Fair Work Act 2009_

s.394 - Unfair dismissal

SlumberCare Pty Ltd T/A Stuarts House of Bedding

[1] This matter involves an application made by Mr Gabriel Supara (Mr Supara or the applicant) under section 394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy. The respondent is SlumberCare Pty Ltd T/A Stuarts House of Bedding (SlumberCare or the respondent).

[2] The matter was the subject of a conciliation conference before a Fair Work Commission conciliator however the matter was not resolved and has been referred to me for determination.

[3] Mr Supara has had two periods of employment with SlumberCare. He was first employed in 2005 and worked until the middle of 2010 when he resigned because of health difficulties.

[4] After starting work at a new job with Spotless Laundry Murdoch in late 2010 he was approached by Mr Stewart Gardiner (Mr Gardiner) the respondent's Managing Director who asked him to return to work at SlumberCare.

[5] Mr Supara began work with SlumberCare for his second period of employment on 11 January 2011 and worked until he was dismissed by the respondent on 8 April 2013.

[6] The letter of termination given to Mr Supara on that date advised that his employment was terminated due to redundancy which was a consequence of a downturn in incoming orders.

[7] SlumberCare objects to Mr Supara making this application on the grounds that his dismissal was a case of genuine redundancy.

[8] The effect of section 385 of the Act, which is set out below, is that a person cannot have been unfairly dismissed if the Commission is satisfied that their dismissal was a case of genuine redundancy.

A person has been unfairly dismissed if the FWC is satisfied that:

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388."

[9] Section 389 of the Act set out below defines what a case genuine of genuine redundancy is.

(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."

[10] At the hearing of this matter Mr Supara was represented by Mr Oud and SlumberCare was represented by Mr Gardiner, Managing Director of SlumberCare.

[11] Both Mr Supara and Mr Gardiner gave evidence.

[12] Much of the evidence in this matter is not controversial. Having considered the evidence of Mr Supara and Mr Gardiner I make the following factual findings.

[13] SlumberCare is a manufacturer of bedding, including mattresses.

[14] The applicant Mr Supara relevantly for the purposes of this application was employed in January 2011 and his dismissal took effect on the day he was notified of this being 8 April 2013.

[15] The letter of termination is signed by the Factory Manager Mr Rowe and is headed

[16] The letter states that Mr Supara's employment is terminated and explains,

"This is due to a downturn in incoming orders in recent times, resulting in recent redundancies. We now find ourselves in a position of unfortunately having to make further cutbacks."

[17] Mr Supara had previously worked for SlumberCare between 2005 and 2010. His most recent period of employment resulted from Mr Gardiner contacting him and asking him to return to work at SlumberCare on a full-time basis. Mr Supara had some reservations about returning to work there because he believed one of the managers was racist. In order to persuade Mr Supara to resume working at SlumberCare Mr Gardiner offered him a higher hourly rate of pay plus overtime. Subsequently Mr Supara accepted Mr Gardiner's offer and returned to work at SlumberCare on 11 January 2010.

[18] Prior to being advised he was to be terminated there was no specific discussion with the applicant about needing to make him redundant.

[19] On his last day of employment Mr Supara was called into a meeting and given a letter by Mr Rowe the Factory Manager explaining that his employment was terminated due to redundancy. Mr Supara asked if Mr Gardiner knew about this and Mr Rowe advised that he did.

[20] When two weeks later the applicant returned to SlumberCare to collect a payslip he noticed one staff member who had previously been terminated had been re-employed.

[21] Some time prior to his dismissal Mr Supara had made a complaint to Mr Gardiner that Mr Rowe had made a racist comment to him. Mr Gardiner spoke to Mr Rowe who denied making any racist comment.

[22] SlumberCare presently have employees from Vietnam, Thailand, Cambodia, Pakistan, Macedonia, China, Sudan, New Zealand, Australia, Burma, India, Ireland, Portugal, Sri Lanka and England. Given that SlumberCare has a multiracial workforce and that there had been no other complaints ever made about Mr Rowe, Mr Gardiner did not investigate this complaint any further.

[23] Since the beginning of 2012 SlumberCare has experienced a significant downturn in orders. The evidence provided to the Commission shows that at the beginning of 2012 the three month moving average value of sales was $1 550 000. This sales value has trended progressively downwards to in January/February/March 2013 be $1 210 000 and this has further deteriorated to be only $1 120 000 in July/August/September 2013.

[24] At the time SlumberCare dismissed Mr Supara sales had decreased in value by approximately 20% over a period of 14 months.

[25] In 2013 the respondent has reduced the number of employees it has by both not replacing staff who have resigned and making others redundant as follows:

[26] Out of this reduction of eleven staff, seven were made redundant.

[27] At the time of Mr Supara's dismissal he was working as a Tape Edger. Mr Supara was working with three other employees who were also Tape Edgers. Mr Gardiner's assessment was that Mr Supara was the least skilful of the four Tape Edgers and so he was selected to be made redundant.

[28] It is likely that in future SlumberCare will need to make more staff redundant.

[29] The respondent objects to the applicant making an unfair dismissal application on the grounds that the dismissal of the applicant was a case of a genuine redundancy.

[30] In this case the evidence is clear that the respondent had been suffering a reduction in orders and consequently throughout 2013 had been reducing the number of employees across its operations. I accept the evidence of Mr Gardiner that that was the only reason that Mr Supara was dismissed. Mr Supara was dismissed because the respondent did not have sufficient work to retain four Tape Edgers. Mr Supara was identified as the Tape Edger with the least skill and so was dismissed.

[31] I am satisfied that SlumberCare no longer required Mr Supara's job to be performed by anyone because of changes in the operational requirements of the enterprise.

[32] SlumberCare was suffering a continuing decline in demand and having decided that Mr Supara should be made redundant there is no evidence that suggests it was reasonable in these circumstances for him to be redeployed elsewhere within the enterprise.

[33] In terms of any obligations in a modern award or enterprise agreement to consult about the redundancy the parties have not provided any specific submissions.

[34] There is no evidence before the Commission that there is an enterprise agreement covering SlumberCare.

[35] Having considered which modern award might apply my conclusion is the Manufacturing and Associated Industries and Occupations Award 2010 [MA000010] (the Award) would cover Mr Supara's employment with the respondent. The Award covers employer's involved in the manufacturer of products such as mattresses and bedding (see clause 4.10 (ii)). The Award includes a range of employment classification that would in all likelihood cover the applicant's work.

[36] The Award includes clause 9 Consultation Regarding Major Workplace Change. This clause provides that where an employer makes a definite decision to introduce major changes likely to have significant effect on employees, which includes termination of employment, the employer must discuss with the employees affected the introduction of the changes and the effects these are likely to have on those employees and measures to avert or mitigate the adverse effects of these changes on those employees. The employer is obliged to then give prompt consideration to any matters raised by the affected employees. The clause also requires the employer to provide in writing to the employees concerned all relevant information about the changes.

[37] In this case I am satisfied that SlumberCare did make a definite decision to introduce a major change which would have the significant effect on Mr Supara of leading to his likely termination of employment.

[38] It is clear from the evidence that SlumberCare did not comply with the obligations under the Award to consult with Mr Supara about him being terminated due to redundancy.

[39] If SlumberCare had complied with its obligations under the Award to consult Mr Supara about the redundancy then I would have concluded that what occurred here was a case of genuine redundancy and so I would have upheld SlumberCare's objection and Mr Supara would not be able to make this application.

[40] This however is not the case. SlumberCare has not complied with the Award obligations to consult about the redundancy and as a consequence this is not a case of a genuine redundancy as defined in the Act.

[41] Mr Supara is not prevented therefore from pursuing this application.

[42] I will now proceed to consider whether the dismissal of Mr Supara was an unfair dismissal.

Was the dismissal harsh, unjust or unreasonable?

[43] Section 387 of the Act details the criteria the Commission must consider when determining whether an employer's dismissal was harsh, unjust or unreasonable, this is set out below.

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] The situation in this case is similar to that the Full Bench considered in UES (Int'l) Pty Ltd v Harvey [[2012] FWAFB 5241] (the Harvey decision).

[45] The reasons for the dismissal of Mr Supara were not related to his capacity or conduct and consequently there was not a valid reason for his dismissal related to his capacity or conduct.

[46] Mr Supara was not notified of the reasons for his dismissal before he was dismissed.

[47] Mr Supara was not provided an opportunity to respond to those reasons before the decision to dismiss him was made.

[48] SlumberCare did not unreasonably refuse to allow Mr Supara to have a support person present to assist at any discussions relating to his dismissal.

[49] Mr Supara's dismissal was not related to unsatisfactory performance.

[50] I intend to adopt the approach of the majority in the Harvey decision to the criteria in section 387(a) - (e) and I find that in the circumstances here each of these matters is neutral with respect to whether the dismissal was harsh, unjust or unreasonable.

[51] The respondent is a small to medium sized business which does not have dedicated human resource specialists nor expertise. In this case I conclude that the size of the enterprise and the absence of dedicated human resource specialists or expertise contributed to SlumberCare not meeting its obligations under the Award to consult about the redundancy of Mr Supara. This weighs in favour of finding the dismissal was not harsh, unjust or unreasonable.

[52] In terms of other relevant matters Mr Supara had been employed for less than two and a half years.

[53] In this case there was a sound, defensible and well founded reason for SlumberCare dismissing Mr Supara and that was because SlumberCare no longer required the job he was doing, as one of four Tape Edgers, to be performed by anyone. The employer only had work for three Tape Edgers. This was because of changes in the operational requirements of the business caused by a downturn in orders over an extended period. This weighs in favour of finding the dismissal was not harsh, unjust or unreasonable.

[54] SlumberCare did not comply with the obligation in the modern award to consult with Mr Supara about the redundancy. This weighs in favour of finding the dismissal was harsh, unjust or unreasonable.

[55] In the case of Mr Jamil Maswan v Escada Textilvertrieb T/A ESCADA

[[2011] FWA 4239] Vice President Watson said that:

"[39] In my view a decision to dismiss on account of redundancy will only be harsh, unjust or unreasonable if the rationale for the decision is seriously undermined or if there is a serious error in procedure such that renders the termination unfair in the circumstances. Here the decision appears open to the employer to make. The failure to consult is not a trivial matter. But as it is clear that consultation was highly unlikely to have negated the operational reasons for the dismissal or lead to any other substantive change, I do not believe that the failure to consult prior to the date of termination rendered the dismissal unfair. Given the evidence in relation to the operational need to restructure, I am of the view that it is likely that Mr Maswan would have been dismissed in any event, even if timely consultation had occurred.

[40] In all of the circumstances I am not satisfied that the termination of Mr Maswan's employment was harsh, unjust or unreasonable."

[56] In this instance there was a sound, defensible and well founded reason for dismissing Mr Supara. I have already decided it was not reasonable in the circumstances for Mr Supara to be redeployed within the enterprise.

[57] SlumberCare's size and the absence of dedicated human resource specialists or expertise did have a bearing on its failure to comply with the consultation requirements in the Award.

[58] There is no evidence to support a conclusion that if SlumberCare had followed the Award's consultation requirements Mr Supara would not have been dismissed.

[59] Considering all of these matters I am not satisfied that SlumberCare's failure to consult Mr Supara caused his dismissal to be harsh, unjust or unreasonable. Mr Supara was not unfairly dismissed.

[60] I will now dismiss this application and an order to that effect will be issued in conjunction with this decision.

Printed by authority of the Commonwealth Government Printer