Electrical Trades Union of Australia, New South Wales Branch (on behalf of Filipe Rodrigues) and Star Electrical Co Pty Ltd [2002] NSWIRComm 297

JUDGMENT: - 10 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP

Matter No IRC02/2903 ELECTRICAL TRADES UNION OF AUSTRALIA, NEW SOUTH WALES BRANCH (ON BEHALF OF FILIPE RODRIGUES) AND STAR ELECTRICAL CO. PTY LTD Application by Electrical Trades Union of Australia, New South Wales Branch on behalf of its member Filipe Rodrigues, re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996

1 These proceedings commenced by way of an application filed by the Electrical Trades Union, New South Wales Branch, on behalf of Filipe Rodrigues ("the applicant"), seeking compensatory relief for his alleged unfair dismissal pursuant to the relevant provisions of Pt 6 ch 2 of the Industrial Relations Act 1996 ("the Act"). The respondent to the application is Star Electrical Co Pty Ltd.

2 The applicant commenced employment as an electrical trades assistant on 29 February 1988 and was dismissed on 10 May 2002 for the reason of alleged redundancy due to lack of work. He was paid four weeks pay in lieu of notice and sixteen weeks severance pay in accordance with cl11 of the Electrical, Electronic and Communications Contracting Industry (State) Award ("the parent award") 318 IG 645.

3 The applicant was employed under the terms of the Star Electrical Co Pty Ltd Enterprise Agreement ("the agreement") - Matter IRC182/00, Tabbaa C, 15 February 2000 - an agreement read in conjunction with the parent award. Both industrial instruments make provision for redundancy (Cl 10B(3) and Cl 11 respectively). It is appropriate to observe at this juncture, that the Union contests the basis of the applicant's redundancy in that it was alleged that an unfair and biased selection process was used.

4 The matter was listed for conciliation and directions on 12 June 2002. Mr McCann appeared for the Union and Mr Boyce from the Electrical Contractors Association appeared for the respondent. Despite the Commission's attempts to secure a settlement of the matter, no agreement could be reached. Accordingly, pursuant to s87 of the Act, the Commission made a finding of unsuccessful conciliation and issued directions in preparation for the arbitration of the claim.

5 Mr Filipe Rodrigues filed a witness statement and gave oral evidence.

6 The applicant described his duties as follows: My role as a trades assistant would involve duties such as cabling for light and power circuits, running sub-mains for switchboards, pre-installing conduits for deckwork, temporary wiring, surface conduits, cable tray installation, "Pyro" work, as well as duties such as chasing walls, concreting, stores duties, handling deliveries, organizing plant and materials for the Tradesman, erecting scaffolds, and fit out work. Quite frankly, I often performed the duties of a Tradesman working unsupervised and sometimes I would even supervise apprentices. I have a traffic controller's ticket, an elevated work platform operator's ticket, and a construction industry green card. (Ex "1")

7 The applicant had worked on various construction sites around Sydney. He said that in fourteen years and three months' service with the respondent, his work ethic and productivity had never been questioned.

8 The applicant believed his redundancy was unfair in that he was selected by a rating system that he did not understand or comprehend. He claimed the system had never been explained to him.

9 The applicant said on 18 April 2002 his supervisor, Mario Gualdi had approached him with a score sheet of his assessment and asked him to sign it. The applicant said Mr Gualdi did not explain what the markings or scores meant and he was the only employee required to sign it. The applicant deposed that Mario Gualdi was related to one of the other trades assistants who was not made redundant.

10 While the applicant agreed that he had not asked for a copy of the score sheet, it had not been offered to him. He said he was not told that he had an avenue of appeal. He said no one had explained to him how the assessment system worked. He agreed there had been a meeting that discussed the selection criteria and employee input was sought. However, Mr Morrison, who conducted the meeting, had difficulty answering some of the employees' questions.

11 In cross examination, the applicant was shown two previous assessment sheets for the years 2000 and 2001. He said he was not aware that he had been assessed at these times.

12 The applicant understood that the respondent may have been experiencing some financial trouble as there were occasional rumours of redundancies. In cross examination, the applicant agreed that a number of the respondent's employees had been made redundant over the past eighteen months. He agreed there had been offers of voluntary redundancy made to the entire workforce. He had agreed to take annual leave around this time and returned after one week. However, the applicant said no one ever made him aware his employment was at risk due to his performance or ability not meeting the assessment standards.

13 On 10 May 2002, Mr Robert Sundercombe (Operations Manager) met the applicant and told him that because of his score, he was being made redundant due to lack of work. The applicant said this came "as a huge shock to him."

14 The applicant said that the respondent had never given him any advice or assistance as to how to achieve a trade qualification. However, another supervisor's son, Jade Coleman, had been offered an apprenticeship in early 2002. The applicant said he would have welcomed the opportunity to explore other employment options with the respondent.

15 Mr Robert Sundercombe is the respondent's operations manager. He has had twenty years experience in the electrical contracting construction industry.

16 Mr Sundercombe gave evidence that the applicant had survived four rounds of redundancy since November 2000 and had assessments in November 2000, February 2001 and March 2002.

17 Mr Sundercombe said the employee assessments were developed after a long process of consultation involving the employees, the respondent's Consultative Committee and the Union. The redundancy selection criteria were discussed at the Consultative Committee with the Union in attendance. A survey of employees was undertaken seeking input about the redundancy selection criteria. The results of the survey were assessed and discussed at the Consultative Committee on 14 March 2002.

18 Mr Sundercombe was asked why other trades assistants' assessment results had different maximum totals - some had seventy-eight and others eighty-eight (Ex 2). Mr Sundercombe said it was a typographical error and all trades assistants were marked out of seventy-eight. Trades assistants were assessed against other trades assistants and not tradesman. Mr Sundercombe was asked why the total gained mark was not written in the box provided on the score sheet. He said it was not necessary to do so, as employees could add up their own marks in each category.

19 Mr Sundercombe said the Consultative Committee had discussed options other than redundancy including employees taking accrued leave or opting for voluntary redundancy.

20 On 18 March 2002, Mr Sundercombe held a meeting of supervisors to explain the selection criteria and how the assessments would occur. Mr Sundercombe did not know if the guidelines were provided to all employees. He agreed that the guidelines do not mention a review if the employee was unhappy with the initial result. Nor did it refer to a copy of the sheet being available to employees on request.

21 A further Consultative Committee meeting was held on 10 April 2002 where the collated survey results were tabled. No names were attached to the results. Offers of voluntary redundancy were made after this meeting. The rated employees were shown their ratings and given an opportunity to respond. If the employees requested a copy, it was to be provided.

22 Mr Sundercombe advised the applicant on 10 May 2002, that he was to be made redundant due to a downturn in work and based upon his assessment.

23 Mr Sundercombe said the respondent continued to experience a downturn in work. He said that forty-five employees had been made redundant in 2002. Twenty-one employees had resigned and were not replaced. Mr Sundercombe said that seven trades assistants were made redundant in May 2002, including the son of a long-term employee. He said that with two hundred and seventy employees some employees would be related.

24 Mr Sundercombe said all retrenched employees, including the applicant, would be welcome back if work picks up for the respondent.

25 Mr Sundercombe stated that, from time to time, the respondent receives requests from non-trades employees for apprenticeships. Mr Coleman was one such case. It was not unusual.

26 Mr Sundercombe acknowledged that the supervisor, Mr Gualdi assessed a member of his own family. Mr Sundercombe believed it was appropriate for this to occur.

27 Mr McCann submitted that, in the context of a number of redundancies over the last two years, the applicant had never been informed that his employment was in jeopardy because of his performance. Consequently, the applicant was given no opportunity to improve his work performance. He was given no information or advice as to how he might apply for an apprenticeship. Unyet, the son of a senior manager had recently taken up an apprenticeship.

28 In answer to a question from the Bench as what advice the Union had provided to its members, Mr McCann said it was difficult to contact each individual employee scattered across many building sites in Sydney. Further, the respondent would not facilitate a mass meeting of all the Electrical Trades Union members. He said that employees were reluctant to complain about their assessment for fear of being "blacklisted" for future employment.

29 Mr McCann said that despite the Union's involvement in the Consultative Committee, the criteria for assessment had never been agreed. He agreed that "last on, first off" no longer applied, as skills and other factors are now taken into account.

30 Mr McCann said that in any event, the respondent applied the guidelines differently. The guidelines were never properly explained to employees. It was inappropriate for a supervisor to have assessed his own father and uncle.

31 Mr McCann agreed that when the list of employees was prepared, no names were mentioned. However, employees quickly worked out who was on the list. Mr McCann said he felt very uncomfortable about not being in a position to inform them of their pending redundancy.

32 Mr Boyce relied on the evidence of Mr Sundercombe. Mr Boyce said that the applicant's dismissal was a genuine redundancy. The Union had been notified and consulted at all stages of the process. Alternatives to redundancy were considered and put in place.

33 Mr Boyce said the respondent no longer offers apprenticeships. In any event, he said it would not have been possible to offer apprenticeships to all redundant trades assistants.

34 Mr Boyce submitted that the selection criteria had evolved over a six month period following consultation with the Union and the Consultative Committee. Employees were surveyed and their input taken into account. Guidelines were developed and applied fairly by the supervisors. There was no evidence of bias simply because a supervisor was related to another trades assistant.

35 The Consultative Committee reviewed the ratings and seven out of eleven trades assistants were made redundant. Employees were given a copy of their assessment and had an opportunity to comment and respond.

36 Mr Boyce submitted that reinstatement was impractical in the context of the industry downturn which had severely affected the respondent. However, if the outlook improved, work would be offered to former redundant employees.

37 Mr Boyce said the Union had not satisfied the onus of establishing whether the applicant's dismissal was "harsh, unjust or unreasonable," within the meaning of the Act. The applicant had received redundancy benefits in accordance with the award provisions. There was nothing unfair about the process or its effect on the applicant.

38 It is beyond doubt that the respondent, like many others in the electrical contracting industry, had undergone a significant downturn since the heady pre Olympic period in 2000. It is undisputed that this employer has undergone four rounds of redundancies since November 2000. Forty-eight employees were made redundant in this year alone.

39 Given this factual matrix the question here to be determined is whether the applicant was fairly treated in the selection process during the latest round of redundancies in May 2002.

40 Thus, it seems convenient to identify, and apply, if appropriate the relatively well known tests of fairness in redundancy situations which have developed from a line of cases of this Commission dating back to the first cases under the Employment Protection Act in the early 1980's.

41 In Shop, Distributive and Allied Employees' Association, New South Wales and W D & H O Wills Holdings Ltd [2000] NSWIRComm 98, I reviewed these various cases and distilled seven obligations on the employer in redundancy situations. The employer should: 1. give reasonable notice to employees and/or their Unions 2. adequately consult with employees and/or their Unions on the impact of the proposed changes. 3. explore genuine alternative options for redundancy, such as redeployment or relocation; 4. ensure such options are fairly offered to the affected employees; 5. provide reasonable standards of redundancy benefits; 6. provide appropriate ancillary services, such as time off to seek alternative work, retraining opportunities, outplacement services or financial planning; 7. ensure employees nominated for redundancy are fairly selected on an objective and unbiased basis.

42 I reaffirmed these obligations in Huseyin Arslan and others and Berkeley Challenge (Commercial) Pty Limited and Others [2001] NSWIRComm 45 and added at Para 24 of that decision: Of course, a failure to properly, or exhaustively comply with each, and every one, of these obligations might not necessarily warrant an adverse finding against an employer. Each case will be determined on its own particular set of facts and circumstances. 43 It is relevant at this point to note the provisions of clause 10(b)(iii) of the agreement which recognises the abandonment of the 'last on - first off' principle. (b) It is a term and condition of employment and of the obligations and rights occurring under this Agreement, that an employee: (iii) Understand that termination of employment will be based on job requirements and skills and that the principle of "last on - first off" will not apply. It is the needs and requirements of the Company together with the efforts, skills and abilities of the employee which will be the determining factors regarding the retrenchment of employees. However where efforts, skills and abilities are equal then seniority shall take precedence.

44 It seems to me, on the basis of the uncontested evidence that I can readily dispose of the obligations referred to in 1,2,3,5 & 6 above by simply making the following observations.

45 The Union was at all times aware of, and accepted the downturn in the industry and its serious effects on the respondent. It had attended Consultative Committee meetings where options other than redundancy and the performance assessment criteria were discussed. The round of redundancies in May were foreshadowed in, at least February 2002 and action taken to minimise the impact. This action included offers of voluntary redundancy and employees being asked to take accrued leave.

46 Viewed in this way, I cannot accept the applicant was unaware that his employment might be in jeopardy. It seems incomprehensible to me that the Union would not have conveyed its concerns over redundancies, which were a live issue throughout these months. It wasn't for the respondent to take the responsibility alone for warning the employees or providing them with information and appropriate advice. Nor can I accept that the Consultative Committee operated in a vacuum without employees being aware of what was being discussed.

47 In any event, I cannot see how the applicant would have been unaware of what was happening, even if the Union had not been involved.

48 This must be so, bearing in mind that firstly, the applicant had survived three previous rounds of redundancy. Secondly, the applicant acknowledged that he had been offered voluntary redundancy.

49 In respect to providing reasonable redundancy benefits, the applicant received four weeks notice and sixteen weeks severance pay in accordance with the provisions of the Award. While I accept these are the minimum standards set by the test case decision of this Commission (See Re Application for Redundancy Awards, 53 IR 419), the benefits arise directly from reference to an enterprise agreement negotiated between the Union and the respondent. In these circumstances, and barring some other exceptional circumstances, the parties in my opinion, are obliged to honour the agreements they have freely entered into and committed their members to accepting. (See Broken Hill Commerce and Industry Consent Award, [2002] NSWIRComm 252).

50 As to the provision of ancillary services, such as retraining or outplacement services, I accept it is not an appropriate consideration in this case. In any event, it was not advanced as an issue in argument by the Union.

51 It follows then, that I need to consider two further complaints raised by the Union as to the procedure in selecting the applicant for redundancy. Firstly, that the respondent had engaged in some form of biased or favoured selection, in that a particular supervisor assessed a family member who was not made redundant. During the proceedings, the Commission expressed some reservations with the perception that this matter raised. However, there was no evidence which would satisfy me that the perception was, in fact, a reality. The onus rests with the Union to bring evidence to give legs to its compliant. It did not do so.

52 The second, and more fundamental complaint, goes to the performance assessment process itself and what the applicant knew about it and whether he knew how to respond if he felt aggrieved by the outcome.

53 After considering the evidence advanced by the parties, the Commission does not believe that there is any legitimate basis for challenging the assessment process.

54 To my mind there is nothing particularly magical or obscure in how the assessment was made. Six criteria were considered - conduct, productivity, trade and general skills, timekeeping, toolbox and safety awareness. The employee is marked from excellent to unsatisfactory with each rating itself given a weighting (Excellent 13 - Unsatisfactory 2). This gives a total result out of seventy-eight.

55 It was said that the applicant had been assessed in 2000 and 2001. I cannot accept that he was unaware of these assessments at the time. It is curious that having survived these rounds, when it goes against him in 2002, he claimed he didn't understand the process and it had never been explained to him.

56 Moreover I am convinced the applicant did understand the process by the following undisputed evidence. All employees received a survey of the assessment criteria and were asked to comment. There is no evidence that the applicant didn't receive the survey or that he complained about it. In any event, his Union was at all times involved in the negotiations. As I said earlier, it does not make sense that with this level of Union involvement, the applicant would now claim complete ignorance of the process.

57 Indeed, if he had any complaint about his result, or the manner in which the assessment was conducted, he had ample opportunity to seek advice from his Union at the time. There is no evidence that he did so.

58 During the course of argument, Mr McCann submitted that the trade assistants must have been assessed on different criteria because he had inadvertently discovered assessment sheets showing different total maximum marks. I cannot accept Mr McCann's reasoning.

59 This is so because the maximum mark has nothing to do with the cut off point - which is the total of the ratings in each category. In other words, the maximum is not taken into account for any percentage purposes. Even if it had been, the fact that the applicant's maximum was said to be seventy-eight and not eighty-eight, would mean that in percentage terms he would have achieved a higher score than those scored out of eighty-eight.

60 In any event, in looking at the disputed assessment sheets (Ex "2") the figure of eighty-eight as a maximum is mathematically wrong. In all the examples, the total on weightings in the body of the document is thirteen multiplied by six, giving a maximum total of seventy-eight.

61 It follows from the foregoing, that the Commission is not convinced that the redundancy of the applicant was unfair such as to be described as "harsh, unjust or unreasonable," within the meaning of Pt 6 ch 2 of the Act.

62 In reaching this conclusion, I am satisfied that this was a genuine redundancy and that the respondent has discharged its obligations to the applicant in such circumstances.

64 However, the Commission notes the respondent's undertaking that should its business position improve, it will offer future work to the applicant commensurate with his skills and ability. If this eventuates I would recommend that the applicant's considerable period of service be a factor of some significance in the applicant's favour.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.