Zoubari v Boral Resources (SA) Pty Ltd

[1996] IRCA 426

DECISION NO: 426/96

C A T C H W O R D S

INDUSTRIAL LAW -  TERMINATION OF EMPLOYMENT - claim of UNLAWFUL TERMINATION - REDUNDANCY - whether VALID REASON for termination - whether HARSH, UNJUST OR UNREASONABLE - whether termination for prohibited reasons of race, religion and national extraction -  application dismissed.

Industrial Relations Act 1988 (Cth) Ss 170DE, 170DF(1)(f), 170EA, 170EDA.

Kenefick v Australian Submarine Corporation Pty Ltd  IRCA No. 103 of 1996, Full Court, 26 March 1996, unreported.
Walker v Ken Vidler Surfsports IRCA No. 655 of 1995, RD Farrell JR, 30 November 1995, unreported.

Kota ZOUBARI -v- BORAL RESOURCES (SA) LIMITED 
SA 1679 of 1995

BEFORE:       R. D. FARRELL JR
PLACE:          PERTH (heard in ADELAIDE)
DATE:            31 July 1996

IN THE INDUSTRIAL RELATIONS    )
COURT OF AUSTRALIA                   )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )         

No. SA 1679 of 1995

BETWEEN:  

Kota ZOUBARI
  Applicant

AND:  

BORAL RESOURCES (SA) LIMITED
  Respondent

MINUTE OF ORDERS

BEFORE:               R. D. FARRELL JR

PLACE:                  PERTH (heard in ADELAIDE)

DATE:  31 July 1996

THE COURT ORDERS THAT:

1.         The application is dismissed.

NOTE:          Settlement and entry of Orders is dealt with by Order 36 of the   Industrial Relations Court Rules

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY

SA1679 of 1995

BETWEEN:

Kota ZOUBARI
Applicant

AND:

BORAL RESOURCES (SA) LIMITED
Respondent

REASONS FOR DECISION

31 July 1996   R. D. FARRELL JR

1. This is an application under Section 170EA of the Industrial Relations Act 1988 for reinstatement or, in the alternative, compensation arising from the alleged unlawful termination of the employment of the applicant, Mr Kota Zoubari (“Mr Zoubari”), by the respondent, Boral Resources (SA) Limited.

1. Boral Resources (SA) Limited is a company within the Boral group of companies (“the Boral Group”).

1. Mr Zoubari commenced employment on 11 September 1989 as a Trainee Production Engineer with Quarry Industries Limited, another company within the Boral Group. He was 27 years of age. He performed different roles as an employee of various Boral Group companies over the next six years. He was dismissed by Boral Resources (SA) Limited on 15 November 1995.

1. With regard to the requirements of Section 170DE of the Act, the respondent contends that Mr Zoubari was dismissed for reasons of redundancy, and that there was therefore a valid reason for the termination based on the operational requirements of the undertaking or establishment. The applicant contends that the termination was not for reasons of genuine redundancy, but rather that redundancy was merely an excuse to terminate Mr Zoubari’s employment because he was perceived as lacking interpersonal skills.

1. In any event, the applicant contends that there was a lack of consultation and a failure to properly consider alternative employment, rendering the dismissal harsh, unjust or unreasonable. The respondent denies that its handling of the redundancy was such that, in all the circumstances, the dismissal was harsh, unjust or unreasonable.

1. Finally, the applicant contends that Mr Zoubari's race, religion and national extraction played a part in Boral SA’s decision to terminate his employment, thus rendering the termination in breach of Section 170DF(1)(f) of the Act. The respondent contends that considerations of race, religion and national extraction played no part in the termination.

Findings as to the Facts.

1. When he commenced employment in September 1989 with Quarry Industries Limited (“QIL”) as a trainee production engineer, Mr Zoubari was to be principally involved with the development of a quality assurance programme for that company. His starting salary was $29,000 per annum.

1. On 1 June 1990, Mr A.J. Laslett (“Mr Laslett”), who had recently taken over the management of QIL, decided that Mr Zoubari was surplus to the QIL’s needs. He wrote to the appropriate officer within the Boral Group, enclosing copies of Mr Zoubari’s application and resume, and recommending that he be placed elsewhere in the group.

1. From 2 July 1990, Mr Zoubari was transferred to the position of Quality Assurance Engineer with Boral Resources (SA) Pty Ltd (“Boral SA P/L”). His employment with Boral SA P/L was confirmed in September 1990 after a probationary period, with improved salary and conditions.

1. In September 1992, Mr Zoubari was appointed to the position of National Quality Assurance Coordinator - Quarries and Concrete (“National Q.A. Coordinator”) within the Boral Group. He was based in South Australia, but reported to Mr J.S. Shaw, a Divisional General Manager of Boral Resources (NSW) Pty Limited. His duties and responsibilities in this new role were to ensure that quality assurance systems were in place and operating at all the Boral Group’s quarry and concrete locations across Australia, and to achieve third party accreditations in all quarry and concrete operations in all States as soon as possible. His salary was to be $47,500 per annum, with other benefits. The job involved extensive travel.

1. Some of the documentation suggests that Mr Zoubari became an employee of Boral Resources Limited, or possibly of QIL, at this point. However, the parties consented that I should regard it as an agreed fact that while he was seconded to Boral Resources Ltd to take on the national role, he continued to be paid by and remained an employee of Boral SA P/L. Boral SA P/L “recharged” his salary to Boral Resources Ltd.

1. In about late December 1992, Mr Zoubari expressed his interest in a position in corporate development. When this was noted by another Manager on a memorandum concerning such a position, the then General Manager of Boral Limited wrote in response:

“If that is the case he should apply, however he did give J. Shaw a commitment that he would carry out the Quality job, he can’t have it both ways!!”

1. In view of this response Mr Zoubari refrained for some time in applying for other positions, and applied himself to his role as National Quality Assurance Coordinator.

1. By 5 September 1994, however, Mr Zoubari had cause to write to Mr Anthony Berg (“Mr Berg”), the Managing Director of Boral Limited, complaining that the position of Operations Manager in Malaysia had been awarded without being advertised internally and without the proper processes being adhered to. Mr Zoubari had previously listed himself on the data base of the Boral Asia division following requests for expressions of interest. He disparaged the credentials of the appointee, and continued:

   “There are far more better qualified people for this position, myself included. Why were we not given the opportunity to apply for this position? ...

   I would like to know the reasons for the Boral Asia decision. Is there a black mark against my name or ethnic background? Or is it only utter incompetence on their behalf?”

1. Mr Berg responded, assuring Mr Zoubari that he should not take this to be the end of the opportunities for him in the Asian business, and that he would be contacted the next time an opportunity arose.

1. During 1994, while Mr Zoubari was on secondment to perform the national role, Boral SA P/L entered into a merger with QIL, and the merged company became the respondent company, Boral Resources SA Ltd (“Boral SA”). Upon the merger taking place, Boral SA became Mr Zoubari’s employer. He remained as the employee of Boral SA until his dismissal.

1. On 1 May 1995, Mr Zoubari’s superior, Mr Shaw, wrote a “Strictly Confidential” memorandum to another senior executive within the Boral Group, advising that Mr Zoubari had achieved the objective of implementing quality management systems for quarries and concrete throughout Australia, and that "the position of National Quality Assurance Coordinator will be surplus to requirements as at 30 June 1995 (Kota is aware of this)".

1. Mr Shaw advised in the memorandum that Mr Zoubari was seeking a career path in line management within the Boral Group, and that his next posting should be either a Technical Manager or an Area Manager’s role.

1. Mr Zoubari says he was unaware of the existence of this document.

1. The applicant concedes that at some time Mr Zoubari became aware that his position was becoming surplus. In a letter to Mr Berg following his dismissal Mr Zoubari refers to “the completion of my task as National Quality Assurance Manager in July”. However, he contends that there was no indication that he, as opposed to the position, was becoming surplus.

1. In late June 1995, Mr Zoubari met with the General Manager, Human Resources for the Boral Group, Mr Bob Cordy. Mr Zoubari sought this meeting in order to determine where his career was going with the Boral Group. In the course of this meeting, there was criticism of Mr Zoubari's "personal/inter-personal style". In a memorandum to Mr Zoubari dated 30 June 1995, Mr Cordy summarised his observations thus:

   ·“your ability to get a job done (task related) is very good.

   ·your personal/interpersonal style at times can be abrupt and put people off side.

   ·your qualifications and experience are essential for Boral and we would like to work with you to improve your line management experience and skills.”

1. Throughout his career with the Boral Group, Mr Zoubari received numerous favourable references, including a later reference concerning the work he was doing at the time of this meeting, which describes the ease and competence with which "Kota interacted with both the clients and the project team". Mr Zoubari received salary increases which were apparently based on some kind of performance appraisals.

1. On 30 June 1995, the position of National Q.A. Coordinator was made redundant. Mr Zoubari’s secondment to that position ended, so that Boral SA could no longer “recharge” Mr Zoubari’s salary to Boral Limited.

1. From June to September, 1995, Mr Zoubari was seconded instead to Boral Concrete (WA) on what was known as the “Wandoo Project” at Bunbury in Western Australia, pending the identification of a position for him by Mr Cordy.

1. From 1 July 1995 Mr Zoubari received a salary increase of $1,500 taking his salary to $52,600 per annum. It was at that time “recharged” to Boral Concrete (WA).

1. A memorandum was issued by Mr Cordy to Senior Managers throughout the Boral Group on 28 September 1995, stating Mr Zoubari's history with the Boral Group, his qualifications, and a request for consideration for any possible vacancies. It notes that Mr Zoubari’s main responsibility as National Q.A. Coordinator has been achieved and that the Company must place him in another position.

1. Meanwhile, Mr Zoubari’s employer - Boral SA - was seeking a permanent position for him within the Company. There were no existing vacancies. However, consideration was given to creating a vacancy.

1. Mr Malcolm Smith was the State Manager, Concrete for Boral SA in 1995. By May 1995 he had formed the view, whether correctly or not, that Mr Zoubari was under-employed. He held a high regard for Mr Zoubari’s technical skills with concrete. To retain Mr Zoubari’s skills for Boral SA, he came up with a proposal whereby the then operations manager, Mr Brian Boyd, who was based in Adelaide, could be shifted to the country manager’s position, so that he could “keep an eye on” Mr Zoubari, who would take on the operation’s manager position. Mr Zoubari had not previously held a line management position. The then country manager, Ashley Georgeson, would go back to his previous job. Mr Smith had an impression based on informal discussions that Mr Boyd, who was 55 years of age, might soon be ready to accept a voluntary redundancy package.

1. Mr Smith persuaded the General Manager of Boral SA, Mr Laslett, to allow him to put the proposition to Mr Zoubari that he take on the position of Operations Manager for Boral SA.

1. Mr Smith met with Mr Zoubari in the first week of September 1995, and put the proposition to him. Mr Zoubari asked what was happening to Brian Boyd. Mr Smith did not answer directly. He says he just shrugged. Mr Zoubari was told that it was thought he could do a better job and that while Mr Boyd was performing well, there was doubt as to whether he would cope with greater future demands on the position, given his lack of formal qualifications. There was either a direct or an implied reference to Mr Boyd’s age by Mr Smith in the course of his explanation for the proposition that Mr Zoubari take Mr Boyd’s job. Mr Zoubari told Mr Smith that he regarded their proposed treatment of Mr Boyd as age discrimination and rejected their proposition.

1. Mr Smith was annoyed at Mr Zoubari’s reaction. He spoke of sticking his neck out for Mr Zoubari, and getting slapped in the face as a result. Mr Zoubari says that Mr Smith pointed out that Boral SA couldn’t afford two salaries. Mr Smith says that he said there were no other jobs and the only option left was redundancy. Mr Zoubari denies this. Mr Zoubari stressed that he was ready to go interstate or overseas to work within the Boral Group.

1. Mr Zoubari then went on leave to the United States. After returning from leave on 25 September 1995, Mr Zoubari says he was given the same offer, this time in a meeting with Mr Laslett and Mr Smith. He refused once again. At no time, according to Mr Zoubari, was he told that his options were to accept the Operations Manager's position or accept redundancy. However, Mr Zoubari says that Mr Laslett told him at this meeting, after he had refused the proposed position, that there were no more jobs for him in Mr Laslett’s division of the Boral Group, and that Mr Laslett didn’t think he had much future at Boral.

1. Given Mr Zoubari’s response, the proposition was never broached with Mr Boyd.

1. Mr Zoubari continued to work for some weeks, with further brief secondments to WA and some tender work in South Australia.

1. On 2 October, 1995, Mr Raymond Orr became General Manager (Constructions Material Group) at Boral SA, and was answerable to Mr Laslett. He understood it to be his responsibility to find Mr Zoubari a role with Boral SA. He reviewed all the positions within the company. He consulted with Mr Cordy and with Mr Smith. He concluded there was nothing available. In early November, he came to the decision that Mr Zoubari should be retrenched. He notified Mr Laslett, who did not object. He advised Mr Zoubari of the final decision on the afternoon of 9 November 1995.

1. On 10 November 1995, Mr Orr wrote formally confirming that there were no suitable positions for Mr Zoubari, and that he would be made redundant effective from 15 November, 1995. The terms of the redundancy included one month’s pay in lieu of notice and six months’ severance pay. The severance pay was calculated under an agreement which strictly did not apply to Mr Zoubari. The payment came from Boral SA’s budget.

Whether There was a Valid Reason for Termination

1. Section 170EDA(1)(a) confers the onus on the employer to prove that there was a valid reason for the termination of the employee’s employment based on the operational requirements of the undertaking, establishment or service.

1. Mr Zoubari was employed by Boral SA. I must therefore consider the operational requirements of that company. In mid-1995 the national role which Mr Zoubari was performing ended; I find that the National Q.A. Coordinator’s position was genuinely redundant.

1. Until then, to the extent that Mr Zoubari’s national role did not further the operational requirements of Boral SA, Boral SA was compensated by “recharging” his salary to an associated company. When Mr Zoubari’s national role ended, Boral SA was no longer reimbursed for his salary.

1. While additional short-term secondments to Western Australia and Mr Zoubari’s taking leave deferred the timing of the decision, eventually Boral SA was faced with the prospect of continuing to bear the cost of the salary of an employee who was not required in their operations.

1. Accordingly, I am satisfied that Mr Zoubari’s dismissal was for a valid reason based on the operational requirements of the undertaking, establishment or service.

1. I have considered whether, in the circumstances of this case, there might properly be said to have been an additional reason, connected with Mr Zoubari’s capacity, which combined with the operational requirements of Boral SA to bring about Mr Zoubari’s termination.

1. It was held in Kenefick v Australian Submarine Corporation Pty Ltd (IRCA No. 103 of 1996, Full Court, 26 March 1996, unreported, at page 15) that such a combination of reasons had brought about the termination of the employees in that case:

   “...the terminations in this case were for two reasons. Both were based on the operational requirements of the respondent. One reason was the need to reduce the workforce, the other was to retain some rather than other employees of the existing workforce. Without both steps, no individual would have been terminated. The decision to reduce the overall number of welders in the hull shop did not of itself lead to the termination of individual appellants, and the process of selection was only commenced after the decision to reduce overall numbers had been taken. Consequently, the respondent carried the onus of showing that there was a valid reason for the selection of each applicant.”

1. This case differs from Kenefick v Australian Submarine Corporation Pty Ltd, in that it was a “one step” decision, namely the decision to eliminate the National Q.A. Coordinator’s position, which led to the termination of Mr Zoubari. There was no additional process of selection.

1. Alternatively, it might be argued that there was still a process of selection. Boral SA could have terminated the employment of another employee and moved Mr Zoubari into their position. If it were correct to analyse Boral SA’s decision in terms of their making a selection in deciding to terminate Mr Zoubari rather than another employee whose position was ongoing, then I am satisfied that the criterion they ultimately used for selection was non-evaluative. They effectively decided, given that there were no existing vacancies within Boral SA, to maintain the status quo and not to go reshuffling positions to create vacancies. Their decision is in my view defensible.

1. The analysis of the decision making process is complicated somewhat by the fact that Mr Smith considered reshuffling positions to create a vacancy. However, to the extent that that was relevant, it would only demonstrate that, had Boral SA taken performance criteria into account, Mr Zoubari would have benefited from the high regard with which Mr Zoubari’s performance was held in the company.

Whether the Termination was Harsh, Unjust or Unreasonable

1. The next matter for determination is whether the termination is harsh, unjust or unreasonable.

1. Section 170EDA(1)(b) confers the onus on the employee to prove that, because the termination is harsh, unjust or unreasonable, there was not a valid reason for the termination.

1. It is now well established that, even in the case of a genuine redundancy, the termination of employment of a particular employee may be harsh, unjust or unreasonable.

1. As I observed after a review of the authorities in Walker v Ken Vidler Surfsports, (IRCA No. 655 of 1995, R.D. Farrell JR, unreported) the indicia to which this court has regard in connection with this issue can be summarised as follows:

   ·The employer should give as much warning as possible to enable the employee affected to take early steps to inform themselves of the facts, to consider possible alternative solutions and, if necessary, to find alternative employment either with the employer or elsewhere.

   ·The employer should seek to see whether instead of dismissal the employee can be offered alternative employment.

   ·The employer should consult with the employee affected, and consider any such possible alternative solutions or possible alternative employment options raised by the employee.

   ·The employer should, with appropriate consultation, establish objective criteria to be applied in selecting the employees to be made redundant, which do not depend solely on the opinion of the person making the selection.

   ·The employer should see that the selection is made fairly in accordance with the established criteria and consider any representations that may be made in respect of the selection.

1. I will consider each of these indicia in turn.

1. With regard to the notice of redundancy, it was made clear to Mr Zoubari from the commencement of his national role that his task was finite in nature. His duties were to ensure that quality assurance systems were in place and operating at all the Boral Group’s quarry and concrete locations across Australia, and to achieve third party accreditations in all quarry and concrete operations in all States. He was best placed to assess when his role was coming to fulfilment. Mr Zoubari was seeking positions outside Boral SA in 1994. Certainly, he was formally advised by at least 30 June 1995 that his role was ending. His employment was not finally terminated until 15 November 1995, and he was then given one month’s pay in lieu of notice and six months in severance pay. The applicant has not satisfied me that Mr Zoubari had inadequate warning of his redundancy in the circumstances.

1. I find that Boral SA genuinely sought alternative employment for Mr Zoubari. There was no evidence before the Court, and the applicant did not suggest, that there were any vacant positions within Boral SA which could have been filled by Mr Zoubari. In addition, Mr Zoubari’s availability was advertised throughout the Boral Group, through Mr Cordy, from 30 June 1995. The fact that the possibility of creating a vacancy in Mr Boyd’s position for Mr Zoubari was entertained by Boral SA’s management further illustrates the genuineness of the attempts to seek alternative employment for him. This was understandable given that his technical abilities were valued, and Boral SA would have to fund any redundancy payout.

1. I accept that it was not within Boral SA’s power to redeploy Mr Zoubari outside of Boral SA by requiring other companies within the Boral Group to select Mr Zoubari to fill any vacancies they might have.

1. I am satisfied that there was adequate consultation between Mr Zoubari and Boral SA. I have referred to the many meetings held from 30 June 1995 until the termination. I am satisfied that it was sufficiently clear to Mr Zoubari that he was facing redundancy if a vacancy could not be found for him.

1. As I have observed earlier, it is arguable whether the indicia relating to criteria for selection of employees for retrenchment are applicable to this situation. The respondent contends that the applicant's job, and his job alone, came to an end and there was therefore no selection for redundancy required. The alternative was therefore whether to put somebody else off to give the applicant their job.

1. While the applicant accepts that the National Q.A. Coordinator position was redundant, it does not concede that Mr Zoubari was therefore redundant. The applicant contends that Mr Zoubari had a career, not just a job, with Boral SA.

1. I have accepted that Boral SA had one more employee than was required in their operations, and that this came about as a result of Mr Zoubari’s position becoming redundant. I have accepted that all other positions within Boral SA were already filled with existing employees.

1. If it can be said that Mr Zoubari was selected for retrenchment, then I am satisfied that the criteria for selection was the preservation as far as possible of the status quo, with employees retaining their existing positions. Preservation of the status quo is an objective criterion for selection.

1. In conclusion, having considered each of the relevant indicia where there is a termination based on operational requirements, I find that the termination of Mr Zoubari’s employment was not harsh, unjust or unreasonable.

Section 170DF

1. The applicant contends that Mr Zoubari's race, religion and national extraction played a part in Boral SA’s decision to terminate his employment, thus rendering the termination in breach of Section 170DF(1)(f) of the Act.

1. The applicant points out that criticism of Mr Zoubari's performance and skills surfaced in June 1995. He contends that his career progression from thereon may have been hampered because of some individual perceptions that he was lacking in inter-personal skills.

1. The applicant contends that there was no evidence upon which to found such criticism. To the contrary, there were numerous testimonials that he did indeed possess those skills.

1. Mr Zoubari was born in Syria and raised in Egypt. He was raised in the Muslim religion. He obtained Civil Engineering and Computer Science qualifications in Egypt and did some work as an engineer there. He immigrated to Australia in March 1989. He has since become an Australian citizen.

1. Mr Zoubari gave evidence that, during his first job with QIL, Mr Laslett unnecessarily questioned him about his race, family background, national origin and religion.

2. Mr Laslett could not recall exactly when he first met Mr Zoubari but could recall that he had identified his name as unusual and that he thought he was Egyptian. He said he was interested in visiting the Nile. He may have asked about Mr Zoubari’s engineering experience in Egypt. He doesn’t believe he would have asked about Mr Zoubari’s religion. He maintains he did not take any of these issues into account in assessing Mr Zoubari’s abilities.

1. Mr Laslett’s memorandum to another manager dated 1 June, 1990 describes Mr Zoubari in the following terms:

   “He is now 28, married to an Adelaide girl and his present salary is $29,000 p.a. He has done a significant amount of work in preparing a quality manual for Q.I. and is a very enthusiastic individual.

   If he can be placed elsewhere in the Group, his multilingual skills may well be of advantage in the future.”

1. The respondent contends that Mr Laslett's only role in events seems to have been to try to keep the applicant in employment. In 1990, Mr Laslett attempted to avoid the consequences of the redundancy by finding Mr Zoubari another position. He also approved Mr Smith’s proposition that Mr Zoubari fill the Operations Manager position in 1995.

1. Mr Smith, in a memorandum dated 12 May 1995, drew a connection between Mr Zoubari's "cultural background" and his alleged poor people management skills. Mr Smith said his assessment was based on complaints and feedback from other managers.

1. Mr Zoubari says that, while Mr Smith was not an easy person to get along with, their relations were good. He says he earned Mr Smith’s respect and did not feel Mr Smith was out to get him. I am satisfied that Mr Smith held a sufficiently high regard for Mr Zoubari to raise options to retain Mr Zoubari additional to those which Boral SA would otherwise have considered.

1. I am satisfied that considerations of race, religion and national extraction did not cause Mr Laslett and Mr Smith to hold an assessment of Mr Smith’s performance and worth to the company lower than they would otherwise have held. In my view, Mr Laslett and Mr Smith’s actions suggest that they had, on balance, a positive view of Mr Zoubari, in any event. I am therefore satisfied that considerations of race, religion or national extraction were not among the reasons for termination.

Conclusion

1. I find that the termination Mr Zoubari’s employment was for a valid reason based on the operational requirements of Boral SA. I am not satisfied that the dismissal was harsh, unjust or unreasonable. I am satisfied that considerations of race, religion and national extraction played no part in the termination.

1. Accordingly, I dismiss the application.

I certify that this and the preceding (16) pages
are a true copy of the reasons for decision of
Judicial Registrar R.D. Farrell.

Associate:
Dated:

APPEARANCES

Representative for the applicant:             Mr J Cunningham

The Association of Professional Engineers, Scientists and Managers, Australia

Counsel appearing for the respondent:               Mr A. Martin

Solicitors for the respondent:                   Piper Alderman

Dates of Hearing:  21, 22 & 28 March, 1996

Date of Judgment:  31 July 1996

Written submissions complete:                8 April, 1996