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

Ms Duc Pham
v
Alliance Contracting Pty Ltd
(U2014/1905)

Unfair dismissal - jurisdictional objection - genuine redundancy.

[1] On 28 May 2014, Ms Duc Pham (Ms Pham or Applicant) made application to the Fair Work Commission (Commission) seeking a remedy for alleged unfair dismissal from her former employer, Alliance Contracting Pty Ltd (Employer).

[2] The application was made pursuant to s.394 of the Fair Work Act 2009 (FW Act).

[3] In response to the application, the Employer asserts that:

• the Applicant is not protected from the unfair dismissal provisions of the FW Act as her dismissal was a case of genuine redundancy.

[4] To assist in the determination of whether Ms Pham’s dismissal was a case of genuine redundancy, I issued Directions and advised the parties that I intended to deal with the matter by way of written submissions. In addition, each party had the opportunity to challenge the submissions or witness statements in a hearing.

[5] Both the Applicant and the Employer requested a hearing.

[6] At the hearing, the Applicant represented herself and gave evidence on her own behalf.

[7] The Employer was represented by Mr A Collier and he gave evidence on behalf of the Employer.

[8] This is my decision and reasons for decision on whether the Applicant’s dismissal is a case of genuine redundancy, and therefore, she is not protected by Part 3-2 Unfair dismissal provisions of the FW Act.

RELEVANT STATUTORY FRAMEWORK

[9] Section 385 of the FW Act sets out the meaning of unfair dismissal as follows:

“(a) the person has been dismissed; and

(b) ...and

(c) ...and

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

[10] The meaning of genuine redundancy is contained in s.389 of the FW Act 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.”

[11] Shortly put, where it is found that a dismissal is a genuine redundancy, it is not an unfair dismissal.

CONSIDERATION

s.389(1)(a) - the employer no longer requires the job to be performed by anyone because of changes in operational requirement

[12] The Applicant was employed as an Accountant and on parental leave at the time the position was made redundant.

[13] I have no reason to find to the contrary, that the Employer experienced a significant turnaround in its business from March 2013 to June 2014.

[14] The Employer suffered a $8M loss on a civil project. During March/April 2014, the Employer lost two (2) of its three (3) mining contracts. The termination of the contracts were up to 18 months premature and unexpected. The Employer was given 60 days notice of termination of the contracts. The remaining mining contract came to an end due to the expiration of time in June 2014.

[15] In March 2013, the Employer’s “headcount” was 288. In June 2014, the Employer’s headcount was 82. This is a 71.5% decrease in approximately 15 months. The Employer’s annualised turnover went from $120M to approximately $35M.

[16] The “headcount” in the Perth Head Office was reduced from 34 to 23 persons in a period of two (2) months. The Applicant was one of those persons made redundant during this period.

[17] The Applicant did not dispute that the Employer was operating in the above business environment set out in paragraphs [13] to [16].

[18] The Explanatory Memorandum to the Fair Work Bill 2008 (Explanatory Memorandum) provides examples of changes to the operational requirements of an enterprise which will lead to a genuine redundancy. They are as follows:

“1548.

• 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 distributing between several other employees and therefore the person’s job no longer exists.”

[19] Having considered the guidance provided by the Explanatory Memorandum, I find, on the undisputed evidence, that the condition required in s.389(1)(a) of the FW Act is met. The Employer no longer required the position occupied by Ms Pham to be performed by a discrete person because of changes in the operational requirements of the business due to a severe deterioration in its operational environment.

s.389(1)(b) - has the employer complied with any obligation in a modern award or enterprise agreement to consult about the redundancy

[20] The Applicant asserts that her dismissal was unfair for a number of reasons. However, in short form, they are as follows:

• the redundancy was made without warning during Ms Pham’s maternity/parental leave;



• the redundancy was made without any consultation and the Employer did not consider any feedback or opinion; and



• the Applicant was not included in formal communications to other employees.

[21] In summary, the Applicant contends that the Employer failed to consult about the redundancy.

[22] The Applicant has not referred to any specific modern award or enterprise agreement but has referred to s.83(1) of the FW Act.

[23] Section 83(1) of the FW Act requires an employer to take all reasonable steps to consult with an employee who is on unpaid parental leave where the employer has made a decision about the person’s pre-parental leave position. The requirement for the employer to consult relates to a decision which would have a significant effect on the status, pay or location of the pre-parental leave position.

[24] It is not my role in this application to make a determination on whether the Employer complied with s.83(1) of the FW Act. However, I have the following evidence in relation to the communications between the Applicant and Employer once a decision had been made to make the position occupied by Ms Pham, redundant. In considering this evidence, I am not concluding that there was an obligation upon the Employer to consult in accordance with a modern award or enterprise agreement.

[25] The Applicant visited her Employer’s premises on 17 April 2014. It was described as a “keeping in touch visit” 1. At that time, she became aware, through her colleagues, that the Employer had made some positions redundant2.

[26] There is a dispute whether the Applicant attended Head Office again on 16 May 2014. Notwithstanding that dispute, the oral evidence is that on 26 May 2014, the Applicant met with the Chief Financial Officer (CFO) and Mr Collier. Specifically, the evidence is as follows:

“Earlier on you admitted to your colleagues informally telling you about the contracts being lost and the redundancies made?---Yes.

So would it then be true that prior to the meeting with the CFO and myself, that you knew that the company was experiencing hardships, had lost contracts, and had made people redundant?---Yes.” 3

“...Would it be true that the CFO and myself met with you to explain to you that your position was redundant?---Yes.”

Would it be true that through the course of that conversation the CFO and I expressed that we had considered alternative forms of employment?---You kept saying that you had consider the other form of employment, but you didn't give me any example or any criterias to be consider on that.”

Would it be true that the CFO and I had a conversation with you wherein we said we had considered alternative forms of employment, such as part-time, such as reduced hours?---No.” 4

“Would it be true that we explained to you the nature of the business and the hardships the company had experienced in terms of the loss of contracts? In addition to the information you already had from your colleagues at your previous visits, would it be true that we expressed to you in significant detail the loss of contracts, the impact that it had had in terms of all the redundancies we had made on site, the redundancies already made in head office, and the financial strains that were on the company?---Yes, you did.” 5

“In terms of a legitimate redundancy, would it be true that I had a conversation with you explaining that due to the significant downsize of the company and the diminished workload within the finance department, and the diminished skill set required, that your role was redundant?---Yes.” 6

[27] Mr Collier’s evidence in examination in chief is that:

“Each department had to identify its capability - including my department, including the finance department - in terms of work volume, skill set needed, and, I guess, the time lines that needed to be met in terms of the work being done, and the sheer financial affordability of the company. Each department head went away and identified those needs...So prior to Ms Pham being made redundant, we had actually made others redundant, and post Ms Pham being made redundant, we had to make some more redundant...I put in a call to Ms Pham and explained to her that in the context of the redundancies...could we please meet with her and have a meeting about that. Did I express to her on the phone then that her role was redundant? No, I didn't. Didn't feel that that was appropriate to do over the phone. Ms Pham came in, the CFO and myself met with Ms Pham...We had considered alternative forms of employment, but in a company that is already experiencing extreme duress, we couldn't see a need for Ms Pham's employment in any way, shape or form, and hence her role was redundant.” 7

“...When we notified Ms Pham that her role was redundant, in fact, she herself brought up the fact, "Is there any other work for me to do? Is there any alternatives?" She actually expressed, "Such as part-time work, such as casual." Both Mr Pratt and myself expressed to her that we had considered those alternatives, and that given the context and the dire straits of the company, and the need within that department, it wasn't an option that we could entertain. We couldn't make a job for someone when we didn't need it and couldn't afford it.” 8

“So in percentage terms, there was a drop of roughly somewhere between 20 to 25 per cent?---That's right, yes. In the whole head office function we dropped from 34 to 33, so it was about 33 per cent of the whole head office function.” 9

[28] In cross examination, Mr Collier gave evidence that:

“Is that true that the company didn't expend any effort to inform me about the changes in the company; that the company is facing financial difficulty?---Well, I would say it's true that we didn't make personal contact, but I would also respond by saying that we were aware through your colleagues that you were informally informed of the hardships experienced by the company.

...I agree that my visit day is 17 April 2014. I was informed by my colleagues on that date, which is two weeks after they received the notification of termination of the project and they had make the redundant of site personnel and - - -“ 10

“So did you make the claim that the decisions were made prior to the meeting on 26 May?---I did say the decision had been made, and that that decision was made in the context that all variable options had been considered.

And you said that decisions, we have no opportunity to discuss about that decisions after you give me the notice of redundancy?---I expressed that it was a matter that didn't need to go round and round because the company had made the decision on the basis of its needs, absolutely.

Did you discuss with me prior to the meeting on 26 May about the redundancy? ---No, because we didn't know we would need to make you redundant.

Until 26 May?---It came to light pretty much a couple of days before that there was some severe hardship in the company and that we needed to extend further redundancies.” 11

“MS PHAM: Yes. But, Commissioner, my point is that the reasons that have been given on the selection process, to make my position redundant was to cover the fact that the job is still there and being performed by another staff member of the team with different title, but the job that doing has the same natures.” 12

[29] The Explanatory Memorandum at paragraph 1550 explains:

“1550. Paragraph 389(1)(b) provides that it 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 redundancy. This does not impose an absolute obligation on an employer to consult about redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.”

[30] The Applicant refers to Roy Morgan Research Ltd v K Baker [2013] FWCFB 8936 in her submission. In that Decision, the Full Bench did, as the Commission did, in the first instance, find that the employee’s enterprise agreement imposed an obligation on the employer to consult. In this application the Applicant did not refer to any industrial instrument which required the Employer to consult with her regarding the redundancy.

[31] The uncontested facts are that in a period of 15 months, the Employer’s workforce was reduced by approximately 70%. During this time, the Employer’s head office reduced by approximately 33%. In such circumstances, it would not be unusual for consultation with employees to be less than perfect. In most cases, employers are attempting to keep their business “afloat” and the remaining employees employed. The perverse irony is that if employers engaged in the pursuit of some perfection in consultation, as desired by many employees, it is likely that this activity would lead to a greater number of employees being made redundant.

[32] The Explanatory Memorandum at paragraph 1553 relevantly explains:

“1553. Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy...”

[33] It would appear, that over a period of time the Employer was having to adapt to changing operational circumstances. This was not a case of a “one-off” downsizing exercise in which there was a carefully laid out communications plan, which included consultation with employees. The Employer was, for whatever reason, facing an evolving workforce reduction. When it came to Ms Pham’s position being abolished, it invited her to a meeting in which she was advised of her position being made redundant. This information came at a time when she was aware that other positions were being made redundant.

[34] As soon as the Employer had determined the position occupied by Ms Pham to be made redundant, its representatives met and discussed the matter with her promptly. Notwithstanding this discussion, I have been provided with no evidence or submissions that the Employer was obliged to consult with Ms Pham pursuant to a modern award or enterprise agreement.

s.389(2) - was it reasonable in all the circumstances for the employee to be redeployed within the employer’s enterprise or associated entities (if any)

[35] The ability to redeploy a person within the enterprise or entities (if any) is generally a matter within the knowledge of the employer. While it is understandable and common for employees to assert that they can be redeployed into another position, in the circumstances of this redundancy, the Employer was experiencing extreme operational stress. In the words of Mr Collier, “...we couldn’t make a job for someone when we didn’t need it and couldn’t afford it” 13.

[36] Having considered the evidence of the circumstances which the Employer faced operationally, I find that Ms Pham could not be redeployed within the enterprise or its entities (if any).

CONCLUSION

[37] For the above reasons, I am satisfied that Ms Pham’s dismissal was a genuine redundancy and consequently, she is not protected by Part 3-2 Unfair dismissal provisions of the FW Act. Accordingly, the application must be dismissed. An order to this effect is issued jointly with this Decision.

COMMISSIONER

Appearances:

D Pham, the Applicant.

A Collier, on behalf of the Respondent.

Hearing details:

2014:

Perth,

11 September.

<Price code C, PR556098>

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