DECISION

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

Mr Brian Broudou
v
Eurolinx Pty Ltd
(U2019/1881)

Application for an unfair dismissal remedy — jurisdictional objection — whether the dismissal was a case of genuine redundancy — whether the employer no longer required the job to be performed by anyone because of changes in the operational requirements of the enterprise — where there was a downturn in business —where decision to reorganise the business was a matter of managerial discretion — whether it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise — where no reasonable alternative available to the employer to redeploy.

[1] This matter involves an application for unfair dismissal remedy made pursuant to s.394 of the Fair Work Act 2009 (Act). The application was made by Mr Brian Broudou (Applicant). The respondent is Eurolinx Pty Ltd (Respondent).

[2] The application was lodged through the Fair Work Commission’s (Commission) website on 21 February 2019. The parties agreed that that the date of the Applicant’s dismissal was 18 February 2019.

[3] The Applicant also states that he began working for the Respondent on 25 October 2017. The Applicant submitted that the employment relationship was subject to an employment contract, which provided that the Applicant was to work as a Technical Service Manager in a full-time capacity.

[4] The Respondent raised a jurisdictional objection to the application on the basis that the dismissal was alleged to be a case of genuine redundancy. I issued directions on 9 March 2019, and the matter proceeded to arbitration before the Commission in a hearing conducted in Sydney on 20 June 2019.

[5] At the hearing, the Applicant appeared on his own behalf. The Respondent was represented by Mr J Proos, Operations Manager of the Respondent. The hearing primarily dealt with evidence and submissions regarding the question of genuine redundancy.

[6] Having considered the arguments and material submitted prior to and at the hearing, I have determined that the employee’s dismissal was a case of genuine redundancy. The application should be dismissed on that basis. My reasons are as follows.

Relevant law

[7] Section 385 of the Act qualifies a claim for unfair dismissal:

“385 What is an unfair dismissal

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

(a) the person has been dismissed; and

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

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

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

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

[8] Before the Commission can consider issues of harshness, etc, sub-s.396(d) of the Act requires the Commission decide whether the dismissal was a case of genuine redundancy:

“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) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.”

[9] Section 389 provides the statutory definition as to what qualifies as a 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.”

[10] In view of s.389 of the Act, there are three questions that need to be answered:

•  Was the job performed by the Applicant no longer required to be performed by anyone?

•  Did the Respondent comply with any obligation in a modern award that applied to the employment to consult about the redundancy?

•  Would it have been reasonable in all the circumstances for the Applicant to be redeployed within the employer’s enterprise?

[11] I will now consider these questions in turn.

Was the job performed by the Applicant no longer required to be performed by anyone?

[12] Sub-paragraph 389(1)(a) of the Act provides that a person’s dismissal was a case of genuine redundancy if 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.

[13] These words have long been used and applied in industrial tribunals and courts as a practical definition of redundancy. 1 The Explanatory Memorandum to the Fair Work Bill 2008 provides examples as to when a dismissal will be a case of genuine redundancy:

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

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

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

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

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

(emphasis added to highlight relevance)

[14] It has been held that a job involves “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employers’ organisation, to a particular employee”. 2 It has also been held that:

“what is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant”. 3

[15] Mr Proos submitted that there had been a downturn in business, namely being a 15% reduction in sales, and a 15.7% reduction in service activity (this was not disputed by the Applicant). In light of this downturn, the Respondent reorganised its business and the Applicant’s duties were distributed among four other employees. Mr Proos submitted that the Respondent made this decision having regard to the commercial challenges at hand and with the sustainability of the business in mind.

[16] The Applicant cavilled with the Respondent’s reallocation of his duties between other employees. The Applicant submitted, and the Respondent did not deny, that some of those duties were allocated to a person hired after the Applicant was dismissed. The duties were still required to be performed, said the Applicant, and so there can be no redundancy if there were still those duties left to do (even if other employees did them).

[17] The Applicant’s argument is untenable. Section 389 of the Act is not concerned with whether duties survive. The section is concerned with whether the job previously performed by the applicant still exists. 4

[18] The Respondent reacted to a downturn in business by redistributing duties among employees. Those duties were the Applicant’s duties. Following that redistribution it became apparent that there were no substantive duties left for the Applicant to perform. Stated in the language of the Act, there was a change in the operational requirements of the Respondent’s enterprise and, as a result, no one was required to perform the Applicant’s job.

[19] In light of these facts, I find that the Respondent has made out its defence under sub-para.389(1)(a) of the Act.

Did the Respondent comply with any obligation in a modern award that applied to the employment to consult about the redundancy?

[20] The Respondent submitted in that the Applicant’s role was award-free. The Applicant did not contest this submission. I have no basis to conclude otherwise.

[21] Accepting that the Respondent’s position is correct (and noting there is no general statutory or common law requirement to consult in these circumstances) then sub-section 389(1)(b) of the Act does not apply in this matter.

Would it have been reasonable in all the circumstances for the Applicant to be redeployed within the employer’s enterprise?

[22] Stated again, the Respondent has satisfied the defence provided by sub-s.389(1) of the Act. That said, that is not the end of the matter, and regard must be had to the exception provided by sub-section 389(2).

[23] The highest, binding interpretation of sub-s.389(2) of the Act still remains that stated in Ulan Coal Mines Limited v A. Honeysett & Ors: 5

“[26] [Subsection 389(2)] must be seen in its full context. It only applies when there has been a dismissal. An employee seeking a remedy for unfair dismissal cannot succeed if the dismissal was a genuine redundancy. In other words, if the dismissal is a case of genuine redundancy the employer has a complete defence to the application. Section 389(2) places a limitation on the employer’s capacity to mount such a defence. The defence is not available if it would have been reasonable to redeploy the employee. The exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances.

…

[28] … [T]he question posed by s.389(2), whether redeployment would have been reasonable, is to be applied at the time of the dismissal. If an employee dismissed for redundancy obtains employment within an associated entity of the employer some time after the termination, that fact may be relevant in deciding whether redeployment would have been reasonable. But it is not determinative. The question remains whether redeployment within the employer’s enterprise or the enterprise of an associated entity would have been reasonable at the time of dismissal. In answering that question a number of matters are capable of being relevant. They include the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job in relation to the employee’s residence and the remuneration which is offered.”

(emphasis added)

[24] Mr Proos submitted that there was no alternative job for the Applicant to perform. The Respondent said little more on this point.

[25] The Applicant contested the Respondent’s position by pointing to the recently hired Assistant to the Operations Manager. This position was being advertised at the time, or near to the time, the Applicant’s role had become redundant.

[26] At the hearing, Mr Proos explained that this role was substantially different from the Applicant’s job. It was a more junior role and on a substantially lower salary.

[27] I accept Mr Proos evidence. While it is an alternative job that the Applicant could have been redeployed into, it would not have been “reasonable” to offer the Applicant the Operations Assistant role as an alternative because the jobs are markedly different in their function, remuneration, and seniority.

[28] Finally, my attention was not drawn to the existence of any associated entities to which the Applicant may be been redeployed.

[29] There is no evidence before me to warrant a finding that there was an option for redeployment. The Applicant has not made out the exception provided under sub-section 389(2) of the Act.

Conclusion

[30] It is worth noting the Applicant was critical of the employer’s management of the business in general. The Applicant submitted that there were issues with efficiency across the business, which he suggested should have been dealt in order to save on costs. The Applicant claims there would have been no need to make his job redundant had those issues been addressed.

[31] While the Respondent conceded there may be efficiency issues in the business, this argument is not to the point. The law more-or-less permits an employer to structure their business as they see fit. In this instance, the Fair Work Commission can take no recourse against what is clearly within the bounds of managerial discretion.

[32] As aggrieved as the Applicant is by the Respondent’s decision to make the Applicant’s role redundant, I have determined on the evidence before me that decision was not made contrary to the Act. The termination is to be characterised as a genuine redundancy. In the absence of available (reasonable) alternative employment, the Respondent was free to terminate the Applicant in the manner that it did.

[33] For the foregoing reasons, the application should be dismissed. An order to that effect will be published separately to this decision.

DEPUTY PRESIDENT

Appearances:

The Applicant appeared for himself.

Mr J Proos, Operations Manager, appeared for the Respondent

Hearing details:

The matter was heard in Sydney on Thursday, 20 June 2019

Printed by authority of the Commonwealth Government Printer

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 1   Ulan Coal Mines Limited v Henry Jon Howarth & Ors [2010] FWAFB 3488 at [15] (Boulton J, Drake SDP, and McKenna C), citing R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Cooperative Limited (1977) 16 SASR 6; Termination, Change and Redundancy Cases (1984) 8 IR 34 and (1984) 9 IR 115; Short v F.W. Hercus Pty Limited (1993) 40 FCR 511.

 2   Jones v Department of Energy and Minerals (1995) 60 IR 304 at 308 (Ryan J), cited with approval in Ulan Coal Mines Limited v Henry Jon Howarth & Ors [2010] FWAFB 3488 at [15] (Boulton J, Drake SDP, and McKenna C).

 3   Jones v Department of Energy and Minerals (1995) 60 IR 304 at 308 (Ryan J), cited with approval in Ulan Coal Mines Limited v Henry Jon Howarth & Ors [2010] FWAFB 3488 at [17] (Boulton J, Drake SDP, and McKenna C). See also: Dibb v Commissioner of Taxation (2004) 136 FCR 388; [2004] FCAFC 126 at [43]-[44] (Spender, Dowsett, and Allsop JJ).

 4   Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674 at [27] (Hamberger SDP), cited with approval in Ulan Coal Mines Limited v Henry Jon Howarth & Ors [2010] FWAFB 3488 at [18] (Boulton J, Drake SDP, and McKenna C).

 5   [2010] FWAFB 7578 (Giudice J, Hamberger SDP, and Cambridge C).