Fair Work Act 2009_

s.394 - Application for unfair dismissal remedy

Application for relief from unfair dismissal - genuine redundancy.

[1] Mr William Eames applied for relief against his dismissal from employment as a Production Operator (PO) with Orrcon Operations Pty Ltd (Orrcon) under s.394 of the Fair Work Act 2009 (Cth). Orrcon is owned by Hills Holdings Ltd (Hills).

[2] Under s.396 of the Act, jurisdictional questions must be decided before considering the merits of Mr Eames' application. These are whether the application is out of time and whether there is a dismissal as a result of a genuine redundancy.

[3] Mr Eames was dismissed on 29 May 2013 and lodged his application on 2 July 2013, which was 13 days after the 21 day time limit allowed. He seeks additional time under s.394(3) saying there are exceptional circumstances because he did not become aware of relevant facts until after the 21 day period. Orrcon resists additional time.

[4] Orrcon also says Mr Eames was dismissed as a result of a genuine redundancy, which by definition cannot be an unfair dismissal. Section 398 sets out what constitutes a 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:

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

[5] Mr Eames has initiated proceedings in another forum relating to possible age and disability discrimination unrelated to his dismissal. He does not seek relief in the Fair Work Commission (the Commission) other than under s.394. Orrcon does not raise any jurisdictional objection arising from this other claim.

[6] Mr Eames provided a statement and a statement in reply, and exhibited a statement by Ms Humphries.

[7] Orrcon's evidence included statements by two of its managers, Mr Chapman (Site Manager Salisbury) and Ms Rayfield (Executive Manager, HR & HE).

[8] Both parties' solicitors made submissions on the jurisdictional issues to be determined.

[9] The following brief chronology of events is detailed below:-

Annual General Meeting of Hills announcing restructuring of operations and ceasing certain business activities.

Managing Director of Orrcon announces closure of two regional plants.

Recruitment freeze implemented across Hills effective to 1 July 2013.

Mill 6 closed and POs transferred to RS90 mill as a third shift. Six POs surplus at this point.

Expressions of interest called for voluntary redundancies.

Managing Director decides that number of POs should be reduced by a further four.

Mr Chapman announces reduction of further 4 POs at Salisbury by way of redundancy following a merits based assessment and expressions of interest to close on 27 May. "Affected people" to be notified 29 May.

Merits based assessment conducted to determine which POs should be made redundant. Two further POs terminated for other reasons.

Ms Rayfield initiates inquiries within Hills for possible redeployment of 4 "Manufacturing Mill Operators" and 1 "Warehouse/Storeperson".

Reply received with responses from 4 senior Hills managers that no suitable positions are available for redeployment.

Ms Rayfield considered options for redeployment of possibly redundant employees within Orrcon, noting there were no further resignations or other staff movements since 24 May 2013.

Mr Eames hosts barbeque inviting former Orrcon colleagues and is told that another employee is performing his former duties.

[10] Mr Eames says that at a barbeque he hosted on 29 June 2013, a month after he was terminated, another person at the party told him that Mr Joel Hathaway was now performing Mr Eames' duties. It seems Mr Eames concluded at this point that his dismissal was not a genuine redundancy, and that he completed an application for relief the following day, 1 July and filed the application on 2 July.

[11] Mr Eames provides some work history, including suggestions that he was bullied and discriminated against. He suffered an accident in February 2013 and was seriously injured. He adds material about what he considers has happened with employment at Orrcon after he was dismissed, including further recruitment.

[12] He says he decided not to seek voluntary redundancy in early 2013 in response to a call for expressions of interest as he was close to retiring and would prefer to work a further 12 months to secure his financial position.

[13] Ms Patricia Humphries provided a short statement that she heard one of the other guests at the barbeque saying Mr Hathaway was now doing Mr Eames' job. Mr Eames says other former colleagues declined to provide statements, fearing reprisal at work.

[14] Mr Eames' solicitors submit that the out-of-time question cannot be decided without first deciding whether the dismissal was a genuine redundancy or not.

[15] Emphasis is placed on the period between Mr Chapman's announcement and the finalisation of Mr Eames' redundancy, arguing that there cannot have been attempts to redeploy Mr Eames within Hills during that short period sufficient to satisfy the requirements of s.389(2). They cited Ulan Coal Mines Limited v Honeysett and others [2010] FWAFB 7578 (Ulan Coal Mines) and Aldred v J Hutchinson Pty Ltd [2012] FWA 8289. The considerations suggested to be relevant by Mr Eames' solicitors, and said to arise from Ulan Coal Mines, include:

● the employee's skills, qualifications and experience;

● the location of the job in relation to the employee's residence;

● the degree of managerial integration between associated entities.

[16] Mr Eames' solicitors also argue that the documents relating to the merits assessment process should be provided to the Commission to ascertain whether the process was unbiased. They also press the post dismissal decisions made by Orrcon in regard to subsequent recruitment.

[17] Mr Chapman gave evidence that Orrcon was undergoing significant rationalisation from late 2012, including closure of several plants as a result of challenging trading conditions. Ultimately it was decided to close facilities that affected Mr Eames' position. There were 89 POs (whether called that or 'mill operator') at the time of the closure, being 6 more than required. It had been anticipated that natural attrition would deal with the surplus. Ultimately 4 other POs departed for other reasons before the redundancy decision was made, leaving only two employees to be selected for redundancy.

[18] Hills has a Redundancy and Retrenchment Standard, exhibited to Mr Chapman's witness statement. Orrcon says that it followed that Standard, and complied with all its legal obligations in deciding which two POs it would select for redundancy. The Standard requires among other things the following:

1. Selection for retrenchment must be based on merit.

2. Any measures, criteria or observations utilised in making this selection must be documented and defensible.

3. The same criteria and measures should apply equally to each "in scope" employee.

4. Each "in scope" employee should be provided with an opportunity to input into the process.

5. Voluntary redundancies may be considered only as a last resort.

6. Seniority-based systems will not be utilised.

[19] Mr Chapman described an assessment process as including several stages including assessment of affected employees against ten core values and work attributes. Three individual supervisors scored their teams, and reviewed the results collectively to ensure consistency. A further review was conducted by the Operations Manager and then by Mr Chapman personally, including examination of the personnel files of the two lowest ranking POs.

[20] Mr Eames had the second lowest score at the end of this process.

[21] Ms Rayfield oversees recruitment and termination, including redundancies at Orrcon. She had oversight of the scoring process by the supervisors and their managers. She says that she and the Managing Director conducted an executive level review that did not change the scores, and confirmed that Mr Eames received the second lowest score.

[22] She outlines the process followed by Orrcon to fulfil its obligations in regard to redeployment. According to her statement, she followed the standard process used at Hills, namely to ask the Director, People, Performance and Culture to investigate possible redeployment within the broader group. She maintains it was reasonable to initiate this process prior to completion of the assessments because she was aware of the skills and qualifications of the class of position that would be considered for redeployment.

[23] Enquiries were made of senior HR staff across Hills and another associated entity, Fielders. In all cases the response was that there were no vacancies or appropriate redeployment opportunities. This, she says, did not come as a surprise, because Hills was undergoing a major restructure involving approximately 208 redundancies across the group since December 2012. Of these, 23 Orrcon positions had been made redundant, resulting in 17 employees being terminated. Further, from January to July 2013 a recruitment freeze had been in place. Accordingly Ms Rayfield was well-positioned to know whether redeployment opportunities for POs might exist.

[24] Ms Rayfield further states that on 28 May 2013 she again considered whether positions had become available since her earlier enquiries, but none had.

[25] As to Mr Hathaway's duties, Mr Chapman says that both Mr Hathaway and Mr Eames were bother employed as permanent POs at the Allgal Plant. He provides details of the workforce, skill levels and training, and workplace flexibility, and some employment background of both Mr Eames and Mr Hathaway. It appears from his statement that Mr Hathaway's roster was changed on 10 June 2013 to the roster that Mr Eames had previously worked.

[26] Mr Chapman says that Mr Hathaway scored in the top 10 of all 89 POs and accordingly was not considered suitable for redundancy. He also provides evidence as to employment matters after Mr Eames was terminated.

[27] On the evidence, it is clear that Orrcon underwent a significant restructure resulting in a reduction in the number of positions required to discharge its operations.

[28] Mr Eames urged consideration of two matters in the Commission's determination of the genuine redundancy question. The first relates to recruitment decisions by Orrcon after Mr Eames' dismissal. The Full Bench in Ulan Coal Mines noted at [28]:

…the question posed by s.389(2), whether redeployment would have been reasonable, is to be applied at the time of the dismissal.

[29] The subsequent actions of Orrcon, apparently in response to changed circumstances, cannot be determinative of whether a position existed for Mr Eames at an earlier date. I place no weight on whether Orrcon later employed or replaced POs or whether temporary staff or contractors were engaged in November 2013.

[30] The second preliminary consideration is whether the assessment matrix should be produced and subjected to scrutiny. Mr Eames' contention is that the assessments are relevant to this being a genuine redundancy. For the following reasons, I have concluded that the production of the assessment matrix does not assist in deciding whether this was a case of genuine redundancy. While, the assessment may go to the choice of one particular employee over another, it is not relevant to the question of whether there were more employees than were required after the mill closure. In other words, while the matrix might be relevant to the employer choosing which employee is made redundant, it is not relevant as to whether there was a genuine redundancy. That question is answered by other facts. The evidence before me shows that the assessment was undertaken according to pre-existing standards, and that it commenced after the decision had been made to reduce employee numbers. It follows that the contents of the matrix cannot establish whether the decision to dismiss an employee (as opposed to a different one) was a genuine redundancy, it merely informs the selection among the potential employees by management.

[31] As Mr Eames' solicitors suggested, it is appropriate to consider whether the dismissal was a genuine redundancy before considering whether exceptional circumstances warrant extra time to make the application. This is because if there was a genuine redundancy, there is no jurisdiction to consider the application at all: "the employer has a complete defence": Ulan Coal Mines at [26].

[32] There are three elements to a genuine redundancy:

(a) the employee is no longer required because of operational changes: s.389(1)(a);

(b) the employer has complied with consultation requirements: s.389(1)(b);

(c) redeployment is not reasonable: s.389(2).

[33] Mr Eames does not suggest there has been a failure to consult in accordance with s.398(1)(b).

[34] Orrcon bears the onus of proving on the balance of probabilities that the redundancy was due to changes in operational requirements: Kieselbach v Amity Group Pty Ltd [PR973864] at [34]. It seems clear on the uncontested evidence that Orrcon had experienced a downturn in its terms of trade, leading to a decision to rationalise and restructure its operations. One effect of that was the closure of Mill 6, and a consequent reduction in the number of POs required across Orrcon's operations.

[35] Mr Eames argues that this is not the case because mill operations required his duties to be performed. He says in particular that Mr Hathaway is performing those duties. In Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674 the employer reduced the number of supervisors from 4 to 3. It was held that it can still be a 'genuine redundancy' if the duties of a redundant job are still required to be performed, but are redistributed to other positions. Similarly, in Markac v CSR Limited [2010] FWA 4548, the employer required fewer process worker positions due to the projected future needs of the firm. The employer ranked its employees based on a skills assessment. The applicant scored poorly in a number of areas in the skills assessment and was consequently made redundant. It was held that it was a genuine redundancy.

[36] Before the Mill 6 closure, Orrcon's operations required 89 POs. After the closure only 83 such positions were required. Natural attrition did not result in a sufficient reduction in staff numbers.

[37] I find that the decision to reduce the number of POs by way of redundancy was the result of changes in Orrcon's operational requirements.

[38] The third element, in s.389(2), requires examination of whether it would have been reasonable in all the circumstances for the person to be redeployed. I note that the POs employed at Mill 6 had been redeployed and shift arrangements changed to accommodate the additional capacity thereby available at the RS90 mill, in anticipation of natural attrition resulting in sufficient downsizing. That did not eventuate.

[39] Mr Eames places some emphasis on the time between the announcement of pending redundancies and his dismissal. In essence he says the employer cannot have given serious consideration to his redeployment because the assessment was completed on one day and he was purportedly made redundant the next, leaving too short a period for proper consideration of his personal circumstances.

[40] While it is evident in this case the employer, including the broader Hills group, has had much recent experience in downsizing, and it had well-established practices for seeking alternatives to termination of employment, Orrcon must still comply with the requirements of s.389(2).

[41] Email exchanges across Orrcon and Hills indicate a certain familiarity with the requirements of redeployment. But there is nothing in these emails that is unreasonable in these circumstances. It is true that the relevant managers appeared well versed in what positions were available in their areas of operation - no doubt precisely because they had very recent experience with the downsizing and the recruitment freeze.

[42] In such circumstances the short time frame can be sufficient to find out whether or not there is an alternative position for a particular class of employee, in this case a PO. It is also reasonable that the question be asked of a class of employee rather than a particular individual. If no position is available for a member of a class of employee, it follows that no position is available for an individual who is a member of that class.

[43] I find that Orrcon made sufficient (and reasonable) attempts to redeploy Mr Eames within Orrcon and across related entities. No suitable or appropriate positions were available, despite reasonable inquiry. It was not reasonable in the circumstances, taking into account the factors offered by Mr Eames' solicitors, for him to be redeployed.

[44] Accordingly I find that the dismissal was the result of a genuine redundancy, uphold Orrcon's jurisdictional objection and must therefore dismiss the application.

[45] It is not necessary for me to consider Mr Eames' request for additional time. However, this matter was fully argued before me. But for the finding I have just made about genuine redundancy, I would have given Mr Eames the additional time sought.

[46] Additional time may only be given by the Commission if there are exceptional circumstances, considering the factors stated in s.394(3), namely:

● whether the former employee first became aware of the dismissal after it had taken effect

● any action taken by the former employee to dispute the dismissal

● prejudice to the employer (including prejudice caused by the delay)

● fairness between the former employee and other persons in similar positions.

[47] Mr Eames' main argument for further time is that he only became aware there may not have been a genuine redundancy during the conversation at the barbeque on 29 June. By that date, time had already run. He then acted promptly to prepare and lodge his application for relief. This is a plausible explanation for the delay, akin to a party not being possessed of actual knowledge relevant to a cause of action until a time after a limitation period has passed. This factor weighs in Mr Eames' favour.

[48] It is uncontested that Mr Eames was aware of his dismissal on 29 May 2013 and that it took effect on that day. This factor is neutral.

[49] Mr Eames took no action to dispute the dismissal after 29 May 2013. This is understandable in the context of his believing (until the barbeque) that he had been made redundant. Disputation would have been fruitless. This factor is neutral.

[50] There is no suggestion that Orrcon would be prejudiced by additional time being given. This factor is neutral.

[51] The employer gave evidence of a fairly comprehensive process. At this stage of the proceedings, Mr Eames' assertions lacked robust evidence. But it cannot be said (aside from the genuine redundancy point) that the application was bound to fail. On that basis the factor is neutral. However, given my finding of a genuine redundancy, the employer has a complete defence to the application.

[52] No material was put to me about relative fairness and no weight is placed on this factor.

[53] Mr Eames has established a reason for delay, and once alerted to the possibility his dismissal may not have been a genuine redundancy, he acted promptly to assert his rights according to law. While I find that exceptional circumstances are established, there is no point in giving additional time because the application must be dismissed for other reasons.

[54] The application is dismissed. Orders will issue accordingly.

Printed by authority of the Commonwealth Government Printer