| [2020] FWC 4445 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Matthew Browne
v
MySharedServices Pty Ltd
(U2020/5114)
COMMISSIONER BISSETT |
MELBOURNE, 26 AUGUST 2020 |
Application for an unfair dismissal remedy.
[1] Mr Matthew Browne has made an application to the Fair Work Commission seeking relief from unfair dismissal in relation to his dismissal from MySharedServices Pty Ltd (MSS or Respondent) on 9 April 2020.
[2] MSS is the employing entity for employees working for a number of organisations – all of which apparently have Directors in common. Mr Browne worked specificity for LeasePLUS Pty Ltd (LeasePLUS), a business that manages vehicle leasing arrangements. LeasePLUS consultants are responsible for generating new business as well as the retention of existing customers. Until his dismissal Mr Browne was responsible for the retention of existing novated lease customers – either through the rollover of their existing lease arrangements or a replacement lease arrangement. At the time of Mr Browne’s dismissal there were 3 leasing consultants, Mr Brown and a sales support officer.
[3] Mr Aytunc Tezay is the Managing Director of MSS. He is also a Director of LeasePLUS Pty Ltd. The CEO of LeasePLUS, Mr Leigh Penberthy, is also a Director of MSS, LeasePLUS and SalaryPackagingPLUS Pty Ltd (SalaryPackagingPLUS). There are a number of other companies in this “group”, some of whom use labour from MSS – such as SalaryPackagingPLUS – and others who only use the services provided by MSS such as accounting and human resource services. Mr Tezay said that a number of these companies ceased trading during the COVID-19 pandemic. I refer to the companies to whom MSS provided labour and/or services as the “related companies”.
[4] MSS employed 57 employees at the time Mr Browne was dismissed. It appears that, of these, about 49 were provided as labour to the related companies with the remaining staff providing marketing, accounting and human resource services to the related companies.
[5] MSS objects to the application of Mr Browne on the grounds that his dismissal was a genuine redundancy. Further, MSS says that it made 3 employees redundant at the time – Mr Browne, a sales support officer and an administrative officer, none of whom have been replaced. MSS says that it was advised that LeasePLUS no longer required the work of Mr Browne to be done by anyone and this had a direct flow on effect to MSS affecting its operational requirements.
[6] At the commencement of the hearing the parties agreed that the matter should be dealt with by way of a determinative conference. To this extent I have considered all of the material put to me by the parties.
[7] On the working day prior to the conference MSS provided a statement to the Commission and Mr Brown from Mr Penberthy. This was not filed in accordance with directions. However, Mr Browne was content to allow the statement and for Mr Penberthy to be called as a witness. Further, Mr Browne provided a statement in reply to that of Mr Penberthy.
[8] As there was no objection, I allowed this additional material of MSS and Mr Browne.
[9] During the course of the conference I requested that Mr Tezay from MSS provide additional information to the Commission. This information was:
• The company structures and relationships;
• A staff list on the day prior to the dismissal of Mr Browne and one week later;
• The “daily report” for the months of March and April for LeasePLUS.
[10] To the extent I have relied on this material I have provided it to Mr Browne and sought submissions from him. I also provided MSS with an opportunity to provide a response in reply to the submissions of Mr Browne.
[11] Section 396 of the Fair Work Act 2009 (FW Act) sets out those matters that must be determined prior to the determination of the merits of a claim for unfair dismissal. Section 396 states that:
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.
[12] Mr Browne’s employment was terminated on 9 April 2020. He made his application on 17 April 2020, within the time limit provided in the FW Act.
[13] Mr Browne was employed by MSS for approximately 7 months at the time of his dismissal. MSS has more than 15 employees and Mr Browne has therefore served the minimum employment period provided for by the FW Act. Both Mr Browne and Mr Tezay agree that Mr Browne’s employment was covered by the Clerks - Private Sector Award 2010. 1 (Clerks Award) I am therefore satisfied that Mr Browne is protected from unfair dismissal (s.382 of the FW Act).
[14] As MSS is not a small business the Small Business Fair Dismissal Code does not apply.
[15] It is therefore necessary for me to consider if Mr Browne’s dismissal was a genuine redundancy.
[16] Whether a dismissal is a genuine redundancy is defined in s.389 of the FW Act. Section 389 states as follows:
389 Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.
[17] I will, as necessary, consider each of these factors.
[18] Mr Penberthy gave evidence that, around late March 2020 and as a result of shutdowns ordered by Government in response to the COVID-19 pandemic, the LeasePLUS business “dried up overnight”. In his written statement Mr Penberthy said that he explored opportunities to seek or find alternative roles in which to redeploy any employee impacted by the downturn. He said:
…it became quickly apparent that all aspects of our businesses were being impacted and that there was no opportunity to find an alternative role as we were needing to cut costs through other redundancies wherever we could. We are a labour heavy business with 70% of our expenses being labour costs. We sped up the pre-planned process improvement and efficiency measures to continue to operate without having to shut our doors or cancel services to our clients.
[19] Mr Penberthy said that some of the measures adopted by LeasePLUS and SalaryPackagingPLUS to deal with the downturn in business included staff with large leave balances being “placed” on annual leave and senior managers volunteering to take pay cuts for a period of time. He also said that staff leaving have not been replaced so that he, for example, had taken on additional duties in the various businesses.
[20] Mr Penberthy said that on 8 April 2020 he informed MSS that a number of employees were no longer required, effective immediately.
[21] Mr Penberthy said that in March 2020 a role as sales consultant in LeasePlus was offered to Mr Jack Kelly. Mr Tezay confirmed that the position had been offered to Mr Kelly and a contract signed prior to the shutdown occuring. Mr Kelly had been engaged in anticipation of continued growth in the business that, because of COVID-19, did not eventuate at the anticipated time. Mr Kelly had not yet commenced at the time of the shutdown and was working out his notice with his (then) current employer. On the event of the slowdown in business Mr Kelly was advised that he would not be able to commence with MSS/LeasePLUS. Mr Kelly did eventually commence his employment in late May 2020 when it was known the business could support another sales consultant.
[22] The daily sales figures provided by MSS/LeasePLUS show a substantial decline in sales after 23 March 2020 and through April 2020 with a 50% reduction in settlements in new business and a 30% reduction in retention. Whilst Mr Browne suggests the drop in settlements from March to April 2020 are attributable to his redundancy this ignores a substantial reduction in new business in late March and April 2020 which cannot be attributable to him (as he did not generate new business) but strongly supports a finding of a substantial downturn in the LeasePLUS business which had a consequential flow-on to MSS.
[23] As a result of the advice given to MSS – as the supplier of labour to LeasePLUS and SalaryPackagingPLUS – that 3 employees were no longer required by those entities I accept that the operational requirements of MSS changed.
[24] MSS provides labour to the related companies and to the extent they no longer required the labour from MSS, its operational requirements changed.
[25] I should observe that the decision of LeasePLUS to have the sales retention function performed and absorbed into the existing work of the sales consultants does not mean that the role performed by Mr Browne was still required to be done. LeasePLUS had clearly decided that the tasks associated with Mr Browne’s role should be broken up and spread amongst other employees. The decision LeasePLUS took was that the agglomeration of these tasks into a single role was no longer required.
[26] In Jones v Department of Energy and Minerals 2 Justice Ryan held that:
…His Honour’s description was cast in terms of a “job” in the sense of a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employer’s organization, to a particular employee. However, it is within the employer’s prerogative to rearrange the organizational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. It is inappropriate now to attempt an exhaustive description of the methods by which a reorganization of that kind may be achieved. One illustration of it occurs when the duties of a single, full-time, employee are redistributed to several part-time employees. What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organization, 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
[27] I am satisfied that MSS no longer required the role performed by Mr Browne to be performed by anyone because of changes in the operational requirements of the business. The requirements of s.389(1)(a) of the FW Act are therefore met.
[28] Mr Browne and Mr Tezay agree that Mr Browne’s employment was covered by the Clerks Award. That Award contains consultation obligations which require the employer to advise employees of any change that may have a significant effect on their employment, the likely effect of the change and any measures being taken to mitigate the effect of the change. “Significant effect” includes termination of employment. As part of the consultation process required by the Clerks Award, the employer is required to consider any matters raised by employees in relation to the change.
[29] During the conference Mr Tezay posited that these obligations surely changed with COVID-19 – a position I corrected him on.
[30] Mr Browne gave evidence, and it was not disputed, that he was called while at home on 9 April 2020 by Ms Melanie Kiekebosch and Ms Ellen Powell and advised that his employment was terminated by reason of redundancy. He received his termination letter immediately.
[31] On Mr Penberthy’s evidence LeasePLUS did not make the decision that it no longer required the work done by anyone until 8 April 2020 when it advised MSS it no longer required Mr Browne.
[32] Mr Browne was not advised of the changed requirements on 8 April 2020, he was not advised of the impact of that change and nor was he advised of any steps being taken by MSS to mitigate the effects of the change. Further, it is apparent that there was no consultation with any of the employees affected by the changed organisational requirements (including those who would have to absorb the work previously undertaken by Mr Browne) to determine if any employees had anything to say about the change.
[33] It cannot be known what might have come out of a proper consultation process with all of the staff affected by the change. It may be that staff would have proposed a reduction in hours or some other steps that may have kept Mr Browne in employment. It cannot be known what proposals Mr Browne (or others for that matter) may have put forward as a means of securing his employment. He may, for example, have offered to take leave with or without pay until the situation was better understood, or until it was known how JobKeeper, having been announced on 30 March 2020, would operate and if MSS would be eligible for it. As it was, none of this occurred.
[34] MSS did not meet its consultation obligations under the Clerks Award. Therefore the requirements of s.389(1)(b) of the FW Act have not been met.
[35] For a dismissal to be a genuine redundancy the requirements of both ss.389(1)(a) and (1)(b) of the FW Act must be met. This has not occurred in this case and for this reason the dismissal was not a genuine redundancy.
[36] The jurisdictional objection of MSS is therefore dismissed.
[37] It is therefore necessary to consider if Mr Browne was unfairly dismissed.
[38] Section 385 of the FW Act says that:
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.
[39] I am, in this case, satisfied that Mr Browne has been dismissed.
[40] As set out above the Small Business Fair Dismissal Code does not apply and the dismissal was not a genuine redundancy.
[41] It is therefore necessary for me to consider if the dismissal was harsh, unjust or unreasonable.
[42] Section 387 of the FW Act states that:
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:
(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.
[43] It is necessary that I consider each of these factors.
[44] The only reason given for the dismissal of Mr Browne was that of redundancy. No issue is raised that goes to capacity or conduct. I am therefore satisfied that there was no valid reason for the dismissal of Mr Browne in relation to his conduct or capacity (s.387(a)).
[45] As there was no valid reason for dismissal based on the capacity or conduct of Mr Browne he could not have been advised of that reason (s.387(b)) nor be given an opportunity to respond (s.387(c)).
[46] The only discussion related to Mr Browne’s dismissal was that had with him by telephone on 9 April 2020. There is no claim by Mr Browne that he was unreasonably refused access to a support person for that meeting. I am therefore satisfied that there was no such unreasonable refusal (s.387(d)).
[47] The dismissal of Mr Browne did not relate to his performance. Section 387(e) of the FW Act is therefore not a relevant consideration.
[48] Section 387(f) of the FW Act relates to the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed and s.387(g) of the FW Act to the effect of the absence of dedicated human resources on the dismissal procedures.
[49] MSS had 57 employees at the time of the dismissal of Mr Browne. Not only that, it provides human resources services to LeasePLUS, SalaryPackagingPLUS and other related companies. Given its size and the service it provides it could reasonably be expected that MSS would have effective and fair procedures for effecting dismissal. If it does, it did not demonstrate any in this instance.
[50] Section 387(h) of the FW Act provides the Commission with broad brush to consider any other matters it considers relevant.
[51] I have taken into account the failure of MSS to engage in any discussion with Mr Browne (and other affected employees) about the changes at MSS caused by COVID-19 and its impact on the provision of resources to LeasePLUS, SalaryPackagingPLUS and other related companies.
[52] I have also considered whether Mr Browne could have been offered alternative roles with MSS.
[53] The failure to consult and the decision of MSS to employ 2 further sales consultants in May 2020 (one being Mr Kelly) is telling that there may well have been opportunities for Mr Browne to be redeployed. That Mr Browne would have been suited to or capable of fulfilling a sales consultant role is generally speculative. To the extent Ms Jaime Duckworth, who gave evidence for Mr Browne at the conference, considers that he could have fulfilled the sales consultant role, I am not convinced that this was a matter reasonably within her knowledge although I accept that, from her observations, she believed that he could.
[54] I have carefully considered the email of Ms Keikebosch to Ms Duckworth of 28 March 2020 – some 12 days prior to Mr Browne’s dismissal – that the business was not considering redundancies. I accept that it may well have been at this time that redundancies were not under active consideration, but I do not think that it can be ignored that the situation for many businesses, at this time, was extremely fluid. Further, I do not know that Ms Keikebosch could have known what it was that Mr Penberthy was considering for LeasePLUS and SalaryPackagingPLUS and the impact this might have on MSS.
[55] I have taken into account that neither MSS, LeasePLUS or SalaryPackagingPLUS ceased trading during the first (or subsequent) set of restrictions operating in Melbourne. In fact LeasePLUS has not only employed Mr Kelly but taken on another sales consultant since that first shutdown. Whilst the circumstances at the end of March 2020 did look bleak for MSS business clearly picked up.
[56] I do accept that, at the time Mr Browne’s employment was terminated the nature of the operation of JobKeeper was not known. It had been announced the previous week. However, Mr Browne is right, the purpose of JobKeeper was to ensure employees and their employer maintained a relationship, to minimise job loss and minimise redundancies. Whilst MSS may not have understood its operation on 8 April 2020 neither did many other employers who managed to maintain employees until such time as the JobKeeper payments came through.
[57] For all of these reasons I am satisfied that the dismissal of Mr Browne was harsh and unjust.
[58] For the reasons given above I am satisfied that Mr Browne’s dismissal was not a genuine redundancy and it was harsh, unjust or unreasonable.
[59] I am therefore satisfied that Mr Browne was unfairly dismissed.
[60] I will therefore consider remedy.
[61] Mr Browne does not seek reinstatement. I am therefore satisfied that reinstatement is not appropriate and I should consider compensation.
[62] The criteria for determining compensation set out in s.392 of the FW Act as follows:
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.
[63] I am not satisfied that I have the relevant submissions and evidence in relation to the compensation that would enable me to make a sound decision.
[64] I will therefore issue directions seeking submissions and evidence in relation to this matter. The directions will be issued at the same time as this decision.
COMMISSIONER
Appearances:
M. Brown on his own behalf.
M. Kiekebosch for the MySharedServices Pty Ltd
Hearing details:
2020.
Melbourne by video:
August 17.
Printed by authority of the Commonwealth Government Printer
<PR722053>
1 MA000002. The Clerks – Private Sector Award 2020 commenced on 29 May 2020, after Mr Browne’s employment was terminated.
2 (1995) 60 IR 304.
3 Ibid at 308.