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[2014] FWC 7565
General information, not legal advice.
Fair Work Commission
2014-10-29
Ms J
Original judgment source is linked above.
s.394 - Application for unfair dismissal remedy
Unfair dismissal - jurisdictional objection - genuine redundancy.
[1] On 10 July 2014, Mr Karan Bhalla (Mr Bhalla or Applicant) made application to the Fair Work Commission (Commission) seeking a remedy for alleged unfair dismissal from his former employer, Welltech Total Water Management (Employer).
[2] The application was made pursuant to s.394 of the Fair Work Act 2009 (FW Act).
[3] The application was referred to me on 28 August 2014.
[4] In response to the application, the Employer asserts that:
[5] To assist in the determination of whether Mr Bhalla's dismissal was a case of genuine redundancy, I issued Directions and advised the parties that I intended to deal with the matter by way of written submissions. In addition, each party was given the opportunity of a hearing to challenge the submissions or affidavits. Neither party sought a hearing.
[6] This is my decision and reasons for decision on whether the Applicant's dismissal was a case of genuine redundancy and therefore not protected from the unfair dismissal provisions of the FW Act.
[7] Section 385 of the FW Act sets out the meaning of unfair dismissal as follows:
(d) the dismissal was not a case of genuine redundancy."
[8] The meaning of genuine redundancy is contained in s.389 of the FW Act as follows:
(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:
(b) the enterprise of an associated entity of the employer."
[9] Shortly put, where it is found that a dismissal is a genuine redundancy, it is not an unfair dismissal.
[10] Mr Bhalla commenced employment on 21 January 2013.
[11] Mr Bhalla was employed as the Employer's Western Australian Engineering Manager.
[12] On 9 July 2014, Ms J Bennett, the Western Australian General Manager, met with Mr Bhalla "and informed him [that] his employment with Welltech would cease due to the lack of work for an Engineer at Welltech".
[13] Mr Bhalla evades a response to the Employer's statement of fact above in paragraph [12] and simply asserts "I had not notice that this was a meeting where I would be dismissed".
[14] Ms Bennett asserts that at the meeting on 9 July 2014, "Mr Bhalla agreed that there was no Engineering management work at Welltech for which he was suited and accepted that his termination had nothing to do with his work performance". Mr Bhalla disagrees with Ms Bennett's recollection of the meeting.
[15] Despite this conflict, the Applicant submits that in the discussions on 9 July 2014, "she [Ms Bennett] then claimed the reason for my dismissal was that the company had no more work for me".
[16] On 14 July 2014, Mr Bhalla was provided with a letter terminating his employment.
[17] The Applicant states that it is "telling that there is no reference to being made redundant on my termination letter, nor have I been paid any redundancy entitlement". This is true.
[18] However, it is also telling that I have no submission or statement from the applicant to say what he said when told he was being made redundant on 9 July 2014.
[19] On 9 July 2014, the Employer provided to the Applicant a written letter of termination of employment which was effective immediately and with two (2) weeks' pay in lieu of notice.
[20] For reasons which will become apparent, I intend to initially deal with the conditions in paragraph 389(1)(b) and s.389(2) of the FW Act first, before I consider whether the Employer no longer required the job to be performed by anyone because of changes in operational requirements pursuant to paragraph 389(1)(a) of the FW Act.
s.389(1)(b) - has the employer complied with any obligation in a modern award or enterprise agreement to consult about the redundancy?
[21] The Employer states in its response to Mr Bhalla's application that the Water Industry Award 2010 (Modern Award) applies to his employment.
[22] Neither the Applicant nor the Employer contend that an enterprise agreement applies to Mr Bhalla.
[23] Clause 12: Redundancy, of the Modern Award refers to an employee's entitlements including redundancy pay. There is no reference in Clause 12 to an obligation upon the Employer to consult with the employee about the redundancy.
[24] In Clause 18: Consultation, of the Modern Award, there is a requirement for employers to notify and consult with employees where a decision has been made to "introduce major changes in...structure...that are likely to have significant effects on employees..." The abolition of one position is not major workplace change.
[25] Accordingly, I find that there was no obligation in a modern award or enterprise agreement to consult about the redundancy pursuant to paragraph 389(1)(b) of the FW act.
s.389(2) - was it reasonable in all the circumstances for Mr Bhalla to be redeployed within the Employer's enterprise or associated entities (if any)?
"The Respondent contends there has been a slowdown in Bypass works causing a reduction in operation requirements. If such a requirement was genuine, there must be a consideration of redeployment.
There was no attempt at redeployment of the Applicant within the company or associated entities" (my emphasis).
"Mr Bhalla was hired to manage significant Bypass Works that Welltech hoped to tender for and expected to gain in Victoria and Queensland. As per the position description, 18 items from the total of 28 were project based items and directly related to project specific deliverables..."
[28] Mr Bhalla disagrees with the above statement of fact in paragraph [27] but only to the extent that there already is an "East Coast Engineering Manager". Whether there is an "East Coast Engineering Manager" or not, I find that Mr Bhalla was employed to manage significant Bypass Works which the Employer anticipated winning contracts for.
[29] The Employer has set out its schedule of Bypass Works from January 2013 to July 2014. According to the Employer, it has not been successful in obtaining any major Bypass projects and believes this is due to "companies and governments delaying infrastructure works and spending".
[30] In summary, the Employer continues to seek Bypass Works but there are "no significant works on foot, nor any expected to occur within the next 6 months". In conclusion, "there has been a very real lack of Bypass Works for Mr Bhalla, being the reason for which he was employed".
[31] The Applicant's responses to the Employer's statement of facts are either broad generalisation or definitional such as whether the Fremantle and Mt Lawley are "major projects". In conclusion, Mr Bhalla asserts "Welltech's tender submission[s] are numerous and ongoing".
[32] This background is necessary to understand the application of the condition in s.389(2) of the FW Act to the actual circumstances of whether Mr Bhalla's dismissal was a genuine redundancy.
[34] The Applicant's responses appear to infer that the administrative duties were part of the duties of an Engineering Manager. However, he does not dispute that "I agreed to undertake the Director's brother's house design and construction for which will be using my Welltech time. The house is yet to be constructed so how is it that I have no work" (my emphasis).
[35] In my view, this assignment of "fill in" work such as designing a Director's brother's house is demonstrative of the Employer's inability to find more work in accordance with the reason why Mr Bhalla was employed. I am positively satisfied that the Applicant was not employed to design a house, or this is the appropriate benchmark, as to whether there are ongoing employment or redeployment opportunities.
[36] The ongoing situation is best described in Ms Bennett's affidavit which reads:
"Mr Bhalla would request to be provided with new/additional work that related to his skills but there simply wasn't any that could be given to him" (my emphasis).
[37] Mr Bhalla agrees that he "requested to be provided with new work" but avoids any direct response to the simple assertion that there was no work which could be given to him. Unlike other response to statements of fact by the Employer, Mr Bhalla avoids giving a direct response to the Employer's statement that there was no work for him; as I have indicated "fill in" work is not the determinative of ongoing employment.
"Mr Bhalla voiced his lack of motivation, diminishing enthusiasm, attention to detail and boredom towards the administrative projects he was undertaking".
[39] Mr Bhalla disputes all of the asserted descriptors above in paragraph [38] except to say that he found the administrative tasks boring.
[40] On 26 June 2014, Mr Bhalla was provided with a Career Development Review Form (Review Form). Mr Bhalla was required and completed a self assessment of the Review Form prior to his meeting with the General Manager.
[41] Mr Bhalla's self assessment of the Review Form relevantly includes the following:
"I was the only Engineer in the company. Given Welltech is a company that provides services requiring quality control by an Engineer and using equipment requiring hydraulic engineering, it is not reasonable to state there is no ongoing work available" (my emphasis).
[43] Ms Bennett states in her affidavit that the Employer's revenue from Bypass Works has dropped 82.5% between 1 January 2014 and 30 June 2014 compared to the period 1 July 2013 to 31 December 2013.
[44] Due to the downturn in major Bypass Works, Mr Bhalla was not made redundant in October/November 2013 but his focus of work was redirected away from what he was employed, to undertake administrative duties. These duties were "fill in" duties in the expectation that Mr Bhalla would be more usefully and productively employed as an Engineer, when the Employer was successful in obtaining contracts which suited Mr Bhalla's skills and expertise.
[45] At a time when the Employer had not been successful in winning Bypass contracts and Mr Bhalla articulating his dissatisfaction and frustration with administrative duties, the Employer came to the conclusion that the action which it should have taken in October/November 2013 to make him redundant, became an imperative in July 2014.
[46] While Mr Bhalla's involvement in the design of a Director's brother's house may have been satisfying, it did not generate revenue for the Employer and provide a long term solution to a lack of suitable work for Mr Bhalla.
[47] In Ulan Coal Mines Limited v Honeysett [2010] FWAFB 7578 (Honeysett) the Full Bench of Fair Work Australia, as it then was, considered, in dismissing an appeal, the interpretation of "redeployed" in s.389(2) of the FW Act.
[48] Relevantly, the Full Bench concluded in relation to s.389(2) of the FW Act that:
"[26] First, s.389(2) must be seen in its full context. It only applies when there has been a dismissal. An employee seeking a remedy for unfair dismissal cannot succeed if the dismissal was a genuine redundancy. In other words, if the dismissal is a case of genuine redundancy the employer has a complete defence to the application. Section 389(2) places a limitation on the employer's capacity to mount such a defence. The defence is not available if it would have been reasonable to redeploy the employee. The exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances.
[28] Thirdly, the question posed by s.389(2), whether redeployment would have been reasonable, is to be applied at the time of the dismissal..."
[49] The Full Bench also made some obiter remarks concerning s.389(2) which relevantly are as follows:
"[34] It may be appropriate to make some concluding remarks about the operation of s.389(2). It is an essential part of the concept of redeployment under s.389(2)(a) that a redundant employee be placed in another job in the employer's enterprise as an alternative to termination of employment. Of course the job must be suitable, in the sense that the employee should have the skills and competence required to perform it to the required standard either immediately or with a reasonable period of retraining. Other considerations may be relevant such as the location of the job and the remuneration attaching to it.." (my emphasis).
[50] More recently, another appeal to the Full Bench of the Commission, considered the provisions of s.389(2) of the FW Act in Technical and Further Education Commission T/A TAFE NSW v Pykett [2014] FWCFB 714 (Pykett).
"[22] Section 389(2)(a) provides an exception to the circumstances in which a person's dismissal was a case of 'genuine redundancy' (within the meaning of s.389(1)). So much is clear from the introductory words of s.389(2): 'A person's dismissal was not a case of genuine redundancy if ...' [emphasis added].
[23] If s.389(2)(a) is enlivened a person's dismissal will not be a case of genuine redundancy even if the person's employer no longer requires the person's job to be performed by anyone because of changes in the operation requirements of the employers enterprise and any relevant consultation obligations have been met. The subsection then goes on to set out the circumstances which enliven the exception, namely :
"...if it would have been reasonable in all the circumstances for the person to be redeployed within...the employer's enterprise." (emphasis added)
[24] The use of the past tense in this expression directs attention to the circumstances which pertained at the time the person was dismissed.
[25] The word 'redeployed' should be given its ordinary and natural meaning. The ordinary meaning of the word 'redeploy' includes:
"Move (troops, workers, material etc) from one area of activity to another, reorganise for greater effectiveness; transfer to another job, task or function_."_ [emphasis added].
[26] The Explanatory Memorandum to what is now s.389(2) is in the following terms:
"1551. Subclause 389(2) provides that a dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer's enterprise, or within the enterprise of an associated entity of the employer (as defined in clause 12).
1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for redeployment or there may be no positions available for which the employee has suitable qualifications or experience."
[34] Honeysett is authority for the proposition that for the purpose of s.389(2)(b) it is sufficient if the Commission identifies a suitable job or position to which the dismissed employee could be redeployed. The Commission must then determine whether such a redeployment was reasonable in all the circumstances. We note that given the factual context the Full Bench in Honeysett did not need to consider whether s.389(2) may be satisfied if the dismissed employee could be redeployed to perform other work within the employer's enterprise _(_or that of an associated entity.) Given its particular factual circumstances Honeysett is not authority for the proposition that it is always necessary to identify a particular job or position to which the dismissed employee could have been redeployed.
[35] As we have mentioned, the use of the past tense in the expression 'would have been reasonable in all the circumstances for the person to be redeployed ...' in section 389 (2)(a) directs attention to the circumstances which pertained when the person was dismissed. As noted in Honeysett, [T]'he exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances'...
[36] We have earlier set out the submissions of the appellant and the respondent as to the proper construction of s.389(2) (see paragraphs [15] to [18] above). We accept the respondent's submissions. For the purposes of s.389(2) the Commission must find, on the balance of probabilities, that there was a job or a position or other work within the employer's enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. There must also be an appropriate evidentiary basis for such a finding. Such an interpretation is consistent with the ordinary and natural meaning of the words in the subsection; the Explanatory Memorandum and Full Bench authority. We acknowledge that the facts relevant to such a finding will usually be peculiarly within the knowledge of the employer respondent, not the dismissed employee. If an employer wishes to rely on the 'genuine redundancy' exclusion then it would ordinarily be expected to adduce evidence as to the following matters:
(i) that the employer no longer required the dismissed employee's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise;
(ii) whether there was any obligation in an applicable modern award or enterprise agreement to consult about the redundancy and whether the employer complied with that obligation; and
(iii) whether there was a job or a position or other work within the employer's enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employer.
[37] The evidence in relation to (iii) would usually include canvassing the steps taken by the employer to identify other work which could be performed by the dismissed employee."
[52] Having considered both Honeysett and Pykett, the emphasis regarding redeployment is to determine what is reasonable in all the relevant circumstances at the time of the dismissal.
[53] The Employer submitted that Mr Bhalla's position became redundant in October/November 2013 and it was at this time, he was redeployed into "fill in" administrative duties which had a different focus, tasks and functions than that for which he was employed to undertake. As a consequence, the Employer submits that it has complied with s.389(2) of the FW Act for Mr Bhalla's position to be a genuine redundancy.
[54] I am unable to agree with that submission because, as Honeysett and Pykett make clear, redeployment must be considered at the time of dismissal. Paragraph [24] of Pykett expresses the position succinctly.
[55] However, Honeysett and Pykett, in my view, are not authority for the proposition that all actions by the parties leading up to a dismissal by reason of redundancy, are excluded from consideration. Dismissal by reason of redundancy is not only a "point in time" exercise. Just as it is necessary to consider events leading up to making a finding of fact that an employer no longer wanted a person's job to be performed by anyone, it is a requirement to take into account all the circumstances leading up to making a finding of whether it would have been reasonable for Mr Bhalla to have been redeployed, at the time of his dismissal.
[56] The condition, "in all the circumstances" in s.389(2) of the FW Act is only limited by relevancy, as set out by the Full Bench in Honeysett at paragraph [28].
[57] The foundations of the Applicant's argument are premised on work activities he was undertaking at the time of his dismissal. While this approach is understandable, it ignores the duties which Mr Bhalla was employed to undertake. In my view, it is necessary to look at both circumstances. Clearly, the activities carried out by Mr Bhalla at the time of his dismissal were attributable to the diminishing requirement for him to carry out the duties for which he was employed. The actual duties undertaken at the time of the dismissal, followed from the change in the Employer's business circumstances.
[58] For the purposes of this application, I am satisfied that the actions of the Employer in trying to keep Mr Bhalla occupied with "fill in" duties from October/November 2013 onwards are relevant to my finding of whether it would have been reasonable, in all the circumstances, to redeploy him within the Employer's enterprise or entities (if any).
[59] I am satisfied, on the evidence, that the "fill in" duties, the longer they continued, were a source of dissatisfaction to the Applicant with the exception of designing a house. For this reason, the "fill in" duties became increasingly unsuitable as a source of redeployment.
[60] For the above reasons, I find that when the duties for which Mr Bhalla was employed "dried up" and the Employer identified other work which could be performed by the Applicant. This "fill in" work extended to work which was outside the Employer's normal operations and did not provide revenue. The "fill in" work became increasingly unsuitable to both parties for different reasons and had to end. In view of these circumstances, I am satisfied that, at the time of Mr Bhalla's dismissal, it would not have been reasonable, in all the circumstances, for him to be redeployed pursuant to s.389(2) of the FW Act.
s.389(1)(a) - the employer no longer requires the job to be performed by anyone because of changes in operational requirements of the employer's enterprise
[61] Having explained in detail the circumstances leading to Mr Bhalla's dismissal in paragraphs [26] to [60], it is unnecessary to repeat them for the purposes of determining whether the Employer no longer wanted the role and duties of Western Australian Engineering Manager being carried out by a discrete employee. For the reasons set out in paragraphs [26] to [60], I find that the Employer no longer required the job to be performed by anyone because of changes in its operational requirements.
[62] For the above reasons, I am satisfied that Mr Bhalla's dismissal was a genuine redundancy and consequently, he is not protected by Part 3-2 Unfair dismissal provisions of the FW Act. Accordingly, the application must be dismissed. An order to this effect is issued jointly with this Decision.
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Bhalla
Welltech Total Water Management [2014] FWC 7565