DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Mark Green
v
Duratec Limited
(U2020/7337)

Application for an unfair dismissal remedy – whether genuine redundancy

[1] This decision concerns an application made by Mr Mark Green under s 394 of the Fair Work Act 2009 (Cth) (Act) for an unfair dismissal remedy. Mr Green was employed as a skilled labourer by Duratec Limited from 1 August 2017 until his dismissal on 13 May 2020 for reason of redundancy.

[2] Mr Green says that his dismissal was unfair because he was not consulted about his redundancy and was dismissed on the same day that he was notified of his retrenchment. He believes that he was selected for redundancy because he raised concerns about his job security in the lead up to his dismissal. Mr Green’s application also contended that he had not received his redundancy entitlements, however this contention was not pressed at the hearing, and the company’s evidence was that his entitlements had been paid.

[3] The company objected to the application on the ground that the dismissal was a genuine redundancy for the purposes of s 389 of the Act, and contended that in any event, the dismissal was not unfair. It said that Mr Green’s position was one of 17 in Victoria that the company made redundant as a result of the downturn in business caused by the COVID-19 pandemic.

[4] The matter was listed for hearing before me on 7 September 2020. Mr Green appeared and gave evidence on his own behalf. The company led evidence from Mr Cain Thomas, the company’s Victorian operations manager, Ms Tracy Fairburn, human resources manager, and Mr Ollie McKeon, the company’s general manager for the eastern states.

[5] The jurisdictional question of whether Mr Green’s dismissal was a case of genuine redundancy is one of the four matters that s 396 of the Act requires the Commission to decide before considering the merits of an unfair dismissal application. I will record here my conclusions on the other three preliminary matters in s 396, none of which were contentious. First, Mr Green’s application was made within the 21-day period required by s 394(2) of the Act. Secondly, Mr Green was a person protected from unfair dismissal, as he earned less than the high-income threshold and had undertaken the minimum period of employment (s 382). Thirdly, the company is not a small business, and therefore no question of compliance with the Small Business Fair Dismissal Code arises.

The evidence and submissions of the parties

[6] The company provides specialised contracting services for the protection and remediation of steel and concrete structures. It has been significantly affected by the COVID-19 pandemic. On 25 March 2020, Mr Thomas attended Mr Green’s worksite and read out to Mr Green and two other workers a two-page document entitled ‘major change consultation’. The document concerned ‘upcoming major changes to the business and the reasons for changes’. It noted that there was future uncertainty from clients as a result of the coronavirus and that contracts had been disrupted and postponed. It said that this ‘will create a requirement to reduce the workforce’, but that the company would try to retain as many roles as possible. The document also stated that the company would identify positions for redundancy by focusing on the specific requirements of each position needed to meet its current work schedule, and that of the foreseeable future. It stated that those immediately affected would be made redundant before the end of March, but that further changes may be required beyond this, and that discussions would be held with affected persons as soon as possible.

[7] Mr Green did not recall Mr Thomas reading out this document. However, Mr Thomas’s evidence was that he had the document on his iPad and read it out to the employees. I accept Mr Thomas’ evidence that he did so. Appended to the company’s materials was a copy of the consultation document. At the top of the document in handwriting are the names of the three employees, as well as Mr Thomas’ name, the date, and the address of the worksite.

[8] Several days later, Mr Green was transferred to a different project that the company was undertaking for the Department of Defence at Fisherman’s Bend. Mr Green continued to work on the project at this site until 13 May 2020.

[9] Sometime after Mr Green’s transfer to Fisherman’s Bend, the company conducted a review of its employee numbers against its current project work and its revised forecast of work. Mr McKeon said that the company determined that 12 permanent and five casual positions were no longer required. This represented a 30% reduction in the company’s Victorian workforce. Among the positions made redundant were the Victorian state manager, a supervisor, and a number of skilled labourers, including Mr Green. Mr McKeon gave evidence that the company determined which skilled labourers would be made redundant having regard to their base skill and the likely future requirement for such skills. He said that Mr Green’s base skill was that of a boilermaker, and that other skills were considered more likely to be needed for forecasted work. The decision to make Mr Green’s position redundant was made on 12 May 2020.

[10] On 13 May 2020 at around 9.00 am, Mr Green received a telephone call and was asked to attend the head office for a meeting. Mr Thomas and Mr McKeon met with Mr Green at around 10.00 am and advised him that his position was redundant. Mr Green was handed a letter of termination, which stated that as a result of a review of the company’s Victorian teams and deliverables, his position was no longer required. The letter stated that the company had endeavored to identify alternative positions but without success, and that Mr Green’s employment would terminate that day. He would be paid two weeks in lieu of notice as well as his redundancy entitlements.

[11] There are several points of conflicting evidence. Mr Green said that, during the meeting on 25 March 2020, Mr Thomas told him that his job was ‘safe’, and that he was therefore very surprised to be made redundant. Mr Thomas did not recall telling anyone their job was safe but agreed that on that particular day, no jobs were being made redundant. It seems unlikely to me that, having read out the consultation document, which clearly foreshadowed redundancies, Mr Thomas would then go on to assure employees that their jobs would remain safe.

[12] Mr Green said that during toolbox talks at the Fisherman’s Bend site, he asked Mr Thomas for information about whether employees’ jobs would be secure and whether they would be redeployed, but Mr Thomas did not provide any information. However, Mr Thomas said very clearly that he did provide updates to employees about the pipeline of work, and that no employees expressed any concerns to him about a lack of information. I accept Mr Thomas’ evidence. It was candid and clear, and consistent with the consultation document which indicated that further updates would be provided.

[13] Mr Green said that he believed that he was singled out for redundancy because he stood up for himself and raised concerns about his job security. Mr Thomas and Mr McKeon firmly denied this. I accept their evidence. I found Mr Green’s evidence about his belief as to the existence of ulterior motives for his selection for redundancy unconvincing. For example, Mr Green said that he and others had felt intimidated to speak up however he provided no details about the alleged intimidation and when I asked Mr Green which other employees had felt intimidated, he said that he did not wish to say. Further, Mr Green did not suggest that other skilled labourers ought to have been made redundant, or that his underlying skills were more deployable than those of others. Mr McKeon’s evidence, which I accept, was that the company looked to the usefulness of employees’ base skill to decide which positions to make redundant. This too is consistent with the content of the consultation document.

‘Genuine redundancy’?

[14] The company contends that Mr Green’s dismissal was a case of genuine redundancy, and that the Commission has no jurisdiction to hear the merits of the application. Under s 385 of the Act, a dismissal cannot have been unfair if it was a ‘genuine redundancy’, which is defined in s 389 as follows:

“(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.”

[15] I consider that Duratec no longer required Mr Green’s job to be performed by anyone because of changes in the operational requirements of its enterprise. I accept the evidence of Mr McKeon that the company had experienced a significant downturn, caused by a reduction in planned project work as a result of COVID-19, and that Mr Green’s job was not needed. Mr Green submitted that there were still casuals and many contractors at the Fisherman’s Bend project. He believes that the total number of workers on site is even higher than when he worked there. However, Mr Thomas explained that while the contractor proportion of those working on site had grown, there were many fewer direct employees of Duratec, and that the volume of workers at any one time was a reflection of the sequencing of tasks on any given job. I accept his evidence.

[16] Mr Green did not dispute that the company is experiencing difficulties. He acknowledged that Mr Thomas had told employees that the company was pricing contracts at cost just to win work. He did not contest that some 30% of Duratec’s Victorian employees had been made redundant. The company’s evidence clearly establishes that it did not want Mr Green’s job to be done by anyone. His position was abolished and has not been reinstated. The fact that contractors and casual staff have remained engaged does not mean that Mr Green’s position was not redundant. Casuals are employed in different ‘jobs’ from full time employees. And there is no evidence that a contractor is performing Mr Green’s former role.

[17] For the purposes of s 389(1)(a), I consider that the company did not want the job performed by Mr Green to be performed by anyone because of changes in the operational requirements of its enterprise, namely the need for a smaller number of employees because of the reduction in the volume of work. In addition, the company’s changed operational requirements were constituted by its new assessment of those requirements, 1 in light of the business downturn that the company was experiencing at the time.

[18] Next it is necessary to consider whether the company complied with any relevant consultation obligations in a modern award or enterprise agreement that applied to Mr Green’s employment. Mr Green was covered by the Duratec Australia Enterprise Agreement 2018 (Agreement). Clause 33 of the Agreement incorporates the model consultation term as set out in Schedule 2.3 of the Fair Work Regulations 2009 (Cth). That term states that where an employer has made a ‘definite decision’ to introduce a major change to production, program, organisation, structure, or technology in relation to its enterprise that is likely to have a significant effect on employees (which includes termination), the employer must notify the relevant employees of the decision to introduce the change, and discuss the introduction of the change, the effect the change is likely to have on employees, and measures the employer is taking to avert or mitigate the adverse effect of the change on employees. Clause 33(5) states that as soon as practicable after making a decision, the employer must discuss the change and the effect it is likely to have on employees. It further states:

‘(b) for the purposes of the discussion--provide, in writing, to the relevant employees:

(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 employees; and

(iii) any other matters likely to affect the employees.’

[19] The company contended that it complied with its obligation to consult with Mr Green under clause 33 of the Agreement by providing to Mr Green relevant information on 25 March 2020 when Mr Thomas read out the consultation document; by giving the toolbox updates from time to time; by meeting with Mr Green on 13 May 2020 and discussing his redundancy; and by providing him with the letter of termination which explained the reasons for his redundancy. It contended that the termination letter constituted the information in writing for the purposes of discussions about the major change, as required by clause 33(5) of the Agreement.

[20] I accept that the company consulted with Mr Green about the ‘major change’ constituted by the need to reduce the size of the workforce due to the impact of the COVID-19 pandemic. It did this on 25 March 2020. However, at that particular time, Mr Green’s position was not redundant. No decision had been made about which positions were surplus to requirements. It might be said that the decision to make Mr Green redundant as part of the structural change was not itself a ‘major change’ requiring consultation, however in my view it is still clearly an ‘effect’ of the major change on an employee and therefore something that needed to be the subject of consultation pursuant to clause 33 of the Agreement.

[21] Importantly, the only written information provided to Mr Green for the purposes of clause 33(5) was the termination letter itself. I do not consider that a termination notice can constitute consultation about redundancy. At the time a termination letter is handed to an employee, termination is no longer a likely effect. It is a fact. It is also no longer possible to discuss measures to mitigate adverse effects of the relevant change, as contemplated by clause 33(5)(a)(iii) of the Agreement. Of course, in some cases, there may be nothing very much to talk about, because there are simply no alternative options. However, as Mr Green said, had there been a discussion about his proposed termination, rather than about his actual termination, he would have had the opportunity to look for another job from the position of being employed, even if not for long. This would have been a measure, albeit a small one, that might have mitigated the adverse effects of the redundancy.

[22] I consider that the company did not comply fully with clause 33 of the Agreement and that accordingly the requirement of s 389(1)(b) has not been satisfied in this case. I therefore conclude that the dismissal was not a case of ‘genuine redundancy’. It is not necessary to consider the remaining element of ‘genuine redundancy’, namely whether it would have been reasonable in all the circumstances to redeploy Mr Green, however I will return to this question further below in the context of considering whether his dismissal was unfair.

Was the dismissal unfair?

[23] The fact that a dismissal was not a ‘genuine redundancy’ for the purpose of s 389 does not lead automatically to a conclusion that it was unfair. It is necessary for the Commission to consider the matters in s 387 of the Act.

[24] In circumstances of dismissal for reason of redundancy, no relevant finding can be made in relation to the consideration in s 387(a), namely whether there was a ‘valid reason for the dismissal related to the person’s capacity or conduct’. 2 Duratec does not contend that there was any valid reason for dismissal related to Mr Green’s capacity or conduct. Rather, its reliance on redundancy as the reason for dismissal is to be considered in connection with s 387(h), ‘any other matters the Commission considers relevant’, to which I shall return.

[25] Similarly, the considerations in ss 387(b) and (c) are not material in the present case. They concern whether the employee was ‘notified of that reason’ (i.e. the valid reason in 387(a)), and whether the person was given an opportunity to respond to any reason related to capacity or conduct. 3

[26] The consideration in s 387(d) is whether there was ‘any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal.’ In this case, these discussions occurred at the termination meeting on 13 May 2020. Mr Green did not request a support person. Of course, he was unaware that the meeting was about his dismissal. However, s 387(d) does not require an employer to offer an employee the opportunity to have a support person present. In this case, there was no refusal by the company for the purpose of s 387(d).

[27] If a dismissal relates to unsatisfactory performance, s 387(e) requires the Commission to consider whether the person has been warned about that performance prior to the dismissal. However, the present matter does not concern performance.

[28] The Commission is required to consider the degree to which the size of the employer’s enterprise, and the degree to which the absence of dedicated human resources specialists or expertise in the enterprise, would be likely to impact on the procedures followed in effecting the dismissal (ss 387(f) and (g)). In my view these considerations do not carry any weight in the analysis of whether Mr Green’s dismissal was unfair.

[29] I then come to s 387(h), ‘any other matters the Commission considers relevant’. My conclusions in relation to the ‘genuine redundancy’ jurisdictional objection are relevant to the question of whether the dismissal was unfair. The company did not need Mr Green’s role to be undertaken by anyone. The company’s decision to make Mr Green’s position redundant was a legitimate reason to end his employment in the circumstances. Mr Green was one of a number of employees whose positions were no longer required because of the downturn in business. Even though the dismissal was not a ‘genuine redundancy’ for the purposes of the jurisdictional objection, this does not mean that the dismissal was not a real and bona fide redundancy. Although it could not be a valid reason related to capacity or conduct for the purposes of s 387(a), Mr Green’s dismissal for redundancy in the present circumstances occurred for a good reason. I take this into account in my consideration of s 387(h). It is a consideration that tells against a finding that the dismissal was unfair.

[30] Mr Green contended that his dismissal was unfair due to the lack of procedural fairness. He objected to the fact that he was dismissed immediately, without any notice or opportunity to put forward other proposals, such as negotiating a reduced salary. But the company simply did not require his job to be done by anyone. It had considered the possibility of redeployment but not identified any suitable opportunities. Mr Green was not able to point to any work to which he could reasonably have been redeployed. He mentioned that there was still ‘steel work’ going on at the Fisherman’s Bend, however he did not establish that there was available steel or other work that he could perform, as opposed to work that other people were doing that he was qualified to undertake. I accept that Mr Green could have performed a variety of work, being a skilled labourer, but that is only one element of the redeployment equation: it is necessary to consider whether there was any other available work. It is has not established in this case that there was any such work.

[31] It is relevant to consider the manner in which Mr Green’s employment was terminated. In particular, he was entitled, pursuant to the Agreement, to be consulted in a particular way, as discussed earlier. Although the company did consult with him about the major change, namely the impact on the business of the pandemic and the need to reduce the size of the workforce, it did not consult with him about the effect of this change on his employment, namely his redundancy. Instead it informed him of his redundancy. It did not ask for his views about mitigation or alternatives. It also did not provide him with relevant information in writing as required by clause 33(5)(b) of the Agreement. Mr Green said that he arrived at the meeting on 13 May 2020 expecting that he would be directed to a new worksite, and that instead he was dismissed. The consultation discussion on 25 March 2020 put employees on notice that their employment was at risk. The company’s decision to make Mr Green redundant cannot have come as a complete surprise to him. But he was entitled to be consulted about his dismissal for redundancy, even if this would not have led to a different outcome.

[32] If the company had fully complied with the Agreement’s consultation provisions, Mr Green would likely have had at least some actual notice of the termination of his employment. In my view, Mr Green’s dismissal was not unreasonable or unjust. However, I consider that, in the particular circumstances of this case, the company’s failure to comply fully with the consultation provision in the Agreement renders Mr Green’s dismissal unfair.

Remedy

[33] Mr Green seeks compensation rather than reinstatement. Section 390(3) of the Act provides that the Commission must not order the payment of compensation unless it is satisfied both that reinstatement of the person is inappropriate, and that it considers an order for the payment of compensation is appropriate in all the circumstances. Reinstatement is clearly inappropriate in this case, because Mr Green’s position has ceased to exist.

[34] I consider that an award of compensation is appropriate. Section 392(2) provides that in determining an amount of compensation, the Commission is to take into account all the circumstances of the case, including the matters identified in subsections 392(a) to (g). The principles that apply to the question of how compensation should be calculated are well established. The method for calculating compensation under s 392 of the Act is informed by the decision of the Full Bench in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc⁴.

[35] As to the question of what effect any compensation order would have on the viability of the employer’s enterprise (s 392(2)(a)), I note that the company has been experiencing a downturn in business however it is a relatively large enterprise and there is no evidence to suggest that a compensation order would affect its viability. As to Mr Green’s length of service (s 392(2)(b)), I note that he had worked for the company for less than three years.

[36] Section 392(2)(c) of the Act directs the Commission to take into account the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed. This requires the Commission to consider what would have occurred if the person had not been dismissed, and in particular, how long the person would have remained employed. This is obviously a hypothetical situation which cannot be described with any certainty. However, given the company’s financial situation and the fact that it had decided Mr Green’s role was not required, I consider it likely that, had Mr Green not been dismissed on 13 May 2020, he would have been dismissed a very short time later.

[37] I assess this hypothetical situation from the standpoint that any subsequent dismissal of Mr Green would have occurred according to law. If the company had made Mr Green redundant in full compliance with the consultation provision in the Agreement, it would have consulted with him about his pending redundancy and provided him with information in writing as contemplated by clause 33(5) of the Agreement. I consider that this would have taken not more than one week.

[38] As to efforts of the applicant to mitigate loss, I consider it unlikely that alternative employment could have been obtained within the first of the six weeks during which Mr Green was without work and that efforts to mitigate the loss of salary in this first week are most unlikely to have been effective, given Mr Green was not aware of the termination of his employment until the day it occurred.

[39] For the purposes of calculating one week’s pay, I note that Mr Green was paid $46.45 an hour and that his regular hours of work under his contract of employment were 36 hours a week. This equates to $1,672.20. To this I will add 9.5% superannuation, which gives a gross figure of $1,831.06. I will order compensation to be paid to Mr Green of this amount less taxation required by law, to be paid within 28 days of the date of this decision.

[40] An order giving effect to this decision is separately issued in PR722807.

DEPUTY PRESIDENT

Appearances:

Ms C. Lewis for Mr Green
Ms T. Fairburn for Duratec Limited

Hearing details:

2020
Melbourne (by telephone)
7 September

Printed by authority of the Commonwealth Government Printer

<PR722806>

 1   See Shachar v Electrical Home Aids Pty Ltd t/a Godfreys [2018] FWC 4892 at [27] – [30]

 2   Appeal by Ventyx Pty Ltd [2014] FWCFB 2143 at [142]

 3   Ibid at [143] and [144]

4 [2013] FWCFB 431. See also Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21 and Ellawala v Australian Postal Corporation AIRCFB, Print S5109, 17 April 2000), [33]