Henry Jon Howarth; Anthony Honeysett; Aaron Oldfield; Christopher Michaelides; Graham Atkinson; Ray Murray; Craig Butler; Rodney Butler; Mark Butler; Daniel Dixon

(U2009/11892, U2009/11904, U2009/11909, U2009/11913, U2009/11916, U2009/11918, U2009/11919, U2009/11920)

Termination of employment - was dismissal a case of genuine redundancy s.385(d).

[1] On 7 September 2009 the Construction, Forestry, Mining and Energy Union - Mining and Energy Division (the Union) lodged applications on behalf of several of its members (Messrs Henry Jon Howarth; Anthony Honeysett; Aaron Oldfield; Christopher Michaelides; Graham Atkinson; Ray Murray; Craig Butler, Rodney Butler, Mark Butler; Daniel Dixon) alleging that their termination by their former employer on 25 August 2009 was unfair.

[2] Section 385 of the Fair Work Act 2009 (the Act) provides:

A person has been unfairly dismissed if FWA is satisfied that:

(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"

[3] On 23 September 2009, the employer, Ulan Coal Mines Limited (Ulan) responded to each application by stating that the termination was a case 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:

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

[5] This decision is concerned with determining whether or not the terminations were cases of genuine redundancy. If they were, then the applications will not fall within the definition of unfair dismissal.

[6] It was not disputed that in the first half of 2009, Ulan conducted a review of its operations. According to the evidence of Mr David Clifford, the general manager of western and southern operations of Xstrata Coal Pty Ltd (Xstrata), the catalyst of such review were comments made by a senior executive of Xstrata as to the number of persons employed by Ulan. For present purposes, it can be simply stated here that Ulan is part of Xstrata which operates a range of coal mines in New South Wales and Queensland.

[7] The review was largely conducted by Mr Clifford and Mr Murray Wood, the operations manager of Ulan. According to Mr Clifford's evidence (Exhibit Ulan 17/[31]) the changes decided upon following the review included reducing the number of employees, outsourcing ancillary and intermittent functions, increasing the proportion of employees with trades qualifications in underground crews and redistribution of labour.

[8] In light of the changes, the following positions were determined by Ulan to be surplus to requirements - 38 mineworker positions (including 19 fixed term positions and 19 permanent positions), 6 staff positions and 75 contractor positions.

[9] Additionally, the desire to increase the proportion of mineworkers with trade qualifications on some underground work crews saw the need to increase trades qualified mineworker positions by eleven.

[10] As to outsourcing of functions, diesel (workshop) servicing, bathhouse cleaning and stores and yard functions, hitherto performed by Ulan employees, were deemed to be more effectively carried out by contractors. Further, underground road construction and longwall outbye work was to be contracted out as they represented occasional or intermittent functions better performed by contracting firms.

[11] To deal with the reduction in employees, fixed-term employees were terminated and expressions of interest were called for, although mineworkers with trades qualifications were not eligible for voluntary separation. Ultimately 14 permanent mineworkers were terminated in reverse order of seniority. The ten applicants in these proceedings are among those 14 mineworkers terminated.

[12] It should be said that prior to any terminations, Ulan held discussions and/or meetings with the Union representatives and with its mineworker employees.

[13] It was not disputed in the proceedings that to meet the test for a genuine redundancy, Fair Work Australia must be satisfied that the dismissals fit the description in section 389(1)(a), and Ulan has met its obligations to consult as described in section 389(1)(b) of the Act. Further, the dismissals will not have been cases of genuine redundancy if Fair Work Australia is satisfied that it would have been reasonable in all the circumstances for the relevant persons to have been redeployed within Ulan's enterprise or enterprise of an associated entity of Ulan.

[14] In determining the first matter, whether Ulan no longer required the applicants' jobs (among others) to be performed by anyone because of Ulan's operational requirements, I have considered the evidence and submissions. On one view, the fact that the work in question is still being performed by someone (mineworkers with trades qualifications or contractors) the answer would seem clear.

[15] However, the statutory provisions (section 389(1)(a)) replicate words and phrases that have been considered and applied over many years by courts and tribunals. It was said by Ulan that customary usage of the words applies to where an employer decides to outsource a task to a contractor rather than have it performed by the employer's own employees.

[16] Many of the decisions referred to by both parties (and they include what I might describe as the "classic" redundancy cases) all tend to deal with "where the job is no longer to be performed by anyone". This does not of itself answer whether "anyone" means any employee of the employer or if it extends to any person even if employed by someone else (e.g. an employee of a contractor). If it is the latter, then in the case before me, the new work to be performed at Ulan by contractors could not be determined to be areas of redundancy as the work is still to be performed by somebody.

[17] However, the matter was considered in part in Shop Distributive and Allied Employees Association v Bunnings Building Supplies Pty Ltd (134 IR 237). The Full Bench of the Australian Industrial Relations Commission (AIRC) made this observation, which was not central to its decision making in that case, but which is relevant to the point I am now discussing. It said at [22]:

"We are concerned with a suggestion in the Commissioner's decision that if the job (in this case the delivery driver job) is still to be undertaken, albeit not by an employee of the respondent, there is no redundancy as defined. Such a literal reading of the definition does not accord with redundancies that have been found to exist in matters decided since the TCR Test Cases . . ."

[18] In the case of Dibb v Commissioner of Taxation [2004] (136 FCR 388), the Full Court of the Federal Court of Australia said (at [43]):

" . . . We consider that it is more accurate to say that an employee becomes redundant when his or her job (described by reference to the duties attached to it) is no longer to be performed by any employee of the employer, though this may not be the only circumstance where it could be said that the employee becomes redundant."

[19] Those decisions referred to above establish that the customary usage and application of the term redundancy extends to where the job is no longer needed to be performed by the employees of an employer, even if the work is to be provided in future by a contractor.

[20] To that extent, any terminations resulting from the introduction of contractors in those areas described in [10] would seem to fall within the definition of genuine redundancy.

[21] Different considerations apply as to those mineworker positions rendered surplus by Ulan's decision to increase the proportion of mineworkers possessing trade qualifications.

[22] It is clear from clause 16 of the Ulan Coal Mines Limited Underground Mine Enterprise Agreement 2006 [AC304157] (the Agreement) that experienced mineworkers (each applicant was such) is defined as:

"Experienced mineworker means an employee whose length of continuous service in the underground mines exceeds twelve (12) months."

[23] There is no distinction between tradespersons and those not holding such qualifications. They are all mineworkers although if trade qualifications are held and mineworkers are appointed as tradespersons they are paid an allowance.

[24] Although some of the evidence was imprecise it seems that a range of underground crews had the number of mineworkers not appointed as tradespersons reduced while the number of mineworkers with trades qualifications were increased.

[25] Ulan said that the greater incidence of trade-qualified mineworkers meant that there would be less down-time for crews if the increasingly complex pieces of machinery required repair or maintenance.

[26] That may be, but there was no evidence as to what role performed by non-trades mineworkers was now no longer performed.

[27] This is heightened by the fact that non-trades mineworkers continue to be the largest proportion of the underground crews. If all underground mineworkers were said to now require trades qualifications it might be more easily said that the positions of mineworkers without trade qualification are redundant. Presumably, the definition of mineworker would reflect such change.

[28] But here, the evidence is that the functions performed by crews and their mineworker components are still being performed as they were previously. The fact that additional trade-qualified mineworkers might enhance repairs and maintenance does not meaningfully diminish the fact that the work performed by all mineworkers (including by the applicants) remains essentially the same.

[29] Where the surplus of mineworkers has been the result of a change in the trade/non-trade proportion, it can not be said of those positions that the jobs are no longer needed to be done. The persistent question posed in the cases cited in these proceedings is, does the employer no longer want the job done by anyone (in its employ). Here the answer surely is, yes, it does want the job still done albeit by someone else including by new employees, and in circumstances where the key definition in the Agreement and job description has remained unaltered.

[30] I should hasten to add, that there is nothing wrong with, and it is quite understandable for, Ulan to prefer better qualified employees. But that is a matter that goes to the merit or validity of the terminations. At this point, I am only concerned with whether the positions rendered surplus is because of genuine redundancy.

[31] I find that jobs made surplus to requirements as a result of Ulan's desire to increase the proportion of mineworkers with trade qualifications and to reduce such proportions of non-trade qualified mineworkers are not jobs which could be described as ones no longer required to be performed by anyone.

[32] There has been one further difficulty in dealing with the aspect related to section 389(1). Because of the large number of mineworkers employed at the mine and their deployment at Ulan, and the changes implemented by it, the evidence is not clear as to which jobs were affected by contracting out and which were affected by the desire to increase trade-qualified personnel.

[33] According the evidence of Mr Clifford, eleven additional trades qualified mineworkers were engaged.

[34] In all the circumstances, including the increased engagement of eleven more mineworkers (albeit with trade qualifications), I can not be satisfied that the termination of any of the ten applicants was because the jobs in question were no longer required to be performed by anyone because of changes in the operational requirements of Ulan's enterprise and I so find.

[35] As to whether Ulan has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about redundancy, of relevance is clause 23.1 of the Agreement which provides:

(1) Where the Company has made a definite decision that the Company no longer wishes the job the employee has been doing, done by anyone and this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of employment, the Company will hold discussions with the employees directly affected and with the employee's representative.

(2) The discussions will take place as soon as is practicable after the Company has made a definite decision which will invoke the needs for consultation and include any reasons for the proposed terminations, measures to avoid or minimise the terminations and measures to mitigate any adverse effects of any terminations on the employees concerned.

(3) For the purposes of the discussion the Company will, as soon as practicable, provide in writing to the employees concerned and their representatives, all relevant information about the proposed termination including the reasons for the proposed terminations, the number and classification of employees likely to be affected, and the number of workers normally employed and the period over which the terminations are likely to be carried out, provided that the Company will not be required to disclose confidential information.

(4) Should the redundancy of employees be necessary over the life of this agreement the Company will first exhaust voluntary redundancies prior to implementing forced redundancies. Where it is necessary to implement forced redundancies the Company will select employees for redundancy having regard to the needs of the business. Where as a result of discussions and the needs of the business are satisfied, seniority will apply to forced redundancies."

[36] According to the evidence of Mr Wood, prior to Ulan finalising its position some consultation with employees and the Union occurred. On 26 June 2009, Mr Clifford and he met with the CFMEU lodge executive where Ulan indicated that there would be reductions in mineworker numbers. This was followed by presentations by Mr Wood to crews of employees indicating that there was a review of operations. These presentations occurred between 28 and 30 June 2009.

[37] Then, following the decision by Xstrata approving the implementation of the changes, Ulan took several steps that can be described as relevant to clause 23.1 of the Agreement.

• On 30 July 2009, Mr Wood wrote to Mr Wayne McAndrew, District President of the CFMEU advising the Union of the proposed restructure (Exhibit Ulan 11/MW4);

• Consultation and discussion meetings were conducted by Mr Wood with employees on 30 and 31 July 2009 and on 7, 16, 17 and 18 August 2009 (Exhibit Ulan 11/[53]);

• Consultation and discussion meetings involving Mr Wood and CFMEU officers and representatives were held on 30 July 2009 and 3, 4, 6, 7 and 14 August 2009. (Exhibit Ulan 11/[53]).

[39] It was the evidence of Mr Wood that at these consultations Ulan presented its position comprehensively and clearly. Screen presentations were made. Questions were invited from the employees and their representatives and responses given by Ulan. It was made clear to employees that copies of slides would be made available if requested by any employee.

[40] Mr Wood's evidence included that at a meeting with CFMEU representatives he had indicated that Ulan was prepared to discuss and consider any proposals in relations to the proposed changes and number of employees to be made redundant.

[41] According to the CFMEU, the consultations were mere formalities where most of the Union's proposals were not taken into account and the Union was not given a real opportunity to have any influence on the outcome.

[42] I described above the number of meetings which had occurred between Ulan and the Union representatives. Whatever is said now, there is no evidence that at the time the Union complained that Ulan was merely going through the motions and that there was not real discussion prior to the terminations. The evidence of Union lodge officers, Mr Wayne Small (Exhibits Union 10 and 11) and Mr Craig Carberry (Exhibits Union 1, 2) reveal dissatisfaction as to Ulan's consultations process, but at the time, and on their evidence they did not complain that clause 23.1 was not being followed

[43] Mr Small in his evidence referred to applications made to Fair Work Australia concerning the proposed redundancy. These notifications (Exhibit Union 11/WS4, WS5) reveal concerns as to Ulan's proposals, but not as to a failure to apply clause 23.1. (A subsequent application to Fair Work Australia and heard on 24 August 2009 was concerned with section 531 of the Act as opposed to being referable to any shortcomings as to clause 23.1 of the Agreement.)

[44] I also note the evidence that Ulan considered a range of proposals or concerns raised by the Union. This resulted in some changes agreed to by Ulan. These were according to the evidence of Mr Wood (Ulan 11/[69]).

"(a) To extend the time period for applications for voluntary redundancy by one week, to 19 August 2009, and consequently to extend the restructure process;

(b) To pay employees who are made redundant average bonus on long service leave entitlements on termination of employment;

(c) To offer permanent employment to fixed term employees if more than 19 permanent employees terminate under the voluntary redundancy scheme;

(d) To offer full time jobs to the fourth year apprentices at the end of their indentures; and

(e) To provide relocation assistance of up to $3,000 for a six month period to employees made redundant who relocated beyond a 200km radius of the Mine."

[45] Furthermore, Mr Wood's evidence (Exhibit Ulan 11/[79]) sets out comprehensively Ulan's attitude and response to a range of matters raised by the Union and/or its employees. Mr Small's evidence in reply did not, to any noticeable degree, challenge what Mr Wood said at his paragraph 79.

[46] In my view, the process of discussion and consultation conducted by Ulan met its obligations imposed on it by clause 23.1 of the Agreement as to holding discussions with the Union (the employee's representatives) and I so find.

[47] Clause 23.1 of the Agreement also imposes an obligation on Ulan to hold discussions with "the employee's directly affected".

[48] It is clear that Ulan met with mineworker employees generally over this period. If those are the group of employees with which discussions are to take place, then for reasons somewhat similar to those described as to discussions with the Union, it could be said that Ulan has met its obligations.

[49] However, the clause is not directed to employees generally but rather is concerned with those "directly affected" (clause 23.1(1)) or those "employees concerned" (clause 23.1 (2) and (3)). A plain reading of the words in question suggests that the discussions must be held with those who face terminations. The discussions, that are to be held with this class of employees, are to be concerned with:

(ii) measures to avoid or minimise the terminations; and

(iii) measures to mitigate any adverse effect of any terminations.

[50] The evidence is that no such discussions occurred with only this class of employees either together or separately. All discussions were with the entire mineworker group or groups of mineworkers (directly affected or not).

[51] It was the view of Ulan in these proceedings that the Applicants each knew of their relatively junior position on the seniority list and would therefore have known that they were affected. Given that, the extensive process of information sharing and face to face interaction was directed in large part at them.

[52] It was also put that all such employees directly affected were invited to put questions on several occasions to the company representatives. None did so.

[53] I consider that whatever employees understood to be their predicament and what they did about it is no answer to the fact that the Agreement imposes the obligation to hold discussions squarely on the employer.

[54] I agree with the Union that it was not known with any certainty how many (and therefore which) employees were directly affected until the voluntary redundancy process was completed on 19 August 2009. Employees directly affected could only be known with any precision at that time and they were terminated largely on 24 August 2009. There were no discussions held between 19 and 24 August 2009 with employees generally and with these employees in particular.

[55] I consider that until 19 August 2009, the discussions held cannot be said to have been with the employees "directly affected" or concerned" (as opposed to employees generally) as that class could not have been known either by the company or the employees.

[56] Ulan put that because one could not know precisely who was affected until the voluntary redundancy process was completed, the most practical option was to hold discussions with all employees as soon as possible. That fails to recognize that the time-frame between the voluntary redundancy period coming to an end and the resultant surplus employees being terminated was in Ulan's power. It was required to ensure that the obligation to hold discussions with employees directly affected was met. It failed to do so.

[57] We should of course strive to ensure that substance and not form are the determinants in these types of cases. I consider that the failure to hold discussions directly with the employees concerned is not important merely because the Agreement so provides but because such discussions and engagement with employees directly affected and explanation of individual circumstances may have resulted in some minimising or mitigating the consequences of the company's decision.

[58] One of the features of this matter has been the opportunities available at other mines and with contractors. Discussions with employees directly affected may have enabled a better focus on individual circumstances and opportunities available in order to mitigate adverse effects.

[59] For example, Mr Wood gave evidence (PN558) and following) that he was aware that the Ravensworth mine had some vacancies. He was asked if he had been told by Ravensworth how many jobs were available. His reply (PN571) was "no, and I didn't ask. I just basically said, well that's a positive, if we can get some jobs up. But again it was over in the valley and it would depend on people's ability to relocate." His evidence continued and he stated that after the terminations he was made aware that three or four of the permanent employees that had been retrenched had applied for jobs at Ravensworth (PN740). Clearly, some employees affected did have an "ability to relocate" and discussion with those employees would have revealed their interest and possibly have better accommodated their positions at an earlier date.

[60] It is also clear from the evidence that a large part of Ulan's efforts to provide information as to alternative jobs was to post information on the noticeboards. However, there was no evidence that the employees directly affected were provided with any specific attention by Ulan as to those vacancies. Indeed, it was the evidence of some of the employees (e.g. Mr Craig Butler PN251) affected that not all saw such notices. In my view a discussion with affected employees would have at least put such employment opportunities squarely before them. The failure to hold discussions with employees directly affected is therefore likely to have had an impact on them.

[61] In all the circumstances, I find that Ulan did not hold discussions with employees directly affected (or concerned) before terminations occurred, and that this amounts to a failure to comply with an obligation in the Agreement to consult about redundancies.

[62] Given my conclusions, it is not necessary to deal with the provisions of section 389(2).

[63] On the basis of either of my findings that the dismissals of the ten applicants can not be said to have arisen because Ulan no longer wanted the jobs performed by the Applicants performed by anyone and that Ulan did not comply with the obligations under the Agreement to hold discussions with the employees directly affected, the dismissals were not cases of genuine redundancies as defined under the Act, and I so find.

S. Crawshaw SC with A. Slevin of counsel and P. Pasfield, solicitor for the applicants.

J. Murdoch SC with A. Morris and T. Ross, solicitors for the respondent.

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