[2010] FWA 3707

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FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Josef Nalevansky
v
Thought Equity Motion Inc
(U2009/13284)

VICE PRESIDENT WATSON

SYDNEY, 12 MAY 2010

Application for unfair dismissal remedy – whether termination consistent with Small Business Fair Dismissal Code – whether termination the result of genuine redundancy – Fair Work Act ss 385, 389, 394.

Introduction

[1] This decision arises from an application for an unfair dismissal remedy pursuant to s 394 of the Fair Work Act 2009 (the Act) filed by Mr J Nalevansky concerning the termination of his employment by Thought Equity Motion Inc (TEM).

[2] The matter did not settle by conciliation and Mr Nalevansky elected to proceed to arbitration.

[3] A hearing was conducted in Sydney on 6 and 19 April 2010. Mr McArdle of counsel appeared on behalf of Mr Nalevansky, and Mr Seck with Ms Liebowitz of counsel appeared on behalf of TEM.

Background

[4] TEM is a registered foreign company in Australia and conducts a business of selling stock video footage for professional and private use. It is based in Delaware, USA and has operations in the US, Japan and Australia.

[5] Mr Nalevansky was employed by TEM as an Account Manager at the Sydney office from 17 March 2008 until 15 October 2009.

[6] In 2009 TEM conducted a review of its Australian operations in the light of losses suffered by the Australian office and the global economic downturn. It considered closing its Australian office, but instead chose to reduce its employment numbers. On 15 October 2009 it held a meeting of its Sydney employees and made four employees, including Mr Nalevansky redundant.

[7] Earlier that month the CEO of TEM conducted a company wide conference call in which he announced that TEM had entered into an agreement with BBC Motion Gallery for the distribution of motion footage worldwide. On 1 March 2010 the BBC contract commenced and TEM employed two former BBC employees. One was employed as Regional Sales Director and the other as a Junior Content Sales Representative, initially on BBC Motion sales only.

[8] Prior to the October changes it employed six employees in Australia, three in sales, two in research and an office manager. It terminated the employment of two sales employees (Mr Nalevansky and the Regional Sales Director Mr Roland Kulen), one research employee and the Office Manager. After the October restructure it continued to employ one Content Sales Representative, Mr Studdy and one research employee, Ms Wanner. With the engagement of the two former BBC employees in March currently four employees are engaged in the Sydney office.

[9] TEM contends that the termination of Mr Nalevansky’s employment was on the grounds of a genuine redundancy and was consistent with the Small Business Fair Dismissal Code (the Code). Both matters are elements of an unfair dismissal under s 385 of the Act.

[10] Pursuant to s 396 of the Act I am required to determine these questions before considering the merits of the application.

Small Business Fair Dismissal Code

[11] Counsel for TEM, Mr Seck submits that TEM is a small business employer and Mr Nalevansky’s termination was consistent with the Code. He submits that as a termination on account of redundancy is neither a summary dismissal nor on account of capacity or conduct, an employer needs only to assert that the dismissal is a genuine redundancy to be consistent with the Code.

[12] Mr Seck relies on introductory passages of an Australian Government publication on the Code and the checklist contained in that publication to support this submission. He tendered the actual Small Business Fair Dismissal Code Declaration issued by the Acting Minister for Employment and Workplace Relations in June 2009. The declaration does not contain the introductory paragraph which mentions redundancy or the checklist which also contains references to redundancy.

[13] As I have held in a previous case, 1 I do not believe that the Code deals with redundancy dismissals. In my view the references to redundancy in the Australian Government publication are not part of the Code itself. Rather, they appear to be references to the effect of ss 385 and 389 of the Act.

[14] I do not believe that a termination can be found to be consistent with the Code unless there is a specific provision or requirement of the Code regarding dismissal on the ground of redundancy and a sound basis for finding that the relevant requirement is satisfied. It is unfortunate that confusion has arisen from the Australian Government publication.

[15] For these reasons I reject the argument that Mr Nalevansky’s termination was consistent with the Code because the employer asserts that it arose from a genuine redundancy. In the light of this conclusion it is unnecessary that I consider the arguments that TEM is not a small business because of its employment numbers outside of Australia.

[16] A dismissal which is a genuine redundancy is not an unfair dismissal because of the combined effect of ss 385 and 389 of the Act. I now turn to consider the effect of these provisions.

Genuine Redundancy

[17] Section 385(d) of the Act provides that one of the ingredients of an unfair dismissal is that Fair Work Australia (FWA) is satisfied that the dismissal was not a case of genuine redundancy. The definition of genuine redundancy in s 389 is as follows:

[18] There have been various decisions of FWA on the meaning of s 389. In another case I have expressed my agreement with the approach of other members of FWA that the words of the section need to be applied to the circumstances of the case. 2 I do not believe that any alternative formulation of the test should be attempted. As is made clear in a recent Full Bench case, it is not a question of whether duties survive. What is critical is whether the holder of a previous job has any duties left to discharge following a restructure or reorganisation.3

[19] It was not argued that a modern award or enterprise agreement applied to Mr Nalevansky so there could not be a failure to comply with provisions of such an instrument regarding consultation about the redundancy. Mr McArdle sought to argue that the absence of consultations is nevertheless relevant to this requirement. I reject this submission. If there is no obligation to consult in a relevant instrument, it cannot be said that there is a failure to comply with such an obligation.

[20] Hence there are two relevant questions. First, whether the dismissal occurred because TEM no longer required Mr Nalevansky’s job to be done by anyone because of changes in TEM’s operational requirements. Secondly, whether it was reasonable in all the circumstances that he be redeployed within TEM or an associated entity.

[21] TEM relies on the evidence of its senior management to the effect that Mr Nalevansky’s termination arose from the decision to rationalise the number of positions in Australia because the business was not generating sufficient returns. It also relies on the actual reduction in employee numbers. Mr McArdle argued that the job Mr Nalevansky was doing is still required to be performed because work of a content sales representative is still required to be undertaken at the Sydney office and is performed by Mr Studdy, and more latterly by the former BBC employees.

[22] I find on the evidence before me that Mr Nalevansky’s employment was terminated because of the October restructure of the Sydney office and that Mr Nalevansky’s job, being the second of the two content sales representatives, was no longer required to be performed by anyone from that time. I do not consider that the subsequent engagement of the former BBC employees alters this situation. Even if the changes were contemporaneous there was a net reduction in the number of employees in the combined business. I conclude therefore that the definition of genuine redundancy in s 389(1) is satisfied in this case.

[23] It remains to consider whether it would have been reasonable in all of the circumstances for Mr Nalevansky to be redeployed within the TEM business. Mr McArdle submitted that it would have been reasonable to appoint Mr Nalevansky to a vacant role for which an internet advertisement was still in existence and that Mr Nalevansky should have been afforded the opportunity to assume a position somewhere within the Company’s operations in Australia or overseas.

[24] At the time of the October restructure there were no other vacant positions in the Australian operations. An advertisement for a position in 2008 remained on a website after it was filled. The company did not advertise for any vacancies after August 2009. TEM decided to reduce its employment numbers by four and made a conscious decision to retain its better performing employees. In these circumstances no issue of redeployment arises. Nor did the prospective acquisition of the BBC business give rise to a position to which Mr Nalevansky could have been redeployed. The new positions came into existence much later and were filled by people then employed by the acquired business who had particular expertise in that acquired business.

[25] I do not consider that in the circumstances of this case s 389(2) requires a reconsideration of the selection process of choosing which employees to retain in the restructured business. In my view this is a question going to the merits of the redundancy selection rather than redeployment. However even if this were a legitimate consideration, I am not satisfied that Mr Nalevansky should have been preferred over Mr Studdy.

Conclusion

[26] For these reasons I conclude that Mr Nalevansky’s dismissal was a case of genuine redundancy. An essential requirement for an unfair dismissal is not present. Mr Nalevansky’s application under s 394 of the Act is dismissed.

VICE PRESIDENT WATSON

Appearances:

C McArdle of counsel for Josef Nalevansky

M Seck with L Liebowitz of counsel for Thought Equity Motion Inc

Hearing details:

2010.

Sydney

April 6, 19

 1   [2010] FWA 3125

 2   [2009] FWA 1676; [2010] FWA 203; [2010] FWA 674; [2010] FWA 1471; [2010] FWA 675; [2010] FWA 2571

 3   [2010] FWAFB 3488 at [15] – [20]; Jones v Department of Energy and Minerals (1995) 60 IR 304, Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674



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