Fair Work Act 2009

s.394 - Unfair dismissal

Application for an unfair dismissal remedy -jurisdictional objection - genuine redundancy - application dismissed.

• [1] Ms Charan was employed as a Senior Accountant by Lamson Concepts Pty Ltd (Lamson) from 30 October 2023 until 24 May 2024. Lamson contends that Ms Charan's dismissal was a genuine redundancy within the meaning of s 389 of the Fair Work Act 2009 (Cth) (Act). Ms Charan contends that her dismissal was not a genuine redundancy and was harsh, unjust and unreasonable.

• [2] After taking into account the views of the Applicant and the Respondent and whether a hearing would be the most effective and efficient way to resolve the matter, I considered it appropriate to hold a hearing for the matter (per s.399 of the Act). I heard Ms Charan's unfair dismissal case against Lamson in the Fair Work Commission (Commission) at Sydney on 3 September 2024. Ms Charan gave evidence at the hearing and also relied upon a bundle of documents. Lamson adduced evidence from Ms Kathryn MacMillan, a Human Resources Advisor employed by Circle Recruitment and HR, who had been involved in the dismissal of Ms Charan on behalf of Lamson and Ms Kate Kershaw, Managing Director of Lamson. Lamson also relied upon a number of documents in support of its case.

• [3] Section 396 of the Act sets out four matters which I am required to decide before I consider the merits of the Application.

• [4] There is no dispute between the parties, and I am satisfied on the evidence that:

(a) Ms Charan's application was made within the period required in s 394(2) of the Act;

(b) Ms Charan is a person protected from unfair dismissal; and

(c) Lamson was not a 'small business employer' as defined in s 23 of the Act and, as a result, the Small Business Fair Dismissal Code does not apply to Ms Charan's dismissal.

• [5] In relation to the final initial matter which I am required to consider, Lamson contends that Ms Charan's dismissal was a genuine redundancy and Ms Charan disputes this. Accordingly, I must decide this question before I consider the merits of the application.

• [6] Section 389 of the Act defines genuine redundancy 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.

• [7] 'Associated entity' has the meaning given by s 50AAA of the Corporations Act 2001 (Cth).

The employer no longer required the employee's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise (s 389(1)(a))

• [8] It is necessary to determine whether Lamson no longer required Ms Charan's job to be performed by anyone because of changes in the operational requirements of Lamson's enterprise.[1]

• [9] A job involves 'a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employer's organisation, to a particular employee'.[2] Where there has been a reorganisation or redistribution of duties, the question is whether the employee has 'duties left to discharge'.[3] For example, an employer may redistribute all the tasks done by a particular person between several other employees, resulting in the person's job no longer existing.

• [10] An employee's job may be genuinely made redundant when the employee's duties, or aspects of them, are still being performed by other employees.[4] The test is whether the job previously performed by the employee has survived the restructure or downsizing, not whether the duties have survived in some form.[5]

• [11] The reference to 'changes in the operational requirements of the employer's enterprise' in s 389(1)(a) of the Act includes circumstances where an employer restructures its business to reduce costs or improve efficiency, productivity, sales, revenue or some other aspect of performance.[6] The operational circumstances of a business which may result in a redundancy are in the direct knowledge of the employer. The evidentiary onus is on the employer to provide direct evidence about the nature of the employee's job and why it is no longer required to be performed as a result of changes in the operational requirements of the employer's enterprise.[7]

Relevant facts - job no longer required because of changes in operational requirements

• [12] Lamson is a materials handling business, with their major product being pneumatic tubing, which they also configure and install for clients. Those clients are in the retail, healthcare, aged care, hospitality, commercial and government sectors.

• [13] Ms Charan worked in the Finance Department along with approximately three other employees who reported to her. Whilst there was some contest about the extent that she had been required to review and improve internal controls within the Finance Department and control environment her role was largely as set out in her position description and consisted of overseeing all of the aspects of the finance and accounting functions of Lamson including:

(a) Preparation and management of financial and management reporting (including monthly and yearly general ledger reconciliations, month end processes involving bank reconciliations, recurring journals, warranty provision calculations, revenue recognition and cost allocations, fixed asset registers with depreciation calculations, monthly sales invoicing reports, monthly management reports, weekly accounts reports, and other ad hoc reports as required); and,

(b) Managing taxation and statutory reporting including PAYG withholding, BAS returns, FBT returns and preparing and lodging payroll taxes and superannuation.

• [14] At no time have any concerns been raised regarding Ms Charan's performance in this role.

• [15] Lamson relied on a number of reports in support of its deteriorating financial situation. There was no serious challenge to the difficult financial circumstances disclosed by these reports. Lamson have observed a significant increase in salaries and wages expenses by more than 25%, from $5.8 million in FY2022 to $7.3 million in FY2024. The sales order intake over the same period has decreased by almost 28%, from $11.8 million to $8.45 million. Ms Kershaw gave evidence for Lamson, which I accept, that sales revenue from retail markets was expected to decline significantly by more than 36% from $3.1 million in FY2024 to $2 million in FY2025. The anticipated decline in sales is partly attributable to a move away from using cash and the consequent decrease in the need for pneumatic tubing for cash transactions. These matters were anticipated to further negatively affect Lamson's future cashflow. In addition, there has been increased competition in the pneumatic tube market recently, placing Lamson under significant pressure in sustaining its financial viability.

• [16] Lamson has enacted various cost-cutting measures to address these commercial pressures, including downsizing its head office and other premises, and reducing other costs including telephone costs. Ms Kershaw gave evidence that Lamson had considered numerous options to possibly mitigate the financial impacts identified above including reviewing its major operating expenses to identify any opportunities for cost savings in rent, car running costs, information technology and insurance premiums. It had also been searching for any alternative products to replace the cash tube systems, however, it had been unsuccessful in finding any suitable products that could offset the reduction in retail sales. Lamson have hired one additional sales team member to seek to increase sales revenue by looking at any upselling opportunities in the healthcare market. However, it had identified very little room for any further cost savings or measures to address Lamson's ongoing financial situation.

• [17] As a result, Lamson made the decision to look further into increasing the sales team to focus on other products, reducing the additional costs of contractors in the maintenance and installation teams, and potentially outsourcing the Finance Department.

• [18] In or around early May Lamson engaged Ms MacMillan to facilitate consultation with the employees who were potentially affected including Ms Charan. On Friday 17 May 2024, Ms Kershaw sent an email to Ms Charan and all other members of the Finance Department titled 'Potential Restructure'. That email included an invitation to a team meeting with Ms Kershaw and Ms Macmillan scheduled to occur at 1:00 PM on Monday, 20 May 2024. Shortly following the sending of that email, Ms Charan found that she was unable to access Lamson's bank logins. Ms Charan's access to Lamson's bank logins was reinstated in the morning of 20 May 2024.

• [19] At a meeting on 20 May 2024, Ms Charan and her team were informed that, as a result of a decline in sales orders, that Lamson would be restructuring the Finance Department and that Ms Charan and her team were at risk of redundancy.

• [20] On 20 May 2024, the Respondent wrote to Ms Charan as follows:

Lamson representatives, accompanied by our HR advisors from CIRCLE HR, will be meeting on an individual basis with each employee whose position may be made redundant. During these

meetings, each employee will be provided with an opportunity to respond to the decision to select them for possible redundancy, raise any measures they consider might be taken to avoid their position being made redundant or mitigate its effect, and raise any possible alternatives to their employment with Lamson being terminated as a consequence. Please feel free to bring a support person to any meetings.

We would like to meet with you on 21st May 2024 at 3:15 PM to consult with you further, and hear your feedback on this situation. The meeting will be conducted via Teams.

• [21] Following the meeting of 20 May 2024, a number of meetings were scheduled between Ms Charan, Ms Kershaw and Ms MacMillan. Ms Charan did not attend these meetings for a number of reasons including that she was unwell, had a medical certificate, that she didn't have access to the office, had made an appointment during her scheduled lunch break which coincided with the time of the meeting, or needed rest. Ultimately, the Respondent asked Ms Charan to send any feedback regarding the restructure and possible redundancy of her role in writing.

• [22] By emails sent on 23 May 2024 Ms Charan provided the Respondent with her feedback following the meeting to discuss the restructure. Ms Charan's email indicated that she sought further details about the alternatives to redundancy that Lamson had evaluated prior to deciding to restructure the Finance Department, and queried why Lamson did not conduct any preliminary discussions with the Finance Department prior to 20 May 2024. Ms Charan also questioned why the Finance Department had been selected for redundancy and no other Lamson department. Ms Charan sought clarification about her current responsibilities, saying that it was important to know who would be in charge of bank reconciliations, BAS lodgements, and end-of-month payroll journals in the event she was made redundant, and inquired as to whether (and why) the outsourcing of those functions would result in cost savings.

• [23] On 24 May 2024 Ms Charan met with Ms Kershaw and Ms MacMillan. At the meeting the Applicant's feedback of 20 May 2024 was discussed, the rationale for restructuring the Finance Department was explained and Ms Charan was told that no suitable redeployment opportunities had been identified. Ms Charan was advised that she was not being retrenched due to any performance-based factors but due to a decision to outsource the entire Finance Department. Ultimately, Ms Charan was advised that her position had been made redundant, that she would be provided a career coach, and paid one week in lieu of notice and entitlements.

• [24] On 24 May 2024 the Respondent wrote to Ms Charan formally terminating her employment. During the week ending 24 May 2024 all employees of the Finance Department were made redundant.

• [25] Ms Kershaw gave evidence, which I accept, that all of the work, tasks and functions of the Finance Department, including the duties and work previously performed by Ms Charan, are now being performed by an Australian company with employees engaged in the Philippines. She gave evidence, which I accept, that the tasks of Ms Charan's role, including the statutory compliance tasks, bank reconciliations and forecasts can and are being performed by the outsourced provider, and that she is not performing the duties or role of Senior Accountant. Ms Kershaw also deposed that the outsourcing decision has decreased the costs of the Finance/Accounting function of Lamson by approximately 50%. Ms Kershaw was not cross-examined on this evidence.

Summary of submissions - job no longer required because of changes to operational requirements

• [26] Ms Charan submits that her role must still be required to be performed due to the fundamental statutory compliance aspect of her duties. She contends that her duties have not disappeared and Ms Kershaw must be performing some of the duties.

• [27] Ms Charan contends that the business factors relied on by Lamson to justify its decision to outsource the Finance Department, including her role, are flawed as other measures could have been identified to reduce costs or increase sales if she, or her team, had been consulted earlier and in circumstances where Ms Charan claims that Lamson's niche business remains stable.

• [28] Lamson contend that rising costs, the impact of a long and declining revenue cycle, decreasing sales and a poor forecast due to a move to a cashless, digital society, resulted in a decision being made to outsource the Finance Department as a cost reduction strategy. As a result, Lamson no longer needed Ms Charan's job to be performed by anyone.

Consideration - job no longer required because of changes to operational requirements

• [29] In Schneider v Apollo Motorhome Holidays Pty Ltd [2015] FWCFB 1259, the Full Bench succinctly said at [28]:

In determining whether a dismissal is a 'genuine redundancy' the Commission is concerned with whether the 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'. A decision by an employer to outsource all of an employee's duties is clearly a redundancy.

• [30] The reference to having the job no longer performed by 'anyone', must mean by anyone employed by the business.[8] I find that the duties undertaken by Ms Charan do not continue to exist at Lamson. I am satisfied that some of these tasks were performed by Ms Kershaw for a short period following Ms Charan's dismissal while the outsourcing was operationalised. However, these duties are now being undertaken by employees working for the outsourced entity. In any event, the test is not whether the duties continue to be performed. The test is whether the job that Ms Charan was working in is no longer required to be performed by anyone.[9] The evidence demonstrates to my satisfaction that Lamson no longer required the job being performed by Ms Charan, Senior Accountant, to be performed by anyone after 24 May 2024.

• [31] The second element of s 389(1)(a) is a question of causation: did changes in the operational requirements of the employer's enterprise cause the employer to no longer require Ms Charan's job to be performed by anyone? I consider, based on the evidence before me, that they did.

• [32] Ms Kershaw gave evidence that there had been a decline in the use of pneumatic tubing for cash transportation due to the broader societal shift towards digital and cashless transactions. This shift is indisputable. It was said that traditional methods of cash handling and transportation were becoming increasingly obsolete. Pneumatic tubing for cash handling is a core part of Lamson's business. Ms Kershaw gave evidence, which I accept, that sales order intake had been declining significantly since 2022 (by approximately 28%) and that this would affect sales revenue over the coming years. In addition, salaries and related costs have increased significantly. This downturn in business led Lamson to investigate or implement various cost reduction measures, to investigate potential alternative products to market and to implement other measures to increase sales revenue. One of the costs savings measures identified and ultimately implemented was the outsourcing of the entire Finance Department. As I have described, Ms Kershaw gave evidence that this had resulted in costs savings of approximately 50% to date.

• [33] I do not accept Ms Charan's contention that the business factors relied on by Lamson to justify its decision to outsource the Finance Department, including her role, are flawed as alternatives could have been suggested if the Finance Department had been consulted with earlier and as Lamson's niche business remains stable. Ms Charan did not lead any evidence to support this contention. In any event, I accept the evidence of Ms Kershaw that the business was not stable as sales had been declining and revenue would likely continue to decline. I also consider, based on the evidence, that Lamson had considered and implemented a number of options to improve its financial position prior to deciding to restructure its business. Ms Charan did not lead any evidence as to what measures she could have identified to reduce costs or increase sales that may have averted the need for a redundancy. Ms Charan asserted that had Lamson consulted with her earlier, she may have been able to provide alternatives to the redundancy, but when pressed, Ms Charan did not identify (nor did any of her evidence disclose) what alternatives she would have proposed. I find that Lamson's decision to make Ms Charan's position redundant as a result of economic and business factors is supported by reports filed by Lamson and the evidence of Ms Kershaw. I also take judicial notice of the fact that traditional methods of cash handling are in decline and likely to become even less prevalent, as society moves to digital and cashless transactions.

• [34] I am satisfied on the evidence that the decision to outsource the Finance Department and make Ms Charan's role redundant was based on the business and economic factors deposed to by Ms Kershaw.

Conclusion - job no longer required because of changes to operational requirements

• [35] Based on the evidence and for the reasons discussed above, I am satisfied, on the balance of probabilities, that Lamson no longer required Ms Charan's job to be performed by anyone because of changes in the operational requirements of Lamson's enterprise.

Compliance with any consultation obligation in a modern award or enterprise agreement that applied to the employment (s 389(1)(b))

• [36] Ms Charan contended that Lamson had not adequately consulted with her in relation to her redundancy. Her main concern was that Lamson had failed to consult with her prior to deciding to outsource the work of the Finance Department. However, she also raised concerns that the consultation process was 'rushed' and that Lamson had decided to terminate her employment prior to the completion of consultation in circumstances where it did not furnish her with sufficient information to enable her to influence that decision.

• [37] For there to be a genuine redundancy within the meaning of s 389 of the Act, Lamson must have complied with any obligation in a modern award or enterprise agreement to consult about the redundancy.

• [38] Ultimately there was no dispute between the parties that Ms Charan was not covered by any award or any enterprise agreement during the relevant period, and I am satisfied as to this matter. Accordingly, Lamson was not required to consult with Ms Charan in relation to her redundancy to meet the requirements of s 389(1)(b) of the Act.

• [39] Ms Charan raised multiple, serious concerns regarding the consultation process conducted by Lamson. If no consultation provisions apply from a modern award or enterprise agreement, then this will not be a consideration in relation to whether a dismissal is found to be a genuine redundancy within the meaning of the Act. Ultimately, broader issues of deficient consultation are not relevant when determining Lamson's jurisdictional objection, because they go to the merits of the claim that the Applicant was dismissed harshly, unjustly or unreasonably.

Whether reasonable in all the circumstances for the person to be redeployed (s 389(2))

• [40] For the purposes of section 389(2) of the Act, the Commission must consider whether there was a job or a position or other work within the employer's enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. There must be an appropriate evidentiary basis for such a finding.[10] The word 'redeployed' in section 389(2) of the Act should be given its ordinary and natural meaning, which is to 'transfer to another job, task or function'.[11]

• [41] If an employer wishes to rely on the 'genuine redundancy' exclusion in s 389 of the Act, then it would ordinarily be expected to adduce evidence, on the question of redeployment, as to whether there was a job or a position or other work within the employer's enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. Such evidence would usually include the steps taken by the employer to identify other jobs, positions or work which could be performed by the dismissed employee.[12]

• [42] Whether it would have been reasonable in all the circumstances for the person to be redeployed directs attention to the circumstances which pertained when the person was dismissed.[13]

• [43] In determining whether redeployment would have been reasonable a number of matters may be relevant, including:

• (a) Whether there exists a job or position or other work to which the employee can be redeployed;[14]
• (b) The nature of any available position;[15]
• (c) Qualifications required to perform the job;[16]
• (d) The employee's skills, qualifications and experience. The employee should have the skills and competence required to perform the role to the required standard either immediately or within a reasonable period of retraining;[17] and
• (e) The location of the job in relation to the employee's residence and the remuneration which is offered.[18]

• [44] It is important, however, to appreciate that, because there is a requirement to assess the reasonableness of redeployment 'in all the circumstances', it is not possible to establish binding or decision rules concerning the application of section 389(2) of the Act in all cases; the circumstances of each particular case must be considered.[19]

• [45] I am satisfied that it would not have been reasonable in all the circumstances for Ms Sharan to be redeployed within Lamson's enterprise, or an enterprise of an associated entity of Lamson, for the following reasons:

(a) Lamson looked into all other areas for re-employment/redeployment within Lamson and was not able to identify any other suitable roles for Ms Charan;

(b) Lamson invited employees to consider solutions and suggest possible alternative outcomes to mitigate the possible redundancy of their positions, with a view to discussing those ideas and possible re-employment/redeployment opportunities within Lamson;

(c) Ms Charan elected not to express an interest in any opportunity for redeployment;

(d) Ms Charan is a Chartered Accountant and employed in the senior, specialised professional role of Senior Accountant within the Finance Department of Lamson reporting to the Managing Director, Ms Kershaw;

(e) The work of the whole of the Finance Department had been outsourced to a third party;

(f) Ms Charan accepts, and I am satisfied, that there were no positions or other work to which she could have been redeployed given her seniority, skills and qualifications;

(g) a role of Admin Assistant was advertised just prior to Ms Charan's dismissal and this role may have been vacant at the time of her dismissal. This role was paid approximately $60,000 per annum plus superannuation, less than half of Ms Charan's salary. Ms Charan accepts, and I am satisfied, that she was overqualified for this position.

(h) I accept the evidence adduced on behalf of Lamson that there were no available positions or roles suitable for Ms Charan, in light of her skills, experience and qualifications.

• [46] For the reasons given above, I am satisfied that it would not have been reasonable in all the circumstances for Ms Charan to have been redeployed within Lamson's enterprise or an enterprise of an associated entity of Lamson.

• [47] I have found that Ms Charan's job was no longer required to be performed by anyone because of changes to the operational requirements of the business, that no consultation obligations in an applicable modern award or enterprise agreement applied to the dismissal, and that it would not have been reasonable to redeploy Ms Charan in all the circumstances. Accordingly, I am satisfied that Ms Charan's dismissal was a case of genuine redundancy within the meaning of s 389 of the Act. It follows, by reason of s 385(d) of the Act, that Ms Charan was not unfairly dismissed. Because Ms Charan's redundancy was genuine within the meaning of s 389 of the Act, I do not have the power to consider whether her dismissal was unfair in the broader sense.

• [48] For the reasons given, I dismiss Ms Charan's application for relief from unfair dismissal. An order will issue to this effect with this decision.[20]

• [49] With this being said, I make the following observation with respect to the duration of the consultation process. At most, the consultation process spread across one week - from the late Friday afternoon communication that there was going to be a discussion about redundancies the following Monday, to the time that Ms Charan was informed that she was dismissed due to her role being made redundant. The timing of the initial communication was unfortunate and, I accept, left Ms Charan feeling anxious. During the one-week period that followed, Ms Charan was obviously deeply stressed about being made redundant on short notice. This is understandable, especially given her personal circumstances and carer's commitments. Whilst ultimately, I cannot determine the merits of Ms Charan's dismissal, I note that I consider that Ms Charan would have benefitted from a longer consultation process where she was more fulsomely engaged, felt less pressured, and given more time to process her potential retrenchment.

[2] Jones v Department of Energy and Minerals [1995] IRCA 292; (1995) 60 IR 304 (Jones) at 308 per Ryan J; applied in Ulan Coal Mines Limited v Howarth [2010] FWAFB 3488; (2010) 196 IR 32 (Ulan Coal 1) at [17].

[4] Dibb v Commissioner of Taxation [2004] FCAFC 126; (2004) 136 FCR 388 at 404-5.

[5] Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674 at [27] per Hamberger SDP.

[6] Nettlefold v Kym Smoker Pty Ltd [1996] IRCA 496 at p. 373.

[7] Kieselbach v Amity Group Pty Ltd PR973864 [34].

[8] See the discussion by the Full Bench in Shop, Distributive and Allied Employees Association v Bunnings Building Supplies Pty Ltd t/as Bunnings Warehouse AIRC PR949303, 15 July 2004 per Harrison SDP, Ives DP and Cribb C at [21].

[9] Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674 at [27] per Hamberger SDP.

[10] Technical and Further Education Commission T/A TAFE NSW v Pykett [2014] FWCFB 714; (2014) 240 IR 130 (TAFE) at [36].

[12] Ibid at [36]-[37]; Teterin & Ors v Resource Pacific Pty Limited t/a Ravensworth Underground Mine [2014] FWCFB 4125; (2014) 244 IR 252 (Teterin) at [28]-[29].

[13] TAFE at [24] & [35]; Ulan Coal Mines Ltd v Honeysett [2010] FWAFB 7578; (2010) 199 IR 363 (Ulan Coal 2) at [28].

[20] PR779751.

Printed by authority of the Commonwealth Government Printer