FWA 4239
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Jamil Maswan
Escada Textilvertrieb T/A ESCADA
VICE PRESIDENT WATSON
SYDNEY, 8 JULY 2011
Application for unfair dismissal remedy - whether termination a genuine redundancy - obligation to consult - failure to consult - whether termination harsh, unjust or unreasonable - Fair Work Act s394, 387, 389.
 This decision relates to an application for an unfair dismissal remedy by Jamil Maswan arising from the termination of his employment by Escada Textilvertrieb GMBH (Escada). The application is made under s394 of the Fair Work Act 2009 (the Act).
 At the hearing of the matter on 4 July 2011 Mr B Adam, of counsel, represented Mr Maswan and Ms K Lopes, solicitor, represented Escada.
 The facts of this matter are largely agreed between the parties. Escada is part of a global retail and wholesale business specialising in women’s designer fashion. In Australia it operates one retail outlet and a head office which is involved in the wholesale business. The Australian operations fall within the Asia-Pacific Region which has its headquarters in Hong Kong. It employs five employees in Australia - three in a retail store in the Sydney CBD and a Brand Manager and Administrative Assistant at the head office, also in the Sydney CBD.
 Mr Maswan was employed by Escada from 8 August 2008 as a part-time Sales Associate. He was later promoted to the role of Retail/Marketing Manager. In this role he was responsible for the shop operations, preparing and implementing seasonal merchandising and buying plans and supervising three sales representatives. He assisted the Regional Manager with the implementation of marketing strategies.
 The Escada Australian operation has been experiencing financial difficulties and has restructured its operations since 2008 when the company operated a number of retail outlets and employed six employees in its head office. A number of positions have been eliminated and a number of others have been downgraded. In 2010 Escada lost its wholesale contract with David Jones which comprised approximately 40% of its wholesale business.
 In November 2010, the Regional Manager, Mr Alan Shoa resigned from the company. This prompted a further review of the Escada Australian operations by the regional executives in Hong Kong. It was determined to advertise for a new role of Brand Manager to be responsible for managing both the Australian Wholesale and Retail Business. Ultimately this led to Mr Maswan’s role as Retail/Marketing Manager becoming redundant. The Regional Manager had been responsible for managing the wholesale role with a salary range of $120-135,000pa. The Retail/Marketing Manager role had a salary of $65,000pa. The new role was established with a salary range of $87-90,000pa.
 The new Brand Manager role is described by Escada as a strategic role, responsible not only for the management of the wholesale and retail operations but also for developing the wholesale operations particularly after the loss of its major wholesale client. The role requires exploring new business opportunities and defining and implementing new marketing initiatives in line with the company’s image. In a brief to its recruitment agency, Escada sought candidates with at least five years experience in luxury brands and fashion, good analytical skills to make business plans, strong leadership and relationship skills and innovation skills to develop and implement new opportunities.
 Mr Maswan gave evidence that he spoke to the Managing Director of Escada’s Asia-Pacific Region, Mr Morten Christenson in November 2010 because he was worried about his future with the company. He said that Mr Christenson told him that he was very important to the Company and that he did not need to worry about the restructuring of the company management.
 On 3 December 2010 Mr Christenson offered the Brand Manager role to Ms Rebecca Jackes. Ms Jackes is a graduate in Business Communications and has had eight years experience in the luxury goods industry in Australia and the UK including a five year period as the NSW Manager of Versace. Ms Jackes accepted the offer of employment on 3 December and commenced in that role on 12 January 2011. She reports to Mr Christensen in Hong Kong. Mr Maswan was not considered suitable for the Brand Manager role as it required higher order skills and experience than he possessed.
 Mr Rex Chan, the Regional Finance Director of Escada gave evidence that the creation of the Brand Manager role was intended to create the potential to have the previous Regional Manager’s duties performed at a lower level with an accent on strategic marketing initiatives for the Wholesale Business as well as merging the functions of the Retail/Marketing Manager’s role. Mr Chan gave evidence that it was only when Ms Jackes accepted the position of Brand Manager and ultimately commenced in the role that it became certain that Mr Mawan’s role was redundant.
 On 12 January 2011 Mr Chan travelled to Sydney at the request of Mr Christenson to meet with Mr Maswan to inform him that his role was being eliminated and that his employment would therefore be terminated. The meeting was short. Mr Chan told Mr Maswan that the two roles had been merged and that Mr Maswan did not have the necessary business strategy and wholesale experience required for the new role. Mr Chan also told Mr Maswan that there were no other alternative positions available. He was told that he was to hand over his duties to Ms Jackes and his employment would thereafter be terminated. He was offered the option of resigning and receiving a reference from Mr Christenson, which Mr Chan had with him, or receiving a termination letter, which had also been prepared in advance. Mr Maswan was shocked and emotional. He subsequently chose the resignation option.
 Mr Maswan advised one of the retail employees, Ms Danielian of the situation. She approached Mr Chan and asked why Mr Maswan had been terminated. Ms Danielian gave evidence that Mr Chan responded with words to the effect that the company wanted to employ a female manager. Mr Chan denies making such a statement and asserts that this was not part of his or the company’s thinking.
 Mr Maswan was given six weeks pay in lieu of notice and subsequent to the filing of the application in this matter was provided with six weeks redundancy pay.
The issues for determination
 The representative for Escada contends that the termination of Mr Maswan’s employment was on account of a genuine redundancy and hence he was not unfairly dismissed. Pursuant to s 396 of the Act I am required to determine this question before considering the merits of the application. If the termination was a genuine redundancy then that is the end of the matter. If the termination was not a case of genuine redundancy the question becomes whether the termination was harsh, unjust or unreasonable.
 Section 385 of the Act provides that a dismissal which is a genuine redundancy is not an unfair dismissal. The meaning of the term “genuine redundancy” is dealt with in s 389 which provides:
“389 Meaning of genuine redundancy
(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:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.”
 Counsel for Mr Maswan contends that both of the requirements of section 389(1) are not present in this case. He further contends that it would have been reasonable to redeploy Mr Maswan into a position in Australia or overseas.
 I am satisfied that the termination of employment arose from the restructure of Escada’s business following the resignation of the Regional Manager. Escada decided to merge the Regional Manager and Retail/Marketing Manager’s roles into the single position of Brand Manager for operational reasons. It is an accepted principle that where two jobs are merged into a single position and that new position subsumes the duties of the previous two roles the merger has the effect of eliminating the previous positions 1. Ms Jackes has been employed in the merged role which has subsumed many of the duties and responsibilities of each of the former jobs, including Mr Maswan’s former duties, and also includes additional duties. It follows therefore that Escada no longer required Mr Maswan’s former position of Retail/Marketing Manager to be done by anyone because of the changes in operational requirements of the enterprise.
 The next consideration is whether Escada complied with its award obligations to consult about the redundancy. Clause 8 of the General Retail Award 2010 relevantly states:
(a) Where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the employees who may be affected by the proposed changes and their representatives, if any.
(b) Significant effects include termination of employment; major changes in composition, operation or size of the employer’s workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of employees to other work or locations; and the restructuring of jobs. Provided that where this award makes provision for alteration of any of these matters an alteration is deemed not to have significant effect.
8.2 Employer to discuss change
(a) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 8.1, the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.
(b) The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in clause 8.1.
(c) For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that no employer is required to disclose confidential information the disclosure of which would be contrary to the employer’s interests.”
 These provisions are of long standing, emanating from the Termination, Change and Redundancy test case 2 in the early 1980s and from time to time have been reflected in legislation. The requirement to discuss proposed changes and consult about the changes has been held to require meaningful consultation and not merely an afterthought. Consultation after an irrevocable decision has been made has been held to not amount to meaningful consultation3.
 As Sachs LJ observed in Sinfield v London Transport Executive  [at 558]:
"Consultations can be of very real value in enabling points of view to be put forward which can be met by modifications of a scheme and sometimes even by its withdrawal. I start accordingly from the viewpoint that any right to be consulted is something that is indeed valuable and should be implemented by giving those who have the right an opportunity to be heard at the formative stage of proposals - before the mind of the executive becomes unduly fixed." 4
 I am unable to conclude that Escada complied with its award obligations to consult with Mr Maswan over his impending redundancy. The evidence establishes that the subject was discussed between Mr Maswan and Mr Christensen in November 2010 when Mr Maswan sought an assurance about his future. The uncontradicted evidence of Mr Maswan is that he was given a response that was reassuring. In fact, at the time, there was consideration of a replacement for both the Regional Manager and Retail/Marketing Manager’s positions. The consideration had proceeded to the stage of advertising for the role. Shortly after a suitable candidate was selected and accepted an offer of employment.
 There could have been consultation at that time to indicate what the company had decided. There could also have been consultation in January before the decision to terminate. The reality is however that Escada decided to advertise for a merged job via its recruitment agency, appoint a successful candidate and wait until Ms Jackes commenced her employment before it informed Mr Maswan of any of its intentions, even though he was directly affected by these changes. The advice given to him on January 12 2011 did not in any way constitute meaningful consultation as contemplated by the award obligation. There may have been reasons for its actions, such as its belief that there were no alternatives and that advice by phone or before Christmas would not be appropriate. None of these reasons lead to the conclusion that the obligation in clause 8 of the award was complied with.
 It follows that Mr Maswan’s employment was not a case of a genuine redundancy as defined in the Act and the application cannot be dismissed on this basis.
 I should also record that I am not satisfied that it would have been reasonable to redeploy Mr Maswan into another role within the company consequent upon his job becoming redundant. It appears clear that he was not considered suitable for the Brand Manager role and that the strategic element, and the business management and relationship skills required were of a higher order than Escada considered that he possessed. Escada executives were in the best position to judge that and I do not doubt their genuineness in doing so. Having reviewed the different job requirements I am of the view that the Brand Manger role is quite different to that performed by Mr Mawan. Given the business circumstances there were significant challenges in the new role, Escada needed to be satisfied that it had a person in that role with the necessary skills and competence to perform that role successfully and deal with those challenges.
 I do not find that the comment allegedly made by Mr Chan that the Company preferred a female manager is reflective of the company’s reasons to merge the two roles and appoint Ms Jackes as Brand Manager. I think that the likely explanation for the discrepancy in the evidence about such comments is that Ms Daniellian misunderstood a comment by Mr Chan about the newly appointed staff member.
 In addition, job opportunities outside of Australia were not realistic alternatives in my view.
Whether redundancy harsh, unjust or unreasonable
 In considering whether a dismissal is harsh, unjust or unreasonable, FWA must take into account the factors set out in s 387 of the Act. That section provides as follows:
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh,
unjust or unreasonable, FWA 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;
(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 FWA considers relevant.”
 The manner of deciding the matter is intended to ensure that there is a fair go all round: s381(2). I will consider the factors in s 387 in the circumstances described above.
 I have found that the reason for termination was redundancy consequent upon a restructure of the operations and the merger of two positions. If this restructure had not have occurred there would not have been a termination. This reason cannot reasonably be described as related to Mr Maswan’s capacity or conduct and hence much of the provisions related to such terminations will not be relevant to the fairness of the termination.
 It follows from the above that this factor is not relevant.
 It follows from the above that this reason is not relevant.
 This factor was not an issue in this case.
 As above for sections 387(a)-(c) this factor is not relevant.
 In my view the small size of the Australian operations and the management of the restructure form Hong Kong has a bearing on the procedures adopted for termination. In my view some latitude should be expected in communications when the parties are not working in closer proximity.
 I do not consider that this is a significant factor. Escada had a dedicated HR support person in Hong Kong available to advise, and obtain further advice, on the process.
 Most of the relevant factors fall into this category. In my view it is clear that the company conducted a restructure of its Australian operations and decided to merge the two positions of Regional Manager and Retail/Marketing Manager. Mr Maswan was not considered appropriate for the merged role. I do not consider that this conclusion was unreasonable. As one incumbent had resigned and the other incumbent was not considered suitable, it was reasonable to seek to recruit a person suitable for the role. Once a good candidate was identified it became almost inevitable that Mr Maswan’s employment would need to be terminated.
 The failure to notify and consult with Mr Maswan in accordance with the award is a serious defect in the procedure. If the outcome of consultation was less predictable the failure to consult over proposed changes could render the termination unfair. However, the decision to terminate appears to be rational and justified. Clearly Escada needed a strong performer with all of the requisite skills in the merged role in order to turn around a poor trading history. It did not consider that Mr Maswan was that person. It found a good candidate who accepted the offer of employment. It therefore made the business decision to make Mr Maswan’s position redundant and terminate his employment for that reason. It advised him of the reason, but not until it was in the process of implementing his termination.
 Payments were made in accordance with the Act and the Award and an additional amount of 2 weeks pay in lieu of notice was given. There was some delay in paying the redundancy pay which is not explained in the evidence. It appears that the obligation to make the payment was not known to Hong Kong management at the time. However it does not follow that redundancy is not the real reason for termination. The restructuring and the merger of positions are clearly established as the true reasons for dismissal.
 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.
 In all of the circumstances I am not satisfied that the termination of Mr Maswan’s employment was harsh, unjust or unreasonable.
 For the reasons above I find that Mr Maslan’s dismissal does not fall within the definition of a genuine redundancy in the Act because of the failure of Escada to comply with its obligations to consult over proposed terminations arising from changes at the workplace.
 I also find that the termination of his employment is not harsh, unjust or unreasonable as the decision was the result of a soundly based business decision to restructure the operations and merge two positions. The failure to consult did not lead to a different conclusion to that which would have, in all likelihood, been reached had consultation occurred. Therefore this failure does not render the dismissal unfair. The application is dismissed.
VICE PRESIDENT WATSON
Mr. B. Adams, of counsel, and Ms J. Gounder for Mr Maswan.
Ms K Lopez for Escada.
1 Dibb v Commissioner of Taxation (2004) 207 ALR 151.
2 Termination, Change and Redundancy case (1984) 8 IR 34; (1984) 9 IR 115.
3 Construction. Forestry, Mining and Energy Union v Newcastle Wallsend Coal Company Ltd (1998) 88 IR 202.
4 Sinfield v London Transport Executive  1 CH 550.
Printed by authority of the Commonwealth Government Printer
<Price code C, PR511174>