Note: An appeal pursuant to s.604 (C2011/5730) was lodged against this decision - refer to Full Bench decision dated 23 December 2011 [[2011] FWAFB 9137] for result of appeal.
[2011] FWA 5215 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Iryna Margolina
v
Jenny Craig Weight Loss Centres Pty. Ltd.
(U2011/6607)
COMMISSIONER RYAN |
MELBOURNE, 8 AUGUST 2011 |
Termination of employment - whether termination was the result of genuine redundancy.
[1] The Respondent in this matter has raised a jurisdictional challenge to the application on the basis that the dismissal of the Applicant from her employment was a genuine redundancy. The jurisdictional challenge was subject to a hearing before Fair Work Australia on 4 August 2011.
[2] Section 396 requires that before FWA considers the merits of an application for an unfair dismissal remedy FWA must decide whether, inter alia, the dismissal was a case of a genuine redundancy.
[3] A genuine redundancy is defined in s.389 as follows:
“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.”
[4] I am satisfied that the requirement specified in s.389(1)(a) has been met. In this matter evidence was given on behalf of the Respondent by Ms Senior, HR Manager for the Respondent and by Ms Cervi, General Manager, Business Development and Innovation. The evidence of these two witnesses was that in January 2011 Nestle acquired the business of the Respondent and immediately commenced to review the operations of the Respondent. By March 2011 a decision had been made that the Applicant’s job and the job of another senior employee would be made redundant and a new position created to cover both roles. The other employee whose job was made redundant was then chosen to fill the newly created position. The Applicant was dismissed.
[5] The fact that each element of the Applicant’s former job was still needed to be done by the employer does not mean that the Applicant’s job was still required. The Applicant’s job comprised her job title and the discrete duties which were attached to that job title. The Respondent made the decision that two specific jobs, each with its own title and specific set of duties, were no longer required, but that what was required was a new job with a new title and with a set of duties that combined the duties of the two pre-existing jobs.
[6] Such structural or organisational rearrangement of jobs is not uncommon and jobs which were required by the employer may no longer be required because the employer through such a structural or organisational change has either eliminated the need for specific duties to be undertaken or has found a better way to have required duties performed. In the present matter the Respondent did exactly this. The Respondent no longer required the Applicant’s job to be performed by anyone because of changes in the operational requirements of the Respondent’s enterprise.
[7] The requirement in s.389(1)(b) can only be considered after two questions have been answered.
[8] The first is: Is there a modern award or enterprise agreement that applies to the Applicant’s employment?
[9] The second question is: If yes, does the modern award or enterprise agreement contain any requirement that the Respondent consult with the Applicant about the redundancy?
[10] The Respondent submitted that there was neither a modern award nor an enterprise agreement which applied to the Applicant’s employment.
[11] The Respondent submitted that the Fitness Industry Award 2010 which applied to weight loss centres was not a modern award which applied to the Applicant’s employment. Having considered the terms of that modern award I agree with the Respondent’s submission. The Respondent submitted that the Jenny Craig Employee Collective Agreement 2008 which does apply to the Respondent has limited application within the Respondent’s business and that it does not apply to the Applicant’s employment. Having considered the terms of that workplace agreement I agree with the Respondent’s submission.
[12] Ms Senior in response to questions from the Tribunal gave evidence as to the duties performed by the Applicant. That evidence paints a very clear picture of the Applicant’s job.
“PN144. The duties would be - how would you describe, if you were preparing a job description, the specific activities that have to be undertaken to fulfil the position? Is it a direct sales position? Is it a - you know, if you're in HR you should be familiar with the structure of identifying not only outcomes but the actual tasks that make up the job description?---So Iryna's role was to manage all the staff within JCAH, and their roles are sales driven as well as a Jenny Craig consultant, so to continue motivating clients. So Iryna's role was to oversee all of these people and to upskill them to ensure that the business is meeting quotas. Iryna's role was also to liaise with external companies in regards to Jenny Craig At Home, the deliveries of the food; and to continue the growth of the business.
PN145. And what's the growth of the business? That's another really generic - - - ?---We have set quotas. We have set quotas within the business - sales targets to meet, and Iryna has the full responsibility of meeting those quotas. The regional managers had that responsibility.
PN146. Does that mean that if her staff didn't get enough clients in she had to get the clients herself?---She would support the consultants and the salespeople to get the clients.
PN147. So she didn't actually have to go and do the direct contact with potential clients? ---No, she would assist in - if required, due to staffing requirements.
PN148. Yes, which is - - - ?---But she oversees it.
PN149.- - - a supervisory or an overseeing role rather than a direct contact role? ---Absolutely overseeing role.
PN150. And the people she's overseeing and upskilling, these are persons who are engaged in the selling of the product directly to clients. So is this cold calling people?---No, it's not cold calling. People call us through our marketing strategies.
PN151. So it's all response to incoming - - - ?---Incoming calls. And generally the first lot of incoming calls come through to our salespeople who potentially sell programs, and then the clients are put onto our Jenny Craig consultants to ensure that they reach their weight loss goal.
PN152. How does that then get to the area where the applicant was working?---She oversees all those people.
PN153. Okay. So the incoming calls come to persons who were being supervised by the applicant?---Yes. It's a call centre environment, our JCAH part of our business.
PN154. And it also has direct contact with the supplies of the product - - - ?---Our food.
PN155.- - - which goes to the client at their home?---Correct. And our logistics team - external logistics team - to ensure that the food is delivered on time.
PN156. When you say "external logistics team" is that external to the applicant's work area - - - ?---Jenny Craig.
PN157. It's external to Jenny Craig?---Mm'hm.
PN158. A separate company or a separate business?---Correct.
PN159. When you say her role was liaising with external companies, that is the external logistics groups - - - ?---Correct.
PN160. - - - as well as - - - ?---As well as with our internal logistics team.
PN161. In the applicant's material it suggests that part of her role could have been done at home because it was computer based?---In some areas we could have some areas working from home. However, her dealing with the staff and upskilling staff, it's also a - it is a bit of a training role as well, so she had to have her face to face with her team to be upskilling. These are our entry level roles, so they have to be skilled in the Jenny Craig areas as well as sales areas.
PN162. I presume that the overseeing of call centre staff and the upskilling of them, you can't do that from a remote location?---No, you can't.”
[13] Notwithstanding the in-house title given to the Applicant’s job it appears that the duties performed by the Applicant fall within the classification levels 5 and/or 6 of the Clerks - Private Sector Award 2010 (Clerks Award).
[14] The Respondent submitted that the title and salary paid to the Applicant meant that the Applicant was not covered by the Clerks Award. The Applicant last signed a contract of employment with the Respondent in February 2008 1. Under the contract of employment the Applicant was titled “a Jenny Direct Regional Manager”. The base salary of the Applicant was $60,000 for a 40 hour week and without the payment of overtime or any penalties or loadings for work on Saturdays or Public Holidays. The contract also provided for bonuses which could be earnt by the Applicant if targets were met. There is nothing within the Applicant’s contract which assists in determining whether or not the Applicant’s employment is within the application of the Clerks Award. However the evidence of Ms Senior in describing the work of the Applicant supports a finding that the Clerks Award does apply to the employment of the Applicant and I so find.
[15] The Clerks Award does contain a term which imposes an obligation on the Respondent to consult with the Applicant about the redundancy. Clause 8 of the Clerks Award is as follows:
“8. Consultation regarding major workplace change
8.1 Employer to notify
(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 representative, if any, the introduction of the changes referred to in clause 8.1, 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.”
[16] The evidence of both Ms Senior and Ms Cervi is that the Applicant was called into a meeting on 21 March 2011 and advised that her job was redundant and that she was dismissed. As the meeting took place away from the Applicant’s normal place of work the Applicant was not permitted to return to her place of work after the meeting. The dismissal was effective immediately the Applicant was informed. There is nothing in the evidence of Ms Senior or Ms Cervi to suggest that the Applicant had any prior knowledge of the intention of the Respondent to declare the Applicant’s job redundant and to dismiss her immediately. The evidence of the Applicant is that the first that she became aware that her job was redundant was at the meeting on 21 March 2011.
[17] It is clear that the requirements of clause 8 of the Clerks Award which required the Respondent to consult with the applicant were not complied with by the Respondent. I find that contrary to the requirements of s.389(1)(b) the Respondent did not comply with the obligation in clause 8 of the Clerks Award that applied to the employment of the Applicant to consult about the redundancy.
[18] Compliance with s.389(1)(b) is an essential step if a redundancy is to be considered to be a “genuine redundancy” within the meaning of s.389(1). Non-compliance with s.389(1)(b) means that the redundancy was not a “genuine redundancy”.
[19] Should the Clerks - Private Sector Award 2010 not apply to the employment of the Applicant then s.389(1)(b) is not relevant and once having satisfied the requirement in s.389(1)(a) the redundancy will be a “genuine redundancy” if s.389(2) does not apply.
[20] The Respondent submitted that it would not have been reasonable in all the circumstances for the Applicant to be redeployed within the Respondent’s enterprise.
[21] The evidence of both Ms Senior and Ms Cervi was that each had had discussions with Ms Harris, Director of Operations in March 2011 about redeployment opportunities for the Applicant. The evidence of each of Ms Senior and Ms Cervi was that each of Ms Senior, Ms Cervi and Ms Harris considered that the opportunities available for redeployment of the Applicant were to jobs at entry level positions and that to offer such jobs to the Applicant would be an insult to the Applicant. 2
[22] Ms Senior gave evidence that the only reason why the Applicant was not offered one of the available positions was that it was considered to be an insult to the Applicant.
[23] Ms Cervi admitted in her evidence that at the meeting on 21 March 2011 that she said to the Applicant words to the effect “for you there is nothing in this company” in response to being asked by the Applicant if there were any other positions the Applicant could fill. 3
[24] The Applicant’s evidence was that she would have accepted a lower paid position including an entry level position as this would have given her more time with her 18 month old daughter. The Applicant’s evidence was that her position prior to the redundancy had required her to work long hours and 6 days a week and that as a result her 18 month old daughter didn’t know her mother. The Applicant gave evidence that she would have accepted a part time job. The Applicant was strenuously cross examined on her preparedness to take on a much lower paid position. In answer to a question from the Respondent the Applicant acknowledged that in the 2010 financial year she had earnt $202,000 from the Respondent being made up of the base salary plus a bonus for 5 years of work of $100,000 plus an annual bonus. The Respondent also cross examined the Applicant about her financial situation particularly in relation to any mortgage over the family home. The following extract from transcript is relevant:
“PN317. Oakley. Apologies. You live in East Malvern, I understand?---Malvern East, yes.
PN318. Do you own your own house there?---Yes.
PN319. And I imagine like most people you'd have a mortgage over that house which
you have to service each month?---Why - - -
PN320. MR ILINOV: Why would that be relevant?---Why would that be relevant?
PN321. THE COMMISSIONER: For a jurisdictional question - - -
PN322. MR RITCHIE: Pardon?
PN323. THE COMMISSIONER: For a jurisdictional hearing what's the relevance?
PN324. MR RITCHIE: I'm trying to establish, I guess, the requirements of the applicant in working in her current role - it seems to be a quite well remunerated role - and her obligations on the level of income and the level of role that she needs to maintain in order to service her financial commitments such as a mortgage?---I don't.
PN325. THE COMMISSIONER: Yes, I'll allow the question.
PN326. MR RITCHIE: Do you have a mortgage over your East Malvern property? ---Yes, I do.
PN327. Yes, you do. And you're required to service that mortgage each month?---I don't.
PN328. You don't service the mortgage?---No.
PN329. So I take it your house has been - - - ?---My husband services the mortgage. So I don't have a financial commitment to pay my weekly mortgage.”
[25] The Applicant had acknowledged in her evidence that “several weeks later (after the dismissal) I took a management/leadership job with a competitor company, although with a considerably lower pay, I am still doing what I enjoy doing most - helping other people live healthier lives and making team members succeed at what they do - provide consultations to people who want to improve their eating.” Under cross examination the Applicant gave evidence that her current salary was $55,000.
[26] I accept the Applicant’s evidence that she was prepared to accept redeployment within the Respondent’s enterprise to a much lower paid position and even to a part-time position. The very fact that in taking on new employment the Applicant has both reduced her base salary from $60,000 to $65,000 down to $55,000 and her total wage from $202,000 in 2010 to $55,000 now supports the Applicant’s evidence that she was prepared to be redeployed to a lower paid position.
[27] By being precious about not wanting to “insult” the Applicant with an offer of redeployment to a lower paid position the Respondent denied both itself and the Applicant the opportunity of properly considering the reasonableness in all the circumstances of redeployment of the Applicant to a lower paid position within the Respondents enterprise. The evidence of the Applicant, which was not challenged by the Respondent, is that the Applicant had the necessary skills to perform a number of the positions which were available within the Respondent’s enterprise and to which the Applicant could have been redeployed.
[28] The Respondent relied upon three decisions of members of Fair Work Australia to argue that redeployment of the Applicant within the Respondent’s enterprise was not reasonable in all the circumstances.
[29] The Respondent relied upon the decision of Richards SDP in McAlister v Bradken Ltd 4 where he said:
“[38] The Applicant contended that there was a positive obligation to identify positions for which the Applicant was capable of performing other than in relation to the position that the held at the time of the redundancy.
[39] I cannot discern from where such an obligation might arise. The meaning of a genuine redundancy at s.389(1)(a) of the FW Act is in relation to “a person’s job” at the time of the alleged redundancy and evidences no intention to take on a wider meaning for the purposes of s.389(2) of the FW Act.
[40] In my view, if the FW Act intended that an employer was required by virtue of s.389(2) of the FW Act to identify any position at all that an employee may be able to perform it would have expressly so directed, and perhaps with some conditionality as to the range of such alternative positions which might be so identified.”
[30] I agree with the conclusion of the Senior Deputy President. However that case and the present matter are very different. In the present matter there was no suggestion from the Applicant that the Respondent was required to identify a position that the Applicant may perform. In fact in the present matter it was conceded by the Respondent that there were other positions available for the Applicant but that none were offered to the Applicant simply because the Respondent did not want to “insult” the Applicant with an offer of a position at a much lower rate of pay.
[31] The Respondent also relied on the decision of Steel C in Taylor v Tatiara Meat Company P/L 5. In that decision Steel C said:
“[37] The respondent relies on a recent decision of Richards SDP in the matter McAlister v Bradken Limited 5 which endorsed an approach to redeployment in these matters that focuses on the attributes of a role, its required skill set and the salary or remuneration rather than a consideration of every possible position available at the time of redundancy.
[38] In the tribunal’s view this is relevant and akin to a consideration of what may be ‘alternative acceptable employment’ in consideration of an application for a reduction in severance payments available within many industrial instruments of this tribunal. The respondent submits that it would have been unreasonable, if not demeaning to the applicant, to offer him a role in the plant. They expected him in any case to reject such an offer in the circumstances referred to previously, where the applicant on three occasions indicated a lack of motivation to work with them.
[39] Having considered all the evidence the tribunal finds that the applicant did not demonstrate a willingness or motivation to work with his new employer and that in all probability, despite his submissions, the applicant would not have found an offer of production work to be acceptable alternative employment to his role and that it was not reasonable in all the circumstances that he be redeployed to such production positions and redeployment generally.”
[32] The decision in that case stands in stark contrast to the present matter where the evidence before the Tribunal is that the Applicant was prepared to accept a position with the Respondent at a much lower salary as in doing so she would have worked less hours and had more time with her daughter. Additionally in the matter before Steel C it is apparent that the employer had reasonable grounds for expecting the employee to reject any offer of a job in the plant on production work. In the present matter the Respondent was not acting on the basis of a view formed after considering the previous conduct of the Applicant but rather on the basis of a view formed by a sense of preciousness amongst the decision makers not to want to “insult” the Applicant.
[33] Finally the Respondent relied upon the decision of Raffaelli C in Shaw v Australian Biotechnologies P/L 6 where he said:
“[10] It was also the evidence of Mr Mende that, in his view, there were no alternative redeployment opportunities for the Applicant (Exhibit AB1/17 at PN36, and PN175). His evidence was based on the fact that the Applicant was paid a base salary of $170,000. Any vacancies within the Respondent were limited to manufacturing technician positions which attracted salaries of about $55,000 (PN36). It was also the evidence that the Applicant had previously indicated a wish that his salary be increased. The Applicant did not give evidence to challenge this view, including by any indication that he might have considered such a large drop in income.
[11] I find that this is not a situation where it would have been reasonable in all the circumstances for the Applicant to have been redeployed with the Respondent.”
[34] Unlike the matter before Raffaelli C in this matter the Applicant has given clear and strong evidence that she not only would have considered but would have accepted a large drop in income because of the increased time with her daughter that would have accompanied a change in jobs.
[35] None of the three decisions relied upon by the Respondent helps it. In fact as each is compared to the present matter it strengthens the conclusion I draw from the evidence in this matter that in all of the circumstances it would have been reasonable for the Applicant to be redeployed within the Respondent’s enterprise.
[36] What each of the three cases and the present matter show is that employers should not arrogate to themselves the role of concluding how the redundant employee will respond to an offer of redeployment to a lower paid position. In each of the three cases relied on the conclusion that the redeployment offer was not reasonable in all the circumstances was not arrived at simply because the employer presumed that to be the case but was only arrived at by the Tribunal considering all of the evidence and material before it and then making a decision.
[37] The critical issue raised by s.389(2) is that the Tribunal must consider “all the circumstances” relating to the possible redeployment of the redundant employee.
[38] The test in s.389(2) is not based upon the presumptions or assumptions upon which the employer has acted. The test is an objective test having regard to far more than simply what the employer has arrogated to themselves.
[39] Where an employer has an obligation under s.389(1)(b) to consult with the employee about the redundancy issues as to the appropriateness of any redeployment to a lower paid position will (or should) inevitably be discussed. However where an employer is under no award or enterprise agreement obligation to consult with the employee about the redundancy then no consultation with the employee may occur. In the absence of consultation with the employee the employer runs the risk that any presumptive conclusion that an employee will be insulted by or demeaned by an offer of redeployment to a lower paid position may be found by the Tribunal to be wrong, and this in turn may lead to a finding that it was reasonable in all the circumstances for the employee to be redeployed to a lower paid position.
[40] Prudence would suggest to any employer that an employer should not presume to know how a redundant employee will react to an offer of redeployment to a lower paid position. Prudence would also suggest to an employer that even if the employer has no modern award or enterprise agreement obligation to consult an employee about a redundancy that the employer should consult with the employee. It appears that Prudence was not employed by the Respondent!
[41] In the present matter the very line of cross examination of the Applicant about her mortgage responsibilities suggests that the Respondent had presumed an answer very different to the one given. In many cases (as the three relied upon by the Respondent show) a presumption that a redundant employee in a high status and high paid position will not want to accept redeployment to a position with lower pay and lower status may be reasonable and may subsequently be found to be correct. However as the present matter makes clear where an employer acts upon the basis of an arrogation that the employee will not accept redeployment to a lower paid position the employer may be proven to be very wrong.
[42] Instead of presuming to know the mind and the financial circumstances of the Applicant the Respondent could simply have asked the Applicant if she was prepared to accept redeployment to a lower paid position which was available. Such a request could have been put to the Applicant by the Respondent in a consultative environment without any appearance or suggestion that any insult was intended towards the Applicant.
[43] I find that it would have been reasonable in all the circumstances for the Applicant to be redeployed within the Respondent’s enterprise.
Decision
[44] The Applicant’s dismissal by the Respondent is not a case of genuine redundancy within the meaning of s.389 of the Act.
[45] The application will continue to be considered on its merits. Should either party request further conciliation in this matter a conference can be convened. Otherwise the matter will be listed for arbitration to consider the merits of the matter.
COMMISSIONER
Appearances:
Mr C. Ilonov for the Applicant
Mr T. Page and Mr M. Ritchie of VECCI for the Respondent
Hearing details:
2011:
Melbourne
August 4
1 Attachment JC-1 to Respondent’s written Outline of Submissions
2 para 9 of Exhibit R2 and paras 9 - 11 of Exhibit R1
3 para 10 of Exhibit R2
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