DECISION

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

Nick Souleles
v
Virgin Australia Airlines Pty Ltd (Administrators appointed)
(U2020/1204)

Application for relief from unfair dismissal - jurisdictional objection - ss. 385 and 396 of Fair Work Act 2009 - whether dismissal was a case of genuine redundancy - s. 389 meaning of genuine redundancy - elements which constitute genuine redundancy - genuine redundancy established - jurisdictional objection upheld.

[1] This matter involves an application for unfair dismissal remedy made pursuant to section 394 of the Fair Work Act 2009 (the Act). The application was lodged at Sydney on 4 February 2020. The application was made by the Transport Workers’ Union of Australia (TWU) on behalf of Nick Souleles (the applicant). The respondent employer is Virgin Australia Airlines Pty Ltd (Administrators appointed) (the employer).

[2] The application indicated that the date that the applicant’s dismissal took effect was 17 January 2020. Consequently, the application was made within the 21 day time limit prescribed by subsection 394 (2) of the Act.

[3] The matter was not resolved at conciliation. The employer raised a jurisdictional objection to the application on the basis that the dismissal was alleged to be a case of genuine redundancy (the genuine redundancy objection). The matter was the subject of a Pre-Hearing Conference/Conciliation by telephone proceedings held on 26 March 2020, at which time the Commission made Directions for the Parties to file and serve all material upon which each would rely in respect to the determination of the genuine redundancy objection.

[4] Subsequently, the employer and the TWU as representative of the applicant, have provided their respective materials in accordance with Amended Directions that were issued on 7 May 2020, and which culminated on 26 June 2020, with each side confirming agreement to have the genuine redundancy objection determined upon the filed documentary material and without the need for any formal Hearing.

[5] The application was the subject of a jurisdictional challenge made by the employer upon the assertion that the applicant’s dismissal was a case of genuine redundancy. Consequently, the employer advanced a jurisdictional challenge to the application relying upon the requirements of subsection 396 (d) of the Act which stipulates that the Commission must decide whether the dismissal was a case of genuine redundancy before any consideration of the merits of the application.

Background

[6] On 28 August 2019, the employer announced it’s 2019 financial year results which included an Underlying Loss Before Tax of $71.2 million, and a total annual loss of $315.4 million. In a message from the employer’s Chief Executive Officer, Paul Scurrah, the employer announced a series of measures that it would implement to redress its financial losses. One of these measures was an organisational restructure described as a “rightsizing program” that aimed to reduce 750 corporate and Head Office roles during FY20 which was estimated to reduce costs by $75 million.

[7] On 21 November 2019, as part of the previously announced “rightsizing program”, the employer commenced a consultation process in respect to a restructure of staff engaged in providing services at its airport lounges. At Brisbane, Canberra, Melbourne, Perth and Sydney airports, the employer operated two types of airport lounge facilities for its customers. At these locations the employer operated a Virgin Australia lounge facility and a separate Club lounge. The Virgin Australia lounge is generally accessible to frequent flyer customers and business class travellers, while the Club lounge is only accessible to persons who are provided an invitation from the employer’s Chief Executive Officer, Paul Scurrah.

[8] At Sydney airport, the employer had eight Lounge Supervisors, three of which were allocated to the Virgin lounge, and five were allocated to the Club lounge. The restructure that was proposed and subsequently implemented by the employer, amalgamated the Lounge Supervisor roles previously delineated between the two lounges. The restructure replaced the eight Lounge Supervisor positions with five newly created Customer Experience Supervisor positions involving work in respect of both lounges. Consequently, the restructure resulted in the reduction of three Lounge Supervisor positions at Sydney airport.

[9] The applicant was one of the eight Lounge Supervisors who were directly impacted by the restructure. The role performed by the applicant and that of the other seven Lounge Supervisors, was made redundant, and replaced by the five Customer Experience Supervisor positions. The employer invited expressions of interest for voluntary redundancy from the eight Lounge Supervisors. None of the eight Lounge Supervisors expressed any interest to take up a voluntary redundancy. Therefore, the restructure would involve three of the individuals who had occupied the Lounge Supervisor positions being made involuntarily redundant.

[10] The employer engaged in a selection process to determine which five of the eight Lounge Supervisors would be retained in the Customer Experience Supervisor positions. Following an assessment process involving the application of identified criteria, the applicant was advised that he was one of the three Lounge Supervisors who had been selected for redundancy.

[11] The applicant was provided with a letter dated 5 December 2019, which confirmed earlier verbal advice of his redundancy which was to take effect on 17 January 2020. The letter indicated that the employer had been unable to identify any alternative roles available for the applicant within the Virgin Group. However, the letter also indicated that prior to 17 January 2020, the employer would continue to consider suitable alternative roles to which the applicant may be redeployed.

[12] Over the following few weeks, the employer and the applicant communicated regarding a number of potential redeployment opportunities. The employer identified potential redeployment opportunities involving inter alia, full-time Cabin Crew positions and part-time Guest Services positions. The applicant considered the various alternative positions and rejected them as he considered them to be unsuitable redeployment options. In an email dated 2 January 2020, the applicant stated inter alia, “… these positions mentioned are not suitable for me as part-time guest services will create financial hardship, and cabin crew duties may include overnighting in another port which is not an option.” 1

[13] In the absence of any redeployment of the applicant, on 17 January 2020, the employment of the applicant was terminated by reason of redundancy and in accordance with the termination advice provided in the correspondence of 5 December 2019.

The Jurisdictional Objection

[14] The submissions made by the employer in support of the genuine redundancy objection included an outline of submissions document dated 7 May 2020 and an outline of submissions in reply document dated 18 June 2020. The employer submitted that the dismissal of the applicant was a case of genuine redundancy, the jurisdictional objection should be upheld, and the unfair dismissal claim should be dismissed.

[15] The employer’s submissions referred to ss. 385 and 389 of the Act which firstly established that a person could not be unfairly dismissed if the dismissal was a case of genuine redundancy, and secondly provided a definition for the meaning of genuine redundancy. The submissions of the employer focused upon the provisions of s. 389 of the Act regarding the meaning of genuine redundancy.

[16] It was submitted that the applicant’s job was no longer required because of the clear operational requirements which underpinned the employer’s decision to make approximately 750 positions, including that performed by the applicant, redundant. Consequently, according to the submissions of the employer, the “rightsizing program” involved inter alia, the restructure in the staffing requirements for the Virgin lounge and the Club lounge at Sydney airport. As a result of this restructure, the employer no longer required the job performed by the applicant as he was one of the three Lounge Supervisors who were not selected for the five Customer Experience Supervisor roles in Sydney.

[17] The employer also submitted that whilst the selection process that it had adopted for determining which three of the eight Lounge Supervisors at Sydney would be made redundant was objectively fair and reasonable, it was well established that the process for selecting which employees are to be made redundant is not relevant to any determination as to whether the dismissal was or was not a case of genuine redundancy in the context of s. 389 of the Act. Further, the employer submitted that it did not matter if some of the applicant’s duties as a Lounge Supervisor remained to be performed by the Customer Experience Supervisors because the test was whether the previous job had survived the restructure or downsizing. The employer submitted that the applicant’s role had not survived because there had been a reduction in the number of the roles from eight to five. Therefore, the employer submitted that subsection 389 (1) (a) of the Act had been satisfied.

[18] The employer’s submissions also contended that it had complied with the consultation obligations of the industrial instrument that governed the work of the applicant, namely, the Airline Operations – Ground Staff Award 2010 (the Award). Clause 9 of the Award was referred to in the employer’s submissions, and it asserted that these consultation requirements had been satisfied by providing the applicant and all other affected employees, comprehensive information, holding a consultation meeting, inviting feedback, and confirming decisions and outcomes in writing. The employer further submitted that it was not required to consult or provide feedback in relation to the reasons for selecting the particular individual Lounge Supervisors including the applicant, who were made redundant.

[19] The employer submitted that its consultation process was comprehensive, thorough, meaningful and in compliance with its legal obligations. Therefore, the employer submitted that subsection 389 (1) (b) of the Act had been satisfied

[20] The employer’s submissions also addressed the question of whether subsection 389 (2) of the Act, which was concerned with redeployment, had been satisfied. The employer submitted that any redeployment opportunities needed to be considered in the context of the significant “rightsizing program” that involved a reduction of approximately 750 roles. Further, the employer acknowledged that the redeployment roles that had been offered to the applicant did involve a reduction in salary, however, it submitted that it had reasonably endeavoured to redeploy the applicant in the prevailing circumstances.

[21] The employer submitted that it had reasonably endeavoured to redeploy the applicant and the applicant had rejected those offers of redeployment. The employer asserted that it could not otherwise reasonably redeploy the applicant given the prevailing circumstances and including the applicant’s expressed rejection of positions that involved a reduction in remuneration and/or requirement to work away from home location.

[22] In summary, the employer submitted that the applicant’s dismissal was a case of genuine redundancy because each of the relevant provisions of s. 389 of the Act had been satisfied. Specifically, the employer submitted that it no longer required the applicant’s job to be performed by anyone due to changes in the operational requirements of its enterprise. Further, the employer submitted that it had complied with its consultation obligations under the Award, and it would not have been reasonable in all the circumstances, for the applicant to have been redeployed. Consequently, the employer submitted that it’s jurisdictional objection should be upheld, and the unfair dismissal application should be dismissed.

The Case Against the Jurisdictional Objection

[23] The TWU provided a statement of the applicant and it filed written submissions in opposition to the genuine redundancy objection advanced by the employer. The statement made by the applicant and the submissions made on his behalf by the TWU, stressed that the applicant had been a long serving, loyal employee of some 17 years, and he had an exemplary employment record.

[24] The submissions made by the TWU on behalf of the applicant were constructed with reference to the provisions of s. 389 of the Act which provided a meaning of genuine redundancy. The submissions of the applicant noted that the applicant had initially been given assurances that the Virgin lounge and Club lounge departments would not be affected by the “rightsizing program”. These assurances were subsequently found to be untrue as the applicant and the other Lounge Supervisors, were informed that the number of Customer Experience Supervisor positions would result in the loss of three Lounge Supervisors.

[25] The submissions of the applicant asserted that it was not a case that the applicant’s job was no longer required due to operational requirements. It was submitted that the roles performed by the applicant could not have been entirely dispensed with as part of the employers “rightsizing program”. Further, it was submitted that the role performed by the Customer Experience Supervisor was identical to the roles that the applicant had previously performed across two departments. Therefore, the applicant submitted that it was unlikely there would no longer be a need for the applicant’s role to be performed because that role would be undertaken by the Customer Experience Supervisors.

[26] Consequently, according to the submissions made on behalf of the applicant, the employer had not fully satisfied the requirements of s. 389 (1) (a) of the Act because despite the reduction in staff numbers due to the operational requirements, there would still be a need for someone to perform the role that the applicant had been performing. It was submitted that it was open to the Commission to make a finding based on the balance of probabilities, that there would still have been a need for the applicant to perform the role that he was performing at the time that the employer terminated the applicant’s employment.

[27] The submissions made on behalf of the applicant acknowledged that the employer undertook a process of consultation as required by clause 9 of the Award. Consequently, the submissions made on behalf of the applicant did not challenge any absence of satisfaction of subsection 389 (1) (b) of the Act.

[28] The submissions made on behalf of the applicant asserted that the dismissal of the applicant was not a case of genuine redundancy because it would have been reasonable in all the circumstances for the applicant to have been redeployed. In this regard, it was submitted that roles that were offered to the applicant were not suitable. Further, it was submitted that the applicant should have at least been provided with the opportunity to apply for and explore possible redeployment into one of the full-time Guest Services roles.

[29] Therefore, it was submitted that it was unlikely that the employer had acted reasonably in all the circumstances towards redeployment of the applicant within the employer’s enterprise or the enterprise of an associated entity. The submissions made on behalf of the applicant asserted that the employer had not met its obligations towards redeployment as required by subsection 389 (2) of the Act.

[30] The submissions made on behalf of the applicant asserted that having regard to the factors in s. 389 of the Act, the Commission should conclude that the applicant’s dismissal was not in fact a genuine redundancy. Further it was submitted that the Commission should consider that the applicant was unfairly dismissed pursuant to s. 385 (4) [sic] of the Act.

[31] The submissions made by the TWU on behalf of the applicant urged that the Commission should reject the genuine redundancy objection that had been advanced by the employer.

Consideration

[32] This Decision has been confined to the determination of a jurisdictional objection which was advanced by the respondent employer.

[33] Relevantly s. 396 of the Act requires that the Commission must decide a number of specified matters before considering the merits of any unfair dismissal application made under s. 394. In this instance the jurisdictional objection arises from the provisions of subsection 396 (d) of the Act. The particular 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) 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.”

The Genuine Redundancy Question

[34] The Act establishes that a person cannot be unfairly dismissed if the dismissal was a case of genuine redundancy. This position arises from the terms of subsection 385 (d) of the Act:

“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.”

[35] 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.”

[36] 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.

[37] For convenience the three elements identified within s. 389 can be abbreviated under the following headings. The first affirmative element which is extracted from subsection 389 (1) (a) has been described as “job lost due to operational requirements”, the second affirmative element extracted from subsection 389 (1) (b) has been called “consultation obligations”, and the third negatory element found in subsection 389 (2) is abbreviated to be “reasonable redeployment”.

[38] Consequently, the approach to consideration of the question of whether the dismissal of the applicant was a case of genuine redundancy has involved examination of the three separate elements contained in s. 389 of the Act, such that, each of these three separate elements must, in combination, be satisfied in order to make any finding of genuine redundancy. This means that the two affirmative elements contained in subsection (1) must be established, and the negatory element found in subsection (2) must not be present in order to make a finding that a particular dismissal was a case of genuine redundancy.

Job Lost Due to Operational Requirements

[39] In this instance, the evidence has established that the applicant was one of three Sydney airport Lounge Supervisors who were dismissed on the basis of alleged redundancy. The decision by the employer to dismiss these employees was directly connected with a restructure of the Virgin lounge and Club lounge operations. The Virgin lounge and Club lounge restructure was part of a broader operational restructure referred to as a “rightsizing program” and which involved the employer removing approximately 750 positions as one of a series of measures aimed at redressing its deleterious financial position.

[40] The Virgin lounge and Club lounge restructure at Sydney airport involved the reconfiguration of the work that had been performed by eight individuals, three of whom were assigned to the Virgin lounge and five who were assigned to the Club lounge. The work that had been performed by these eight individuals was redesigned to be performed across both lounges and resulted in the requirement for only five persons to fill the Customer Experience Supervisor positions. The evidence established that the work that was previously performed by a total of eight Virgin lounge and Club lounge Supervisors such as the applicant, was redistributed and reassigned to five employees performing the newly created roles of Customer Experience Supervisor. The redistribution or reassignment of work amongst retained employees does not alter the fact that a job as opposed to the work of an individual was no longer required. In this case, the Virgin lounge and Club lounge restructure at Sydney airport meant that three Lounge Supervisor jobs were no longer required.

[41] Consequently, the first element of s. 389 of the Act has been established, that is, the employer no longer required the job of the applicant as a Club lounge Supervisor (and two others), to be performed by anyone because of changes in the operational requirements of the employer's enterprise.

Consultation Obligations

[42] The second element contained in s. 389 of the Act requires a positive finding that the employer had complied with any Award or Agreement obligations to consult about the redundancy.

[43] The employment of the applicant was governed by the Airline Operations – Ground Staff Award 2010 (the Award). Clause 9 of the Award relevantly included the following terms:

“9. Consultation about major workplace change

9.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:

(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and

(b) discuss with affected employees and their representatives (if any):

(i) the introduction of the changes; and

(ii) their likely effect on employees; and

(iii) measures to avoid or reduce the adverse effects of the changes on employees; and

(c) commence discussions as soon as practicable after a definite decision has been made.

9.2 For the purposes of the discussion under clause 9.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:

(a) their nature; and

(b) their expected effect on employees; and

(c) any other matters likely to affect employees.

9.3 Clause 9.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.

9.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 9.1(b).”

[44] The evidence has established that the employer provided the applicant (and all other Lounge Supervisors), with a comprehensive consultation pack and draft position description documentation. The employer also held a consultation meeting with the affected employees, and it invited their feedback. The employer subsequently confirmed decisions and outcomes in writing. In this instance, no challenge was made that there was any non-compliance with relevant consultation obligations.

[45] The applicant made complaint about being misled by the employer’s managers as to their being no anticipated impact upon the Sydney lounge departments from the “rightsizing program”. Assurances that were allegedly provided to the applicant subsequently did not come to pass. In these circumstances, the applicant, as a long serving employee with an exemplary employment record, was understandably aggrieved when he was informed that he was not successful in obtaining one of the Customer Experience Supervisor positions.

[46] It is important to note that the consultation obligations of the Award did not extend to any requirement upon the employer to disclose the details of its selection process. Further, the consultation obligations could not provide prevention for there being some apparent personal misleading information or any misunderstanding that may arise from the provision of information as part of informal aspects of the consultation process. Importantly, the selection process which was used to determine the particular individuals who are to become redundant is not a relevant consideration in respect to the genuine redundancy question; see for example, the Decision of Simpson C in Klavs v Prestige Painters 2. (Of course, any selection process could not involve the adoption of some aspect which breached a general protection.)

[47] In this instance, the evidence has established that the employer adopted a process to implement its operational restructure of the Sydney airport Virgin lounge and Club lounge operations which was compliant with the consultation obligations arising from the provisions of the Award. Consequently, the relevant consultation obligations have been met, and this element of subsection 389 (1) (b) of the Act has been satisfied.

Reasonable Redeployment

[48] The third element of s. 389 of the Act is the negatory provision contained in subsection 389 (2). This element renders what may have been a genuine redundancy, which possessed the elements of subsection 389 (1) (a) and (b), to not be a case of genuine redundancy if redeployment was reasonable in all the circumstances. Redeployment is contemplated to extend to any associated entities of the employer.

[49] The first and second affirmative elements extracted from subsection 389 (1) broadly involve an examination of the conduct of the employer, essentially what gave rise to the dismissal and whether there was compliance with any relevant consultation obligations. The third element concerning reasonable redeployment involves examination of both the employer’s actions and those of individual employees. The reasonableness or otherwise of any redeployment is a matter that would need to be assessed on a case by case basis having regard for the approach to redeployment adopted by both the employer and the employee.

[50] Consequently, the consideration of the reasonable redeployment element of s. 389 of the Act has involved an examination of the actions which the employer undertook in the pursuit of redeployment both in general application and for individual employees, and it has also involved careful scrutiny of the conduct and approach to redeployment demonstrated by the applicant.

[51] The approach to redeployment adopted by the employer involved, inter alia, the provision to the applicant of the internal career opportunities list. The applicant was invited to identify any positions which he might consider as potential redeployment prospects. Subsequent discussion between the applicant and relevant management personnel then followed.

[52] Unfortunately, in circumstances where the employer was undertaking a significant restructuring involving the loss of approximately 750 positions, there were obvious limitations for redeployment opportunities. There were two potential redeployment opportunities identified, namely Cabin Crew positions, and part-time Guest Services roles.

[53] The applicant’s rejection of these potential redeployment prospects was quite understandable. The Cabin Crew positions would have involved a considerable amount of away-from-home work which was not suitable to the personal circumstances of the applicant. The part-time as opposed to full-time Guest Services positions involved a significant reduction in remuneration.

[54] The applicant asserted that he should have been offered an opportunity to fill one of the full-time Guest Services positions that were vacant at the time of the redundancy. The refusal by the employer to offer the applicant any opportunity to apply for a full-time Guest Services position was asserted to establish that his dismissal was not a case of genuine redundancy.

[55] However, the evidence has established that the Guest Services positions were governed by the Virgin Australia Ground Crew Agreement 2018 (the Agreement), and the Agreement contained stipulated arrangements for any vacancy in full-time Guest Services positions to be first offered to part-time employees engaged under the Agreement. Consequently, the employer was required by the terms of the Agreement, to offer vacant full-time Guest Services positions to persons engaged in existing part-time Guest Services positions, before it could contemplate any potential redeployment of a person such as the applicant, who was not employed under the terms of the Agreement.

[56] All of the vacant full-time Guest Services positions were filled by part-time employees engaged under the Agreement. Therefore, the employer could not offer the applicant redeployment into any of the full-time Guest Services positions but only the part-time positions.

[57] In all the circumstances, no criticism can be made of the approach to redeployment adopted by either the employer or the applicant. The circumstances were such that no reasonable redeployment could be arranged despite the genuine attempts made by both the employer and the employee.

[58] Consequently, the requirements which have been established to arise from subsection 389 (2) of the Act, and as confirmed in the Full Bench Decision in Ulan Coal Mines v Honeysett and Ors  3, have been satisfied.

Conclusion

[59] This Decision has been made in respect to a jurisdictional objection raised by the respondent employer to an application for unfair dismissal remedy. The jurisdictional objection has been advanced on the basis that the dismissal was a case of genuine redundancy and therefore, by operation of subsection 385 (d) of the Act, without standing.

[60] The determination of the jurisdictional objection has focused upon the meaning of genuine redundancy as contained in s. 389 of the Act. Section 389 of the Act contains two affirmative elements and one negatory element which must be satisfied in order to establish that a dismissal was a case of genuine redundancy.

[61] In this instance, upon careful analysis and having regard for all of the relevant circumstances, the first two affirmative elements have been satisfied. The employer no longer required the applicant’s job to be performed by anyone because of changes in its operational requirements, and the employer complied with the relevant consultation obligations stipulated by the Award.

[62] In respect to the negatory element contained in subsection 389 (2) which deals with reasonable redeployment, in all the circumstances the negatory element in subsection 389 (2) was not established. In this regard, no finding could be made that it would have been reasonable in all the circumstances for the applicant to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer.

[63] Therefore, the dismissal of the applicant was a case of genuine redundancy in accordance with the meaning of genuine redundancy stipulated by s. 389 of the Act.

[64] In view of the finding made as to genuine redundancy, the jurisdictional objection of the employer is upheld. The application for unfair dismissal remedy is jurisdictionally barred and must therefore be dismissed. An appropriate Order will be issued accordingly.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<PR721315>

 1   Annexure “LD-7” page 87 of the statement of Leonnie Dober.

 2   Ms Felicity Klavs v Prestige Painters [2013] FWC 2485.

 3   Ulan Coal Mines Limited v A. Honeysett and Ors and R. Murray and Ors v Ulan Coal Mines Limited [2010] FWAFB 7578.