Fair Work Act 2009

s.394 - Unfair dismissal

Application for an unfair dismissal remedy - whether genuine redundancy - failure to consult - jurisdictional objection dismissed - dismissal harsh and therefore unfair.

[1] This decision concerns an application made by Miss Jamie Duckworth (Applicant) on 23 April 2020 for an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (Act). The Applicant was, until the termination of her employment which took effect on 9 April 2020, employed by My Shared Services Pty Ltd (Respondent) as a Sales Support Consultant. She commenced employment with a related entity of the Respondent on 20 May 2019. Miss Duckworth contends that her dismissal was harsh, unjust or unreasonable. She does not seek reinstatement and instead seeks an order for compensation.

[2] The Respondent's reason for its decision to dismiss the Applicant from her employment was that of redundancy brought about by a decline in novated lease enquiries the result of the COVID-19 pandemic and consequential streamlining of functions and operational efficiencies.

[3] On 8 May 2020, the Respondent gave notice that it objected to the application on the ground that the dismissal of the Applicant was a case of genuine redundancy and therefore the Applicant was not unfairly dismissed within the meaning of s.385 of the Act.

[4] The Respondent's jurisdictional objection was heard before me concurrently with the merits of the application on 24 August 2020. Miss Duckworth appeared on her own behalf and gave evidence in support of her application. Mr Aytunc Tezay, the Respondent's Managing Director, appeared on behalf of the employer Respondent. Mr Tezay together with Mr Matthew Brown, Ms Ebru Butler and Mr Leigh Penberthy gave evidence on behalf of the Respondent. At the conclusion of the hearing, I directed that the parties file final written submissions by certain dates and I reserved my decision pending receipt of those submissions. Having received those submissions, for the reasons that follow, I have concluded that the dismissal of the Applicant from the employment by the Respondent was not a case of genuine redundancy within the meaning of s.389 of the Act. It follows that the jurisdictional objection should be dismissed. I have also decided that the dismissal was harsh and therefore unfair. These are my reasons for that conclusion.

[5] The factual background is not contested and can be briefly stated.

[6] On 20 May 2019, Miss Duckworth was employed in the role of Customer Support Officer by MyMortgagePlus Pty Ltd, a related entity of the Respondent.[1] In that position, Miss Duckworth was responsible for providing administrative support to mortgage brokers employed by the company.[2] On 30 June 2019, MyMortgagePlus Pty Ltd ceased trading and on 20 July 2019 Miss Duckworth signed a contract of employment with the Respondent, which described her position as Sales Support Consultant.[3] The Respondent is a financial services provider. In her position the Applicant worked with the Respondent's novated lease sales team.[4]

[7] The Respondent's business, like many others, has been adversely affected by the COVID-19 pandemic.[5] The Respondent's evidence was that the business suffered a rapid decline in novated lease enquires.[6] In the four weeks preceding the Applicant's dismissal, novated lease enquires are said to have declined by 50%.[7] The Applicant did not seriously cavil with this proposition and concedes the business has suffered a reduction in turnover.[8]

[8] On 23 March 2020, while Miss Duckworth was on personal leave, the Respondent directed the Applicant and a number of other employees to take annual leave because of a reduced work requirement.[9] The direction given at the time was likely unlawful - it was contrary to the National Employment Standards contained in the Act. However, for the purposes of determining this application, nothing turns on this.

[9] On 9 April 2020, Miss Duckworth received a telephone call from Ms Ellen Powell, the Respondent's Chief Operations Officer, and was advised that her position was redundant.[10] The Applicant was assured that the dismissal was in no way related to performance.[11] Later that day, Miss Duckworth was sent a notice of termination which states that her position had been terminated due to redundancy.[12]

Consideration and application of the statutory framework

[10] Section 396 of the Act requires that certain matters must be determined by the Commission in relation to any unfair dismissal remedy application before the merits of the application may be considered. In respect of the matters identified in paragraphs (a), (b) and (c) of s.396, it was not in dispute and I find that:

1. the application was made within the 21-day period required in s.394(2)(a);

2. the Applicant was a person "protected from unfair dismissal" within the meaning of that expression in s.382 at the time of her dismissal by the Respondent; and

3. the Respondent was not a "small business employer" within the meaning of s.23 of the Act at the relevant time. It is therefore unnecessary to consider whether the Respondent complied with the Small Business Fair Dismissal Code

[11] In respect of s.396(d) of the Act, as indicated above, the Respondent gave notice that it objected to the application on the ground that the dismissal of the Applicant was a case of genuine redundancy.

[12] Section 389 of the Act sets out the meaning of "genuine redundancy" and provides 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."

[13] It is uncontroversial that the Clerks - Private Sector Award 2010 (Clerks Award) covered the Respondent and the Applicant and applied to them at the relevant time.[13] Like other modern awards, the Clerks Award imposes an obligation on an employer to consult employees whose employment the employer has decided to terminate due to redundancy. These requirements are found at clause 8 of the Clerks Award. Clause 8.1 of the Clerks Award states that where an employer has made a 'definite decision' to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees (which includes termination of employment) the employer must give notice of the changes to all employees who may be affected and discuss the changes with affected employees, the likely effect on employees, measures to avoid or reduce the adverse effects of the changes, and commence discussions as soon as practicable after a definite decision has been made. Clause 8.2 further states:

"8.2 For the purposes of the discussion under clause 8.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:

[14] During the hearing the Respondent conceded that it did not comply with its consultation obligations under the Clerks Award.[14] In the circumstances, I am satisfied that the Applicant's dismissal does not meet the definition of genuine redundancy in s.389 of the Act. It therefore follows that the Respondent's jurisdictional objection be dismissed.

[15] I turn now to consider the merits of the application.

Was Miss Duckworth's dismissal harsh, unjust or unreasonable

[16] In considering whether a dismissal was harsh, unjust or unreasonable, the Commission must consider the following factors outlined in s.387 of the Act:

(a) whether there was a valid reason for the dismissal related to the person's capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person - whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the Commission considers relevant.

[17] Having regard to the structure and content of s.387, in deciding whether a dismissal was harsh, unjust or unreasonable, each of the matters identified in that section must be taken into account. They are mandatory relevant considerations.

[18] Moreover, each matter must be given appropriate weight having regard to the factual findings made and taking into account the submissions of the parties. A statutory requirement that a matter be taken into account means that the matter is a 'relevant consideration' in the sense discussed in Minister for Aboriginal Affairs and Another v Peko-Wallsend Limited and Others (Peko-Wallsend),[15] that is, it is a matter which the decision maker is bound to take into account. The obligation to take into account the matters set out at s.387 means that each of the matters must be treated as a matter of significance in the decision-making process.[16] As Wilcox J said in Nestle Australia Ltd v Federal Commissioner of Taxation:[17]

"To take a matter into account means to evaluate it and give it due weight, having regard to all other relevant factors. A matter is not taken into account by being noticed and erroneously discarded as irrelevant".[18]

[19] The weight given to a particular matter is ultimately a matter for the Commission subject to some qualification. As Mason J explained in Peko-Wallsend:

"It follows that, in the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power. ... I say "generally" because both principle and authority indicate that in some circumstances a court may set aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to a relevant factor of no great importance. The preferred ground on which this is done, however, is not the failure to take into account relevant considerations or the taking into account of irrelevant considerations, but that the decision is "manifestly unreasonable"."[19]

[20] The meaning of the words "harsh, unjust or unreasonable" in the context of a dismissal was explained in Byrne & Frew v Australian Airlines Ltd[20] by McHugh and Gummow JJ as follows:

". . . It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted."[21]

[21] Ultimately, it is the matters set out in s.387 of the Act to which regard must be had in assessing whether a particular dismissal was harsh, unjust or unreasonable. I consider these matters in turn below.

[22] The inquiry under s.387(a) is concerned with whether there was "a valid reason" for the dismissal relating to the Applicant's capacity or conduct, although a valid reason need not be the reason given or relied upon by the Respondent at the time of the dismissal.[22] The essence of a valid reason is that the reason should be "sound, defensible or well-founded"[23] and should not be "capricious, fanciful, spiteful or prejudiced."[24]

[23] In the present case, the reason for the Applicant's dismissal was not related to her capacity or conduct. As the majority in UES (Int'l) Pty Ltd v Harvey[25] determined, where a decision to dismiss is made on redundancy grounds and does not relate to the dismissed employee's capacity or conduct there cannot have been a valid reason for that dismissal related to the employee's capacity or conduct.[26] The Respondent does not contend that there was any valid reason for dismissal related to Miss Duckworth's capacity or conduct. Neither party suggested that the decision in UES was wrong and should not be followed.

[24] The factual findings that I have earlier made support a conclusion that the Applicant's dismissal was on redundancy grounds and did not relate to her capacity or conduct. Like the majority in UES, it seems to me appropriate in the circumstances of this case, that the question of whether there was a valid reason related to the Applicant's capacity or conduct in considering whether the Applicant's dismissal was harsh, unjust or unreasonable, is a neutral factor.

[25] Notification of a valid reason for termination should be given to an employee protected from unfair dismissal before the decision is made,[27] in explicit terms,[28] and in plain and clear terms.[29] This is an element of that which may be described as procedural fairness in order that an employee may respond to the reason. Procedural fairness requires that an employee be notified of the reason for the dismissal before any decision is taken to terminate employment in order to provide them with an opportunity to respond to the reason identified. Sections 387(b) and (c) would have little practical effect if it was sufficient to notify an employee and give them an opportunity to respond after a decision had been taken to terminate employment.[30]

[26] The Applicant was notified of the reason the Respondent relied on for the dismissal.[31] However as is evident from the terms of s.387(b), the consideration as to notification of the reason is concerned with a reason connected with capacity or conduct. For reasons already given, that is not the case here. In the ordinary course, this factor would seem to be neutral in a case like this,[32] although I note that, as a matter of fact the Applicant was notified of the reason for the dismissal, being the redundancy of her position.

[27] An employee protected from unfair dismissal should be given an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the employee. The consideration of whether and to what extent that opportunity was given is to be applied in a common-sense way to ensure the employee is treated fairly and should not be burdened with formality.[33]

[28] Once again, this consideration is concerned with affording an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the employee. The Applicant's dismissal did not relate to her capacity or conduct and so, in the circumstances of this case, this consideration is also neutral.

Any unreasonable refusal by the employer to allow the person to have a support person -

[29] If an employee protected from unfair dismissal has requested that a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse to allow that person to be present. This consideration is directed to an employer's unreasonable refusal to allow a support person to be present. It is not concerned with whether an employer offered the employee such an opportunity. In most cases, this section will be engaged if the employee asks for a support person to be present and the employer refuses the request.[34] It may well be appropriate, in some cases, to consider the overall circumstances in which meetings to discuss an employee's performance, capacity and conduct or dismissal occurred to properly determine whether there was an unreasonable refusal by the employer to allow the employee to have a support person present.

[30] The Applicant contends that the Respondent did not provide her the option of having a support person present when it dismissed her.[35]

[31] The consideration in s.387(d) does not require or confer a right on an employee to have a support person present at every or even any meeting in relation to a possible dismissal. The relevant consideration is whether an employer unreasonably refused an employee's request to have a support person present to assist in any discussions relating to dismissal. There is no evidence of any unreasonable refusal by the Respondent to allow the Applicant to have a support person present to assist in the telephone discussion on 9 April 2020 relating to her dismissal. That the Respondent did not offer the Applicant a support person during the telephone discussion is of little moment. This consideration does not weigh in favour of a conclusion the dismissal was unfair.

Warnings regarding unsatisfactory performance - s.387(e)

[32] If an employee protected from unfair dismissal is dismissed for the reason of unsatisfactory performance, the employer should warn the employee about the unsatisfactory performance before the dismissal. Unsatisfactory performance is more likely to relate to an employee's capacity than their conduct.[36] For the reasons given earlier in this decision, I am satisfied that the Respondent dismissed the Applicant on redundancy grounds and that the dismissal did not relate to any unsatisfactory performance on the part of the Applicant. In the circumstances this consideration weighs neutrally.

Impact of the size of the Respondent on the procedure followed - s.387(f)

[33] The consideration in s.387(f) is not concerned with standards but with the likely impact on the procedures followed of the size of the employer's enterprise.

[34] There is no evidence that the Respondent's size, in and of itself, affected the procedure adopted by the Respondent in effecting the dismissal. The Respondent's evidence was that the circumstances of the redundancy were impacted by the various physical distancing measures imposed as a result of the COVID-19 pandemic.[37] In my view, the procedure adopted by the Respondent in the lead up to the dismissal and in effecting the dismissal fell short of appropriate. The Respondent has already accepted that it failed to consult. As a consequence of that failure some of the considerations that might have had the effect of mitigating or ameliorating effects of redundancy on the Applicant were not considered. The size of the Respondent's enterprise does not excuse nor explain this omission.

Absence of dedicated human resources management specialist/expertise on procedures followed - s.387(g)

[35] This consideration is concerned with "the degree to which the absence of dedicated human resources management specialists or expertise" would be likely to have the identified impact.

[36] Neither party gave evidence about the absence or otherwise of dedicate human resources management specialists or expertise or that any such absence contributed to the manner in which the dismissal was effected. Moreover, the Respondent has on staff a People & Culture Manager, Ms Melanie Kiekebosch. Accordingly, I find that here there was no such absence and so this consideration does not weigh as a mitigating factor in the consideration of whether Miss Duckworth's dismissal was unfair.

Any other matters that the Commission considers relevant - s.387(h)

[37] Section 387(h) provides the Commission with broad scope to consider any other matters it considers relevant.

[38] That the Respondent failed to consult the Applicant about the redundancy is a relevant consideration. This deprived the Applicant and the Respondent the opportunity to consider the matters which might mitigate the effect of redundancy on the Applicant. Amongst these mitigating factors could have been, for example, an examination of the prospect of reducing the Applicant's hours to more accurately reflect the reduction in workload or the prospect of the Applicant taking a period of unpaid leave.

[39] I also regard the Applicant's length of service as a relevant matter. At the time of her dismissal the Applicant had completed less than 12 months of service with the Respondent. This is not a significant period of employment by any measure.

[40] I have also taken into account that redeployment into another position with the Respondent or with a related entity of the Respondent is not possible. It is clear that the prospect of redeployment was not discussed with the Applicant. The Respondent submits that there was no opportunity for redeployment as the Applicant's was not the only position made redundant at the time.[38] The Applicant concedes that there was no position of which she was aware into which she could be immediately redeployed.[39] In the circumstances, but for the failure to consult the Applicant, dismissal would otherwise have been a case of genuine redundancy and so would not have been regarded as unfair.

[41] The right to be consulted about a decision to reduce staffing numbers which may impact the ongoing employment of an employee is a substantive right and not merely perfunctory. The Applicant should have been consulted about the proposed redundancy and the consequent employment termination before her employment ended. That the Respondent failed to so do meant that the Applicant was deprived the opportunity of discussing with her employer options to mitigate or ameliorate effects of redundancy on her. Consequently, mitigating options such as reduced working hours or leave without pay were not discussed or considered. Taking all of the matters into account as I have set out above and weighing them, I consider that the dismissal of the Applicant on redundancy grounds without consultation was harsh, and therefore unfair.

[42] For the reasons given, the Applicant's dismissal was not a genuine redundancy within the meaning of the s.389 of the Act.

[43] The Applicant's dismissal in the circumstances was harsh, and therefore unfair.

[44] I have separately issued directions to enable the parties to make further submissions as to the remedy (if any) that should be ordered taking into account my conclusion.

[1] Document titled 'In response to the applicants outline of submission in number order' dated 30 July 2020 at [1]

[3] Letter of offer dated 17 July 2019 and Employment Agreement and Transcript of proceedings (24 August 2020) at PN445-PN446

[4] Document titled 'In response to the applicants outline of submission in number order' dated 30 July 2020 at [1]

[5] Respondent's outline of argument: objections at 4(b) and Transcript of proceedings (24 August 2020) at PN138-PN144

[7] Letter from Ms Ellen Powell, Chief Operations Officer, dated 12 June 2020

[8] Transcript of proceedings (24 August 2020) at PN137-PN144

[9] Applicant's outline of submissions at [3]

[11] Document titled 'In response to the applicants outline of submission in number order' dated 30 July 2020 p 4 at [5] and p 5 at [3]

[12] Notice of Redundancy dated 9 April 2020

[13] Applicant's outline of submissions at [1] and Respondent's outline of submissions: objections at 4(e)

[14] Transcript of proceedings (24 August 2020) PN17-PN52

[15] [1986] HCA 40; (1986) 162 CLR 24; see also Griffiths v The Queen [1989] HCA 39; (1989) 167 CLR 372 at 379; Ho v Professional Services Review Committee No 295 [2007] FCA 388 at [23]- [26] and Hasim v Attorney-General of the Commonwealth [2013] FCA 1433, (2013) 218 FCR 25 at [65]

[16] See Friends of Hinchinbrook Society Inc v Minister for Environment (No 3) (1997) 77 FCR 153; Australian Competition and Consumer Commission v Leclee Pty Ltd [1999] FCA 1121; Edwards v Giudice [1999] FCA 1836 and National Retail Association v Fair Work Commission [2014] FCAFC 118

[17] (1987) 16 FCR 167 cited with approval by Hely J in Elias v Federal Commissioner of Taxation [2002] FCA 845; (2002) 123 FCR 499 at [62] and by Katzmann J in CFMEU v FWA [2011] FCA 719; (2011) 195 FCR 74 at [103]

[18] (1987) 16 FCR 167 at 184

[19] [1986] HCA 40; (1986) 162 CLR 24 at [15], pp 39-41

[22] Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-378

[23] Selvachandran v Peteron Plastics Pty Ltd [1995] IRCA 333; (1995) 62 IR 371 at 373

[25] [2012] FWAFB 5241: (2012) 215 IR 263

[27] Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41]

[28] Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 150-151

[29] Previsic v Australian Quarantine Inspection Services Print Q3730

[30] See also Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 151 which was dealing with the corresponding provisions in s.170CG(3)(b) and (c) of the Workplace Relations Act 1996

[31] Exhibit 1 at [1] and Notice of Redundancy dated 9 April 2020

[32] See UES (Int'l) Pty Ltd v Harvey [2012] FWAFB 5241 at [43]: (2012) 215 IR 263 at 278

[33] RMIT v Asher [2010] FWAFB 1200; (2010) 194 IR 1 at 14-15

[34] See also Fair Work Bill 2008 - Explanatory Memorandum at [1542]

[35] Applicant's outline of submissions at [1] and Exhibit 1 at [5].

[36] Annetta v Ansett Australia (2000) 98 IR 233 at 237

[37] Document titled 'In response to the applicants outline of submission in number order' dated 30 July 2020 at [2]

[38] Respondent's outline of argument: objections at 4(g)

[39] Transcript of proceedings (24 August 2020) PN491

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