[2012] FWAFB 5241 |
FAIR WORK AUSTRALIA |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
SENIOR DEPUTY PRESIDENT ACTON |
SYDNEY, 14 AUGUST 2012 |
Appeal against decision [[2012] FWA 2811] and order [PR521967] of Commissioner Ryan at Melbourne on 2 April 2012 in matter number U2011/13024.
DECISION OF SENIOR DEPUTY PRESIDENT ACTON AND COMMISSIONER BISSETT
Introduction
[1] Mr Leevan Harvey was employed by UES (Int’l) Pty Ltd (UES) until October 2011 when he was dismissed. He subsequently made an application to Fair Work Australia (FWA) under s.394(1) of the Fair Work Act 2009 (Cth) (FW Act) for an order granting him a remedy on the basis his dismissal was unfair (an unfair dismissal remedy application).
[2] Mr Harvey’s s.394(1) application was heard and determined by Commissioner Ryan. The Commissioner found Mr Harvey’s application was made within time, Mr Harvey was a person protected from unfair dismissal by the FW Act, Mr Harvey’s dismissal was not a case of genuine redundancy and the Small Business Fair Dismissal Code did not apply to Mr Harvey’s dismissal.
[3] The Commissioner also found that Mr Harvey’s dismissal was harsh, unjust or unreasonable and granted him $7,198.28 as a remedy.
[4] UES has appealed the Commissioner’s decision 1 and order2 granting the remedy. This decision deals with that appeal.
Relevant law
[5] Section 394(1) of the FW Act provides that a person who has been dismissed may apply to FWA for an order under Division 4 of the FW Act granting a remedy for unfair dismissal.
[6] Section 385 of the FW Act provides that 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.”
[7] Section 396 of the FW Act provides that before considering the merits of an application for an unfair dismissal remedy order, FWA must decide some other matters. Section 396 is as follows:
“396 Initial matters to be considered before merits
FWA must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
[8] An effect of s.396 of the FW Act is that if a dismissal was a case of genuine redundancy, FWA does not need to consider whether it is satisfied the dismissal was harsh, unjust or unreasonable.
[9] Section 389 of the FW Act sets out the meaning of “genuine redundancy” and is 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.”
[10] The Explanatory Memorandum to the Fair Work Bill 2008 says the following in respect of now s.389:
“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 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, project or undertaking.
1548. The following are possible examples of a change in the operational requirements of an enterprise:
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 dismissal is not a case of genuine redundancy if it would have been reasonable in all 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.” (Underlining added)
[11] Section 387 of the FW Act sets out the criteria for considering whether a dismissal was harsh, unjust or unreasonable. Section 387 is as follows:
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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; 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 FWA considers relevant.”
[12] Section 390 of the FW Act sets out when FWA may order a remedy for an unfair dismissal as follows:
“390 When FWA may order remedy for unfair dismissal
(1) Subject to subsection (3), FWA may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) FWA 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) FWA may make the order only if the person has made an application under section 394.
(3) FWA must not order the payment of compensation to the person unless:
(a) FWA is satisfied that reinstatement of the person is inappropriate; and
(b) FWA 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.”
[13] Section 391 of the FW Act sets out matters relevant to an order for reinstatement. Section 392 of the FW Act sets out matters relevant to an order for compensation as follows:
“392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), FWA must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that FWA considers relevant.
Misconduct reduces amount
(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by FWA to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by FWA to be paid to a person under subsection (1) must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”
Commissioner’s decision
[14] In his decision, after making relevant findings with respect to the matters in s.385(a), (c) and (d) and s.396(a) to (c) of the FW Act, the Commissioner turned his attention to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable.
[15] The Commissioner set out some of the evidence in the matter as follows:
“[10] Evidence in the matter was given by the Applicant on his own behalf and by Mr Stevenson, Victorian Sales and Business Manager, and by Mr Colin Muir, Warehouse Supervisor on behalf of the Respondent.
[11] The evidence of Mr Stevenson was that there was significant decline in business which necessitated a reduction in labour costs in the warehouse where the Applicant was employed with 3 other employees (including Mr Muir as the Warehouse Supervisor).
[12] On 6th October 2011 Mr Stevenson convened a meeting with the warehouse employees where he advised the 3 staff in attendance (the Applicant was still on annual leave at the time) that due to a downturn in sales redundancies were being looked at. Mr Stevenson described the meeting as:
‘we discussed reduced hours, extended annual leave being taken, job sharing and that sort of thing, so we looked at a lot of opportunities, all of which I must say was a rather hostile reaction from the fellow employees.’ (PN429)
[13] Following this hostile reaction Mr Stevenson then concluded the meeting by saying:
‘If anyone can think of anything before I make a decision in the next few days please let me know.’
[14] The next day Mr Muir spoke to Mr Stevenson and suggested that if an employee was to be made redundant it should be Mr Harvey. Mr Muir in his evidence recounts that he said words to the effect: ‘you can’t make Adrian and Simon’s role redundant, they are the best performers by far. If any position is made redundant, my choice would be Leevan’s role because he is very slow compared to Adrian and Simon.’ Mr Stevenson in his evidence recounted that Mr Muir said words to the effect; ‘if redundancies are going to happen know that Simon White and Adrian Hollis are by far more efficient store people than Leevan.’ Mr Stevenson also reviewed ‘job picking cards’ for the 3 storepersons and formed the view that the Applicant was not as efficient as the other 2 storepersons and that his expertise in Goliath products was no longer deemed to be a critical aspect in the stores department. Mr Stevenson on 11 October 2011 recommended to the HR Manager and to the National Sales Manager that Mr Harvey be made redundant. On or about 14 October 2011 the National Sales Manager authorised the termination of a role in stores.
[15] When the Applicant returned from his period of annual leave on Monday 17 October 2011 he worked all day and at 4.00pm was called into a meeting with Mr Stevenson, with the Customer Services Manger also present. The Applicant was advised that his position had been made redundant. The termination pay owed to the Applicant was transferred to his bank account on 17 October 2011.
[16] It is clear from the evidence of Mr Stevenson, and I find, that the Respondent determined that a position in the stores department had to be made redundant consequent upon a fall in sales.” 3
[16] Next the Commissioner considered the particular matters under s.387 of the FW Act. With respect to whether there was a valid reason for the dismissal of Mr Harvey related to his capacity or conduct (including its effect on the safety and welfare of other employees), 4 the Commissioner said:
“Section 387(a)
[18] The Respondent made a decision that a position in the stores department had to be made redundant. Having made that decision the Respondent then considered which of the 3 storepersons would be dismissed. Mr Stevenson’s decision to select the Applicant for dismissal was based on ‘(1) was the views of Brian Muir, the warehouse supervisor, (2) was looking at the pick rates and the efficiencies.’ PN447
[19] The reason for the dismissal related to the Applicant’s capacity.
[20] Mr Stevenson had regard to the view expressed by Mr Muir on 7 October as to the Applications [sic] efficiency vis a vis the other two store employees. Mr Muir did not offer (and Mr Stevenson did not ask for) a justification or rationale for the view he expressed.
[21] Mr Stevenson assessed the efficiency of the 3 storepersons by having regard to the ‘job picking cards’ for each of the 3 employees. The evidence of both Mr Stevenson and the Applicant clearly identified that the ‘job picking cards’ were not an accurate measure of efficiency as they were not comparing like for like. Also reviewing the ‘job picking cards’ alone meant that other work performed by the employees which was not recorded on a ‘job picking card’ was not considered. The Applicant had forklift duties in addition to job picking whilst another employee did not have forklift duties and was only engaged in job picking.
[22] The review of the ‘job picking cards’ presented a picture which had all the appearances (but without the reality) of showing the Applicant to be less efficient than the other two storepersons. As this picture accorded with the unsubstantiated view expressed by Muir then Mr Stevenson, relying on both, determined that the Applicant was in fact less efficient than the other two storepersons. The decision to select the Applicant for dismissal was not sound, defensible or well founded.
[23] I find that there was no valid reason for the dismissal of the Applicant.” 5
[17] The Commissioner also found that:
[18] With respect to whether there were any other matters relevant to FWA’s consideration of whether Mr Harvey’s dismissal was harsh, unjust or unreasonable, the Commissioner stated:
“Section 387(h)
[31] There are a number of relevant factors under this factor which must be taken into account.
[32] The Applicant was covered by a modern award although the exact modern award was not established. The Applicant contended that the appropriate modern award was the Storage Services and Wholesale Award 2010 but the Applicant’s initial employment agreement with the Respondent indicated that the Applicant was ‘employed as a Permanent Full Time employee under The Vehicle Manufacturing, Repair, Services and Retail Award 2010.’
[33] Both of the modern awards have the same ‘Consultation regarding major workplace change’ clause which is in the following terms:
‘8. Consultation regarding major workplace change
8.1 Employer to notify
(a) Where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the employees who may be affected by the proposed changes and their representatives, if any.
(b) 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 elimination or diminution of job opportunities, promotion opportunities or job tenure; 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 award makes provision for alteration of any of these matters an alteration is deemed not to have significant effect.
8.2 Employer to discuss change
(a) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 8.1, the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.
(b) The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in clause 8.1.
(c) For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that no employer is required to disclose confidential information the disclosure of which would be contrary to the employer’s interests.’
[34] Mr Stevenson conceded that he was advised by the HR Manager to consult with employees including the Applicant. Mr Stevenson conceded that no consultation took place with the Applicant. The requirement on the Respondent to consult with the Applicant about ‘the effects the changes are likely to have on employees’ would at the very least have required the Respondent to identify to the Applicant that he was likely to be the storeperson selected for dismissal and reasons for that selection. This in turn would have given the Applicant an opportunity to respond which in turn would have required the Respondent to ‘give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.’
[35] The Respondent relied upon the decision in Maswan v Escada Textilvertrieb T/A ESCADA in which Watson SDP (sic) said:
‘[39] In my view a decision to dismiss on account of redundancy will only be harsh, unjust or unreasonable if the rationale for the decision is seriously undermined or if there is a serious error in procedure such that renders the termination unfair in the circumstances. Here the decision appears open to the employer to make. The failure to consult is not a trivial matter. But as it is clear that consultation was highly unlikely to have negated the operational reasons for the dismissal or lead to any other substantive change, I do not believe that the failure to consult prior to the date of termination rendered the dismissal unfair. Given the evidence in relation to the operational need to restructure, I am of the view that it is likely that Mr Maswan would have been dismissed in any event, even if timely consultation had occurred.’
[36] I agree that the failure to consult is not a trivial matter and in relation to the present application it is a serious matter. In the present application the evidence is that there was a decision by the Respondent to reduce the number of storepersons from three to two. The operational need to restructure was not based upon a decision that the job being performed by the Applicant was no longer required to be done by anyone. Rather any one of the three storepersons could have been selected for dismissal. In such circumstances it is clear that had the Respondent consulted with the Applicant prior to making a decision as to which employee was to be dismissed, the dismissal of the Applicant may not have occurred as one of the other two storepersons may have been dismissed or one of Mr Stevenson’s suggestions may have been accepted. The view formed by Mr Stevenson that the Applicant was less efficient than the other two storepersons would have been subject to challenge and response from the Applicant had the required consultation taken place. The requirement on the Respondent to give prompt consideration to matters raised by the Applicant may have led to a different outcome.” 12 (Endnotes omitted)
[19] Having regard to the “combined weight of all of the relevant factors” 13 in s.387, the Commissioner found the dismissal of Mr Harvey by UES was harsh, unjust or unreasonable. The Commissioner then turned his attention to the remedy for Mr Harvey’s unfair dismissal. The Commissioner was satisfied that the reinstatement of Mr Harvey would be inappropriate, but that an order for the payment of compensation would be appropriate in all the circumstances.
[20] In calculating the amount of compensation, the Commissioner took into account all the matters in s.392 of the FW Act.
[21] The Commissioner considered that had Mr Harvey not been dismissed he would have been employed for another “8 months (3 weeks) more,” 14 having regard to his length of service and the evidence of the Victorian Sales and Business Manager for UES that Mr Harvey was a quiet and very courteous worker who did his job without issue. He calculated the amount Mr Harvey would have received at $23,812.16. The Commissioner was also satisfied that Mr Harvey had made a genuine attempt to mitigate the loss suffered by him as a result of his dismissal and had earned some $1,151.26 in remuneration. In respect of whether there were any other matters relevant to his determination of a compensation amount, the Commissioner said:
“Section 392(2)(g)
[50] Whilst I am satisfied that had the Applicant not been unfairly dismissed he would have continued working for the Respondent for at least a year I nevertheless consider it relevant that the Respondent did need to reduce the labour cost of the stores department by the equivalent of one storepersons [sic] wage. The most equitable outcome would have been for the three storepersons and the Warehouse Supervisor to have agreed to reduce their hours of work so that no-one was dismissed (one of the suggestions put by Mr Stevenson). If this had occurred then the amount of money that the Applicant would have earnt, had he not been dismissed, would have been reduced by 25% or $5953.04.” 15
[22] As a result, the Commissioner calculated the total amount of compensation that should be awarded to Mr Harvey at $7,198.28.
Grounds of appeal
[23] UES submitted on appeal that the Commissioner erred in finding there was no valid reason for the dismissal of Mr Harvey.
[24] We note that the Commissioner’s decision on the matters in s.396(a) to (d) of the FW Act, including that Mr Harvey’s dismissal was not a case of genuine redundancy because UES had failed to relevantly consult, meant the Commissioner needed to consider s.387 of the FW Act regarding whether the dismissal was harsh, unjust or unreasonable. In doing so the Commissioner had to take into account the matter in s.387(a), being whether there was a valid reason for the dismissal related to Mr Harvey’s capacity or conduct (including its effect on the safety and welfare of other employees).
[25] The Commissioner’s decision reveals that he considered the reason for Mr Harvey’s dismissal related to his capacity because UES selected Mr Harvey for dismissal based on the views of the warehouse supervisor and Mr Harvey’s pick rates, both of which suggested Mr Harvey was less efficient than other employees. The Commissioner decided that reason was not sound, defensible or well-founded because no justification or rationale for the supervisor’s views was given and the pick rates were not an accurate measure of relative efficiency. As a result, the Commissioner decided there was no valid reason for Mr Harvey’s dismissal.
[26] We have concluded, however, that s.387(a) of the FW Act regarding the matter of whether there was a valid reason for the dismissal related to the person’s capacity or conduct does not go to the process for selecting the person for redundancy. We have come to this conclusion having regard to the following factors and for the following reasons.
[27] The terms of s.389 of the FW Act suggest the process for selecting individual employees for redundancy is not relevant to whether a dismissal was a case of genuine redundancy. The relevant Explanatory Memorandum confirms as much. Setting aside jurisdictional pre-requisites and the matters in s.396(a) to (c), FWA only needs to consider s.387(a) concerning whether there was a valid reason for a person’s dismissal related to the person’s capacity or conduct if one or more of the criteria in s.389 of the FW Act, which sets out the meaning of genuine redundancy, have not been met. The criteria in s.389 which have not been met can be taken into account in FWA’s consideration as to whether the dismissal was harsh, unjust or unreasonable as part of s.387(h), being “any other matters that FWA considers relevant”. 16
[28] We think it unlikely that it was intended that FWA’s consideration of whether there was a valid reason for the dismissal related to the person’s capacity or conduct would extend to the process for selecting the person for redundancy when:
(i) the process for selecting a person for redundancy is not relevant to FWA’s determination of an unfair dismissal remedy application if the s.389 criteria for a case of genuine redundancy are met, and
(ii) any unmet criteria in s.389 of the FW Act can be taken into account as part of s.387(h) in FWA’s consideration as to whether the dismissal was harsh, unjust or unreasonable.
[29] To conclude otherwise would mean that where an employer met the s.389 criteria for a genuine redundancy the process for selecting the person for redundancy would not be a matter FWA would consider in respect of an unfair dismissal remedy application. However (unless the application was otherwise determined) an employer who did not meet the s.389 criteria because, for example, they failed to consult as required by s.389(b) of the FW Act would have both the failure to consult and the process for selecting the person for redundancy considered in any unfair dismissal remedy application.
[30] We recognise that statutory provisions concerning a valid reason for termination of employment connected with or related to an employee’s capacity or conduct and the issue of the selection process for redundancy were considered by the Full Federal Court in Kenefick v Australian Submarine Corporation Pty Ltd (No 2) 17 and Cosco Holdings Pty Ltd v Thu Thi Van Do and Others18 and a Full Bench of the Australian Industrial Relations Commission in Windsor Smith v Lui.19 However, the legislative context in which each of those decisions was made was very different to that in the FW Act.
[31] In our view the evidence established that the reasons for Mr Harvey’s dismissal by UES was that UES no longer required his job to be performed by anyone because of changes in the operational requirements of its enterprise and it was not reasonable in all the circumstances to redeploy him. We earlier set out the evidence relevant to the changes in the operational requirements aspect of these reasons. In relation to the no reasonable redeployment aspect, the evidence was that Mr Harvey was a storeperson in Victoria and the only position available at the time was a sales representative position in Western Australia. 20 But for the failure of UES to comply with its obligation under the relevant modern award that applied to Mr Harvey’s employment to consult about the redundancy, Mr Harvey’s dismissal would have been a case of genuine redundancy within the meaning of the FW Act. The evidence also established that the reasons for his dismissal were “sound, defensible and well-founded” 21 reasons.
[32] The evidence in this case did not establish that there was any other reason for Mr Harvey’s dismissal. In other words, if there had been no changes in the operational requirements of UES’s enterprise or if relevant redeployment had been available, Mr Harvey would not have been dismissed. The valid reasons for Mr Harvey’s dismissal did not relate to his capacity or conduct in the requisite sense.
[33] The Commissioner’s decision that there was no valid reason for Mr Harvey’s dismissal was erroneously founded on a conclusion that the reason for his dismissal related to his capacity. Further, the Commissioner failed to have regard to the fact there were sound, defensible and well-founded reasons for Mr Harvey’s dismissal due to changes in operational requirements and no reasonable redeployment, when taking into account other matters relevant to his consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable. The Commissioner’s reference to UES’s “operational need to restructure” 22 in the course of considering UES’s failure to relevantly consult is not sufficient. As a result, his decision that there was no valid reason for Mr Harvey’s dismissal was affected by appealable error.
[34] UES also submitted on appeal that the Commissioner erred in concluding that the remuneration Mr Harvey would have received, or would have been likely to receive, if he had not been dismissed would have been $23,812.16. This figure was based on Mr Harvey’s employment continuing for “at 8 months (3 weeks) more” but for his dismissal. UES submitted that the Commissioner should have concluded that Mr Harvey’s employment would have continued for no more than another two weeks. A further two weeks, being the outer limit of the period it would have taken UES to consult with Mr Harvey about the redundancy in accordance with the relevant modern award and, thereby, effect a genuine redundancy within the meaning of s.389 of the FW Act.
[35] We think there is also merit in this ground of appeal. If UES had consulted with Mr Harvey about the redundancy in accordance with the relevant modern award then, on the evidence in the case, his dismissal would have been a genuine redundancy within the meaning of s.389 of the FW Act. There is no sound reason to believe such consultation would have taken any longer than two weeks or yielded a result other than his dismissal.
[36] The Commissioner substantially over estimated the remuneration Mr Harvey would have received, or would have been likely to receive, if he had not been dismissed. That over estimation was integral to the Commissioner’s determination of the amount of compensation in lieu of reinstatement he ordered UES to pay to Mr Harvey. The Commissioner’s determination as to the amount of compensation to be paid to Mr Harvey by UES was therefore also affected by error in the decision making process.
[37] We have decided we should grant permission to appeal. We consider it is in the public interest to do so. We have come to the view it is in the public interest because the appeal raises novel issues about the operation of s.387 of the FW Act regarding whether a dismissal was harsh, unjust or unreasonable and s.392 of the FW Act regarding the remedy of compensation when a dismissal is not a genuine redundancy because of failure with respect to an obligation to consult. In light of the errors in the Commissioner’s decision making process on those matters, we also uphold the appeal and quash the Commissioner’s decision and order. We will deal with Mr Harvey’s unfair dismissal remedy application.
Consideration of the s.394(1) application
[38] The Commissioner found that Mr Harvey’s s.394(1) application was made within the time specified by s.394(2)(a), that Mr Harvey was a person protected from unfair dismissal and, in effect, that the dismissal was not consistent with the Small Business Fair Dismissal Code. None of these findings were challenged on appeal. They were made out on the evidence and we adopt them.
[39] We also find that the dismissal was not a case of genuine redundancy. The evidence is that there was a significant decline in the business of UES with insufficient sales to sustain three storepersons in its warehouse. The warehouse employed a supervisor and three storepersons. Mr Harvey was a storeperson. The employer consulted with the other employees in the warehouse, while Mr Harvey was on annual leave, about potential redundancies in the warehouse due to the downturn in UES sales. UES then decided to make Mr Harvey’s position as storeperson redundant due to the downturn in its sales. However, UES did not consult with Mr Harvey about the redundancy as required by the modern award applying to his employment. The evidence establishes that it would not have been reasonable in all the circumstances for Mr Harvey to be redeployed within the enterprise of UES or the enterprise of an associated entity of UES.
[40] On the evidence, therefore, we consider Mr Harvey’s dismissal was not a case of genuine redundancy within the meaning of s.389. However, this is only because UES did not consult with Mr Harvey about the redundancy in accordance with its obligation in the modern award that applied to Mr Harvey’s employment.
[41] As to whether the dismissal of Mr Harvey was harsh, unjust or unreasonable, we turn to the matters in s.387 of the FW Act.
Valid reason (s.387(a))
[42] As we have already indicated, in our view the reasons for the dismissal of Mr Harvey by UES were not related to his capacity or conduct (including its effect on the safety and welfare of other employees). Accordingly, there cannot have been and was not a valid reason for his dismissal related to his capacity or conduct (including its effect on the safety and welfare of other employees). In the circumstances of this case we regard it as a neutral matter with respect to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable.
Notification and opportunity to respond (ss.387(b) and (c))
[43] The matters in s.387(b) and (c) of the FW Act deal with whether there was procedural fairness in respect of a reason for dismissal related to Mr Harvey’s capacity or conduct. As a matter of fact Mr Harvey was not notified of or given an opportunity to respond to a reason for his dismissal related to his capacity or conduct. However given the reasons for his dismissal, we regard them as neutral matters with respect to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable.
Support person (s.387(d))
[44] UES did not unreasonably refuse to allow Mr Harvey to have a support person present to assist at any discussions relating to his dismissal. We also regard this as a neutral matter with respect to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable.
Unsatisfactory performance (s.387(e))
[45] Mr Harvey’s dismissal did not relate to his unsatisfactory performance, so this matter is not relevant to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable. We regard it as a neutral matter with respect to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable.
Size of the UES enterprise and human resource management (s.387(f) and (g))
[46] UES has some 81 employees and a dedicated human resources manager. On the evidence, we conclude the size of the employer did not have a detrimental impact on the procedures UES followed in effecting Mr Harvey’s dismissal. In this case, we are prepared to regard it as a neutral matter with respect to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable. UES has a dedicated human resource manager. Accordingly, the matter of the degree to which the absence of dedicated human resource management specialists or expertise in UES impacted on the procedures it followed in effecting Mr Harvey’s dismissal is not relevant to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable. We regard it as a neutral matter with respect to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable.
Other matters (s.387(h))
[47] As we have earlier indicated, there were sound, defensible and well-founded reasons for Mr Harvey’s dismissal, being that UES no longer required his job to be performed by anyone because of changes in the operational requirements of its enterprise and it was not reasonable in all the circumstances to relevantly redeploy him. We regard such valid reasons as matters relevant to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable. They are matters telling against a conclusion that the dismissal was harsh, unjust or unreasonable.
[48] UES, however, failed to consult with Mr Harvey as required by the “consultation regarding major workplace change” clause in the modern award that applied to his employment. In the circumstances the failure to so consult was unreasonable. We regard such a failure to consult as also a matter relevant to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable. Further, it is a matter telling for a conclusion that Mr Harvey’s dismissal was harsh, unjust or unreasonable.
Conclusion regarding harsh, unjust or unreasonable
[49] Taking into account the matters referred to above, we are satisfied Mr Harvey’s dismissal by UES was harsh, unjust or unreasonable. A failure to consult does not necessarily mean a dismissal was harsh, unjust or unreasonable. However, in this case we consider the failure to consult was unreasonable and is sufficient to lead us to conclude Mr Harvey’s dismissal was harsh, unjust or unreasonable, notwithstanding the valid reasons for his dismissal and the due weight we have given to those valid reasons.
[50] We turn then to consider remedy.
Remedy
[51] As we earlier indicated, we are satisfied Mr Harvey made an application under s.394 of the FW Act and was a person protected from unfair dismissal by UES at the time he was dismissed. We are also satisfied Mr Harvey was unfairly dismissed having regard to our findings in respect of the matters in s.385 of the FW Act. Accordingly, we may make an order granting a reinstatement or compensation remedy. We are satisfied that the reinstatement of Mr Harvey is inappropriate. Neither he nor UES support reinstatement and Mr Harvey’s dismissal was brought about by a redundancy. We consider that an order for the payment of compensation is appropriate in all the circumstances of the case.
[52] The criteria relevant to the deciding of the amount of compensation are set out in s.392(2).
Remuneration that would have been received (s.392(2)(c))
[53] We are of the view that the remuneration Mr Harvey would have received, or would have been likely to receive, if he had not been dismissed would have been another two weeks’ remuneration. Two weeks is the period it would have taken UES to comply with its obligations in the relevant modern award to consult with Mr Harvey about the redundancy that led to his dismissal. Two weeks’ remuneration for Mr Harvey was an amount of $1,365.38 gross plus 9% superannuation.
Remuneration earned (s.392(2)(e))
[54] Mr Harvey has earned some $1,151.26 from employment since his dismissal. However, we do not deduct that from the remuneration of $1,365.38 gross plus 9% superannuation that he would have received from UES but for the dismissal because it is not apparent that that amount was earned in the two weeks following his dismissal.
Income reasonably likely to be earned (s.392(2)(f))
[55] Nor do we deduct from that remuneration of $1,365.38 gross plus 9% superannuation any amount of income reasonably likely to be so earned by Mr Harvey during the period between the making of an order for compensation and the actual compensation. The two weeks following his dismissal on which the remuneration of $1,365.38 gross plus 9% superannuation is based does not extend to the period referred to in s.392(2)(f).
Other matters (s.392(2)(g))
[56] There are no other matters that we consider are relevant to take into account in the determination of an amount of compensation in lieu of reinstatement for Mr Harvey, apart from those in ss.392(2)(a), (b) and (d), s.392(3) and s.395(5) of the FW Act to which we next refer.
Viability (s.392(2)(a))
[57] There is no evidence that an order for $1,365.38 gross plus 9% superannuation payable to Mr Harvey by UES would affect the viability of the UES enterprise.
Length of service (s.392(2)(b))
[58] Mr Harvey had over four years service with UES and Goliath Hinging System Pty Ltd, which was acquired by UES in July 2011. Such a period of service provides no basis for reducing the amount of $1,365.38 gross plus 9% superannuation in compensation.
Mitigation efforts (s.392(2)(d))
[59] We accept that Mr Harvey made reasonable efforts to mitigate the loss suffered by him because of his dismissal. His mitigation efforts do not provide a basis for reducing the amount of $1,365.38 gross plus 9% superannuation in compensation.
Misconduct (s.392(3))
[60] Misconduct did not contribute to the UES decision to dismiss Mr Harvey. As a result we do not reduce the compensation amount of $1,365.38 gross plus 9% superannuation on account of misconduct.
Compensation cap (s.392(5))
[61] The amount of $1,365.38 gross plus 9% superannuation is less than the compensation cap in s.392(5) of the FW Act for Mr Harvey.
Conclusion
[62] We are satisfied an order for the payment of compensation of $1,365.38 gross plus 9% superannuation, less taxation as required by law, by UES to Mr Harvey in lieu of reinstatement is appropriate in all the circumstances of the case. It accords a fair go all round to both UES and Mr Harvey. An order to this effect is attached at PR525373. The stay order issued by FWA on 1 May 2012 in matter C2012/3508 is set aside. 23
SENIOR DEPUTY PRESIDENT
DECISION OF SENIOR DEPUTY PRESIDENT KAUFMAN
[63] The facts and the relevant provisions of the Fair Work Act 2009 are set out in the reasons for decision of Senior Deputy President Acton and Commissioner Bissett, which I have read in draft.
[64] It is clear that the termination of the employment of the respondent was not a case of genuine redundancy within the meaning of s 389(d) of the Act because the appellant had not complied with its obligations to consult as required by s 389(1)(b). Had the dismissal been a case of genuine redundancy the respondent would not have been unfairly dismissed and his application for a remedy could not have proceeded. Thus the only consideration in deciding whether he had been unfairly dismissed under s 385 was whether the dismissal was harsh, unjust or unreasonable, as he had been dismissed [s 385(a)] and the appellant is not a small business and consistency or otherwise with the Small Business Fair Dismissal Code is not relevant [s 389(c)].
[65] With one reservation, I agree with the findings of the majority at [31] that the reason for the respondent’s dismissal was that the appellant no longer required the respondent’s job to be performed by anyone because of changes in the operational requirements of its enterprise and it was not reasonable in the circumstances to redeploy him. In my opinion it is more accurate to say that the appellant did not require the job of one of its three storemen to be performed by anyone as the changes to its operational requirements only required that those functions be performed by two people.
[66] I also agree that the evidence established that the reason for the Respondent’s dismissal was sound, defensible and well reasoned. Such a reason is usually held to be a valid reason. 24
[67] Although s 387(a) requires Fair Work Australia to consider whether there was a valid reason for the dismissal related to the person’s capacity or conduct, consideration of whether there was otherwise a valid reason is not precluded and, in my view, in appropriate circumstances, ought be considered under s 387(h).
[68] In this case there is no dispute that the respondent’s dismissal was a case of redundancy within the generally understood meaning of that expression. That it was not a genuine redundancy for the purposes of s 385(d), and thus was not excluded from the s 385 definition of ‘unfairly dismissed’, does not detract from the fact that his position was nevertheless redundant.
[69] It is trite that there may be more than one reason for a dismissal. 25 In my view, there was a valid reason - redundancy - for the termination of the respondent’s employment. However, that may not have been the only reason for his dismissal. As in this case only one of the three storemens’ positions was removed, the reason for the respondent’s selection for redundancy, and hence his dismissal, became relevant.
[70] At [23] the Commissioner found that there was no valid reason for the dismissal of the respondent, and at [19] that the dismissal related to his capacity. In my view the Commissioner correctly found that the respondent’s dismissal related to his capacity as the reason for his selection for redundancy related to his capacity in that he was believed by the appellant to be the least efficient of the three storemen. In that sense, a reason for the dismissal, one of the reasons, related to the respondent’s capacity.
[71] As there was no evidence to the contrary, the Commissioner erred in finding that there was no valid reason for the respondent’s selection and hence his dismissal. There was no basis for the Commissioner not to accept the opinion to that effect of Mr Muir, the respondent’s supervisor, a person ideally placed to make such an assessment.
[72] The next factor that weighed heavily in leading to the Commissioner’s conclusion that the dismissal was unfair was the failure of the appellant to have consulted the respondent prior to dismissing him.
[73] There were only three storemen. The appellant discussed the downturn of work with the other two and sought their input into alternatives to letting any one of the three go. Had one of the two, rather than the respondent, been selected for redundancy it is likely that it would have been held that there had been consultation as required by the applicable modern award and the dismissal of that person would not have been an unfair dismissal under s 385. Any application for a remedy would have fallen at the first hurdle. The only reason that the respondent was not consulted was because he was on leave at the relevant time. In my view the Commissioner erred in his conclusion that the respondent’s dismissal was unfair in the circumstances.
[74] The Commissioner referred to the decision of Vice President Watson in Maswan v Escada Textilvertrieb t/a ESCADA 26, but in my view did not apply the reasoning of that decision, which in my respectful opinion is correct, to the facts of the case before him. As was the case in ESCADA, “consultation was highly unlikely to have negated the operational reasons for the dismissal or lead to any other substantive change.” As was also the case in ESCADA, it is likely that the respondent would have been dismissed in any event, even if timely consultation had occurred. The Commissioner erred in conjecturing as he did in [36].
[75] In my view, the Commissioner also erred in finding at [24] that the Respondent was not notified of the reason for his dismissal. The operative reason for his dismissal, albeit related to his capacity, was redundancy. Had there been no redundancy there would have been no selection for dismissal. On his return from leave the respondent had been told that his position had been made redundant. That was sufficient notification of the reason for dismissal.
[76] Section 400 of the Act precludes us from granting permission to appeal unless we consider it in the public interest to do so. It is not sufficient to merely have found error in the decision below. In my view the error of the Commissioner in not considering that there might have been a valid reason for the dismissal because there had been a redundancy in the generally understood sense, sufficiently attracts the public interest to warrant the grant of permission.
[77] Adopting the reasoning of ESCADA, I would find that the dismissal of the respondent was not harsh, unjust or unreasonable and not unfair. I agree with the findings of the majority in relation to s 387 (b) to (g).
[78] I would grant permission, allow the appeal, quash the decision of the Commissioner and dismiss the application for a remedy.
SENIOR DEPUTY PRESIDENT
Appearances:
R Millar of counsel with D Berlusconi of the Motor Traders’ Association of New South Wales for UES (Int’l) Pty Ltd.
A Dircks and G Dircks of Just Relations - Consultants for Mr Leevan Harvey.
Hearing details:
2012.
Melbourne and Sydney, by Video Link:
May 1.
2012.
Melbourne:
May 16.
Endnotes:
1 Leevan Harvey v UES (Int’l) Pty Ltd, [2012] FWA 2811.
2 Leevan Harvey v UES (Int’l) Pty Ltd, PR521967.
3 Leevan Harvey v UES (Int’l) Pty Ltd, [2012] FWA 2811.
4 Fair Work Act 2009 (Cth), s.387(a).
5 Leevan Harvey v UES (Int’l) Pty Ltd, [2012] FWA 2811.
6 Ibid at [24].
7 Ibid at [25].
8 Ibid at [26].
9 Ibid at [27].
10 Ibid at [28].
11 Ibid at [29]-[30].
12 Ibid.
13 Ibid at [37].
14 Ibid at [46].
15 Ibid.
16 Fair Work Act 2009 (Cth), s.387(h).
17 (1996) 65 IR 366.
18 (1997) 77 IR 94.
19 (1998) 140 IR 398.
20 Transcript in U2011/13024 at PN675-678 and 726-730.
21 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 at 373.
22 Leevan Harvey v UES (Int’l) Pty Ltd, [2012] FWA 2811 at [36].
23 UES (Int’l) Pty Ltd v Leevan Harvey, PR523270.
24 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373. This case has been extensively followed.
25 See Windsor Smith v Liu (1998) 140 IR 398 at 404 where a Full Bench of the Australian Industrial Relations Commission observed, albeit under different legislation, “where employment is terminated on redundancy grounds it is a question of fact whether the employees selected for redundancy were selected for a reason related to the operational requirements of the employer’s business, for a reason related to the employee’s capacity or conduct, or for reasons of both kinds”.
26 [2011] FWA 4239 at [39].
Printed by authority of the Commonwealth Government Printer
<Price code C PR525372>