Fair Work Act 2009_

s.739 - Application to deal with a dispute

Alleged dispute about any matters arising under the enterprise agreement and the NES; [s186(6)].

[1] This matter primarily concerns the criteria to be utilised in ranking employees for involuntary redundancy where the employees have a common commencement date of employment on the Gorgon Project.

[2] The parties were unable to reach agreement on the criteria and requested the Commission to make a decision on the matter.

[3] On 18 July 2013, the Maritime Union of Australia (MUA or Applicant) made application to the Fair Work Commission (Commission) seeking an urgent conference to deal with a dispute in accordance with a dispute settlement procedure (DSP).

[4] The MUA is in dispute with Patrick Projects Pty Ltd (Employer).

[5] The DSP is contained in the Patrick Projects AMC Cargo Handling Agreement 2012-2015 (2012 AMC Agreement).

[6] The application is made pursuant to s.739 of the Fair Work Act 2009 (FW Act).

[7] The primary dispute relates to the involuntary redundancy of 62 permanent employees at the Australian Maritime Complex, Henderson, Western Australia (AMC) and its consequences for approximately 85 casual employees who are employed to work on the Gorgon Project (Project).

[8] The entire Project workforce employed pursuant to the 2012 AMC Agreement has been made aware that there may be future redundancies.

[9] The primary dispute was resolved by way of a consent order (Consent Order) issued on 22 July 2013 which subsequently has become the subject of a further dispute between the parties but is not relevant for the purposes of this decision and reasons for decision.

[10] As part of the Consent Order, the parties agreed that as of the date of the redundancies, the Project workforce would be divided into 3 categories:

● Pool A supplementary casual employees (consisting of those permanent redundant employees as at 25 July 2013 who wished to continue as part of the workforce); and

● Pool B supplementary casual employees (consisting of the existing approximately 85 casual employees as at 25 July 2013).

[11] The parties acknowledge that should further collective redundancies occur, it may be necessary to select a number from the permanent workforce who have a common commencement date on the Project. Consequently, it will be necessary to adopt a matrix of factors which is fair and transparent in which to prioritise those employees who have a common starting date.

[12] Further, should business circumstances change and there is an increased demand for the Employer's services, there may be the necessity to re-engage employees in Pool A supplementary casual employees as permanent employees who also have a common commencement date on the Project.

[13] The parties agreed, in the Consent Order, that in the event of the MUA and the Employer being unable to agree on the selection criteria, the Commission would receive submissions and make an order setting out the factors for consideration in determining the ranking of employees for redundancy who have a common commencement date.

[14] The parties agreed that it was not the purpose of the Commission to provide the minutia of the selection but the principal criteria and weightings.

[15] The parties were unable to reach agreement on the selection and the Commission received their respective submissions in a hearing on 7 August 2013.

[16] The submissions of the parties were as follows.

[17] The MUA submitted that the criteria should be:

● FTR (fail to report) where employees have been made aware they have accrued an FTR and have had an opportunity to explain or dispute the issuing of an FTR;

● lateness to work where employees have been made aware they are late to work and have had an opportunity to explain or dispute the lateness; and

● where the above criteria have failed to identify sufficient numbers, a random draw of remaining employees.

[18] The Employer submitted 4 criteria to determine priority with the following weighting to determine priority:

[19] The Employer provided a summary of authorities supporting the above criteria as part of its written submission.

[20] An employee whose employment ceases on the grounds of a genuine redundancy is not protected from unfair dismissal pursuant to subsection 385(d) of the FW Act.

[21] Dismissal on the grounds of genuine redundancy usually occurs when the employer's requirements for the employee to carry out that work has ceased or reduced, or is expected to cease or reduce.

[22] The parties to this dispute have acknowledged the potential for work carried out pursuant to the 2012 AMC Agreement to progressively reduce and eventually cease. However, there are a number of factors, at any particular time, which impact on the demand for the employees' services, irrespective of the Employer's overall contract to provide.

[23] In considering whether there is a genuine redundancy, it is necessary to give attention to whether the employee's dismissal is attributable to a downturn of the employer's business and consequential reduction of employees to carry out the type of work associated with the decline in business. If there has been a decline in business activity, the next question is whether the employee's dismissal was attributable to the cessation or reduction in business activity.

[24] At this point, I turn to the Employer's submission that the selection criteria is one of management prerogative.

[25] In each authority cited by the Employer, the principle of management prerogative is not entirely unregulated but subject to the principles of fairness. In applying the principles of fairness, the situation of employers dismissing employees for reasons other than those attributable to a decline in business is mitigated or avoided.

[26] Both parties agree that the selection process should be fair, transparent, easily understood and as objective as is possible in the circumstances.

[27] Having considered the submissions, I set out the following "headline" criteria in the identification of the prioritisation of employees to be made redundant.

[28] Where measures to avoid redundancies have been utilised to the extent possible and it is necessary to invoke redundancies, the Employer should seek volunteers from the permanent workforce employed pursuant to the 2012 AMC Agreement irrespective of their Project commencement date of employment.

[30] The parties have agreed that where involuntary redundancies are required, selection will be in accordance with "last in, first out" (LIFO) principle. This selection procedure means that the employee's date of commencement on the Project determines his or her priority for selection. For example, a person who commences on 7 August 2012 will be selected for redundancy ahead of a person who commenced on 31 July 2012. Those who commenced on 31 July 2012 will be selected ahead of those who commenced on 30 June 2012 and so forth.

[31] LIFO is transparent and easily understood.

[32] I now turn to the selection criteria for the prioritisation for employees for involuntary redundancy.

[33] Lateness or no-attendance for work should form part of the selection criteria.

[34] It will be necessary for the Employer to have accurate records.

[35] In reviewing an employee's attendance record, absences which are accompanied by a medical certificate should not be counted. Further, absences associated with, for example, pregnancy, should not be considered.

[36] Both parties agreed that FTR should be considered as part of the selection criteria. I agree.

[37] An employee's attendance is transparent, easily understood and objective.

[38] For employees who have no disciplinary record, they should be given the maximum weighting possible under this criteria.

[39] While I am unaware of the Employer's hierarchy of disciplinary penalties, I would anticipate that persons who are in receipt of a final written warning should receive the least possible "points" under this criterion. A person with a verbal warning should receive more "points" than a person with a written warning and so forth. If multiple warnings are possible and have been applied to employees, these should be treated more seriously than single instances.

[40] This criterion is transparent, easily understood and objective.

[41] It is difficult to envisage the selection for employment or promotion in employment could occur without an employer assessing a person's skills and/or experience. Similarly, I cannot think of a sound reason why it should not be considered when assessing an employee for redundancy where employees are being assessed in comparison to others.

[42] In selecting the criteria, I make the following observations. Firstly, it would be wrong to equate attendance at training courses with skills and experience. The reality is that each employee brings to their employment an individual set of skills and experience from previous employment. These skills and experience may be readily transferrable or require developing or supervision depending on the individual.

[43] I am not prepared to accept that because a group of employees commenced on the Project on the same day, that their skills and competence for the job which they are required to perform are equal.

[44] Some employees will be multi-skilled, competent in all aspects of the duties and others of varying degrees. The workplace is no different to any collection of individuals in a social setting.

[45] Where there is ranking of employees, it would seem inherently wrong for the Employer not to be able to assess employees on the basis of skill and experience, when its ongoing services are dependent on those skills and experience of the workforce.

[46] I acknowledge that this criterion has a greater component of subjectivity but I am confident that the sub-level factors which will go to its total make up, can include matters of an objective nature such as the various "qualifications" which will be considered.

[47] It is almost inconceivable that an employer would not consider an employee's past performance, behaviour and attitude in a competitive selection process for promotion. Likewise, it is difficult to envisage an employer wanting to divorce performance, behaviour and attitude when competitively selecting employees for redundancy.

[48] While such an assessment is predominantly subjective, the best person to make such a judgement is the employee's immediate supervisor. I find such a procedure comparable with similar processes for promotion or performance assessment generally. In fact, employees would be rightfully dissatisfied if anybody other than their immediate supervisor made an assessment of their performance for whatever purposes.

[49] The Employer's submission to have a "stand alone" criterion of safety is commendable in highlighting the need to promote a safe working environment and culture. However, in my view, it can be included as part of the overall assessment of an employee's performance, behaviour and attitude.

[50] The MUA is concerned that the use of an immediate supervisor will create "disharmony and conflict where employees are seen to be selected for capricious and unfair reasons". Obviously, if it is demonstrated that an employee was capriciously selected for redundancy, it may render the dismissal as unfair. However, the benefit of having a weighted mixture of selection assists to avoid particular individuals being unfairly selected for redundancy. In any selection process, anomalous outcomes (either positive or negative) should be reviewed and given focus to eliminate any concerns by the workforce that selection for redundancy is arbitrary or capricious.

[51] I now turn to the weighting to be given to the selection criteria.

[52] The MUA put to the Commission that the weightings should be as follows:

[53] I did not ask Mr Edmonds to develop the MUA's proposal but acknowledged the bias towards skills.

[54] The Employer initially submitted to the Commission that the weightings should be:

[55] Towards the end of the hearing, the Employer incorporated safety into performance and suggested a "third, third, third" weighting.

[56] In my view, attributing weightings to such criteria is not a science but a subjective and intuitive best guess. My inclination is to form a view closer to the Employer's submission, simply because the MUA weightings are so heavily skewed towards Skills and, to all intents and purposes, ignores attendance, discipline and performance.

[57] The weightings of the criteria which I have adopted above should be:

[58] In coming to a decision, I have attempted to "balance" the objective with the subjective, transparency and fairness to employees with the need for the Employer to be able to retain those employees from its existing workforce which best meets its needs going forward.

[60] Firstly, that the MUA and the Employer provide a summary of this decision and reasons for decision to the entire workforce which is signed by the respective principals. Secondly, that subsequent to the implementation of the above criteria and weightings, the parties review the outcomes and make any necessary changes.

[61] This is my Decision and Reasons for Decision.

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