s.394 - Application for unfair dismissal remedy

Application for an unfair dismissal remedy - whether genuine redundancy - application dismissed

• [1] Ms Yioanna Sewell (Applicant) was employed by The Trustee for Ross Family Trust (Respondent) from November 2017 until she was dismissed on 6 January 2025 by reason of redundancy. The Respondent operates a tobacconist retail business in Grafton NSW and she was employed as the Store Manager on a full time basis.

• [2] The Applicant claims her dismissal was not a case of genuine redundancy and that her dismissal was unfair.

• [3] The Respondent says that the Applicant's role was genuinely redundant in that it no longer required the role to be performed due to declining revenue of the business and to avoid potential bankruptcy.

• [4] The Commission must determine, by virtue of s.396 of the Act, the question of whether the dismissal was a genuine redundancy before considering the merits of the application.

• [5] At the hearing, the Applicant was self-represented and the Respondent was represented by its owner, Mr Ben Ross.

• [6] For the reasons set out below, I find that the Applicant's dismissal was a case of genuine redundancy, and as a result she is not a person protected from unfair dismissal.

• [7] As noted above, the Respondent operates a small tobacconist retail store in Grafton NSW. The business sells tobacco products and some gift wares. There were three employees at the time the Applicant's employment came to an end.

• [8] The Applicant was employed for 7.5 years as the Store Manager on a full-time basis. She was the only full time employee, with the other two employees being employed on a casual basis.

• [9] Mr Ross gave unchallenged evidence that there was a gradual downturn in business which he put down to decreasing rates of smoking, a higher cost of cigarettes, and three other businesses in the area selling tobacco products providing considerable competition. There had also been an increase in the illegal tobacco trade which was having a significant impact on the business.

• [10] Mr Ross said he and the Applicant met regularly to discuss sales figures and in particular the downturn in business. As a result of the downturn Mr Ross increased his working hours in the shop to save on wage costs.

• [11] In October 2024 the business had an operating loss of over $46,000.

• [12] By December 2024, it became apparent to Mr Ross that things were not improving and he was in a difficult position financially. He provided a profit and loss statement for the month of December 2024 showing the downward trend in revenue and profit. He said the loss in sales due to the illegal tobacco trade was around 75%.

• [13] Mr Ross said that prior to Christmas, he came to the conclusion that he could no longer afford the Applicant's full time position, particularly where he could undertake most of her duties himself without being required to pay himself a wage.

• [14] Mr Ross said that he decided to wait until after Christmas to talk to the Applicant, and in the meantime he spoke with the Fair Work Ombudsman to ascertain what his obligations were.

• [15] Mr Ross met with the Applicant on 6 January 2025 outside the shopping centre, at which time he told her he was going to "have to let you go because I'm financially broke and I cannot afford you anymore". Both parties agreed the discussion was very short. The dismissal took effect on 10 February, equating to 5 weeks' notice of termination.

• [16] There were various issues that the Applicant raised that related to events after her dismissal, which for the reasons set out below are not relevant to the matter I need to decide, that being whether her redundancy was genuine.

• [17] Under s.385(d) of the Act a person is not unfairly dismissed if the dismissal was a genuine redundancy. The term 'genuine redundancy' is defined in s.389 of the Act:

(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.

• [18] Therefore, there are three relevant matters for consideration in determining whether the Applicant's dismissal was a case of genuine redundancy, namely:

1. Did the employer no longer require the employee's job to be done by anyone because of changes in the operational requirements of the employer's enterprise?

1. Has the employer consulted in accordance with the consultation provisions of a relevant modern award or enterprise agreement?

1. Was it reasonable in all the circumstances for the employee to be redeployed in the employer's enterprise?

• [19] The Explanatory Memorandum to the Fair Work Bill 2008 provides that a redundancy may be genuine where, for example, the employer only needs three people to do a particular task or duty instead of five, or where the tasks done by a particular employee are distributed between several other employees and therefore the person's job no longer exists.[1]

• [20] Further, the process for selecting an individual employee for redundancy is not a relevant question as to whether the redundancy is a genuine redundancy.[2]

Did the employer no longer require the employee's job to be done by anyone because of changes in the operational requirements of the employer's enterprise?

• [21] As noted above, in considering the question of whether an 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', it is well established that the test can be met when job functions are retained but are redistributed.

• [22] 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.[3] 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.[4]

• [23] 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.[5] 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.[6]

• [24] In Ulan Coal Mines Limited v Henry Jon Howarth and others[7], the Full Bench said:

"[17] It is noted that the reference in the statutory expression is to a person's 'job' no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals [1995] IRCA 292; (1995) 60 IR 304 a job involves 'a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees' organisation, to a particular employee' (at p.308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. In these circumstances, it was said that:

'What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant...' (at p.308)

This does not mean that if any aspect of the employee's duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation (2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the 'job' of that employee no longer exists.

[18] In Kekeris v A. Hartrodt Australia Pty Ltd[8], Senior Deputy President Hamberger considered whether a dismissal resulting from the restructure of a supervisory team was a case of genuine redundancy. As a result of the restructure, four supervisory team leader positions were replaced by three team leader positions. The Senior Deputy President said:

'When one looks at the specific duties performed by the applicant prior to her termination they have much in common with those of two of the new positions in the new structure. The test is not however whether the duties survive. Paragraph 1548 of the explanatory memorandum makes clear that it can still be a 'genuine redundancy' where the duties of a previous job persist but are redistributed to other positions. The test is whether the job previously performed by the applicant still exists.'"

• [25] In Adams v Blamey Community Group[9], the Full Bench, in relation to s.389(1)(a), said:

"it is necessary to state at the outset that consideration of whether the employer no longer required the person's job to be performed by anyone because of changes in the operational requirements of the enterprise does not involve a merits review of the employer's decision to make the person's job redundant. It is not to the point that it may have been open to the employer to make a different operational decision which may have allowed the relevant employee's job to be retained. As was stated in Low v Menzies Property Services Pty Ltd, "Whether it was objectively fair or justifiable to decide to abolish a position is beside the point, as long as the employer acted as it did because of changes in its operational requirements."[10] What s.389(1)(a) requires is for findings of fact to be made as to whether, firstly, the employer has made the decision that the relevant employee's job is no longer required to be performed by anyone and, secondly, whether that decision was made because of changes in the operational requirements of the enterprise. If there was an ulterior motive for the decision - that is, if the real reason for the decision did not genuinely relate to any change in operational requirements, whatever the ostensible reason may have been - then it will not be possible to make the second finding of fact. However once these findings of fact are made, the element of the genuine redundancy definition contained in s.389(1)(a) is satisfied and no further inquiry is necessary."

• [26] In Low v Menzies Group of Companies [2014] FWC 7829[11], the Commission stated that:

"It is not the function of the Commission, in determining whether a dismissal is a case of genuine redundancy, to form a view about the merits of the decision to make a position redundant. Whether it was objectively fair or justifiable to decide to abolish a position is beside the point, as long as the employer acted as it did because of changes in its operational requirements".

• [27] The Applicants primary complaint was that her job was still required to be performed.

• [28] The Respondent acknowledged that the Applicant's former duties still exist because they are tasks which are inherent to the operation of a retail store. However, the Respondent has not employed another full time store manager, and as such, it argues, the job itself has not survived the redundancy.

• [29] I am satisfied on the evidence that there was a change in operational requirements which resulted in the Respondent no longer needing the Applicant to fulfil the Store Manager role. The change in operational requirements arose because the Respondent needed to respond to the decline in revenue and downturn in business, and it did so by making the Applicant's role redundant. The Applicant was the only full time staff member and Mr Ross was able to absorb most of the duties of the Store Manager role himself.

• [30] The case law cited earlier makes it clear that it is not to the point that another operational decision might have been available to the Respondent.

Has the employer consulted in accordance with the consultation provisions of a relevant modern award or enterprise agreement?

• [31] The Respondent concedes it fell short of meeting its obligations under the General Retail Industry Award 2020 (the Award) in that it did not give the Applicant information in writing about the change as required by clause 34.2. However, it argued that it had provided the Applicant with the relevant information because Mr Ross and the Applicant engaged in regular and frank conversations about the financial position of the business, and that as the Store Manager the Applicant access to information that made it clear revenue was declining over time.

• [32] I am satisfied that the Respondent gave the Applicant the relevant information required by the Award, albeit not in writing. I am further satisfied that she was aware of the financial position of the business given her access to this information and given the regular discussions she had with Mr Ross about this issue.

• [33] Relevantly, in Tyszka v Sun Health Foods Pty Ltd[12], the Commission stated that:

"The fact that the company failed to commit the situation to writing as per the agreement does not obviate the regular contact it had with the relevant people and, in its totality, I find it complied with the consultative arrangements as provided for in the Agreement and is consistent with the provisions of the Act."

• [34] I consider the same approach can be taken in this matter and accordingly I am satisfied that the consultation requirements are met. However if I am wrong about this, then I find the dismissal is otherwise not harsh, unjust or unreasonable because the financial position of the Respondent provides a valid reason for dismissal, and I am satisfied that none of the other factors set out in s.387 of the Act would otherwise make the dismissal unfair.

Was it reasonable in all the circumstances for the employee to be redeployed in the employer's enterprise?

• [35] As set out earlier, s.389(2) provides that a person's dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer's enterprise.

• [36] 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.[13] 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'.[14]

• [37] The Applicant was the only full time employee. I am satisfied there was no other position for her to be redeployed to at the time her role was made redundant.

• [38] For the above reasons, I am satisfied that the Applicant's employment came to an end for reason of a genuine redundancy within the meaning of s.389 of the Act.

• [39] As a result, the Applicant is not an employee who is protected from unfair dismissal and her application under s.394 of the Act must be dismissed. An order dismissing the application (PR787912) will be issued with this decision.

[1] See Explanatory Memorandum to the Fair Work Bill 2008 at paragraph 1548.

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

[4] Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674 at [27].

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

[6] Kieselbach v Amity Group Pty Ltd PR973864 at [34].

[7] [2010] FWAFB 3488.

[8] [2010] FWA 674.

[9] [2016] FWCFB 7202.

[10] [2014] FWC 7829 at [16]

[11] [2014] FWC 7829.

[12] [2010] FWA 1781.

[13] Technical and Further Education Commission T/A TAFE NSW v Pykett [2014] FWCFB 714 at [36].

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