| [2017] FWC 607 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Paul Williams
v
Staples Australia Pty Ltd
(U2016/8696)
Mei Wu
v
Staples Australia Pty Ltd
(U2016/8698)
Noeline Rogers
v
Staples Australia Pty Ltd
(U2016/8699)
Patricia Williams
v
Staples Australia Pty Ltd
(U2016/8700)
COMMISSIONER CAMBRIDGE |
SYDNEY, 3 FEBRUARY 2017 |
Applications for unfair dismissal remedy - jurisdictional objection - whether dismissals were cases of genuine redundancy - s. 389 meaning of genuine redundancy - consultation obligations - jurisdictional objection dismissed - dismissals harsh, unjust and unreasonable - reinstatements Ordered.
[1] This Decision is made in respect to four applications for unfair dismissal remedy made under s. 394 of the Fair Work Act 2009 (the Act). The applications were lodged at Sydney on 4 August 2016, and they were respectively made by Paul Williams, Mei Wu, Noeline Rogers and Patricia Williams (collectively, the applicants). The respondent employer is Staples Australia Pty Ltd (the employer or Staples). The applications indicated that the National Union of Workers (the NUW) represented the applicants.
[2] The applications stated that the date that each of the applicants’ dismissals took effect was 20 July 2016. Consequently, the applications were made within the 21 day time limit prescribed by subsection 394 (2) of the Act.
[3] The filed documentation indicates that on 7 September 2016 the applications were the subject of unsuccessful conciliation proceedings conducted before a Member of the Fair Work Commission, (the Commission) Dean DP. The Parties have agreed that the applications should be joined, and the matters have subsequently proceeded to joint determination by way of arbitration involving a Hearing conducted at Sydney on 17 January 2017.
[4] The employer raised jurisdictional objection to the applications on the basis that the dismissals of the applicants were cases of genuine redundancy in satisfaction of the meaning of genuine redundancy prescribed by s. 389 of the Act. The employer advanced its jurisdictional challenge to the applications under subsection 385 (d) of the Act. Therefore, the requirements of subsection 396 (d) of the Act became relevant. Subsection 396 (d) of the Act relevantly stipulates that the Commission must decide whether the dismissal was a case of genuine redundancy, before there could be any consideration as to whether the dismissal was harsh, unjust or unreasonable. The Parties agreed that it would be logical and efficient for any Hearing of the applications to comprehend all evidence and submissions regarding both the jurisdictional objection and the substantive merits of the applications.
[5] At the Hearing, the Commission granted permission pursuant to s. 596 of the Act, for the Parties to be represented by lawyers or paid agents. The applicants were represented by Mr J Nolan, barrister, who was instructed by Mr M Burns, solicitor from the firm of W. G. McNally Jones Staff. Mr Nolan adduced evidence in the form of witness statements of each of the applicants. The witness statements of the applicants were admitted without requirement for any of the individuals to be cross-examined. The employer was represented by Mr A Manos, barrister, who was instructed by Ms M Hurley-Smith from the firm of Baker & McKenzie. Mr Manos introduced evidence from one witness, Mr S Brogan, who provided numerous, voluminous witness statements and he was cross-examined on various aspects of this material.
[6] The relevant factual background surrounding the dismissals of the applicants was not the subject of any significant contests. The applicants were four of twelve employees made redundant in July 2016, as a consequence of a decision made by the employer to reduce the number of permanent warehouse employees engaged at its Erskine Park site.
[7] The employer conducts a national operation as a supplier of business and office products, and it has 31 sites throughout Australia. The employer has in excess of 1700 employees in Australia, and it operates from two sites in Sydney, a Head Office located in Mascot, and a distribution centre at the Erskine Park site.
[8] The work of warehouse employees engaged at the Erskine Park site is governed by the terms of the Staples Enterprise Agreement 2014-2016 (the Agreement). In July 2016, the Erskine Park site operations involved in excess of 60 permanent warehouse employees engaged directly by Staples. In addition, the site operations included a supplementary casual labour hire workforce of 90 to 100 individuals not employed by Staples, and whose employment is not governed by the Agreement.
[9] On 5 July 2016, the employer made a decision to reduce the number of permanent warehouse employees by 10 to 14 individuals. This decision was taken to reduce the operating costs of the warehouse because as a business unit, the warehouse had been performing at levels which were over budgeted figures. In the previous financial year the warehouse was about $1m over budget, and it continued to operate at similar over budget levels during the first half of 2016.
[10] Labour costs accounted for approximately 60% of total operating costs of the warehouse, and a reduction of 12 employees was determined to be necessary to provide some improvement in the budget position of the warehouse. The decision to implement redundancies for permanent warehouse positions was announced to a meeting of a Joint Consultative Committee (JCC) which had been specifically convened for that purpose on Monday, 11 July 2016. The formation and operation of the JCC is prescribed by terms in the Agreement.
[11] Some employee members of the JCC expressed displeasure at the announcement of the redundancies. After the JCC meeting had concluded, the employer held meetings with permanent warehouse employees during which advice of the decision to implement redundancies was conveyed to those in attendance. Following these group meetings, a number of particular individuals had one on one meetings with the relevant manager in charge of the implementation of the redundancies, Mr Brogan. All permanent warehouse employees were also provided with a letter which confirmed the implementation of the redundancies. These letters also confirmed that employees would be assessed by use of a selection matrix which would be concluded by 13 July 2016.
[12] On 12 July 2016, a meeting was held at the Erskine Park site which was attended by an NUW official, the NUW site delegates, and relevant managers including Mr Brogan. During this meeting the NUW official expressed his strong displeasure about the news of the redundancies, and he made criticism of inter alia, a particular component of the selection criteria which had been mentioned by Mr Brogan, and he complained that the employer had not engaged in proper consultation regarding the redundancies. The NUW official also advised Mr Brogan that he would notify the Commission of an industrial dispute in respect to the redundancies. Mr Brogan subsequently sent an email to the NUW official which included complaint about that official’s behaviour and conduct during his attendance on site during that day, 12 July.
[13] On 13 July 2016, the 12 employees who had been selected for redundancy were individually advised of that outcome. Each individual who had been selected for redundancy was provided with a letter which confirmed their circumstance, and indicated that unless alternative employment was obtained, their employment would cease on 20 July 2016. Each of the 12 employees who had been selected for redundancy was also provided with a list of role vacancies currently available in the business.
[14] During the individual meetings with the 12 employees who had been selected for redundancy, three of those employees immediately indicated that they did not which to pursue redeployment, and consequently the employment of those three individuals was terminated with effect from 14 July 2016. The remaining eight employees were dismissed on the basis of redundancy with effect from 20 July 2016. Five of the 12 employees who were made redundant indicated that they were content to accept that outcome and had expressed a desire to volunteer for selection, while the remaining 7 individuals were made redundant on a “non-voluntary” basis. Four of those seven individuals have made the unfair dismissal applications in these proceedings. All 12 employees were paid relevant redundancy entitlements in accordance with the terms of the Agreement.
[15] The applicants have pursued their respective claims for unfair dismissal remedy, which has been challenged by Staples on the basis that the dismissals of each of the applicants was a case of genuine redundancy.
[16] Mr Manos who appeared for Staples, made oral submissions in support of written material which had been filed on behalf of the employer. Mr Manos submitted that the dismissals of the applicants was each a case of genuine redundancy, and therefore by operation of subsection 385 (d) of the Act, the dismissals of the applicants could not have been unfair.
[17] Mr Manos made submissions which firstly addressed the particular provisions of s. 389 of the Act regarding the meaning of genuine redundancy. The submissions made by Mr Manos examined in detail, the approach to the meaning of genuine redundancy which had been established by virtue of various Court and Full Bench authorities.
[18] At the outset of the submissions made by Mr Manos, it was acknowledged that the onus rested with the employer to establish the jurisdictional objection whereby Staples asserted that the dismissals of the applicants were cases of genuine redundancy. Mr Manos submitted that the particular requirements of the meaning of genuine redundancy found in s. 389 of the Act were satisfied.
[19] In respect to the first component of s. 389, namely, subsection 389 (1) (a) of the Act, Mr Manos submitted that, in July 2016, the employer had taken a decision to restructure the unprofitable position of the warehouse. This unprofitable position arose from a decrease in the volume of work, and an increase in operating costs particularly compared to competitors. Mr Manos said that the restructure resulted in the abolition of 12 jobs that the employer no longer required to be performed. According to the submissions of Mr Manos, this circumstance satisfied the requirements of subsection 389 (1) (a) of the Act.
[20] It was further submitted by Mr Manos that the second component of s. 389 of the Act found in subsection 389 (1) (b) of the Act, which involved compliance with any obligations in the Agreement regarding consultation, had also been satisfied in respect to the dismissals of the applicants. In this regard, Mr Manos referred to what he described as the general consultation provisions found at Annexure 3 of the Agreement. Mr Manos submitted that the decision to implement the redundancies had been made on 5 July 2016, and on the same day the employer sent an invitation to members of the JCC to attend a meeting on 11 July. Following the meeting of the JCC, there were then general meetings of employees during which there was opportunity to provide suggestions and engage in the consultation process as envisaged by the terms of the Agreement.
[21] The submissions made by Mr Manos acknowledged that there had been an expedited format of the consultation which was aimed to conclude at the end of the week commencing 11 July 2016. Mr Manos submitted that the expedited process was used to avoid uncertainty and any disruption to the business. Mr Manos stressed that evidence of the consultation process importantly included the adoption of a suggestion made by the NUW official in respect to one particular criteria of the selection matrix.
[22] Mr Manos further submitted that the consultation obligations which had been included in an Undertaking provided to the Commission at the time that the Agreement was approved had also been satisfied. The Undertaking mentioned the requirement to consult in respect to roster changes and the impact about any such changes. According to the submissions of Mr Manos the consultation requirements of the Undertaking had been met, and that the Undertaking did not, in practice, introduce different consultation obligations than that established by Annexure 3 of the Agreement.
[23] The submissions made by Mr Manos also addressed the consultation requirements that arose from clause 31 of the Agreement. Mr Manos said that the obligation to include the JCC in decision-making for all major changes had been satisfied by the meeting of the JCC that had been held on Monday, 11 July 2016. In this regard, Mr Manos noted that during the meeting of 11 July, members of the JCC had asked various questions, and answers had been provided by Mr Brogan. Mr Manos submitted that this process involved the inclusion of the JCC in the decision-making.
[24] The final component of section 389 of the Act, namely the reasonable redeployment obligations arising from subsection 389 (2), was also satisfied according to the submissions made by Mr Manos. Mr Manos submitted that there were no vacant roles in the warehouse and vacancies in respect of other roles throughout the business were examined but none were suitable to the particular circumstances of the applicants. The submissions made by Mr Manos stressed that the jobs that the applicants had previously performed were no longer required, although some of the duties performed may have continued to have been performed by other warehouse employees. Mr Manos submitted that it would not have been reasonable in all the circumstances for any of the applicants to have been redeployed as they simply did not have the qualifications or skills to perform any of the positions which had been identified as potentially available.
[25] The further submissions made by Mr Manos addressed the question that would potentially arise in the event that the Commission found that the dismissals of the applicants did not satisfy the meaning of genuine redundancy as established by s. 389 of the Act. In this regard Mr Manos framed his further submissions in accordance with the requirements of section 387 of the Act.
[26] Mr Manos submitted that in cases of redundancy, consideration was confined to subsection (h) of s. 387 of the Act. In particular, Mr Manos submitted that the criteria which was used in the selection matrix was not a relevant consideration in respect to subsection 387 (a) of the Act. Mr Manos said that any dismissal in a redundancy circumstance did not involve consideration of the question of valid reason related to the person’s capacity or conduct.
[27] It was further submitted by Mr Manos that the dismissals of the applicants would only be unfair if it was established that either the rationale for the decision-making was seriously undermined or there was a serious error in procedure. Consequently, according to the submissions made by Mr Manos, there was no foundation upon which to challenge the decision to implement the redundancies, and despite the expedited format for the process of the implementation of the redundancies, the evidence established that there was compliance with the relevant obligations and that the quality of the consultation had been established. Further, it was submitted that even if there could be some contemplation of an improved process, the ultimate outcome would prevail, and there would be the resultant redundancies. Mr Manos said there was no serious defect in the procedure that Staples had adopted, and the reason for the ultimate decision to dismiss had not been undermined, and therefore the dismissals of the applicants could not be held to be harsh, unjust or unreasonable.
[28] Mr Manos made further submissions regarding the question of any remedy that potentially would arise if the jurisdictional objection was not upheld, and the Commission also found that the dismissals of the applicants were unfair. Mr Manos submitted that any remedy would be confined to compensation as there were no roles available within the employer’s business to which the applicants could be reinstated. Mr Manos stressed that it would be inappropriate to provide any remedy of reinstatement in circumstances where the employer would then probably have to proceed with another round of redundancies.
[29] In summary, Mr Manos submitted that the dismissals of the applicants were each a case of genuine redundancy because each of the requirements which provide for the meaning of genuine redundancy contained in s. 389 of the Act had been satisfied. Consequently, Mr Manos said that the applications for unfair dismissal remedy were without jurisdictional foundation and should be dismissed.
[30] Alternatively, Mr Manos submitted that the dismissals of the applicants were not harsh, unjust or unreasonable. Mr Manos said that the dismissals of the applicants were not unfair because there was proper basis for the redundancies and there was no serious error in procedure. Further, Mr Manos submitted that even if the dismissals were found to have been unfair, any remedy was confined to a payment in respect to identified lost remuneration as reinstatement would be inappropriate. Mr Manos returned to his primary submissions, and urged that the applications for unfair dismissal remedy be dismissed.
[31] The Hearing of these matters has involved both the preliminary jurisdictional objection raised by the respondent employer, and the substantive merits of the claims. Accordingly, the applicants presented their case in opposition to the jurisdictional objection, and they also advanced the issues in support of the broader merits questions.
[32] Mr Nolan appeared for the applicants, and he referred to two written outline of submissions documents, which he supplemented with further oral submissions.
[33] In respect to the jurisdictional objection raised by Staples, Mr Nolan submitted that the dismissals of the applicants were not cases of genuine redundancy. Mr Nolan referred to the meaning of genuine redundancy contained in s. 389 of the Act, and he strongly challenged that Staples had complied with relevant consultation requirements of the Agreement as required by subsection 389 (1) (b) of the Act.
[34] Mr Nolan submitted that the timeline that encompassed the process, from the decision to reduce warehouse positions, through to the determination to dismiss the applicants, was too pre-emptory, too hasty, and unseemly. Mr Nolan said that the speed with which the redundancies of the applicants was decided and implemented reflected an entirely meaningless and hollow gesture that did not represent consultation as required by the relevant terms of the Agreement.
[35] Mr Nolan referred to a number of Authorities which he said provided guidance on the question of consultation and in particular he cited the Judgement of Logan J in the case of CEPU v QR Limited 1. The submissions made by Mr Nolan acknowledged that employers had the right to make managerial decisions, and that management prerogative must prevail in virtually all circumstances. However, according to the submissions of Mr Nolan, the employer’s decision-making right was qualified by the obligation to consult. In this instance, Mr Nolan submitted that the employer had not consulted in any meaningful way, nor had it properly pursued reasonable redeployment. Therefore, Mr Nolan submitted that the dismissals of the applicants were not cases of genuine redundancy, and the jurisdictional objection raised by Staples should be rejected.
[36] Mr Nolan referred to various terms contained in the Agreement which established obligations for Staples to consult with its employees and their representatives in circumstances such as the July 2016 decision to restructure the warehouse. The submissions made by Mr Nolan stressed that clause 31 of the Agreement had not be complied with when Staples convened a JCC meeting during which the decision to implement the redundancies was conveyed. Mr Nolan said that this did not involve including the JCC in the decision-making process as required by clause 31 of the Agreement.
[37] The submissions made by Mr Nolan also referred to evidence that the actual decision about the named individuals selected for redundancy was made on the evening of 12 July by the management committee and without any involvement of the JCC. Mr Nolan said that the evidence revealed that there was no real or proper opportunity for the employees, their representatives, and the JCC to be properly engaged in consultation regarding the reduction in warehouse employee numbers. Mr Nolan submitted that consultation did not involve an empty concept whereby the employer simply went through the motions of advising employees and their representatives of decisions that it had taken, and then implementing those decisions within a very short timeframe that did not provide for adequate opportunity to offer alternative approaches and potential mitigation or avoidance of the adverse impacts of the employer’s decision.
[38] Mr Nolan further submitted that the evidence of the truncated process which led to the dismissals of the applicants, was not undertaken in accordance with the requirements of Appendix 3 of the Agreement or the Undertaking provided by Staples to the Commission. Further, Mr Nolan submitted that the employer’s approach to redeployment was little more than a fig leaf, as there was no realistic or practical exploration of redeployment options.
[39] Mr Nolan made further submissions regarding the question of whether the dismissals of the applicants were harsh, unjust or unreasonable. Mr Nolan referred to the various matters set out in s. 387 of the Act.
[40] Mr Nolan submitted that there was a fundamental defect with the approach adopted by the employer, whereby it used conduct and performance criteria within the selection matrix and the applicants were given no opportunity to challenge their selection based upon the use of that criteria. Mr Nolan submitted that there was a fundamental denial of natural justice because the employees that were selected to be made redundant had no opportunity to question the basis for their selection.
[41] The submissions made by Mr Nolan emphasised that the process that Staples adopted for implementing its decision to make a particular number of warehouse employees redundant was severely flawed. Mr Nolan said that the employer’s process did not firstly, comply with the relevant consultation obligations arising from the Agreement, and secondly the selection process introduced conduct and performance issues without any kind of procedural fairness requirements.
[42] Mr Nolan concluded his submissions by reiterating that the dismissals of the applicants were not cases of genuine redundancy. Mr Nolan submitted that the dismissals of the applicants did not satisfy the meaning of genuine redundancy established by section 389 of the Act because, in particular, the employer had not complied with the consultation obligations of the Agreement, nor had it properly explored the prospects for reasonable redeployment of the applicants. Further, Mr Nolan submitted that the dismissals of the applicants were unfair because the applicants were selected for redundancy via a process that was severely flawed to the extent that the applicants had no opportunity to challenge the basis for their selection. Mr Nolan submitted that the evidence demonstrated that the circumstances of the dismissals of the applicants rendered the dismissals to be harsh, unjust and unreasonable.
[43] Mr Nolan provided further submissions which firmly asserted that each of the applicants earnestly sought a remedy of reinstatement. Further, Mr Nolan submitted that, as there was no issue raised in terms of any loss of trust and confidence in the employment relationships, reinstatement of the applicants was the appropriate and primary remedy that was available. The submissions made by Mr Nolan, stressed that the employer’s failure to properly consult and adopt a fair and just process for the implementation of the redundancies meant that reinstatement of the applicants was an appropriate remedy. Consequently, Mr Nolan submitted that the Commission should find that each of the applicants had been unfairly dismissed, and Orders should be made for their reinstatements.
[44] These applications for unfair dismissal remedy arise in respect to redundancy circumstances. The applicants were not dismissed for any reason related to particular performance, capacity, or conduct events. Instead, the dismissals of the applicants arose from a decision of the employer to reduce the number of its warehouse employees.
[45] Staples raised jurisdictional objection to the applications on the basis that the dismissals of the applicants were cases of genuine redundancy, and any dismissal for genuine redundancy cannot be held to be an unfair dismissal. The question of whether the dismissals of the applicants were cases of genuine redundancy is a matter which s. 396 of the Act requires the Commission to decide before any consideration of the merits of the application could be undertaken. The relevant provisions of s. 396 of the Act are:
“396 Initial matters to be considered before merits
The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
(a) ...
...
(d) whether the dismissal was a case of genuine redundancy.”
[46] A dismissal that is found to be a case of genuine redundancy cannot be an unfair dismissal, because of the operation of subsection 385 (d) of the Act. Section 385 is in the following terms:
“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.”
[47] Section 389 of the Act provides for a meaning of genuine redundancy:
“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.”
[48] An examination of the provisions of s. 389 of the Act identifies three specific elements which, if satisfied in combination, determine whether or not a dismissal was a case of genuine redundancy. Subsection 389 (1) contains two affirmative elements, both of which must be established, in order to allow for a finding that a dismissal was a case of genuine redundancy, and subsection 389 (2) contains one negatory element which, if established, renders the dismissal not to be a case of genuine redundancy.
[49] In this instance, the focus of the contest about whether the dismissals of the applicants were cases of genuine redundancy has involved the consultation obligations arising from subsection 389 (1) (b) of the Act, and the reasonable redeployment requirements of subsection 389 (2).
[50] Translated into the circumstances of this case, subsection 389 (1) (b) of the Act requires the Commission to find that Staples complied with any obligation in the Agreement to consult about the redundancies of the applicants. There are three major terms contained in the Agreement which create obligations upon Staples to consult with its employees and their representatives in circumstances where a decision has been made to introduce a major change, such as the termination of employment on the basis of redundancy.
[51] The first and perhaps most obvious consultation term of the Agreement is that found at Annexure 3, which is entitled “Consultation” and is reproduced as follows:
“Annexure 3
Consultation
(1) This term applies if:
(a) the Company has made a definite decision to introduce a major change to production, program, organisation, structure, or technology in relation to its enterprise; and
(b) the change is likely to have a significant effect on Associates of the enterprise.
(2) The Company must notify the relevant Associates of the decision to introduce the major change.
(3) The relevant Associates may appoint a representative for the purposes of the procedures in this term.
(4) If:
(a) a relevant Associate appoints, or relevant Associates appoint, a representative for the purposes of consultation; and
(b) the Associate or Associates advise the Company of the identity of the representative;
the Company must recognise the representative.
(5) As soon as practicable after making its decision, the Company must:
(a) discuss with the relevant Associates:
(i) the introduction of the change; and
(ii) the effect the change is likely to have on the Associates; and
(iii) measures the Company is taking to avert or mitigate the adverse effect of the change on the Associates; and
(b) for the purposes of the discussion- provide, in writing, to the relevant Associates:
(i) all relevant information about the change including the nature of the change
proposed; and
(ii) information about the expected effects of the change on the Associates; and
(iii) any other matters likely to affect the Associates.
(6) However, the Company is not required to disclose confidential or commercially sensitive information to the relevant Associates.
(7) The Company must give prompt and genuine consideration to matters raised about the major change by the relevant Associates.
(8) If a term in the enterprise agreement provides for a major change to production, program, organisation, structure or technology in relation to the enterprise of the Company, the requirements
set out in subclauses (2), (3) and (5) are taken not to apply.
(9) In this term, a major change is likely to have a significant effect on Associates if it results in:
(a) the termination of the employment of Associates; or
(b) major change to the composition, operation or size of the Company's workforce or to the skills required of Associates; or
(c) the elimination or diminution of job opportunities (including opportunities for promotion or tenure); or
(d) the alteration of hours of work; or
(e) the need to retrain Associates; or
(f) the need to relocate Associates to another workplace; or
(g) the restructuring of jobs.
(10) In this term, relevant Associates means the Associates who may be affected by the major provision of warehouse and logistical services.”
[52] The terms of Annexure 3 are essentially the same as the terms of the model consultation term as was initially constructed under regulation 2.09 of the Fair Work Regulations 2009, and applicable, mutatis mutandis, to the circumstances of employment governed by the Agreement. For instance, warehouse employees are referred to as “Associates” throughout the Agreement.
[53] The second significant term of the Agreement which establishes a consultation obligation upon Staples is found as part of an Undertaking that was provided by Staples at the time that the Agreement was approved by the Commission (April 2014). The relevant part of the Undertaking which became a term of the Agreement, is reproduced as follows:
“2. Staples undertakes to make the following changes to the Staples Enterprise Agreement 2014-2016- consultation term:
The employer undertakes and agrees to consult the employees to whom the agreement applies about roster changes. The employer also undertakes and agrees to provide information to employees about a change to their regular roster or ordinary hours of work, to invite employees to give their views about the impact of the change (including any impact in relation to their family or caring responsibilities) and to consider any views given by the employees about the change.”
[54] This part of the Undertaking introduced consultation requirements specifically in respect to changes to regular rosters or ordinary hours of work. This aspect of the Undertaking appears to have been provided so that the terms of Annexure 3 comprehended changes that were made to the model consultation term and which commenced from 1 January 2014.
[55] The third significant term in the Agreement which establishes a consultation obligation upon Staples is found at clause 31, and it is entitled Functions of the Committee. This clause should logically be read in conjunction with the preceding clause 30 which is entitled Joint Consultative Committee. These clauses of the Agreement (clauses 30 and 31) establish the JCC, and prescribe its functions. Relevantly, clause 31 includes the following text:
“Staples Management will commit to including the Committee in decision making for all major changes in the Erskine Park warehouse that will affect the Associates. However the final decision to proceed will rest with Staples Management.”
[56] There was very little factual dispute about the particular activities undertaken by Staples in respect to the implementation of its July 2016 decision to make between 10 and 14 warehouse jobs redundant. The various events that surrounded the implementation of the redundancies and which occurred between 5 and 20 July 2016, have been carefully examined so as to determine whether Staples complied with the obligations that arise from the various consultation terms of the Agreement.
[57] Regrettably, in this instance the evidence has disclosed an approach to consultation in respect to the redundancies of warehouse jobs that was unduly hasty and largely tokenistic. Staples management did not engage in genuine or meaningful consultation with its employees and their representatives, but instead it made disingenuous gestures which it sought to portray as consultation.
[58] The first indication that any of the employees had that the budgetary position which had been outlined in numerous so described “Town Hall” meetings in any way translated into a requirement to immediately reduce warehouse jobs, was the announcement made to the JCC on 11 July 2016. By the evening of the following day the 12 individuals selected for redundancy had been determined. It was an astonishingly fast process. Employees were first told one day, and individuals were selected for redundancy by the next day.
[59] The budgetary position of the warehouse vis-a-vis the total site budgetary position had been set out in PowerPoint presentations at numerous “Town Hall” meetings, the records of which were provided from September 2015. The financial results figures that were provided to employees at the February 2016 “Town Hall” meeting congratulated the overall site for achieving “$324K under budget. Well done!” At the March 2016 “Town Hall” meeting the year-end financial results which confirmed that the warehouse was about $1 million over budget, concluded with “Due to the fantastic work done by the Transport and Facilities team, the total site beat budget by: $685,847”. There was no evidence provided of even one documentary record of concern about the particular budgetary underperformance of the warehouse. However, in the space of 2 days, employees were first informed of and then selected for redundancy.
[60] The process that was adopted by Staples whereby it advised employees on 11 July of the decision to make between 10 and 14 warehouse employees redundant, and the selection of the particular 12 individuals made by the following evening, could not, on any reasonable and objective contemplation, provide for the discussion and provision of relevant information as contemplated by clauses 5 (a) and 5 (b) of Annexure 3 of the Agreement. There was plainly no proper opportunity for discussion about measures that might avert or mitigate the adverse effects of the decision to implement redundancies in the warehouse. As an example, the prospect that a number of existing full-time employees may have contemplated altering their work arrangements to part-time, and perhaps job share as a means to avoid job losses, did not emerge as a discussion topic. There was simply insufficient time for discussion about a topic such as job share.
[61] Further, at no stage did Staples invite employees to give their views about the impact of the change (including any impact in relation to their family or caring responsibilities) and to consider any views given by the employees about the change. Staples was obliged to provide such an invitation to employees in accordance with the terms of the Undertaking, and the failure to include an invitation of this nature in the letters provided to warehouse employees on 11 July 2016 entitled “Notification of change - Reduction of roles”, represented further evidence of the failure of the employer to comply with the consultation obligations in the Agreement.
[62] In addition, the JCC was not involved in any aspect of the decision-making processes connected with the redundancies. For example, as Mr Brogan attested; “The employees were not involved in the matrix grading at all.” 2 The JCC was informed of the decision to reduce warehouse employee numbers by between 10 and 14 at the specially convened meeting held on the morning of 11 July 2016. Importantly, the JCC was not involved in any decision-making regarding the composition of the selection matrix, or the particular application of the matrix which determined the 12 individuals to be made redundant. The role of the JCC was nothing more than a forum where the employer simply conveyed the decisions that it had taken, and responded to questions and complaints. Consequently, Staples acted in clear contravention of the terms of clause 31 of the Agreement whereby it was obliged to involve the JCC in decision-making, notwithstanding that it retained a final decision-making veto.
[63] On any reasonable and objective contemplation of the consultation obligations that arose from the relevant terms of the Agreement, the evidence has unequivocally established that Staples’ actions in respect to the implementation of the redundancies were so significantly non-compliant as to be grossly deficient. The extent to which Staples management disregarded the attendant consultation obligations is reflected by its submission that; “the Applicant(s) did not appoint a representative for the purposes of the process in Annexure 3 of the EBA”. 3 This regrettable submission which attempted to subvert the legitimate operation of the consultation provision, was made in contravention of; (a) evidence that Mr Brogan had acknowledged the representative role of the NUW4 and; (b) the terms of clause 32 of the Agreement which, inter alia, stated: “Staples recognises that Associates are entitled to be supported by their union, or any other representative of their choice, in relation to matters affecting their employment.”
[64] Subsection 389 (2) of the Act is a provision which renders what may have otherwise been a genuine redundancy, which possessed the elements of subsection 389 (1), to not be a case of genuine redundancy, if redeployment was reasonable in all the circumstances. The subsection contemplates redeployment to extend to any associated entities of the employer.
[65] In this instance, given the findings that have been made in respect to the failure by Staples to comply with the consultation obligations in accordance with subsection 389 (1) (b) of the Act, it may not be strictly necessary to develop firm conclusions about the pursuit of any reasonable redeployment of the applicants. However, there were two aspects of the issue of reasonable redeployment which should be mentioned.
[66] Firstly, there was no evidence of examination of potential redeployment opportunities that may have arisen from involvement and interaction with the other business units that operated at the Erskine Park site. As previously mentioned, the financial results for the Transport and Facilities team more than accounted for the underperforming warehouse figures. The extent to which the budgetary figures correlated with profitability was not examined. However, there would seem to be some realistic potential to contemplate the redeployment of individuals from an underperforming business unit into one of the better performing areas of operation.
[67] Secondly, in December 2016 Staples employed 19 new permanent warehouse employees. These new employees have essentially been engaged in the jobs that were made redundant when the applicants were dismissed. The engagement of the 19 new employees in December 2016 occurred because of a requirement found in clause 28 of the Agreement which is entitled “28 New Hires”. The relevant part of clause 28 of the Agreement states; “Staples commits to the hire of 20 permanent Associates, a combination of Full-Time and Part-Time, between 1st January 2014 and 31st December 2016.”
[68] Mr Brogan gave evidence about the obligation created by clause 28 of the Agreement to “… put on 20 permanent associates through the life of the agreement - by the end of the life of the agreement …” 5 Consequently, at the time that Mr Brogan made the decision to make between 10 and 14 employees redundant he was aware that within five months Staples would have to hire 20 (or 19) employees to work in the positions that were being made redundant.
[69] The unusual circumstances created by clause 28 of the Agreement led to an outcome with a net result of there being eight additional warehouse employees at the end of the life of the Agreement, 31 December 2016. Conceivably, in the knowledge of the obligation to comply with clause 28, Mr Brogan could have made a further eight warehouse employees redundant, and then hired 20 new employees to replace the 20 that had been made redundant.
[70] It would appear that the spirit and intent of clause 28 of the Agreement was to create a net position involving an additional 20 permanent warehouse employees by the time that the Agreement expired on 31 December 2016. The implementation of the redundancies of 12 permanent employees in July 2016, defeated the spirit and intent of clause 28. The net result that involved an additional eight employees, could have, in all likelihood, been achieved without the loss of employment of any of the seven non-voluntary individuals selected on the evening of 12 July 2016.
[71] Therefore, because of the unusual circumstances created by clause 28 of the Agreement, there was considerable potential, indeed, there was an obvious prospect, for the applicants to have been redeployed into four of the 20 positions that had to be filled by 31 December 2016. Unfortunately, because of the undue haste and absence of proper consultation involving the implementation of the redundancies in July 2016, the implications of the operation of clause 28, and consequent potential for redeployment of the applicants into positions which were essentially pending, was not traversed.
[72] In the particular circumstances of this case, I am satisfied that the requirements which have been established to arise from subsection 389 (2) of the Act, have been satisfied. That is, it would have been reasonable in all the circumstances, for the applicants to have been redeployed within the employer’s enterprise into positions which were, in effect, pending, and required to be filled by virtue of the operation of clause 28 of the Agreement.
[73] In summary, in respect to the question of whether the dismissals of the applicants were cases of genuine redundancy, Staples failed to comply with relevant consultation obligations in the Agreement and thus the dismissals of the applicants have not satisfied the requirements of subsection 389 (1) (b) of the Act. Further, in all the circumstances of this case, it would have been reasonable for the applicants to have been redeployed into positions which had to be filled under obligations arising from clause 28 of the Agreement. It follows that the dismissals of the applicants were not cases of genuine redundancy.
[74] As the dismissals of the applicants were not cases of genuine redundancy, the further contested element of s. 385 of the Act, namely, whether the dismissals were harsh, unjust or unreasonable, has required further consideration and determination.
[75] Section 387 of the Act contains criteria that the Commission must take into account in any determination of whether a dismissal is harsh, unjust or unreasonable. These criteria are:
(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; and
(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 the FWC considers relevant.
[76] The reason for the applicants dismissals was redundancy due to the over budget performance of the warehouse section of the Erskine Park site. This reason for dismissal does not relate to the capacity or conduct of the applicants. However, the capacity or conduct of the applicants was connected with their selection for redundancy via the application of the criteria in the selection matrix. The question of the basis for the selection of the applicants via the criteria in the selection matrix is a matter more appropriately addressed via subsection 387 (h) of the Act.
[77] In this instance, I have been prepared to treat this factor as neutral or simply not applicable to the circumstances of the case.
[78] The employer provided written notification of the reason for the applicants’ dismissals in respective letters dated 20 July 2016.
[79] This factor is not relevant to the circumstances under consideration in this instance, but forms part of the consideration of aspects of the selection procedure via application of the criteria in the selection matrix.
[80] This factor is not relevant to the circumstances under consideration in this instance.
[81] This factor is not relevant to the circumstances under consideration in this instance.
[82] This factor is not relevant to the circumstances under consideration in this instance.
[83] This factor is not relevant to the circumstances under consideration in this instance.
[84] The applicants were dismissed for reason of redundancy in circumstances where the employer failed to comply with consultation obligations in the Agreement, and where it would have been reasonable in all the circumstances for the applicants to have been redeployed within the employer’s enterprise. Consequently, there were significant procedural deficiencies which accompanied the dismissals of the applicants.
[85] Although it is speculative, it is nevertheless quite conceivable that in the circumstances of this case, if the employer had complied with relevant consultation obligations, the applicants would have been redeployed into positions which were pending. In any event, the nature and severity of the employer’s non-compliance with consultation obligations represents a manifest injustice inflicted upon the applicants.
[86] It is relevant to acknowledge the procedural deficiencies that accompanied what was a hastily developed selection matrix, and the application of that matrix without capacity for any individual to challenge the outcome. Although one of the criteria in the selection matrix was removed as a result of a complaint made by the NUW official, there was no proper opportunity for carefully considered input from any employees or their representatives regarding the selection matrix or its application.
[87] An examination of some of the criteria described in the selection matrix would have raised understandable concern amongst employees and their representatives, if they had been given an opportunity to scrutinise it on 12 July 2016. Criteria such as “Lives the Company Values and Commitments” and “Attitude towards the company and peers” involve highly subjective assessments that would potentially provide a manifestly unreasonable basis for lower scoring of a particular individual.
[88] There was evidence that the subjective nature of the criteria that was included in the selection matrix provided a patently unreasonable outcome. As an example, in the case of one of the applicants, the following evidence was provided:
“During my termination meeting I asked Mr Brogan “Why me?” And he responded with words to the effect of “It’s your attitude to management”. The difficulty for me with this is that I was a union delegate…. it would be very easy to say that any union delegate had “an attitude to management” because it is an inherent in their role as a delegate to speak up to management on behalf of workers who are less confident.” 6
[89] The process for selection of the 12 individuals that were made redundant failed to provide those individuals with any opportunity to challenge the basis for their selection. The applicants had no opportunity to question or scrutinise the score that they individually received via application of the selection matrix. The absence of any review mechanism has meant that the particular scoring for any one individual may have involved some blatant mistake that has remained unidentified, and which could have meant that that individual was erroneously selected for redundancy. Consequently, the hasty process that was implemented without proper consultation and with an absence of any transparency, has established the prospect that even if the selection criteria could not be impugned, there is no foundation upon which to be satisfied that the selection process was conducted without error.
[90] Consequently, the process which Staples adopted for the implementation of its decision to restructure the warehouse and which led to the selection of 12 employees who were made redundant was so severely flawed that the consequential dismissals of the applicants were entirely unreasonable. This unreasonableness has been compounded by the manifest failure of Staples to comply with the consultation obligations of the Agreement, and consequently the dismissals of the applicants were also unjust. Further, in the circumstances of this case, the applicants could have reasonably been redeployed into positions which Staples were obliged to fill before 31 December 2016, and the failure to consider this reasonable redeployment has meant that the dismissals of the applicants were also harsh.
[91] This Decision has initially involved determination of a jurisdictional objection raised by the employer in response to the four applications for unfair dismissal remedy. The jurisdictional objection has been advanced on the basis that the dismissals of the applicants were cases of genuine redundancy.
[92] The determination of the jurisdictional objection has focused upon the meaning of genuine redundancy as contained in s. 389 of the Act. In particular, those aspects of the meaning of genuine redundancy contained in subsections 389 (1) (b) and 389 (2) of the Act, have been the subject of contest. The matters of contest have involved whether the employer complied with consultation obligations under the Agreement, and whether it would have been reasonable in all the circumstances for the applicants to have been redeployed within the employer’s enterprise.
[93] An examination of the particular circumstances of this case has led to the conclusion that the employer failed to comply with obligations in the Agreement that applied to the employment of the applicants in connection with consultation about their redundancy. The nature and extent of the non-compliance was, regrettably, significant, and it went far beyond some minor or trivial absence of technical, procedural compliance. Further, following careful consideration of the particular circumstances of this case, it would have been reasonable, in all the circumstances, for the applicants to have been redeployed into four of the 20 positions which were to be filled pursuant to clause 28 of the Agreement. Therefore, the dismissals of the applicants were not cases of genuine redundancy. The jurisdictional objection raised by Staples is dismissed accordingly.
[94] Further consideration of the circumstances involving the dismissals of the applicants has established that the dismissals were invoked by way of the adoption of a severely flawed process which denied the applicants substantive and procedural fairness. The determination to dismiss the applicants as opposed to other employees, involved the application of highly subjective criteria and the adoption of a procedure which denied any opportunity for scrutiny or appeal.
[95] Consequently, the dismissals of the applicants were not cases of genuine redundancy and the dismissals were harsh, unreasonable and unjust. Consideration must therefore turn to the question of appropriate remedy for the unfair dismissals of the applicants.
[96] The applicants have sought reinstatement as remedy for their unfair dismissals.
[97] The question of remedy in respect of an unfair dismissal is the subject of Division 4 of Part 3-2 (ss. 390 - 393) of the Act. Section 390 is immediately relevant to the consideration in this instance, and is in the following terms:
“390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) The FWC may make the order only if the person has made an application under section 394.
(3) The FWC must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.”
[98] I have carefully considered whether it would be appropriate to make Orders for the reinstatements of the applicants. It is well established that reinstatement is the primary remedy for unfair dismissal. The Parties have provided supplementary submissions on the question of whether the reinstatements of the applicants would be an appropriate remedy.
[99] The supplementary submissions made on behalf of Staples strongly asserted that any reinstatements of the applicants would be inappropriate. It was asserted, inter alia, that the employer would be required to create four new roles for the applicants, and then it would need to engage in further redundancies that would mean that the applicants would again be terminated for redundancy grounds after a period of consultation.
[100] Upon careful reflection, I must firmly reject this submission. If the applicants were reinstated and Staples then properly complied with its consultation obligations under the Agreement there is considerable prospect for any subsequent redundancy process to lead to an outcome where individuals other than the applicants may be selected. In any event, even if the applicants were “unsuccessful” in any properly conducted implementation of redundancies they would at least have been dismissed via a process that had the requisite level of integrity and legitimacy. As a result both Staples and its employees could then have confidence that any subsequent dismissals resulted from a properly conducted redundancy process that was compliant with consultation obligations and was objectively fair and reasonable.
[101] The supplementary submissions made on behalf of the applicants included a rejection of the assertion that the employer would be required to create four new roles if the applicants were reinstated. It was submitted that because of the significant use of labour hire employees to supplement the work of directly engaged warehouse employees, any reinstatements of the applicants “could be managed - at minimal cost and with minimal inconvenience - by adjusting the quantity of labour hire labour.”
[102] This submission might satisfactorily address any immediate accommodation for the reinstated applicants. However, as was acknowledged by the submissions made on behalf of the applicants during the Hearing, the employer retained the managerial prerogative to determine the particular configurations of its workforce which it believed best suited its operational requirements.
[103] There are various factors which, in the circumstances of this case, operate to strongly support the reinstatements of the applicants.
[104] Firstly, in this instance the failure of the employer to comply with consultation obligations involved significant defects. This was not a case where an employer made inconsequential or minor, technical process mistake(s).
[105] Secondly, there was reasonable prospect of redeployment of the applicants into the positions which had to be created under the obligations of clause 28 of the Agreement. The applicants would be understandably perplexed at an outcome whereby they lost their jobs due to redundancy in July 2016, but in December 2016 there were 19 new employees hired into those jobs, with a net increase of 8 positions. Further, the requirement for the hiring of 20 new employees was known at the time that the applicants were made redundant.
[106] Thirdly, there was no evidence of any deterioration in the employment relationships. In general terms, the restoration of the employment of the applicants would not suffer from any loss of mutual trust and confidence, particularly as Mr Brogan’s role had subsequently changed.
[107] Fourthly, the applicants had either unblemished work records or reasonably good employment histories. Although one of the applicants was issued with a written warning in September 2015, that warning was “active” for only six months.
[108] Fifthly, there was evidence from each of the applicants which inferred that there was an element of improper, indeed unlawful, reason introduced into their particular selection for redundancy. In one case, an applicant suggested that his role as a workplace representative may have operated to influence his selection for redundancy, in the other cases, the applicants provided evidence which suggested that prior workplace injury may have operated as a factor in their selection for redundancy. Inferences of this nature should be properly dispelled with the adoption of a process that is compliant with consultation obligations, and is transparently fair and reasonable. Therefore, what might be described as industrial justice would be served and recognised by the return of the applicants to work at the warehouse.
[109] Against these factors which support reinstatement, I recognise the employer’s understandable resistance to any reinstatement. Further, I acknowledge the prospect that other employees, or even the applicants themselves, may ultimately be made redundant. However, such redundancies would hopefully be made via a transparent and fair process that complied with the consultation obligations of the Agreement.
[110] I have decided that the reinstatements of the applicants would be appropriate, and that consequential Orders for maintenance of continuity of employment, and restoration of lost pay should also be made. The Orders also require a reduction from the amount calculated to represent lost pay, of any amounts paid to the applicants as redundancy entitlements.
[111] Orders providing for the reinstatements of the applicants will be issued separately.
[112] In the event that the Parties are unable to agree on the amount to be paid to the applicants in accordance with Order 3, regarding an Order to restore lost pay, the matter will be listed for further proceedings to enable the Commission to determine that amount. Any request for such further proceedings should be made within 21 days from the date of this Decision.
COMMISSIONER
Appearances:
Mr J Nolan of Counsel, along with Mr M Burns from W. G. McNally Jones Staff Lawyers for the applicants.
Mr A Manos of Counsel, along with Ms M Hurley-Smith from Baker & McKenzie for the employer.
Hearing details:
2017.
Sydney:
January, 17.
1 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited [2010] FCA 591
2 Transcript @ PN268.
3 Respondent 1 @ paragraph 20 (c).
4 See for example Exhibit 9 @ paragraph 48.
5 Transcript @ PN174.
6 Exhibit 2 @ paragraphs 21 and 23.
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