[2015] FWC 3058

The attached document replaces the document previously issued with the above code on 19 May 2015.

It corrects footnote 5

from [2014] FWAFB 714 at 37

to [2014] FWCFB 714 at 37.

Bronwyn Corless

Associate to Deputy President Hamilton

Dated 20 May 2015

[2015] FWC 3058

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Lisa Turner
v
Dawsons Haulage
(U2014/13975)

DEPUTY PRESIDENT HAMILTON

MELBOURNE, 19 MAY 2015

Application for relief from unfair dismissal - genuine redundancy - operational reasons, consultation, redeployment

[1] On 28 November 2014 Ms Lisa Turner filed an application for an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (the Act) against Dawsons Haulage.

[2] The matter was listed for mention and/or directions on 18 March 2015. The matter was subsequently listed for jurisdiction and arbitration conference/hearing on 30 April 2015.

[3] Neither party was represented. The applicant had assistance from a friend with some experience in employee relations. What appeared to be a simple redundancy/restructuring question in a smaller business involved perhaps 25 separate statutory tests. Some of these tests have been the subject of considerable Commission consideration and debate. This is difficult for smaller businesses and unrepresented litigants to deal with.

[4] Witness statements and other documents were filed.

[5] I have had regard to all the submissions and evidence.

Genuine Redundancy

[6] The Act provides:

‘385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(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.
...

389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.’

Submissions

[7] It was agreed that all jurisdictional requirements are met with one exception. The applicant is a person protected from unfair dismissal within s.396. However, the employer objected to the application on the grounds that it was a genuine redundancy 1. The letter of termination dated 17 October 2014 stated that the termination was a result of the economic downturn and a restructure within the business, the position of operational assistant was no longer needed, and the applicant’s position ‘ has become redundant. This decision is not a reflection of your performance’. The employer also stated that he was generous in payments made to the applicant, and had paid the applicant 4 weeks in lieu of notice and 11 weeks’ severance pay, in excess of entitlements of 3 weeks plus 8 weeks.

[8] In this case Ms Turner submits that her position was not redundant, she could have been redeployed and the redeployment requirements of s.389(2) were not met, consultation did not occur in breach of s.389(1)(b), and other matters 2.

Was there a genuine redundancy?

Section 389(1)(a) - Operational requirements

[9] In my view the employer no longer required the applicant’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. I accept the evidence of Mr.Dawson that her duties were distributed to others 3, and prefer that evidence to any given to the contrary by the applicant. I do not accept that another employee is performing the same job. The requirements of s.389(1)(a) are met.

Section 389(1)(b) - Consultation

[10] It is agreed that there is no agreement in place. However it is agreed that a modern award applies to the applicant’s former position, the Clerks – Private Sector Award 2010. This contains the standard change clause (clause 8) which applies to the termination of Ms.Turner because of the circumstances of the restructure outlined in the letter of termination and other evidence before me. The employer made a definite decision to introduce major change in organisation, and it had the significant effect of termination of employment.

[11] In this case there is little dispute about the consultation that occurred. According to the applicant, she met with the owner, Mr.Dawson, on 17 October 2014, who told him that there was no position for her to return to and she was going to be made redundant. She asked about ‘any other options available to me before the redundancy for example repositioning or retraining’. Mr.Dawson replied that there were no other positions she could complete. Then later there was a discussion on 23 October 2014 about entitlements, at which the applicant was handed a letter of termination. There was other contact.

[12] However, Mr.Dawson did not engage in the consultation process required by clause 8. There was no meeting to discuss the effects the changes were likely to have or measures to avert or mitigate the changes. The employer did not provide in writing to the employee 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 (clause 8.1(iii)). The requirements of s.389(1)(b) are not met. While this is a redundancy because of a restructure, it is therefore not a ‘genuine redundancy’ as defined by the Act. This may seem a paradoxical conclusion to many given my conclusions above. However, a genuine redundancy as defined by the Act is not the same as a redundancy.

Section 389(2) - Reasonable to redeploy

Redeployment

[13] The issue of redeployment within s.389(2) has been considered in a number of Commission decisions including Full Bench decisions in Ulan v. Ulan Coal Mines Limited⁴ and TAFE NSW v. Pykett⁵. I adopt the reasoning in those decisions, which it is unnecessary to repeat. Commission decisions on the issue of redeployment overseas include Roy v. SNC-Lavelin Australia Pty Ltd⁶. I accept the evidence of Mr.Dawson in preference to that of the applicant. It would not have been reasonable in all the circumstances for the applicant to be redeployed.

Conclusion

[14] The requirements of s.389 are not met. This was not a genuine redundancy.

Section 387

[15] Turning to deal with the general termination provisions, there is no valid reason within s.387(a). The employer specifically stated in the termination letter that the termination was ‘not a reflection of your performance’, which Mr.Dawson confirmed in giving evidence. The dismissal was not for the applicant’s capacity or conduct within the section, but for redundancy reasons 7.

[16] The applicant was not told of a valid reason within s.387(b), because there was no valid reason. The applicant had the opportunity to respond within s.387(c) at the meeting on 17 October and did respond. The employer did not refuse to allow the applicant to have a support person within s.387(d). There was no unsatisfactory performance within s.387(e). The employer is small to medium and lacks specialist human resource practitioners, and this has impacted on the procedures followed (ss.387(f),(g)). In particular the employer appeared to be unaware of the change clause and its requirements. I have taken into account all matters within s.387(h).

Conclusion

[17] The termination was harsh, unjust or unreasonable.

Remedy

[18] I am satisfied that reinstatement is not appropriate, and it is not sought. However, in my view in the circumstances an order of compensation is not appropriate within s.390(3).

[19] Even if I apply the factors in section 392(2) in the alternative the result is the same. In the alternative I take into account the decisions in Sprigg v Paul’s Licensed Festival Supermarket 8, Ellawala v Australian Postal Corporation9, Smith v Moore Paragon Australia Ltd10, and Haigh v. Bradken11. I note that the applicant claimed some $21,897.63 under a number of headings including travel and child care12.

[20] In relation to s.392(2)(a), I am satisfied that a payment of compensation will not have an effect on the viability of the employer’s enterprise, given Mr.Dawson’s somewhat qualified statements in evidence on this issue. He did not claim that it would have such an effect 13.

[21] I have taken account of the length of the applicant’s service within s.392(2)(b). The applicant was employed in January 2012 and was notified of her dismissal on 17 October 2014, taking effect on 7 November 2014 according to the application (questions 1.1-1.3).

[22] In relation to s.392(2)(c), and (f), I am satisfied that the applicant would have been employed for an extra three weeks during which the consultation required by clause 8 would have occurred, and following which the applicant would have been made redundant. This means that the applicant would have earned an additional 3 weeks’ pay. However, the final day of employment was 7 November 2014, according to the termination letter.

[23] The applicant was paid for the periods 30 October 2014-5 November 2014, 6 November 2014-12 November 2014, and 13 November 2014-19 November 2014 the amount of $1,200 gross each week. In other words pay continued for a two week period after termination on 7 November 2014, payments which it was not required to make but chose to make. In addition, the employer paid on 31 October 2014 the amounts of $5,327.63 gross pay in lieu of notice, and $8,500 severance pay (Exhibit D1). In addition, severance pay under s.119 of the Act amounts to 6 weeks pay, not 8 weeks. The applicant has been overpaid entitlements, and on the evidence of Mr.Dawson deliberately so in response to the circumstances of the redundancy 14. He paid the extra severance pay pursuant to an agreement he had with the employee (Exhibit D2), signed by the employee. The applicant, however, notwithstanding this now seeks extra payments. I accept the evidence of Mr.Dawson in preference to that of the applicant.

[24] With respect to s.392(g), I have regard to those extra payments.

[25] In Haigh v. Bradkin 15 the Commission said:

‘[10] The frequently quoted case on compensation calculations is Sprigg v Paul Licensed Festival Supermarket 16 in which a Full Bench of the Australian Industrial Relations Commission (AIRC) confirmed the following steps in determining compensation under the unfair dismissal provisions of the Workplace Relations Act:

“1. Estimate the amount the employee would have received or would have been likely to receive if the employment had not been terminated,
2. Deduct monies earned since termination,
3. Deductions for contingencies,
4. Calculate any impact of taxation,
5. Apply the legislative cap.”

[11] The legislation has been amended since that time by permitting a reduction in an amount otherwise payable if an employee’s misconduct contributed to the employers decision to dismiss. The Full Bench decision in Sprigg has also been the subject of comment by other Full benches. In Smith v Moore Paragon a Full Bench of the AIRC said:

“COMMENT IN RELATION TO THE GUIDELINES IN SPRIGG
It seems to us that the amounts arrived at by the application of the guidelines in Sprigg in the present matter are on their face manifestly inadequate for employees with the length of service of the Appellants, the circumstances of their dismissal and their poor prospects for future employment. This causes us to sound a warning in relation to the application of Sprigg. The guidelines laid down in Sprigg and refined in Ellawala v Australian Postal Commission are clearly designed to serve the proper and desirable purpose of fostering uniformity and consistency in decision-making by individual members of the Commission when assessing compensation pursuant to s.170CH(6). However, those guidelines are not a substitute for the words of the Act. By virtue of s.170CH(2), any remedy ordered by the Commission must be a remedy that the Commission considers “appropriate” having regard to all the circumstances of the case including the matters set out in s.170CH(2). Section 170CH(6) confers a general discretion “if the Commission considers it appropriate in all the circumstances of the case” to “make an order requiring the employer to pay the employee an amount ordered by Commission in lieu of reinstatement” subject to the Commission having regard “to all the circumstances of the case including” the matters listed in s.170CH(7) - the same list of matters set out in s.170CH(2) - and subject also to the `cap’ provided for in s.170CH(8) and (9). If an application of the guidelines in Sprigg yields an amount which appears either clearly excessive or clearly inadequate, then the member should reassess any assumptions or intermediate conclusions made or reached in applying the guidelines so as to ensure that the level of compensation is in an amount that the member considers appropriate having regard “to all the circumstances of the case” including the matters listed in s.170CH(7) and subject to the `cap’ provided for in s.170CH(8) and (9). In this context it should be borne in mind that the result yielded by an application of the Sprigg guidelines may vary greatly depending upon particular findings in relation to the various steps including, in particular, step one, which necessarily involves assessments as to future events that will often be problematic.” [footnotes omitted]

[26] I am not satisfied that an order for payment of compensation is appropriate in all the circumstances within s.390(3)(b) and s.392, whether the Sprigg formula is applied or the discretion in s.390(3)(b) discussed above. No compensation is payable applying the Sprigg test step 1 quoted above, having regard to the deliberately generous payments made by the employer:

‘Estimate the amount the employee would have received or would have been
likely to receive if the employment had not been terminated’

[27] The employee would have received the same remuneration if she had not been terminated, because the employer continued to pay her wages and paid more than required severance pay. The applicant has received sufficient pay to compensate her for her dismissal. This does not mean that all overpayments will necessarily have this effect. This is a decision on the facts of the present case in which the employer has deliberately acted in a generous fashion. Further, the applicant agreed to a severance pay deal and signed it and now seeks to avoid it.

[28] It would be an injustice and contrary to a fair go all round to make a further order of compensation.

[29] I have however found that the applicant should have been consulted in accordance with clause 8 of the award.