[2014] FWC 2500

FAIR WORK COMMISSION

DECISION

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

Mr Sohail Khawaja
v
Queensland Tissue Products Pty Ltd
(U2013/15794)

SENIOR DEPUTY PRESIDENT RICHARDS

BRISBANE, 17 APRIL 2014

Summary: unfair dismissal application - whether dismissal a genuine redundancy - s.389 of the Act - Full Bench in Re: Pykett - application of authority to s.389(2) - no requirement to redeploy to any position.

[1] This matter concerns an application under s.394 of the Fair Work Act 2009 (“the Act”) by Mr Sohail Rabb Khawaja (“the Applicant”), who seeks an unfair dismissal remedy following the termination of his employment from Queensland Tissue Products Pty Ltd (“the employer”).

[2] The Applicant had been an employee of the business for some time, since 1995. He was employed as the Superintendent of the De-Inking Plant (“DIP”) at the time of his dismissal. The employer took over that business (when it was in administration) in 2002, and in the course of so doing recognised the Applicant’s previous service.

[3] The employer’s business includes a de-inking facility and a virgin paper mill plant.

[4] The employer objected to the application proceeding on the basis that it contended the Applicant had been made genuinely redundant for the purposes of s.389 of the Act.

[5] The employer contends that it made the Applicant’s position redundant and dismissed the Applicant for that reason on 30 October 2013. The employer paid a total of $68,122.85 to the Applicant in severance pay and other entitlements at the time.

[6] Section 385 of the Act provides as follows:

385 What is an unfair dismissal

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

(a) the person has been dismissed; and

[...]

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

[7] There is no argument that the Applicant was not dismissed from his employment on 30 October 2013. But it is contended that the Applicant’s dismissal was a case of genuine redundancy.

[8] Section 389 of the Act provides 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.

Consideration

Section 389(1)(a)

[9] The employer’s argument in this respect is that the Applicant performed a senior role in the DIP. However, over a number of years the DIP failed to be commercially viable. The evidence led in these proceedings was to the following effect:

• Changing market attitudes caused a decline in demand for recycled paper products, particularly dyed products with low levels of relative brightness;



• Consumers demand higher levels of brightness in final products;



• Energy and water costs have increased;



• De-inking of waste paper has been reducing steadily over the past five years;



• 50% decline in processing of waste paper last year than in 2009 (from 5000 tonnes to 2,156 tonnes approx.);



• De-Inking Plant running at 10% of capacity in 2012 – 2013 financial year;



• Currently more cost-effective to import recycled paper from overseas than to produce locally; and



• The number of employees in the plant had been declining.

[10] The decision was made subsequently that staffing levels would be reduced in that area still further. One employee was made redundant in July 2013. The Applicant was made redundant in October that same year. The employer held the view that the DIP operating systems meant there was little or no supervision required of the 3 staff on day shift (a supervisor and two forklift operators), and the Applicant’s job was therefore redundant.

[11] The evidence in these respects was led principally by Mr Steven Johnson who is the Group WHS&E Manager and Mr Desmond Lau, the Plant Operations Manager.

[12] The Applicant contended that the commercial assessment made of the viability of the DIP was flawed, and its analysis of production decline misleading.

[13] The Applicant may well have his own views in these regards. But whether or not a plant operation is maintained at current levels, downsized or else expanded is a matter for the business judgement of the employer in question. It is the employer who carries the risk of business failure or declining productivity. Because there is no demonstrated reason that calls into question the genuineness of the operational changes made by the employer, I accept the evidence, as led, of Mr Lau in particular in this regard.

[14] This, I add, was not a case in which there was any doubt as to the genuineness, either, that the reason for the Applicant’s dismissal was because of the operational decisions made by the employer. The Applicant sought to include consideration of various health and safety issues that he had raised over a period of several years, by including almost 40 pages of e-mails and related documents which showed that he had raised various concerns that dated back to 2004. That is, he sought to argue that he was dismissed because of reasons other than the operational reasons referred to above. But these matters did not appear to have any impact whatsoever upon his job security then, or his standing in the eyes of his employer (such that the redundancy itself could be said to have been a sham).

[15] Indeed, the evidence of Mr Steven Johnson, was that the Applicant had been of very considerable assistance to him in identifying and ameliorating OHS concerns at the site over time. The two demonstrated some rapport over the course of the hearing and I do not doubt the genuineness of Mr Johnson’s claims.

[16] The Applicant also contended that he had raised certain issues over time about the plant’s capacity to meet a production related certification audit to satisfy the environmental expectations of its retailers. The Applicant claimed that his redundancy was concocted in haste to ensure that he was no longer a source of difficulty in the pending repeat audit.

[17] But this later claim was difficult to make out. The materials show that the employer seems merely to have placed considerable responsibility in the Applicant’s hands and to have empowered him to take steps to achieve certification in respect of the audit. If the employer had sought to rid itself (under the guise of a redundancy) of a troublesome employee in this respect it was acting in a most profoundly counter intuitive manner.

[18] The Applicant also contended that a range of his duties were still being performed for the employer, by “someone else”. Mr Lau, the employer, agreed that this was the case, and gave evidence that a range of the Applicants duties had been distributed across a number of other employees following his termination.

[19] In this respect, the Explanatory Memorandum to the Fair Work Bill 2008 provides some insight into the scope of meaning of a redundancy as contemplated under the Act:

Clause 389 – Meaning of genuine redundancy

1546. This clause sets out what will and will not constitute a genuine redundancy. If a dismissal is a genuine redundancy it will not be an unfair dismissal.

1547. Paragraph 389(1)(a) provides that a person’s dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.

1548. The following are possible examples of a change in the operational requirements of an enterprise:

• a machine is now available to do the job performed by the employee;



• the employer’s business is experiencing a downturn and therefore the employer only needs three people to do a particular task or duty instead of five; or



• the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.




1549. It is intended that a dismissal will be a case of genuine redundancy even if the changes in the employer’s operational requirements relate only to a part of the employer’s enterprise, as this will still constitute a change to the employer’s enterprise.

1550. Paragraph 389(1)(b) provides that it will not be a case of genuine redundancy if an employer does not comply with any relevant obligation in a modern award or enterprise agreement to consult about the redundancy. This does not impose an absolute obligation on an employer to consult about the redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.

1551. Subclause 389(2) provides that a 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, or within the enterprise of an associated entity of the employer (as defined in clause 12).

1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for redeployment or there may be no positions available for which the employee has suitable qualifications or experience.

1553. Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy. However, if the reason a person is selected for redundancy is one of the prohibited reasons covered by the general protections in Part 3-1 then the person will be able to bring an action under that Part in relation to the dismissal. [...] [My emphasis]

[20] The Applicant’s belief that elements of his prior job were still being done by someone else or other persons does not allow me to conclude that there was not a redundancy for operational reasons.

[21] On the basis of this evidence the Applicant’s employer no longer required his job to be performed by anyone because of changes in the operational requirements of the enterprise. Thus the requirements of s.389(1)(a) of the Act were met.

[22] As I have mentioned above, the Applicant took a view that the commercial and market judgments made by his employer were wrongly founded and that there was no requirement to make his position redundant and to reduce the operational activity of the DIP. But as I have alluded to earlier the Applicant was not well placed to second guess the decision making of his employer in this regard, though he considered himself to be so..

Section 389(1)(b)

[23] The Act requires that an employer who seeks to make out the defence of a ‘genuine redundancy’ must have complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

[24] The Applicant performed duties as a superintendent, which is a managerial position as described in the hearing. The Applicant’s employment, the employer claimed, was not subject to a modern award or to an enterprise agreement. The Applicant took no point of difference with the evidence in this regard.

Section 389(2)

[25] Section 389(2) of the Act provides that the dismissal of an employee will not be found to be a case of genuine redundancy, notwithstanding satisfaction of s.389(1)(a) and s.389(1)(b) of the Act, 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.

[26] The Full Bench in Technical and Further Education Commission T/A TAFE NSW v L. Pykett [2014] FWCFB 714 (“Re: Pykett”) considered the basis on which the Commission can reach a finding in relation to s.392 of the Act. In so doing the Full Bench (which I take to having been referring to s.389(2) of the Act rather than s.389(2)(a) of the Act) found as follows:

[35] As we have mentioned, the use of the past tense in the expression ‘would have been reasonable in all the circumstances for the person to be redeployed ...’ in section 389 (2)(a) directs attention to the circumstances which pertained when the person was dismissed. As noted in Honeysett, [T]’he exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances’.  The question is whether redeployment within the employer’s enterprise or an associated entity would have been reasonable at the time of dismissal. In answering that question the Full Bench in Honeysett observed that a number of matters are capable of being relevant:

“They include the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job in relation to the employee’s residence and the remuneration which is offered”. 

[36] [...] For the purposes of s.389(2) the Commission must find, on the balance of probabilities, that 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 also be an appropriate evidentiary basis for such a finding. Such an interpretation is consistent with the ordinary and natural meaning of the words in the subsection; the Explanatory Memorandum and Full Bench authority. We acknowledge that the facts relevant to such a finding will usually be peculiarly within the knowledge of the employer respondent, not the dismissed employee. If an employer wishes to rely on the ‘genuine redundancy’ exclusion then it would ordinarily be expected to adduce evidence as to the following matters:

(i) that the employer no longer required the dismissed employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;

(ii) whether there was any obligation in an applicable modern award or enterprise agreement to consult about the redundancy and whether the employer complied with that obligation; and

(iii) 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 employer.

[27] In this instance the evidence before me is that the employer (and its related companies) maintain no other de-inking facilities in Australia. The Applicant’s experience was in de-inking facilities.

[28] The employer contended that it examined the availability of alternative employment (which was limited, as I will explain below) and was not able to identify any position for which the Applicant was qualified or experienced. This evidence was unmoved on cross examination and showed no signs of fabrication or falsification. The wider context of that investigation requires attention, however.

[29] The Applicant had performed duties in a managerial role in an office during the hours 9AM -5PM for the duration of his lengthy period of employment with the employer. The Applicant did not challenge the following description of his duties:

What were the duties of Mr Khawaja that distinguished his from job from that of a supervisor?---The supervisor is more hands on basis to deal with day to day problems, and the applicant, in our opinion, is more to do with more strategy, planning, ordering, making decision, or arrange the roster. So ordering raw material, ordering the consumable material, ordering equipment, will be the applicant's job, not the supervisor's job. Supervisor will be controlling the machine and supporting the operator - the lower level. And if the supervisor would have any problem they can't fix, then they would go to the applicant. So summarise, the applicant is on site, only Monday to Friday in office hours, he is doing senior job, in terms of training, in terms of getting a supplier - or alternative supplier - getting a cheaper product, ordering, you know, and providing procedure, providing document, what are the day to day process. 1

[30] The evidence was that the only positions that were available at the time were 12 hour shift positions, as a machine operator or forklift driver. During the cross examination the Applicant did not make it clear in response to questions what his disposition was in relation to alternative employment (such as performing shift work as a forklift driver).

[31] The employer is entitled to form a view that redeployment into such positions would result in an unsuitable and unproductive outcome for the business. I do not read s.389(2) of the Act as referring to a requirement for an employer to redeploy an employee into any position. The Full Bench in Re: Honeysett quoted approvingly by the Full Bench in Re: Pykett does not suggest that this is the case (see below). Indeed the Explanatory Memorandum (cited above) also makes clear that:

1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for redeployment or there may be no positions available for which the employee has suitable qualifications or experience. [My emphasis]

[32] I add to the relevant factual matrix that Mr Steven Johnson gave evidence that the Applicant had told him that he (the Applicant) would not be prepared to work such hours owing to his family responsibilities. The Applicant claimed he could not recall that conversation having occurred. But I have no reason to question Mr Johnson’s recollection, particularly as his evidence was given candidly and that he had revealed an established and amiable relationship with the Applicant, which was reciprocated by the Applicant. This much was in evidence in the hearing. I consider that Mr Johnson bore the Applicant no ill will, and I consider his evidence to be candid and truthful.

[33] When all the circumstances are taken into account (as the decisions in Re: Honeysett and Re: Pykett suggest is necessary for reaching the requisite degree of satisfaction under s.389(2) of the Act), I do not consider that it was unreasonable for the employer to not redeploy the Applicant to another position (such as a forklift driver or machine operator 12-hour shift position). In so concluding I have taken into account the claim made to Mr Johnson by the Applicant, the profound difference between the nature of the work that was available and that which the Applicant had been performing for the employer, and the reasonable requirement for the employer to evaluate its own productivity requirements.

[34] I do not consider, therefore, that the employer acted unreasonably in not redeploying the Applicant to another position. Having found as such, I am satisfied that the Applicant was desirous of maintaining a position at the employer’s premises. But I believe that position was in the continuing role of Superintendent, as the Applicant had vigorously disagreed with the operational decisions being made in relation to the DIP, and the technical and commercial basis for that decision making.

[35] I add to this that the Full Bench in MacLeod v Alcyone Resources Ltd T/A Alcyone [2014] FWCFB 1542 found that the availability of a more junior position into which an employee (whose position had been made redundant) was not redeployed did not contravene s.389(2) of the Act (or otherwise):

[32] To avoid doubt, we note as a matter of principle that the availability of a more junior role into which the employee could have been redeployed could provide a basis for finding that a redundancy was not genuine, or that a dismissal was harsh, unjust or unreasonable. Each case will turn on its own facts. On the facts of this case, it was open to the Deputy President to conclude that s.389(2) was not satisfied as it was reasonable for the employer to assume that the junior receptionist position was not an appropriate position to consider for redeployment due to its nature, as well as the lack of indication from Ms MacLeod that she was interested in the position.

[36] It may well be the case that in some circumstances, for example, there will be an alignment of views between the employer and the employee (whose position has been made redundant) regarding redeployment to a lower paying or more junior position in the employer’s enterprise. There the employer will consider (perhaps amongst other factors) the skills and experience of the employee to be appropriate to the new position and the employee will wish to undertake the more junior role (and happily accommodate the changes in the nature of the work and its terms and conditions). Interesting issues arise, however, if a new contract of employment is required to give effect to such an arrangement (given that there will be significant differences between the nature of the work the employee is being asked to perform compared to what he or she had performed previously).

[37] In the circumstances before me, the employer considered that the nature of the Applicant’s long standing previous work was too far removed from the available positions in the business to provide a productive accommodation. The Applicant’s own view of his skills and knowledge compared to others in the Company add to this conclusion. The Applicant had also informed Mr Johnson that he was not disposed to shift work, which is a matter I have mentioned earlier.

[38] Given the evidence, it appears that the Applicant’s principal concern in these proceedings has been to prove the decision to reduce the DIP’s capacity resulted from a wrong-headed commercial and technical assessment, more than to make out a case in addition (or in the alternative) as to why he should have been offered an alternative position in the employer’s establishment.

Conclusion

[39] In light of the findings above, I conclude that the Applicant’s position was made redundant for the purposes of s.389(1)(a) of the Act; that the circumstances of s.389(1)(b) of the Act did not apply to him or his position; and that the employer did not unreasonably fail to redeploy the Applicant to another position with the Company (for the purposes of s.389(2) of the Act).

[40] Consequently, the Applicant was dismissed from his employment for genuine operational reasons, pursuant to s.389 of the Act. And because of this, the application made under s.394 of the Act must be dismissed because the Applicant was not a person unfairly dismissed under s.385(d) of the Act.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr S. Khawaja, Applicant

Ms C. Tucker (of Australian Industry Group), for the Respondent

Hearing details:

Brisbane

2013

10 and 11 April