondent are not analogous to those of Ulan Coal Mine. The information provided by the respondent is inconclusive. The employment numbers are not contested by the applicant however the reasons given for the employment reduction are not substantiated by any evidence of the business conditions faced by the enterprise. The content of the message of 21 June 2103 contradicts the submissions in that it states that “we are not looking to reduce casual numbers or letting people go in various support departments”. The area the applicant was employed in reduced employment by 2, from 36 to 34, from 26 May 2013 to 26 June 2013 one of whom resigned and the other is the applicant. By 20 October 2013 employment was up by 1 to 35. These employment figures do not provide the evidence upon which I can base a finding that the job the applicant was doing was no longer required to be performed by anyone because of changes in the operational requirements. Taking into account all the circumstances I find that the respondent has not discharged their onus in regard to this limb of s389 of the Act. As will be seen from the consideration of the next limb of s.389 below, if I am wrong in this conclusion it does not change the outcome.

The respondent has complied with any obligation in a modern award or enterprise agreement that applied to the applicant’s employment to consult about the redundancy

[31] It was agreed that the applicant was covered by the Lipa Pharmaceuticals Ltd Employee Collective Agreement 2008-2013 (the Agreement). Clause 24 of the Agreement contains relevant provisions at subclauses 24.5 to 24.9 inclusive as follows:

“24.5 Where the Employer has made a definite decision to implement changes in production, program, organisation, structure or technology that are likely to have significant effects on Employees, the Employer shall as soon as possible notify the Employees who may be affected by the proposed changes.

24.6 ‘Significant Effects’ include termination of employment; major changes in the composition, operation or size of the Employer’s workforce or in the skills required; the alteration of hours of work; the need for retraining or transfer of Employees to other work or locations; and the restructuring of jobs, provided that where this Agreement makes provision for alteration of any of the matters referred to herein an alteration shall be deemed not to have significant effect.

24.7 The Employer shall discuss with the Employees affected, among other things, the introduction of the changes referred to in this clause and the effects the changes are likely to have on Employees.

24.8 The discussions shall commence as early as practicable after a definite decision has been made by the Employer to make the changes referred to in this clause hereof.

24.9 Where redundancies occur within a group of same/similar positions, leading to the need to make selections for retrenchment, the Employer will consider the following in coming to a decision as to which Employee/s to be retrenched:

(a) ability to discharge duties (i.e. skills match, performance, competencies, etc);

(b) special circumstances such as the need to retain specific skills;

(c) any formal disciplinary history;

(d) Employee preferences for retrenchment within the group;

(e) any other factors the Employer considers relevant.”

[32] Furthermore clause 49 of the Agreement reads as follows:

“49.1 Where the Employer is proposing significant changes in work practices, shift arrangements, working hours or manning, consultation will occur with those Employees affected to allow reasonable opportunities for their input.”

Did the respondent have an obligation to consult with the applicant arising from this provision of the Agreement?

[33] In a recent decision of the Commission, Roe C considers a similar question in the context of considering whether an employee is genuinely redundant. In Mr Georg Thomas v InfoTrak Pry Ltd T/A Info Trak 6 Roe C finds that the relevant award, the Professional Employees Award 2010, contains clause 9 - Consultation regarding major workplace change and that the Respondent had a duty to discuss change in accordance with Clause 9.2.

[34] In light of the employers admitted failure to do so Roe C finds that the termination of the employee was not a genuine redundancy because there was a requirement to consult about redundancy pursuant to the award which was not complied with.

[35] This clause is not in the same terms as the clause being considered by Roe C. However like the clause considered by Roe C it is a provision that covers a wide range of circumstances, arguably including employment reduction due to operation reasons.

[36] The Macquarie Concise Dictionary Third Edition defines “consult” as:

“1. To seek counsel from; ask advice of 2. Refer to for information 3. To have regard for (a person’s interest, convenience, etc) in making plans 4. To consider or deliberate, take counsel, confer”

[37] In the Ulan decision cited above the Full Bench considered the consultation obligation of the employer in the context of a restructure of the operations of the mine. The Full Bench considered that the employer had complied with their obligation in circumstances where they had consulted with a group of employees. In coming to this conclusion they rejected the view of the Commissioner that the obligation to consult did not relate to mineworker employees generally but to the particular mineworkers who were dismissed due to redundancy, however this was in the context of the individuals affected being included in the group of employees with whom consultation had taken place.

[38] The Full Bench said at paragraph 25:

“The Commissioner considered that it was this group of mineworkers who are referred to in sub-clause 23.1 as being the employees who were ‘directly affected’ (cl. 23.1(1)) or the ‘employees concerned’ (cl. 23.1(3)) and that the sub-clause required that the discussions be held with them (par [49]).”

[39] The Full Bench said at paragraphs 28 – 32:

“[28]....It is clear that the intention in those cases is that the employees and their representatives should be involved in the problems of redundancy as soon as a firm decision has been taken that retrenchments might be necessary (see TCR Case [1984] 8 IR 34, at 62-64). This intention can also be discerned from the wording of sub-clause 23.1 of the Agreement itself. The requirement is for discussions to begin ‘as soon as is practicable’ after a definite decision is made about redundancies. The decision is described in the sub-clause as one which ‘may’ lead to termination of employment (par 23.1(1)) and the discussions to be held will include consideration of the reasons for ‘proposed terminations’ and measures to ‘avoid or minimise the terminations’ (par 23.1(2)). The discussions as such will be of relevance to the entire workforce of an enterprise or at least to that part of the workforce whose work or jobs will be affected by terminations due to redundancy. In the present case, this would be the mineworker employees at the mine. These are the employees ‘directly affected’ by the decision to change the size and composition of the mineworker workforce at the mine and the group with whom the Company must hold discussions. The discussions are envisaged to take place before the number of terminations is finalised and the particular employees to be retrenched are identified.

[29] The benefit of having discussions at an early stage of the process is that it will allow the employees an opportunity to influence such decisions and to put proposals as to measures to avoid or minimise the terminations and to mitigate any adverse effects of the terminations on the employees concerned. In some cases, the discussions and consultations may cover the basis on which employees to be retrenched due to redundancy will be selected. However in the present matter this is determined by the Agreement to be according to seniority. Were it not for this factor, we consider there might be more weight to the Applicants’ submissions concerning more individualised consultation in connection with the impending retrenchments.

[30] In the present case, the Company held discussions about the restructure and consequent redundancies with the entire workforce, including the mineworkers who were dismissed. There was evidence that each of the Applicants was present during the consultation meetings. The CFMEU as the representative of the employees was also involved and the discussions covered the matters referred to in paragraph 23.1(2) of the Agreement, namely the reasons for the proposed terminations, measures to avoid or minimise the terminations and measures to mitigate adverse effects.

[31] We do not consider, in the particular circumstances of the present matter and having regard to the obligation under sub-clause 23.1 of the Agreement, that a further round of discussions was required to be held by the Company with the employees to be dismissed, either separately or as a group. This does not mean that such separate discussions might not be worthwhile and appropriate e.g. as part of the consideration of measures to mitigate the adverse affects of terminations or to ensure that opportunities for other employment and assistance are properly examined. However they are not part of the discussions envisaged and required under sub-clause 23.1 of the Agreement and that is the test in these particular circumstances. In different circumstances this will of course vary according to the terms of particular awards and agreements.

[32] The Commissioner found that the Company had complied generally with the obligation in the Agreement by consulting with the CFMEU and the mineworker employees generally about the redundancies. This was sufficient to satisfy the requirement in s.389(1)(b) of the Act.”

[40] In this case Mr Khayum conceded that there was no consultation with the applicant about his redundancy and since no other employees were affected and in any event there was no submission that employees generally had been consulted. I conclude that the respondent has not complied with their obligation arising from the Agreement to consult about the redundancy. Accordingly I find that the respondent has not discharged their onus in relation to section 389(1) (b) of the Act.

It would not have been reasonable in all the circumstances for the applicant to be redeployed within the respondent or the enterprise of an associated entity of the respondent

[41] Guidance on the meaning of this provision of the Act was given by the Full Bench in Ulan Coal Mines v Honeysett and Others 7 in paragraphs 26-28 as follows:

“[26] First, s.389(2) must be seen in its full context. It only applies when there has been a dismissal. An employee seeking a remedy for unfair dismissal cannot succeed if the dismissal was a genuine redundancy. In other words, if the dismissal is a case of genuine redundancy the employer has a complete defence to the application. Section 389(2) places a limitation on the employer’s capacity to mount such a defence. The defence is not available if it would have been reasonable to redeploy the employee. The exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances.

[27] Secondly, it is implicit in the terms of s.389(2)(b) that it might be reasonable for an employee dismissed by one employer to be redeployed within the establishment of another employer which is an entity associated with the first employer. It follows that an employer cannot succeed in a submission that redeployment would not have been reasonable merely because it would have involved redeployment to an associated entity. Whether such redeployment would have been reasonable will depend on the circumstances. The degree of managerial integration between the different entities is likely to be a relevant consideration.

[28] Thirdly, the question posed by s.389(2), whether redeployment would have been reasonable, is to be applied at the time of the dismissal. If an employee dismissed for redundancy obtains employment within an associated entity of the employer some time after the termination, that fact may be relevant in deciding whether redeployment would have been reasonable. But it is not determinative. The question remains whether redeployment within the employer’s enterprise or the enterprise of an associated entity would have been reasonable at the time of dismissal. In answering that question a number of matters are capable of being relevant. They include the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job in relation to the employee’s residence and the remuneration which is offered.” (my emphasis)

[42] There is no submission concerning the existence of any associated entity or entities of the respondent therefore I will confine my consideration of this limb of s.389 to a consideration of whether it would have been reasonable in all the circumstances for the applicant to be redeployed within the respondent.

[43] Mr Khayum’s submisions in relation to this point were confined to an assertion that there were no other jobs within the respondent for the applicant to be redeployed to. However there was no indication that this possibility was discussed with the applicant. To discharge its onus under s.389(2) the respondent must satisfy the Commission that it was not reasonable to redeploy the applicant and simply asserting that there were no other jobs available is insufficient in my view.

[44] I find that the respondent has not discharged their onus in relation to s.389(2)(a) of the Act.

[45] In these circumstances the jurisdictional objection made pursuant to s.389 of the Act by the respondent is dismissed.

Merit argument

[46] When a jurisdictional objection on the grounds of genuine redundancy is dismissed it often follows that because no other reason has been advanced for the dismissal, there is no valid reason for the dismissal related to the person’s capacity or conduct.

[47] In such circumstances further inquiry to determine whether the dismissal was harsh, unjust or unreasonable and thus unfair might not be called for. However this is not such a case. In this case the respondent advanced two reasons for the dismissal of the applicant. Genuine redundancy, which I have not accepted, and the unplanned absence record of the applicant.

[48] Therefore I will consider the merit of the applicant’s case that he was unfairly dismissed.

Statutory framework

[49] The Fair Work Commission exercises its discretion in relation to an application for an unfair dismissal remedy pursuant to Part 3-2 Unfair Dismissal of the Act. Section 385 of the Act reads as follows:

385 What is an unfair dismissal

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.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.

[50] Section 385 of the Act makes it clear that for a person to be found to have been unfairly dismissed the person must have been dismissed in the first place. The meaning of dismissed is found in s.386 of the Act. The applicant in this matter meets this definition.

386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.

[51] Section 385 of the Act also makes it clear that a person who has been dismissed in circumstances where the Small Business Fair Dismissal Code was appropriately applied or the dismissal was a case of genuine redundancy is not unfairly dismissed. Neither of these conditions prevail in this case.

[52] Therefore, in determining whether the applicant in this matter was unfairly dismissed, I must consider whether the dismissal was harsh, unjust or unreasonable.

[53] Case law suggests that these words are to be given their ordinary non-technical meaning and are to be applied objectively. 8

[54] Also that they can be considered separately, but of course may overlap. In Byrne v Australian Airlines Pty Ltd, 9 McHugh and Gummow JJ said:

“It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

[55] Section 387 of the Act provides a set of matters that I must take into account.

[56] The section reads as follows:

387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that FWC considers relevant.

[57] If I find that the applicant was unfairly dismissed I then must apply the provisions of Division 4, Remedies for Unfair Dismissal of Part 3-2 of the Act in order to determine the appropriate remedy as between reinstatement or the payment of compensation.

Consideration

Valid reason

[58] A valid reason is one that is sound, defensible and well founded 10. It is not the function of the Commission to stand in the shoes of the employer but to assess whether the employer had a valid reason connected to the employee’s capacity or conduct.11
The Act requires an examination of whether there was a valid reason for dismissal, not whether the reasons given to the employee for the dismissal were valid.

[59] In Aperio Group (Australia) Pty Ltd T/A Aperio Finewrap v Sulemanovski a Full Bench of FWA said at paragraph 21: 12

“[21] It is apparent that in applying s.387(a) of the Act, Commissioner Ryan limited his consideration to whether the reason that Mr Sulemanovski refused to sign the undertaking was a valid reason for the termination of the employment. The Commissioner was obliged to consider more broadly whether there was a valid reason for the dismissal related to Mr Sulemanovski’s capacity or conduct, as required by s.387(a) of the Act. In restricting his consideration to whether the refusal to sign the undertaking was a valid reason for the termination the Commissioner erred, acting upon a wrong principle and misapplying the statutory requirements.”

[60] This decision is consistent with the decision of the Full Bench of the Australian Industrial Relations Commission (AIRC) as it then was, in MM cables (A Division of Metal Manufacturers) v Victor Zammit 13 where they say at paragraph 42:

“[42] We think that there are two difficulties in the approach adopted by the Commissioner to the question of whether there was a valid reason for Mr Zammit’s termination of employment. First, the Commissioner seems to have confined himself to determining whether the reason given for Mr Zammit’s termination was a valid reason. The question in s.170CG(3)(a) is not so limited. Rather the Commission is obliged to consider whether there was a valid reason for the termination - that inquiry is not limited to the reason given by the employer for the termination.”

[61] The applicant had what would reasonably be regarded as a poor attendance record in 2012. He was absent from work due to illness or other reason (in which case he said he had the permission of his supervisor) for 1 day in September 2012, 3 days in October 2012, 6 days in November 2012 and 1 day in December 2012. His submission was that as a casual employee who did not receive payment for personal leave he did not appreciate that he had the same obligations as a permanent employee in relation to taking days off. He was not aware of the Agreement or the respondent’s policy in relation to absence from work. He said once he was made aware of the policy he complied with it and noted that he had no absences between December 2012 and June 2013.

[62] He received a warning on 13 May 2013 about his attendance. Based on the submissions of the respondent this can only have been in relation to the applicant’s record for 2012. Curiously the warning letter contained the following:

“A critical part of your employment contract and responsibility to Lipa is for you to be available on the job when one is expected to be there. Your absenteeism is well beyond any average or comparable level when compared to all other departments. It is now (my emphasis) having a direct and negative impact on your work and the ability of your department to meet its objectives.”

[63] However, there were no absences recorded in 2013 save for the absences in June 2013, after the warning was given, and immediately prior to the dismissal. These absences were due to illness for which the applicant had obtained a medical certificate. However, he was dismissed on his return to work immediately after the three days off and did not have the opportunity to provide the medical certificate to the respondent.

[64] I find that the applicant’s attendance record did not constitute a valid reason for dismissal.

Procedural fairness

[65] I must also consider the facts of the process of the applicant’s dismissal against the matters set out in s.387(b)-(g) of the Act. The manner of the applicant’s dismissal was not contested save for the applicant contending that he did not receive a letter of termination. It is agreed that the applicant was dismissed by a new supervisor of the respondent with no explanation at all. He was approached as he entered the premises on 5 June 2013 and asked for his swipe card. If his absence record played a part in his dismissal he was given no chance to discuss or respond to the respondent’s concerns and I have found that he was not offered the opportunity of consultation in relation to the operational reasons advanced in his letter of termination. He was not offered a meeting of any kind let alone one in which he was given the opportunity of having a support person present. He was warned about his attendance record in May 2013, however, the warning was in relation to his performance in 2012 with an indication that the situation would be monitored over the next 6 months. Mr Khayum submitted that a termination letter had been sent to the applicant, however, the applicant was adamant that he had not received it. The letter that was provided to the applicant and the Commission subsequent to the hearing cited operational reasons, not unplanned absences, as the reason for dismissal. These are significant procedural flaws that weigh in favour of a finding that the dismissal was harsh, unjust and unreasonable. The respondent employed around 350 employees at the time of the dismissal and has a dedicated human resource function, therefore, I do not think that the provisions of s.387(f) and (g) mitigate the procedural flaws identified in the process of dismissal.

[66] This all weighs in favour of a finding that the applicant’s dismissal was harsh, unjust and unreasonable and thus unfair.

Any other matters that the Commission considers relevant

[67] The applicant’s employment status seems to have been a factor in the mindset of both the applicant and the respondent in this matter. The applicant thought that as a casual he did not have the same obligations to comply with the Agreement in relation to absence from employment as permanent employees. The respondent conceded that the applicant was a casual employee who was employed on a regular and systematic basis with a reasonable expectation of continuing employment on a regular and systematic basis. Yet their initial response to the application contained in the Form F3 appeared to rely on his employment status. In answer to the question, what were the reasons for dismissal, they replied:

“Reduce staff. He was a casual and as business slows down, his services were no longer required.”

[68] As the structure of employment relationships in our economy evolves it is important that employees and employers understand their rights and responsibilities and as a casual employee the applicant was no less entitled to be treated fairly in the termination of his employment than a permanent employee.

Conclusion

[69] Taking all of the above into account I conclude that there was no valid reason for the applicant’s dismissal and the dismissal was harsh, unjust and unreasonable and thus unfair.

Remedy

[70] It follows from this conclusion that I must apply the provisions of Division 4, Remedies for Unfair Dismissal of Part 3-2 of the Act in order to determine the appropriate remedy as between reinstatement or the payment of compensation.

[71] Section 390 of the Act reads as follows:

Section 390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

Note: Division 5 deals with procedural matters such as applications for remedies.

[72] The Act is clear that reinstatement is the primary remedy in circumstances where the Commission finds that a dismissal is unfair and only when the Commission is satisfied that reinstatement is inappropriate is the alternative remedy, compensation, to be considered.

[73] The applicant seeks reinstatement and the respondent submits that reinstatement would be impractical due to the downturn in the demand for the products of the respondent and the factory shut down scheduled for 13 December 2013 to 20 January 2014.

[74] I am not convinced that the applicant was dismissed for operational reasons and I am not convinced that for operational reasons his reinstatement would be inappropriate. Upon reinstatement he will be subject to the lawful directions of the respondent in relation to any matters pertaining to a factory shut down but of itself that is no reason not to reinstate him.

[75] In the circumstances I believe the appropriate remedy is reinstatement and I will order that he is restored to the position he was in immediately prior to his dismissal from 23 December 2013 with full continuity of employment pursuant to s.392(2) of the Act and, pursuant to s.391(3) of the Act, reimbursement of remuneration for the period from his dismissal to his reinstatement.

[76] The applicant is required to provide the respondent with an account of his gross earnings between the date of his dismissal and the date of reinstatement and pursuant to s.391(4) that amount is to be deducted from the amount that is to be reimbursed to the applicant to satisfy the decision above.

[77] An order reflecting this decision will issue.

DEPUTY PRESIDENT

Appearances:

T de Haan, the Applicant

M Khayum for Lipa Pharmaceuticals Ltd

Hearing details:

2013.

Sydney:

11 October, 18 November.

 1   Respondent’s Submissions p3

 2   Form F3 - Employer’s Response to Application for Unfair Dismissal Remedy

 3   Ulan Coal Mines v Honeysett and Others[2010] FWAFB 7578 PN26

 4   [2010] FWAFB 3488

 5   Exhibit K3

 6   [2013] FWC 1134

 7   [2010] FWAFB 7578

 8   Sheppard and Heery JJ in Bostik (Australia) Pty Ltd v Dimitrja Gorgevski (No 1) (1992 41 IR 452 at 459) where their Honours said this in relation to the wording of Clause 9 of the Manufacturing Grocers Award 1985

 9 1995 185 CLR 410 at 465

 10   Selvachandran v Peteron Plastics Pty Ltd 1995 62 IR 371 at 373

 11   Walton v Mermaid Dry Cleaners Pty Ltd 1996 142 ALR 681; Miller v University of NSW 2001 110 IR 1 at 30

 12   [2011] FWAFB 1436

 13   S8106 [2000] AIRC 61

Printed by authority of the Commonwealth Government Printer

<Price code C, PR545841>