Fair Work Act 2009
s.394—Unfair dismissal

Marcelino da Costa Oliveira;
Saturnino Soares; and
Rolando Xavier
v
The Trustee for Clipper Pearls Unit Trust T/A Clipper Pearls Pty Ltd
(U2013/14424) (U2013/14427) (U2013/14428)

Termination of employment.

[1] This decision concerns applications for an unfair dismissal remedy made under section 394 of the Fair Work Act 2009 (the Act) by Mr Marcelino da Costa Oliveira, Mr Saturnino Soares and Mr Rolando Xavier (collectively, the applicants). The respondent in each of these applications is Clipper Pearls Pty Ltd (Clipper or the respondent).

[2] The facts relevant to these applications are common and consequently the applications were heard together.

[3] The respondent objects to each of the applications on the ground that the dismissal of each of the applicants was a case of genuine redundancy and as such the applicants cannot have been unfairly dismissed.

Background

[4] Clipper is a pearling company with their administrative offices and pearl farm in Broome.

[5] Clipper collects pearl oyster shells by either drifting at sea along the Eighty Mile Beach south of Broome or from its pearl hatchery which produces juvenile oysters which are then deployed to the ocean where the pearl shells grow over a period of two years. The farmed oyster shells are regularly cleaned to allow them to grow and feed effectively. Clipper requires qualified coxswain skippers and deckhands to assist in both processes.

[6] In 2010 Clipper engaged the applicants along with 12 other trainees, all of whom were from Timor-Leste, in a pilot training programme. The applicants came to Australia to work with Clipper under a training visa.

[7] By October 2012 nine of the trainees had chosen not to continue with their training and were no longer employed with Clipper. Six of the trainees, including the applicants, showed potential to complete their Coxswain Certificate but had not been able to achieve this in the time originally expected. Consequently Clipper sought an extension of their visas for these six trainees to enable them to complete their studies over a further period.

[8] Relevantly each of the applicants had their visas extended through until February 2014 at which time their visas would expire.

[9] The respondent dismissed the applicants effective 23 September 2013.

Witness evidence

[10] Mr Kevin Austin appeared in Broome for each of the applicants. Each of the applicants gave their evidence by mobile telephone from Timor-Leste.

[11] Ms Erica Hartley appeared in Broome for the respondent. Mr Patrick Moase, Clipper’s General Manager, and Mr Mark Holtom, Clipper’s Human Resources Manager gave evidence in person in Broome.

[12] The evidence of the applicants was very limited. The applicants agree with the respondent as to the circumstances of the business in the lead up to their dismissals. Each of the applicants agreed that the respondent’s business had been negatively affected by two cyclones and disease amongst the oysters. The applicants recognised that the respondent’s harvest for 2013 was poor. The applicants agreed that the respondent prior to dismissing them had made a number of changes to reduce its costs.

[13] The applicants accept that the financial position of the respondent prior to their dismissals was poor as explained by the respondent’s witnesses.

[14] The applicants’ evidence was consistent with the respondent’s witness evidence as to the process of meetings held with them on 9 and 10 September 2013 and the various letters they received from the respondent regarding their dismissals.

[15] Some of the applicants’ evidence was that they felt they had been dismissed because of their nationality.

[16] One of the applicants said that after they had been dismissed they were replaced by backpackers.

[17] Considering the evidence of the applicants and the evidence of Mr Moase and Mr Holtom I make the following findings.

[18] As at 23 September 2013 Mr Xavier and Mr Soares were working as boat skippers and Mr da Costa Oliveira as a deckhand.

[19] Clipper’s business was negatively affected from 2009 as result of the global financial crisis.

[20] In 2011 Clipper’s pearl harvest was negatively affected by the onset of oyster oedema disease.

[21] In February 2012 and again in March 2013 category four severe tropical cyclones struck in the Broome region and this on both occasions damaged Clipper’s shell stocks reducing subsequent pearl harvests.

[22] The shell stock harvested over a two-year period had reduced significantly and by 2013 it was approximately 65% less than expected. These events had negatively impacted on Clipper’s revenue from the harvests in the financial year 2011 - 2012 and again in the financial year 2012 - 2013.

[23] Mr Moase gave specific evidence as to percentage reduction in Clipper’s revenue this caused in 2013. I am satisfied that the cumulative effects of these events had severely impacted on the businesses profitability by 2013.

[24] By August 2013 Clipper had decided to take immediate measures to reduce its operating costs. One of those steps was to change its operational arrangements from working with a large mothership which spent an extended period at sea. The mothership was crewed with 29 persons and stayed at sea for 10 consecutive days. To reduce costs the mothership was taken out of service and replaced by a smaller boat carrying a crew of only 10 persons which would travel to the shell beds on a daily basis.

[25] All employees including the applicants were advised of these operational changes by letter dated 9 September 2013.

[26] Around 21 through to 26 August 2013 Mr Moase having reviewed the results of the harvest decided to reduce expenses further by cutting labour costs. His decision was that three of the trainee positions would be made redundant.

[27] I accept his evidence that these employees were chosen because they were not permanent employees and would not have ongoing employment after their visas expired in February 2014. I accept his evidence that the nationality of the three applicants was not a consideration when he decided that their positions would be made redundant.

[28] Mr Moase, Mr Holtom and Mr Bainbridge, General Manager of Operations for Clipper, held a meeting with the six trainees on 9 September 2013. At the meeting the trainees were informed about Clipper’s difficult financial situation and the need to reduce operating costs. The six trainees were informed of the company’s decision that three of the trainee positions were to be made redundant. Mr Moase explained that they were being considered for redundancy because their employment was due to finish in February 2014 whilst the other deckhand and boat skipper employed by Clipper were permanent employees.

[29] The six trainees were told they had the opportunity to volunteer for redundancy but that if no one volunteered then three of the trainees would be selected by Clipper to be made redundant. Mr Moase explained that there was no substantial difference in his view in their performance and if Clipper needed to decide who would be made redundant they would take into account factors such as their living arrangements, any accommodation leases they were individually committed to and whether there were any other outstanding financial commitments within Australia that they could not change. Mr Moase explained this was to ensure the choice of which trainees were made redundant did not result in the remaining trainees having a financial burden, such as paying for a lease by themselves which they could not meet.

[30] At the meeting the trainees were each given a written summary of their termination payments that would apply if they were made redundant and explaining the date of termination would be 23 September 2013.

[31] The evidence is that it was also explained that whichever trainees were to be made redundant if they wanted to try to complete the formal requirements for their Coxswain Certificate prior to 23 September 2013 Clipper would assist them to do so and would help them put together the documented sea time necessary.

[32] The evidence is that it was common for Clipper to meet with the Timor-Leste employees as a group given that they were all in the same situation as trainees.

[33] The meeting on 9 September 2013 was conducted in English which was the usual language to communicate with the applicants. The applicants had been undertaking off-site training at the Kimberley Training Institute where their courses and examinations were conducted in English and the applicants had successfully completed these courses. Notwithstanding this Mr Moase offered the applicants a written summary of their termination payments to be translated into another language but all six of the trainees declined this offer.

[34] The next day 10 September 2013 a further meeting with the same participants was held.

[35] None of the trainees had decided to volunteer for redundancy. Mr Moase then advised the group that he had decided that the three applicants’ positions would be made redundant.

[36] Mr Soares then said he would be happy to be made redundant if he was paid the full amount of his wages through to when his visa expired in February 2014. Mr Moase explained that was not possible but they would be paid their full redundancy entitlements.

[37] On 3 October 2013 the applicants were each provided with a letter of termination (dated 26 September 2013) setting out all of the information that had been confirmed to the applicants verbally at the two meetings on 9 and 10 September 2013.

[38] The evidence is clear that from the meeting on 10 September 2013 the applicants were fully aware that their positions were to be made redundant effective 23 September 2013.

[39] The evidence of Mr Moase which I accept is that prior to making the final decision to make the three applicants redundant he did consider alternative employment possibilities and whether Clipper could redeploy the trainees within its business. He also consulted with Mr Holtom in regard to this. Clipper’s business involved the pearl farming operation where the applicants had been working and separately the small pearl hatchery operation at Beagle Bay which was staffed with three highly skilled employees with aquaculture certification. There were no vacancies of any description in either of these operations for the applicants.

[40] Clipper is owned by Autore Pearling Pty Ltd which is part of a pearling conglomerate, the Autore Group, which has marketing, wholesale and retail pearling divisions, but which are stand-alone entities and are separate in their own right.

[41] The Autore Group does have a pearling operation conducted in Indonesia. The evidence of Mr Moase was that this is completely separate and Clipper is not able to redeploy employees into their business. In any event the applicants being from Timor-Leste were working in Australia on training visas which only allowed them to work in Australia.

[42] At its peak in early 2011 Clipper employed 55 people in total. At the end of September 2013 after the applicants were made redundant the employee numbers had been reduced to 29 in total, made up of 22 full-time employees and 7 casual employees. As at 9 July 2014 Clipper had 35 employees, made up of 16 full-time employees and 19 casual employees.

[43] The uncontested evidence is that at the time the applicants were dismissed the respondent believed there would be no further trips to sea for the 2013 season. However shortly after the dismissal of the applicants Mr Moase took the decision to do one extra trip or swing to sea. As Mr Holtom described it doing one more swing out to sea at this time of year was unheard of and to do so was unprecedented. By this stage Clipper had already winterised its vessels and released its casual employees.

[44] Mr Holtom first became aware of this decision on 1 October 2013 and he immediately sent a newsletter out by email to all present and past employees including the applicants advising them of this development. The newsletter explained that the further swing would take place on 24 October 2013. The intent of the newsletter was to be able to attract some of the employees who have experience working for Clipper for this additional swing.

[45] Mr Holtom then recruited casual deckhands and casual cooks for this trip. No skippers were recruited. None of the applicants contacted Mr Holtom regarding these opportunities.

[46] At the completion of the swing to sea all of these casual deckhands and casual cooks were dismissed.

[47] Subsequently in November 2013 a further six positions at Clipper were made redundant.

[48] The positions then made redundant included those occupied by the three remaining trainees who had been part of the group of six trainees which included the applicants, the engineering supervisor with 12 years’ service, the base logistics supervisor with 10 years’ service and a boat skipper with five years’ service.

Submissions

[49] The submissions made on behalf of the applicants are as follows.

[50] Their dismissals were not a case of genuine redundancy and involved racial discrimination.

[51] The applicants complain that their written notices of termination were not received until after the dismissals had taken effect.

[52] The applicants complain that they were given two weeks’ notice of their dismissal whereas there contract stipulates four weeks’ notice.

[53] Immediately after the applicants were dismissed the respondent employed working holiday visa holders to fill the positions the applicants had occupied. Further the applicants’ positions were advertised as vacant for employment.

[54] The dismissal of the applicants has denied them the opportunity to complete their training and achieve the maritime qualifications.

[55] The parent company, the Autore Pearling Group, had multiple opportunities for alternative employment and training within its Australian and international pearling operations for the applicants.

[56] The respondent submits that the dismissal of each of the applicants was a genuine redundancy in the terms of section 389 of the Act and consequently pursuant to section 385 of the Act the applicants have not been unfairly dismissed.

The legislation and the Award

[57] Section 385 of the Act set out below explains in what circumstances the Commission would be satisfied that a person has been unfairly dismissed.

“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

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

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

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

[58] If a dismissal was a case of genuine redundancy then that person has not been unfairly dismissed.

[59] Section 389 of the Act defines the phrase genuine redundancy as set out below.

“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.”

[60] At the time of the dismissal of the applicants the Aquaculture Industry Award 2010 [MA000114] (the Award) applied to their employment. This Award includes standard provisions regarding consultation where an employer has made a decision to introduce major changes. These consultation obligations are those applicable in this case for the purposes of section 389(1)(b) of the Act. This clause is set out below.

“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 the 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.”

Consideration

[61] The central issue to be determined in each of these applications is whether the dismissal of the applicants was a genuine redundancy within the meaning of section 389 of the Act.

[62] The applicants accept and the evidence is clear that at the time of their dismissal the respondent’s financial situation was deteriorating. The evidence as to why this was is set out above. The respondent in response to its deteriorating finances was in the process of taking a number of steps to reduce its costs. First operational changes were made as to how it sent its employees to sea to harvest pearls and then decisions were made to further reduce costs by reducing the number of employees.

[63] The evidence is clear that the applicants were the first of a number of employees to be made redundant.

[64] The redundancies were necessary because of a decision to reduce costs by reducing the overall size of Clipper’s production team.

[65] I am satisfied that at the time the decision was made to dismiss the applicants on 10 September 2013 and at the time the dismissal took effect on 23 September 2013 the respondent no longer required the applicants’ jobs to be performed by anyone because of changes in its operational requirements.

[66] The respondent was subject to the Award and it applied to the applicants’ employment at the time they were notified of their redundancy.

[67] Clipper met with the applicants being the employees who may be affected and others on 9 and 10 September 2013 and at that time notified them of the changes proposed and discussed their individual situations with them and provided each of them information in writing about the changes the respondent proposed which was to make three positions in the production team redundant.

[68] I am satisfied then that Clipper did comply with the obligation in the Award to consult with each of the applicants about their position being made redundant.

[69] With respect to considering redeployment I am satisfied on the evidence that there were no positions within Clipper’s enterprise to which any of the applicants could be redeployed.

[70] Mr Austin for the applicants has argued that Clipper should have redeployed the applicants to any of a number of other businesses he has mentioned. The evidence before the Commission however does not support a conclusion that any of these businesses the applicants’ representative has referred to were an associated entity of the respondent to be considered for the purposes of possible redeployment.

[71] For completeness even if any of these separate businesses were an associated entity of the respondent there is no evidence that there was an identifiable job or a position or other work to which it would have been reasonable in all the circumstances to redeploy any of the three applicants.

[72] It was repeatedly alleged that the decision to select the applicants for dismissal was a discriminatory decision based on their nationality.

[73] The respondent’s explanation for selecting the applicants was that unlike Clipper’s other employees the applicants’ visas were to expire in February 2014 and so they would probably not be working longer than this even if they were not made redundant. The loss that they would suffer by being made redundant was effectively limited to the period between 23 September 2013 and when their visas expired in February the following year. These employees were identifiably different in this way. The reasoning was this was a lesser loss than would befall other permanent employees who could be chosen for redundancy who would be otherwise expecting to continue in their employment indefinitely.

[74] An employer making a decision as to which of its employees to make redundant is always faced with an unenviable decision. The basis on which Clipper selected these applicants to be made redundant was wholly believable and in the circumstances sensible and in no way discriminatory.

[75] The evidence is that a number of other employees who are not from Timor-Leste were a few months later also made redundant and a number of those were fully qualified and experienced employees who had been working for Clipper for many years.

[76] There is no evidence to support the applicants’ allegation that the decision to make them redundant was discriminatory.

[77] In any event as was explained at the hearing of this matter in the context of determining whether each of the applicants’ dismissal was a case of genuine redundancy it is well established that this question does not involve considerations of the process for selecting the individual employee for redundancy over other employees that were not selected for redundancy. 1

Conclusion

[78] The dismissal of each of the applicants was a case of genuine redundancy.

[79] None of the applicants were unfairly dismissed.

[80] Consequently each of these applications for unfair dismissal remedy will be dismissed and an order to that effect will be issued in conjunction with this decision.

COMMISSIONER

Appearances:

K Austin representative for the applicants.

E Hartley solicitor for the respondent.

Hearing details:

2014.

Broome:

August 20, 21

 1   Fair Work Bill 2008 Explanatory Memorandum at para [1553] and UES (Int’l) Pty Ltd v Harvey 215 IR 263 at para [27].

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