[2021] FWC 5345 [Note: An appeal pursuant to s.604 (C2021/6558) was lodged against this decision.]

Fair Work Commission|2021-09-07

Rui Liu v JHC Corporate P/L [2021] FWC 5345 (7 September 2021)

[2021] FWC 5345 [Note: An appeal pursuant to s.604 (C2021/6558) was lodged against this decision.]

s.394 - Unfair dismissal

Application for an unfair dismissal remedy. Consideration of "small business employer" and "genuine redundancy". Distinction between genuine redundancy and redundancy. Whether dismissal unfair. Dismissal held to be redundancy and not an unfair dismissal.

[1] This decision concerns an application for unfair dismissal remedy made by Ms Rui Liu against her former employer, JHC Corporate Pty Ltd (JHC) as a result of her dismissal from its employment which took effect on Friday, 26 March 2021. At the time of her termination of employment Ms Liu had worked for JHC for slightly more than two years, having commenced employment with the company on 21 January 2019.

[2] JHC contests the claim, submitting that two of the "initial matters" requiring consideration by the Commission pursuant to s.396 of the Fair Work Act (the Act) apply to the circumstances of Ms Liu's employment meaning her application is unable to proceed.

[3] Ms Liu's application was the subject of a determinative conference conducted by me on Monday, 5 July and Tuesday, 13 and Wednesday, 14 July 2021 at which a number of people appeared and presented their submissions, evidence, and opinions pertinent to the application, as well as other matters. Both speaking on behalf of the Applicant were Ms Liu herself and Ms Liu's husband Mr Hong Shen. Appearing for the Respondent, JHC, were its Director, Ms Yueli Cui (Helen), her husband, Mr Jack Xu, and several employees, Mr Zhong Hua Zhu (Jason), Ms Bin Xin (Lisa), Mr Hou Ming Chu (Philip) and Ms Chun Fang Ren.

[4] Many of the participants gave some or all of their evidence through a Mandarin interpreter. Unfortunately, the proceedings were marked by a higher than usual amount of animus between the participants, as well as the desire by most if not all to rely upon irrelevant considerations.

[5] For the reasons set out below I am satisfied, in relation to the two initial matters referred to above that while matters of consistency with the Small Business Fair Dismissal Code do not arise and that the Applicant's dismissal was not a genuine redundancy within the meaning of the Act, it was a redundancy nonetheless.

[6] Further, after consideration of whether the Applicant's dismissal was unfair or not, I am satisfied it was not an unfair dismissal.

[7] Ms Liu commenced employment with JHC on 21 January 2019 and over the period of her employment worked in several positions. When her employment commenced her job title was UV/Laser Printer/Engraver.[1] In March 2019 she moved to JHC's Film Graphic Office, as a Film Producer/Graphic Designer and in January 2020 she returned to the UV/Laser Printing role.[2] The basis of some of those moves is contested. Job descriptions for these positions are not in evidence before the Commission. Each party has a tendency to refer to the UV/Laser Printer/Engraver role by the shorthand of "Laser Engraver".[3]

[8] For the purposes of context about Ms Liu's employment, JHC imports corporate promotional products such as mugs, keyrings, pens and the like and applies corporate logos and messages to the products and sells them to client companies for their own promotional purposes. JHC occupies large premises in Dandenong South which could be as large as 3500 m2 and shares those premises with another company, the Dex Group, which operates in an allied industry. JHC's Owner/Director is Ms Cui and Dex Group's Owner/Director is Mr Xu. For reason of the circumstances referred to later in this decision it is obvious the lines between the actions and decisions of the two companies frequently blur with it being highly likely the two are associated entities. Mr Xu was the main spokesperson for JHC in the proceedings before me.

[9] From about March 2020, the global COVID-19 pandemic began affecting JHC's operations. Staff, including Ms Liu were placed on Jobkeeper employment subsidies. Those payments continued for much of 2020 and into 2021. For a number of reasons, I cannot be certain the Jobkeeper payments to Ms Liu were continuous between March 2020 and March 2021 (noting that likely nothing especially turns on that matter).

[10] In March 2020 JHC proposed to first make 6 employees redundant followed by a further 4 people.[4] One of the people identified for redundancy in the second batch of redundancies was Ms Liu. Later exchanges between her and Ms Cui on the proposal led to JHC deciding not to make Ms Liu redundant at that time, or indeed the other people in the second batch.[5].

[11] In early 2021 the Jobkeeper subsidies came to an end. JHC says that at around the same time it decided to make a further group of employees redundant because of its financial situation. In this regard, Mr Xu's evidence was that "...we cannot survive after JobKeeper finished. We have to do something to save cost, to make sure we survive. So, we could not maintain so many staff. There are not enough workload for them".[6] In total four people were told they would be made redundant in March 2021, including Ms Liu.

[12] On 10 March 2021 Ms Liu and others were called to a meeting where Mr Xu informed them their jobs could not continue.[7] Ms Liu was given a letter of termination, the contents of which are below, which gave her notice her employment would end on 26 March 2021:

Termination of your employment by reason of redundancy

As you know, there has been a severe downturn in our business operations as a result of the coronavirus pandemic.

We have conducted a review of our business operations and we have made the difficult decision that the position of Laser Engraver is no longer required. Unfortunately, this means that your employment agreement will terminate. This decision is not a reflection on your performance.

Given the size of the company's operations, and the severe impact of recent events on our business, there is no possibility of redeploying you in another part of the company's operations.

Accordingly, your employment will end on 26th of March, 2021. Based on your length of service, your notice period is 3 weeks. You will be paid with your entitlement of redundancy pay.

You will also be paid your accrued entitlements and any outstanding pay, including superannuation.

Redundancy and leave payments may give rise to waiting periods for Centrelink payments. You should contact Centrelink to find out how long you have to wait to receive any applicable benefits.

I want thank you for your valuable contribution during your employment with us.

[13] After Ms Liu finished her employment with JHC she was told by someone they had seen an advertisement for her position.[9] The advertisement was seen on a Mandarin language employment website and is not in English. Ms Liu contends the advertisement was for her job or a job she could do.

[14] Ms Liu makes numerous contentions about her circumstances, including the following (noting this list is not a complete listing of her claims):

• Her return to the Laser Engraving role was not with her agreement and in fact her move out of the Film Graphic role was a dismissal, which should be treated as an unfair dismissal.[10]

• Her dismissal in March 2021 was not for reason of redundancy but for a number of reasons she attributes to her manager, Mr Zhong Hua Zhu (also known as Jason) which include matters of sexual harassment and bullying. She believes she was selected for redundancy owing to a "special deal" between Jason and JHC.[11]

• If her dismissal was a redundancy, it was not a genuine redundancy. JHC did not reduce its employment numbers.[12] This is reinforced by the advertisement JHC placed after she was dismissed.

[15] For its part, JHC argues the circumstances leading to Ms Liu's dismissal were considerably simpler:

Her move out of the Film Graphic Office in early 2020 was because the company did not see her as performing well in that role.

It initially planned to make her redundant at the start of the pandemic around March 2020 but did not do so after representations from Ms Liu and the availability of the Jobkeeper employment program. It then placed her on Jobkeeper subsidies.

Assessment of its trading circumstances in early 2021, coinciding with the end of the Jobkeeper subsidies, lead it to decide it had to make four people redundant, one of whom would be Ms Liu.

• The company's decision to advertise another position after the redundancy was because its workload had picked up at about the same time as Ms Liu's dismissal. Instead of the additional work being in the laser engraving department, it was in digital printing, requiring a skill set it did not think was held by Ms Liu.[13]

Ms Liu was not considered suitable for this new position since JHC's appraisal of her skills lead it to the view she was not able to undertake the work to JHC's expectations of quality and attention to detail.

Was the termination consistent with the Small Business Fair Dismissal Code?

[16] JHC argues it is a small business employer relying on the Act's definition as one that "at a particular time if the employer employs fewer than 15 employees at that time" (s.23 (1)).

[17] Relevant to determination of the matter is JHC's relationship with the Dex Group. Although the relationship is not entirely clear, the evidence points to it being highly likely the two are associated entities which would mean JHC is not a small business employer since the calculation of the number of employees takes into account the employees of associated entities (s.23(3)).

[18] At the time of Ms Liu's termination of employment JHC employed 10 people, according to its Form F3, (Employer Response Form). In the course of the proceedings Mr Xu identified there were 12 people employed by JHC, including his wife. He also identified that Dex Group employed 17 people, including him.[14] These numbers were later amended by Mr Xu in the course of proceedings to 9 people employed by JHC and 14 people employed by Dex group.[15]

[19] Such evidence as is before me leads to a conclusion the two are likely associated entities. In this regard, it is to be noted that while the letter of termination is under the letterhead of "JHC Corporate P/L", immediately below the company name is an address block which includes a Dex Group web and email address. The two entities share a large warehouse, and the Directors of the entities are Ms Cui for JHC and Mr Xu for Dex Group, who was also the main spokesperson for JHC in these proceedings. Mr Xu was also the person who communicated the redundancy decision to Ms Liu. The job advertisements placed by JHC some weeks after Ms Liu's employment ended were in the name of Dex Group with it not being clear to me which company would be the employer once it appointed somebody in response to the advertisement.

[20] I also take into account that s.121(1)(b) does not require the payment of redundancy pay to a person made redundant by a small business employer. Despite that, when Ms Liu's employment was terminated she was given and worked out a period of 3 weeks' notice and was promised she "will be paid with your entitlement of redundancy pay".[16] Further, Ms Liu's final payslip records a payment to her of 240 hours pay, indicated as "ETP tax-free", which equates in broad terms with the 6 weeks redundancy pay she would be due under s.119(2) if her employer was not a small business employer at the time of her termination of employment.

[21] While it is more than likely from these matters the two entities are associated entities and that as a result the combined employment base is well above the small business employer threshold it is unnecessary for me to determine the matter. This is because even though it argues it is a small business employer, the Respondent does not claim its termination of Ms Liu's employment was consistent with either head of the Small Business Fair Dismissal Code. It is not put forward by JHC that Ms Liu termination of employment was for reason either of "summary dismissal" or "other dismissal" as those things are set out within the Code. Accordingly, a finding that Ms Liu's dismissal was consistent with the Small Business Fair Dismissal Code is not available to me even if JHC is a small business employer.

[22] Having considered all the relevant evidence as to the Respondent's small business objection, I am not satisfied Ms Liu's dismissal was consistent with the Small Business Fair Dismissal Code.

Was Ms Liu's termination a "genuine redundancy"?

[23] I do not find that Ms Liu's termination of employment was a "genuine redundancy" as defined, although I do find it was a redundancy nonetheless.

[24] In this regard the Act defines a genuine redundancy in the way set out in s.389:

(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."

[25] While the evidence allows a finding that Ms Liu's employment was terminated for the reasons set out in s.389(1)(c) I am not satisfied the consultation obligation in s.389(1)(b) was complied with.

[26] The evidence relied upon by JHC about Ms Liu's position being redundant is primarily its trading position in March 2021. It argues that it made one round of redundancies in March 2020 and was about to make a further round when the Jobkeeper employment subsidies were announced by the Australian Government. The introduction of those subsidies saved Ms Liu's job, and those of others, at the time. By March 2021 demand for the company's products remained weak; the March Quarter 2021 sales were just 50% of the comparable period in 2019.[17] During 2020 JHC needed to restructure its loan arrangements. Finally, in 2021, the absence of Jobkeeper support was assessed as likely to place severe financial pressure on JHC if there was not a reduction in labour costs. The company's three-month gross profit margin would be eroded with rent (about 57% of gross profit) and wages (about 29% of gross profit). The payment of other costs would make it extremely difficult financially.[18]

[27] Mr Xu's evidence is that prior to making Ms Liu and others redundant he warned staff generally that workload remained low and that JHC may have to make people redundant.[19] When workload did not pickup, he resolved to make redundancies and describes in his evidence a process by which he reviewed the company's workload and made decisions about who would be selected. One of the parts of the business he examined was the laser engraving department, in which Ms Liu worked, where it was his assessment there was "very little work left over, so we even don't need that department, people working there. That little workload can be shared with other people".[20]

[28] I accept the Respondent's evidence about its workload and that it no longer required Ms Liu's job to be performed by anyone because of changes in the operational requirements of its enterprise and that accordingly her position was redundant.

[29] While that finding meets the first limb of the definition of "genuine redundancy" within s.389(1) consideration must also be given to the second limb, as to whether JHC complied with any obligations in a modern award or enterprise agreement that applied to the employment to consult about the redundancy. It is also necessary to consider the matter of redeployment as required by s.389(2).

[30] JHC is not covered by an enterprise agreement. The Respondent states in its Form F3, Employer Response Form, that Ms Liu's employment was not subject to an award.[21] Such is improbable. The evidence amply supports Ms Liu was working in roles that are the subject of coverage under the Graphic Arts, Printing and Publishing Award 2020[22] (the Graphic Arts Award). Her final payslip records her employment classification as "printer" and her hourly pay rate as $19.84, which was the minimum hourly rate for a level one employee under the Graphic Arts Award at the time.

[31] The Graphic Arts Award requires, so far as is relevant to s.389(1)(b), consultation with affected employees about major change likely to have significant effects, which includes termination of employment. Noting that a proposed termination of employment is defined by the Award as something which may have significant effects on employees the Graphic Arts Award requires the following consultation with employees:

"37. Consultation about major workplace change

37.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:

(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and

(b) discuss with affected employees and their representatives (if any):

(iii) measures to avoid or reduce the adverse effects of the changes on employees; and

37.2 For the purposes of the discussion under clause 37.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:

37.3 Clause 37.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer's interests.

37.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 37.1(b).

37.5 In clause 37 significant effects, on employees, includes any of the following:

(b) major changes in the composition, operation or size of the employer's workforce or in the skills required; or

(f) the need for employees to be retrained or transferred to other work or locations; or

37.6 Where this award makes provision for alteration of any of the matters defined at clause 37.5, such alteration is taken not to have significant effect."

[32] Compliance with the clause requires several steps by an employer which has made the definite decision to make people redundant:

It needs to provide in writing information relevant to the change;

It needs to consider any matters raised by the employees in the discussions.

[33] Necessarily, consultation as prescribed "is not perfunctory advice on what is about to happen ... Consultation is providing the individual, or other relevant persons, with a bona fide opportunity to influence the decision maker".[23]

[34] Mr Xu was the person who communicated her dismissal to Ms Liu. Mr Xu gave the following evidence about what was said and done on 10 March 2021, the day on which Ms Liu was notified of JHC's decision to terminate her employment (noting the reference in the passage below to "Mrs Rui" is a reference to the Applicant):

"So on 10 March we called four people in my office. I told them, 'I'm going to redundant four people. You are the one I'm going to redundant.' I also ask them, 'Is there anything you want to say?' or - you know, I described the situation of company and I told them, you know, why we made the decision, and I also asked them, 'You can call anyone, follow up,' to say, 'Do you have any questions or do you have any sort of - you ask them. You can ask me now or afterwards to let me know if something I made decision inappropriate.'

So on that meeting I explained quite a bit and I give them chance to express what they say, and Mrs Rui on that meeting didn't say anything, but Mrs Fang said something, also Michael said something. So I explained to them already. That meeting - I think at least 20 minutes was the meeting, because that time I feel very sorry for them. I apologise for them, and I also tell them my sincere apology, and anything I can do I will help."[24]

[35] There was no consultation in the manner envisaged in the Award's clause 37. At best there was a one-way conversation on 10 March 2021 led by Mr Xu in which he informed Ms Liu and three others at JHC he could no longer maintain their employment and that their employment was to be terminated. Having communicated that news, he asked for their views. Unsurprisingly, not much came forward.

[36] Despite the difficult circumstances of needing to inform four people their jobs were likely to end, effective consultation of the type envisaged by clause 37 could have been undertaken by JHC. At the least it should have been explained to the employees why the decision was necessary and the reasons they were the ones selected for redundancy, as well as being given some time to reflect on the proposal, perhaps overnight. It would have been appropriate to then ask the employees in a resumed meeting the next day whether they had questions or alternative proposals.

[37] As it was, Mr Xu communicated the news and handed out an already prepared termination letter. Such process is not compliant with the Graphic Arts Award's clause 37.

[38] Pursuant to s.389(2) a termination of employment is also not a genuine redundancy if it would have been reasonable in all the circumstances for the dismissed person to be redeployed within the employer's enterprise or an associated entity. JHC's termination letter asserts that redeployment of Ms Liu is not possible "[g]iven the size of the company's operations, and the severe impact of recent events on our business". Such though skates across the subject, rather than directly engaging with it. The letter was given to Ms Liu on 10 March 2021, and she finished her employment on 26 March 2021, yet on 8 April 2021 an advertisement appeared for an alternative position. The Respondent explains the advertising as arising because of unexpected demand for its digital printing products, flowing from Mr Xu's return from a tradeshow which ended on 26 March 2021.[25] The first job advertisement then appeared just under two weeks later.

[39] While I accept that the increase in digital printing demand arose at short notice and after Mr Xu returned from the tradeshow, as well as after Ms Liu's termination of employment ended, it has to be noted that the Respondent plainly viewed her as having insufficient skills to perform the work which arose after termination.[26] Such views were likely foremost in Mr Xu's mind as to whether Ms Liu could be kept on, or after she had left, she could be offered a return to the business to work in the digital printing job.

[40] Ms Liu argues the company was busy at the time for her termination, however, argues the situation generally. Mr Xu and Ms Cui's evidence on its financial and trading position is consistent with the Respondent suffering a severe and sustained downturn in business and that it could not afford to maintain the then prevailing labour costs in the absence of the Jobkeeper subsidies. Those matters are consistent with what JHC expressed to her when it notified her about her forthcoming redundancy, there was not, at that time a "possibility of redeploying you in another part of the company's operations".

[41] In all, I accept that it was not reasonable in all the circumstances for Ms Liu to be redeployed within the Respondent's enterprise or an associated entity at the time she was dismissed.

[42] Since I have found that Ms Liu's termination of employment was not a genuine redundancy, as defined, it is necessary to consider whether she was unfairly dismissed.

[43] The legislative provisions relevant to whether a person has been unfairly dismissed are set out in s.387 of the Act, which is as follows:

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(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 FWC considers relevant."

[44] Determination of whether the Applicants dismissal was harsh, unjust or unreasonable requires each of the matters specified in s.387 to be taken into account.

[45] The Full Bench has summarised the approach that should be taken by the Commission to the criteria within s.387 in the following way:[27]

"[28] The following propositions concerning consideration as to whether there is a valid reason for dismissal for the purpose of s.387 are well established:

• a valid reason is one which is sound, defensible and well-founded, and not capricious, fanciful, spiteful or prejudiced;[28]
• a reason would be valid because the conduct occurred and justified termination; conversely the reason might not be valid because the conduct did not occur or it did occur but did not justify termination (because, for example, it involved a trivial misdemeanour);[29]
• it is not necessary to demonstrate "serious misconduct" or misconduct sufficiently serious to justify summary dismissal in order to establish a valid reason for dismissal;[30]
• the existence of a valid reason to dismiss is not assessed by reference to a legal right to dismiss[31] (so that, for example, where summary dismissal has occurred, it is not necessary to determine whether the right of summary dismissal was legally available); and
• the criterion for a valid reason is not whether serious misconduct as defined in reg.1.07 has occurred, since reg.1.07 has no application to s.387(a) (although a finding that misconduct of the type described might well ground a conclusion that there is a valid reason for dismissal based on the employee's conduct).[32]" (original references)

[46] Relevant to matters of redundancy, a dismissal is a case of genuine redundancy when the employer no longer requires the person's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise, and it has complied with any obligation imposed by an applicable modern award or enterprise agreement to consult about the redundancy. A dismissal is not a case of genuine redundancy if it would have been reasonable in all of the circumstances to redeploy the person within the employer's enterprise, or the enterprise of an associated entity of the employer.

[47] Despite a failure to consult with employees about redundancy and a consequential finding the dismissal was not a genuine redundancy, in circumstances where 'consultation was highly unlikely to have negated the operational reasons for the dismissal or lead to any other substantive change', the failure to consult may not be so strongly considered by the Commission in determining whether it was an unfair dismissal.[33] Generally speaking the process for selecting individual employees for redundancy is not relevant to whether a dismissal was a case of genuine redundancy, although consideration of the subject may be relevant to the Commission's consideration of the criteria within s.387.[34]

[48] Potentially relevant to this matter is the claim by Ms Liu that her immediate manager, Jason, the production manager, pursued women employees as his lover. According to Ms Liu he has a "special deal" with JHC which effectively lets him do what he wants. The allegations have two main features; firstly, that the workplace is featured by sexual harassment and bullying surrounding the manager's choice of favourites, and secondly, that Ms Liu was selected for redundancy since she was not someone in whom the manager was sexually interested.

[49] Ms Liu also levels claims of other types of bullying directed at her by the Respondent and people working for it. Jason would yell at her or withhold things she needed to do her job or take other steps to undermine her.

[50] Those allegations are obviously very serious, however they are not established in the evidence. That is not to say the things Ms Liu claims did not happen, or that her allegations cannot be established, merely that the evidence before me does not substantiate her claims. The sexual harassment allegations are entirely comprised within Ms Liu's observations and assumptions about those observations and those of her husband. She reports that Jason would favour women in whom he could develop an interest but did not give cogent evidence on the subject. The bullying allegations are general and rely on her experiences and what she relayed to her husband, Mr Shen. In particular she found Jason's conduct during 2019 and 2020 especially to be difficult and she would return home distressed and crying. She accuses him of yelling at her and being extremely rude and withholding things essential to do her work and limiting essentials such as toilet breaks or requiring her to clean the toilet.[35]

[51] There is insufficient evidence on either subject and so I do not make findings about them.

[52] The claims of sexual harassment could be relevant in these proceedings if I found that Ms Liu's termination, or selection for redundancy, was as a result of such harassment. Findings on that subject are simply not available to me since there is insufficient evidence on the subject.

[53] Likewise, the apprehension of workplace bullying could also be relevant for consideration if it were established that Ms Liu's termination or selection for redundancy came about as a result of workplace bullying, whether directly or indirectly. Again, there is insufficient evidence on the subject. Ms Liu is unable to draw an evidential link between her dismissal and what she says is the workplace culture at JHC and in particular featured with a tolerance of bullying.

[54] The evidence that JHC has recently made some changes in the workplace about harassment and bullying could be viewed in two ways. In May 2021, after the commencement of this action, Mr Xu sent Ms Liu an email noting her claims and that it was his responsibility to ensure there is no bullying or harassment in the workplace and proposed a questionnaire apparently for sending to employees under the Dex Group banner. The proposed questionnaire is basic and would hardly qualify as ensuring the company's duty of care on these matters. Even so, it does not qualify either as an admission of some type or evidence that bullying and harassment is prevalent in the workplace. Rather, the email to Ms Liu is to be viewed as an attempt at least by a small businessperson to do something in the way of acknowledging their requirements in respect of bullying and harassment.

[55] I also take into account that one of the people said by Ms Liu to be in a relationship with the manager was also one of the other three employees notified on 10 March 2020 of their dismissal for reason of redundancy. If her thesis was correct - that women employees were groomed and then rewarded for their relationship with the manager, and others punished - the termination of someone who allegedly succumbed to grooming would be counter-intuitive with its central tenet.

[56] Ms Liu's employment with JHC covered a period of slightly more than two years commencing in January 2019 and ending in March 2021. Her initial job title was UV/Laser Printer/Engraver.

[57] In March 2019 she moved to JHC's Film Graphic Office, as a Film Producer/Graphic Designer, which Ms Liu saw as a promotion on the basis of merit. In January 2020 she returned to the UV/Laser Printing role. Ms Liu took that move to be a product of bullying at the hands of Jason, her supervisor. She believes she had been doing well in the film and graphic role, but that Jason was hostile and bullying toward her, causing her to cry almost every day after work. She accuses Jason of having deleted graphic files she needed in order to learn. On Ms Liu's account the difficulties with Jason had started in 2019, not long after she had moved into the Film Graphic role. When Mr Shen raised Jason's conduct towards his wife with Ms Cui in May 2019, the latter is reported as having been dismissive, saying "Rui doesn't need think too much about Jason's yelling. Its just Jason's personality". Around the same time Ms Liu believed Jason was putting pressure on JHC to dismiss her.[36]

[58] At or around the same time Ms Liu was issued with a warning about alleged poor work performance (the complete details of which are not before the Commission). In this regard, Ms Liu recalls that she was issued "a written warning once she had made a mistake due to too much work loads. The company had also forced Rui to do the duty of cleaning the toilet under a schedule". Ms Liu regards the return move to the Laser Engraver position to be a termination of employment and an unfair dismissal at that.[37]

[59] In January 2021, Ms Liu reports the production manager as having simply instructed her to leave the Film Graphic position and to return to the previously held Laser Engraver role, something she thought would be a temporary move.[38] When he told Ms Liu about the move, on 6 January 2021, the manager:

"just said to Rui: "leave Film Graphic position. And go back to the Laser Digital department." That's it, no more word".[39]

[60] The circumstances by which Ms Liu lost her employment include being informed on 10 March 2021 that she needed to attend a meeting with Mr Xu in his office. She did not know the subject of the meeting, which was arranged without warning, merely being told that she needed to go to Mr Xu's office. Having arrived at the office Mr Xu proceeded to tell Ms Liu and three other employees their jobs were ending because of a downturn in the company's business. He asked them if they had anything to say and it seems that not much was said by anyone; two employees spoke, and Ms Liu did not say anything.[40] Mr Xu provided Ms Liu with a termination letter which advised she was to be made redundant and that her last day of employment would be Friday, 26 March 2021. The other employees were also provided with letters from Mr Xu.

[61] Ms Liu worked through her notice period and finished on 26 March 2021. Not long after that date she was told about a job advertisement on a Mandarin language website advertising employment at Dex Group. Two versions of the advertisement were placed, with the first apparently being placed on 8 April 2021 in the name of the Dex Group and the second appearing to have been first placed on 5 May 2021.[41] Ms Liu and Mr Shen have provided translations of both advertisements. The translations suggest the advertisements are not identical but have substantial similarities, and so only the first is reproduced below. Mr Xu contests some aspects of the accuracy of the translations, and particularly the job description title:

4. Good attitude, systemised and focus on details.

5. Good team work and communication."[42]

[62] Ms Liu and Mr Shen argue that the advertisements demonstrate Ms Liu's job was not redundant since the company had a need for new employees to perform work she was qualified to do. They also point to things they heard that an employee who remained behind had to work considerable overtime so as to complete an important order:

"On April 3, 2021, that is 5 days after left the company, I saw the company advertised its UV/Laser Engraver position. On that job ads it says there is age requirement of between 31 to 40 years old.

According to my former worker, a new stuff replaced my UV/Laser Engraver position on April 9th. And because I had left too much undone work, the new and other stuffs (sic) needed working overtime (including Saturdays) to catch up. One of them had done 66 hours overtime with cash (no overtime penalty) in two weeks. (This employee has been working overtime with cash for many years, in many roles)."[43]

[63] Ms Cui's Form F3, the Employer Response Form, argues the additional employment came about because of changed circumstances:

"In March 2021, my husband went for APPA show and promoted our digital printing business, in April 2021, our digital printing started getting more orders, surprisingly in mid of April the whole industry is all suddenly getting really busy, our digital printing business also booming, then we realised that we need to get someone to look after digital printing, Jason cannot cope with the work load by himself, we need some to learn how to setup the machine, about 3 weeks after Mrs. Rui Liu's redundancy, we put ad online for digital printing position."[44]

[64] Mr Xu's evidence on the subject is consistent with this explanation. At the end of March 2021, he went to an industry trade-show and that as a result his UV digital printing business started picking up. He and his managers responded by deciding the company needed employees with the skills to build on the demand:

"... In the end of March I went for the APPA Roadshow. We're promoting our digital UV printing as the new method of printing, and the show was successful and when I came back in the end of March to Melbourne and that UV digital printing business started picking up, and in April, beginning of April, getting more orders, a lot more orders.

So then we decided - so Jason goes, 'Look, we maybe need some - it's about time to get someone to learn how to operating machine, how to set up the job, how to do the artwork on their machine,' and I said, 'Okay, if that's the case' - it is every day we're getting more orders. I said, 'Okay,' then the general manager Phillip put an ad on for that UV digital printing, ...."[45]

[65] After the roadshow, which was from 23 to 26 March 2021:[46]

"The business picking up - started busy. So in beginning of April we found more orders every day coming. That's why Jason suggest we might need someone to learn, because he didn't have time to set up every day. I said, 'Fine.' That's why on 8 April we put ads on for that position."[47]

[66] Mr Xu's evidence is firm that the Respondent's digital printing workload picked up between 26 March 2021 when Ms Liu's employment finished and 8 April 2021 when the advertisement was placed. He did not consider Ms Liu for re-employment due to his assessment of her skills:

"THE COMMISSIONER: Okay. Now, the question I'm getting to is why not reconsider Ms Liu to do that work?

MR XU: Okay, so that's another question, sir. You know, it is very complicated. For her capability to learning on digital printing, I would say it's almost impossible, because she wasn't capable of doing the film-making. How can you make it to capable of doing the complicated job, even more complicated job, which requires a lot of skill on computer and art, graphics side of it, change colours, everything, and also to design a jig, to make a jig, to operating onto another laser engraving, which is cutting the jig. This requires a lot of skill, and for her capability, to do that is impossible. That's what I would say."[48]

[67] Mr Xu and Ms Cui provided extensive evidence about JHC's trading position as it was in March 2021. The evidence they gave about their financial situation was not challenged to any great degree by the Applicant or her husband, other than for them to insist the company was busy and shows JHC to be under a significant level of stress at or around the time Ms Liu and the other three employees were dismissed. The information well establishes a parlous trading position against which cost reduction would not only be a likely managerial response, but an essential one. Further, it undermines Ms Liu's claims that workloads remained busy and the demand for employment ongoing.

[68] In summary, the financial and trading information before the Commission shows the following:

• The Dex Group's sales had declined in March 2020 to 65% of the comparable period's sales in 2019. The lowest point of the sales decline was in August 2020 (47%), but by December had only recovered to 66%. Sales in each of the first three months of 2021 were between 68% and 69% of the 2019 base.[49]

• JHC's GST March Quarter sales value declined by around 50% between January 2019 and March 2021. Mr Xu asserts that at the same time the costs of goods sold increased by between 15% and 30% and the company's shipping costs increased "3 times".[50]

• As a result, in 2020 the business needed to seek an increased business loan from its bankers.[51]

• The absence of Jobkeeper support created severe financial pressure on JHC without a reduction in staff. The company's three-month gross profit margin would be eroded with rent (about 57% of gross profit) and wages (about 29% of gross profit). The payment of other costs would make it "extremely difficult to me financially".[52]

[69] Mr Xu's oral evidence corroborates these matters. I accept the financial data provided is not audited or the subject of independent evidence. To that extent it is open to some question. Nonetheless, the facts of the matters include that JHC was eligible and received the Australian Government Jobkeeper payments, the eligibility requirements of which are both well-known and substantial. JHC's business is in a market sector dependent on customers wanting promotional products for events they convene for their own marketing purposes. Very obviously the demand for those products will have reduced considerably since before the start of the pandemic and demand is likely to remain soft.

[70] Mr Xu's oral evidence explained his decision making from the start of the pandemic. First, in relation to 2020:

"And also I applied for more money, which is [omitted] and they approved. So I put that money into business, to save business. So at that time it's very hard, because we're importing material from China but we have to pay them. So the money I owe China is enormous, a lot. As the sales go down I cannot be able - I won't be able to pay back China the goods we import, so I have to get more money from the bank to pay them.

So that's how I struggle to get through, but luckily I come to here now; I still survive. So that's the situation when we went through the 2020. I assume the - I suppose most of company during pandemic would be similar situation as I was.

And then we come to the redundancy. In the March, because the sales does down, everyone in the office, we start panic, very panicking, and we're talking about it a lot every day, we're watching the orders, number of orders, and towards the end of March we decided to redundant people.

The first group of redundancy, which is six people. So we redundant six people, and also we decided that's not enough, we needed to redundant more, so we made a second group of people, which is four more people, which is the - Mrs Rui was in the list, second list, but at the end of March, government announced that we could have the JobKeeper, so then I did - at that time then I reconsidered the second group of redundancy people, whether we should help them to get JobKeeper to maintain their job or not.

We discussed it, and at the same time Ms Rui rang my wife, not send a message. She said she send a message to my wife. Actually, she rang my wife, say, 'Can I get help from you? Can you help me to get the JobKeeper to keep my position?' and my wife said, 'Okay, I'll talk to my husband.' Then once we got the announcement from government, say JobKeeper is there, I said, 'Okay, we'll help them.' So that four people, the rest of the staff, were maintained to get JobKeeper to support them, but - -".[53]

[71] The company's trading position had not improved tremendously by 2021 and coinciding with the removal of the Jobkeeper subsidies JHC began to review each of its work areas:

"MR XU: Yes, then we discussed what we've got to do, and we all discovered in our factory we've got not enough workload for all the people. We have to sort of, you know, redundant a few people, then we discussed the where - which, where, and also can we just redeploy them to the other positions. In pad printing section we redundant one lady, because not enough workload, and for the screen printing there is one man, which is Mark, he resigned for retirement. So that's one we short, no problem.

Another one is Michael. He's in the transfer area. Not enough workload, so we said, 'Okay, this guy maybe can go.' For laser engraving department we discussed there is very little work left over, so we even don't need that department, people working there. That little workload can be shared with other people. Other people not busy.

So that's what we decided. 'Okay, well, maybe just the' - this laser engraving is getting less and less work because we're going to discontinue a lot mugs and key rings. Nowadays, the trend goes. Everything got to be eco. So the paper pens, the bamboo pens or even the wheat straw pens become more popular. The metal pens not popular at all. So the laser engraving of metal pens, it's declined.

The key rings, no one wants it at the moment. No one wants the key rings. It's very rare. Still have orders, but declined. The mugs the same. The mug they want, the bamboo material mugs, they wanted, you know, the wheat straw mugs, but metal ones they decline as well, so we predict that they will be reducing anyway.

So if we've got so little workload, it just not enough to keep two full-time there. We may just close there. We just get people - Jason doing the set-up and get people just - the products, and a couple of hours, three hours a day, should be finished the work.

So that's the situation we analysed and we decided, look, we maybe can reduce people from there. So that's how, based on current situation workload, we decide, 'Okay, we don't need four more people,' you know, which is the - we already thought and considered are there any positions we can deploy them to, but actually we found there's nowhere, because every department we've got one person gone. We don't need them.

The only place we need it is, you know, the storeman, but at that time we're not busy, we can cope without the storeman. The storeman for her - I'm not sure if she went into it or not, but the storeman at that time, in March this year, we still very quiet, and we even don't need it. So general manager is doing the booking for the fresh freight and for the unloading container, Jason, production manager, he's doing, and sometimes I help him to cope with it. That's no problem. Without the storeman we still can going. So that's the situation in March, how we made a decision on it."[54]

[72] Mr Xu and Ms Cui's evidence suggests they are firmly in control of their family's businesses. While those businesses and JHC in particular are being buffeted hither and thither by the unpredictability of the pandemic Mr Xu in particular impresses as a person who is prepared to not only take firm remedial action to cut costs but to also invest where it may provide a return.

[73] I am satisfied therefore that Ms Liu's termination of employment was for the reason of redundancy, albeit not a "genuine redundancy" insofar as the limited statutory definition might apply. It was for the reason that JHC no longer required her job to be performed by anyone.

Application of the s.387 criteria - whether dismissal harsh, unjust or unreasonable

[74] I will deal with each of the criteria within s.387 in turn.

(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)

[75] Determination of a valid reason involves an examination of whether the reason given is "sound, defensible or well founded", within the overall context of the employment relationship.[55] It is not the Commission's role to "stand in the shoes of the employer and determine whether or not the decision made by the employer was a decision that would be made by the court."[56] However, I "must consider the entire factual matrix in determining whether an employee's termination was for a valid reason."[57]

[76] Consideration of this criterion requires examination of whether there was a valid reason for an employee's dismissal related to the person's capacity or conduct. Having found that Ms Liu was dismissed for reason of redundancy, a finding is not available that there was a valid reason for her dismissal relating to her capacity or conduct. Consideration of this criterion is therefore a neutral matter in my overall consideration of whether her dismissal was harsh, unjust or unreasonable.

(b) whether the person was notified of that reason

[77] Ms Liu was notified of the reasons held by JHC for her dismissal in a letter given to her on 10 March 2021. Consideration of this criterion is also a neutral factor.

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

[78] For the Commission to have regard to whether an employee has been given an opportunity to respond to the reason for dismissal there needs to be a finding that there is a valid reason for dismissal.[58] While so, it is also accepted that "an opportunity to respond" amounts to an opportunity to provide reasoning to a decision maker that would, all things being equal, allow a reasoned explanation to cause the decision maker to accept what is proffered and to change from their foreshadowed path.

[79] Since Ms Liu's termination of employment did not relate to her capacity or conduct, I find consideration of this criterion to be a neutral factor.

(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

[80] The evidence shows there was no unreasonable refusal by JHC to allow Ms Liu to have a support person present to assist at any discussions relating to her dismissal.

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

[81] Ms Liu's termination of employment was not related to unsatisfactory work performance.

(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

[82] While the procedures followed by JHC to effect Ms Liu's dismissal were basic, they were appropriate and seemingly on the basis of legal advice. I do not consider the procedures adopted by the Respondent were impacted by its size.

(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

[83] There is no evidence that JHC has any dedicated human resource management specialists or expertise in its enterprise, so this is criterion is a neutral factor in my consideration as to whether Ms Liu's dismissal was unfair.

(h) any other matters that the FWC considers relevant

[84] Two other matters are relevant for consideration. They are that:

Ms Liu's dismissal was the product of a significant downturn in JHC's business and profitability and a redundancy, although not a genuine redundancy;

Upon termination of employment Ms Liu worked out her notice period and was paid a redundancy payment equating to that required by the National Employment Standards.

[85] The Full Bench has held through the majority in UES (Int'l) Pty Ltd v Leevan Harvey that the fact of a valid reason for termination arising from the redundancy of a person is a matter relevant to consideration as to whether an applicant's dismissal was harsh, unjust or unreasonable.[59] Further, and arising from the same matter, it was held that a failure to consult over a redundancy does not necessarily mean a dismissal was harsh, unjust or unreasonable, but that it may.[60]

[86] The circumstances of Ms Liu's termination of employment are that it was sound, defensible and well-founded since JHC no longer required her job to be performed by anyone because of changes in the operational requirements of its enterprise and it was not reasonable in all the circumstances to redeploy her. Although not a small business employer as that term is defined in the Act, it is nonetheless small, even after taking into account the scale of its own operations and those of Dex Group.

[87] The Respondent's only observable failing was that it did not consult with Ms Liu in the manner required by the Award in order for the termination of employment to be a genuine redundancy. The fact that it is not a "genuine redundancy" as defined does not mean the termination is not capable of being found to be a redundancy for genuine reasons. The evidence does not lead to any findings that Ms Liu's termination of employment was otherwise unfair. Her selection for redundancy was plausible and there is no element of procedural unfairness to be found. Redeployment was not a feasible alternative, given the Respondent's assessment of her skills and the gap between those and its assessed needs.

[88] The redundancy payment made to Ms Liu and the notice given to her are consistent with the Respondent's obligations, from which observation two things spring.

[89] Firstly, it suggests that the Respondent endeavoured to comply with its obligations and extend to Ms Liu as much fairness as could be achieved in the circumstances in which she lost her job through no fault of her own.

[90] Secondly, and more substantially, the fact of the payment leans against a finding of unfairness in the absence of any other matters of unfairness. The payment of 6 weeks redundancy pay is an amount that would need to be deducted from any order of compensation if such were made by the Commission.[61] The only finding of substance or procedure made by me against the Respondent is its failure to consult with Ms Liu as required under the Award. Had it done so, that consultation would likely have taken no more than a couple of days.

[91] There is no evidence that on this occasion, unlike in 2020, the Respondent would have changed its mind and kept Ms Liu on. Unlike in 2020 Jobkeeper subsidies were no longer available and so there would be no apparent benefit, and only further cost to JHC, in retaining Ms Liu.

[92] In such case a proper application of the Sprigg[62] formula would lead to a finding that Ms Liu's anticipated period of employment was minimal, and probably no longer than the period of notice she was given. The deductions required from any headline compensation would reduce the amount to zero or close to it.

[93] Accordingly, these circumstances lean away from the possibility there could be a finding that Ms Liu's termination may be found to be harsh or unjust. The possibility of a finding that Ms Liu's dismissal was unreasonable is removed with my finding there was a valid reason for her termination of employment, with her job being redundant.

[94] My consideration of this criterion therefore does not resolve in Ms Liu's favour.

[95] After considering each of the criteria within s.387, I am satisfied that there was a valid reason for Ms Liu's termination of employment, namely that it no longer required her job to be performed by anyone because of changes in the operational requirements of its enterprise and it was not reasonable in all the circumstances to redeploy her. Other than JHC's failure to consult with Ms Liu about its decision, there were no substantial procedural defects or other matters which would cause me to find that her dismissal was harsh, unjust or unreasonable.

[96] As a result, I am unable to find that Ms Liu was unfairly dismissed.

[97] The application for unfair dismissal made by Ms Liu is itself dismissed and an order to that effect is issued at the same time as this decision.

[1] Witness Statement of Rui Liu annexure to Form F2 Unfair Dismissal Application, 16 April 2021, Hearing Book, p.16.

[2] Applicant Document "The Timeline of Events", Hearing Book, p.104.

[3] See for example; the Applicant's Further Submissions (Hearing Book, p.29, 35); Form F3, Employer Response Form, 11 May 2021, item 2.2, Hearing Book, p.75)

[8] Respondent Document "Employee's Redundancy Letter", 9 March 2021, Hearing Book, pp.202 - 203.

[9] Statement Sent to Employer annexure to Form F2 Unfair Dismissal Application, 16 April 2021, Hearing Book, p.19.

[10] Applicant's Submissions, Hearing Book, p.61.

[12] See Annotated Form F3, Employer's Response Form, Hearing Book, p.74.

Rui Liu v JHC Corporate P/L [2021] FWC 5345

At a glance

Court

Decision date

Source

Judgment (228 paragraphs)

Rui Liu v JHC Corporate P/L [2021] FWC 5345 (7 September 2021)

Parties

Legislation Cited (1)

Cases Cited (8)