Unfair dismissal and genuine redundancy

 

This extract from a decision of the Fair Work Commission in an unfair dismissal case deals with the legal issues involved when determining whether an employer may rely upon the jurisdictional defence of the termination of employment being a genuine redundancy. The decision is particularly lengthy, hence I have endeavoured to limit the passages to the important legal considerations dealt with be the Commissioner. The complete decision, which is of course a matter of public record can be accessed at the Commission’s web site at [2022] FWC 1398

“Consideration

Introduction

[1] On 1 November 2021, Mrs Catherine Funtulis made an application to the Fair Work Commission (the Commission) pursuant to s.394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy, alleging that she had been dismissed from John Deere Limited (Australia/New Zealand) (the Respondent) and that her dismissal was harsh, unjust or unreasonable.

[2] In her Form F2 – Unfair Dismissal Application (F2), Mrs Funtulis stated that she was dismissed following a restructure undertaken by the Respondent which resulted in a number of positions being made redundant. Mrs Funtulis was advised that she was not suitable for redeployment into available positions.

[3] On 11 November 2021, the Respondent filed a Form F3 – Employer response to the application. In the Form F3, the Respondent objected to the application on the jurisdictional grounds that Mrs Funtulis’ dismissal was a case of genuine redundancy.

Background

[4] Mrs Funtulis commenced employment with the Respondent on 25 May 2011. At the time her employment ended on 25 October 2021, noting she was not informed of the termination until 1 November 2021, she was engaged as a Finance Analyst in the Accounting and Finance Team. The Respondent’s position is that Mrs Funtulis was not covered by a modern award or enterprise agreement.

[5] The Respondent markets and distributes agriculture, construction and turf equipment in Australia and New Zealand. It, together with its parent company, Deere & Company, and other subsidiaries of Deere & Company, underwent significant structural changes in 2020 as part of a “Smart Industrial Redesign” aimed at streamlining parts of the business, and changing the organisational structure to better align positions and duties with the evolving needs of the business.

[6] The Respondent explained that Deere & Company required the Accounting and Finance Team to fulfil a new role within the organisation and lift its performance post-Smart Industrial Redesign. Accordingly, the Respondent determined it was necessary to change the structure of and skillset required in the Accounting and Finance Team. The Respondent claimed that it no longer required Mrs Funtulis’ job to be done by anyone, and it explored all reasonable redeployment opportunities for her to no avail. The Respondent is of the view that it had no obligation to consult about its decision, but did so anyway. Mrs Funtulis received 25 weeks’ redundancy pay and 5 weeks’ pay in lieu of notice as part of her role having been made redundant.

[7] Mrs Funtulis contended that her dismissal was not a case of genuine redundancy, arguing that there is a continued need for her job despite the changes in the operational requirements of the Respondent’s enterprise. Further, she contends that the Respondent failed to consult her about the redundancy and failed to redeploy her.

…………………………………………………….Consideration

[116] I turn now to a consideration of the criteria set out in s.389 of the Act. For Mrs Funtulis’ dismissal to be a case of genuine redundancy, the Respondent must meet each of the criteria set out in s.389 of the Act.

s.389(1)(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

[117] The test to be considered where there has been a reorganisation or redistribution of duties is whether the employee has any duties left to discharge.8 Where there is no longer any function or duty to be performed by an employee, his or her position becomes redundant even where aspects of that employee’s duties are still being performed by other employees.9

[118] The decision in Kekeris v A. Hartrodt Australia Pty Ltd T/A a.hartrodt10 considered this point and established that the test is whether the previous job has survived the restructure or downsizing, rather than a question as to whether the duties have survived in some form. The Full Bench in Ulan Coal Mines Limited v Howarth and others11 considered and applied the decision of Ryan J in Jones v Department of Energy and Minerals12 and said:

“[17] It is noted that the reference in the statutory expression is to a person’s “job” no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals (1995) 60 IR 304 a job involves “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees’ organisation, to a particular employee” (at p. 308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational 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. In these circumstances, it was said 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…” (at p.308)”

This does not mean that if any aspect of the employee’s duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation (2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the “job” of that employee no longer exists.”

[119] The evidence before the Commission is that the Respondent conducted an analysis of its staffing requirements and decided that it could do without the Finance Analyst role, together with one other role. The Respondent has determined that roughly, the following split of Mrs Funtulis’ duties would be distributed as follows:

Senior Finance Analyst: 20%
SA&G Accountant (newly created role): 30%
Asset Accountant (newly created role): 30%
Team: 20%

[120] When considering making a role redundant, it is unsurprising that some of the duties will still be required by an employer to be performed; not all duties can simply vanish. The split of the duties previously performed by Mrs Funtulis is also not surprising; some of the more complex duties are now required to be performed by the senior role, whereas some of the less complex duties are now required to be performed by more junior roles to the one performed by Mrs Funtulis.

[121] The fact that at the time of the hearing the SA&G Accountant and Asset Accountant positions had not been filled is a neutral consideration. The Respondent has a desire to fill those two roles, and until it does, approximately 60% of the duties that had been performed by Mrs Funtulis are being performed by existing members of the finance team.

[122] I am satisfied the Respondent no longer requires the role of Finance Analyst to be performed by anyone because of changes in the operational requirements of its enterprise.

[123] The criterion in s.389(1)(a) of the Act is satisfied.

s.389(1)(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

[124] I have considered whether the Respondent was required to consult with Mrs Funtulis. I am not satisfied that Mrs Funtulis’ employment was covered by any modern award or enterprise agreement. Accordingly, there was no consultation clause the Respondent was required to comply with.

[125] If there had been a relevant consultation clause the Respondent was required to comply with, I am satisfied that the approximate 12 days of consultation before making the decision to make Mrs Funtulis redundant would have satisfied the standard consultation clause.

s.389(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.

[126] Whether redeployment of an employee is considered reasonable will depend on the circumstances that exist at the time of the dismissal.13

[127] In Hallam v Sodexo Remote Sites Australia Pty Ltd,14 a Full Bench of the Commission stated the following:

“…..Subsection 389(2) states that 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. Subsection 389(2) places no obligation on an employer to redeploy, or to do everything possible to achieve a redeployment outcome. The exception is applied at the time of dismissal. It operates so that a dismissal that would otherwise be a case of genuine redundancy under subsection 389(1) will not be so if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or with an enterprise of an associated entity of the employer.”

[128] As the Full Bench observed in TAFE NSW v Pykett,15 to show that it would have been reasonable for the Respondent to redeploy Mrs Funtulis, it is not necessary to identify a particular job or position in which Mrs Funtulis could have been redeployed. However, the Commission must be satisfied on the balance of probabilities, and based on the evidence, that there was a ‘job or a position or other work’ to which it would have been reasonable to redeploy Mrs Funtulis.

[129] The two available jobs for consideration are the SA&G Accountant and Asset Accountant roles. I do not consider it appropriate to have regard to other roles which had been filled in September and October 2021. Mrs Funtulis was not made redundant then, and these were not available roles for the Respondent to consider. An employer does not need to hold jobs open or even discuss with an employee the potential for redeployment until a decision has been made to make an employee’s role redundant.

[130] On the evidence before the Commission, it is clear that by mid-September 2021, the Respondent had determined the duties required for the SA&G Accountant and Asset Accountant roles. By 16 September 2021, Ms Strong and Mr Maione had concluded that neither Mrs Funtulis nor the other team member would be suitable to be redeployed into either role. Ms Strong then produced the key competencies on 20 September 2021 and shared this information with Mr Maione and Ms Hart.

[131] As Accounting Manager, Ms Strong was afforded considerable autonomy to determine the two new roles she considered she required. This was ultimately adopted by Mr Maione and further by Mr Edwards. The business made a decision that going forward, it required all of those particular skills and duties, and it was prepared to reward the roles as Grade 6.

[132] The analysis of Mrs Funtulis’ competencies, detailed in the late September 2021 spreadsheet is confronting. Ms Strong completed the analysis, while Mr Maione provided additional commentary. Where Mrs Funtulis considers that Ms Strong did not particularly like Mrs Funtulis, no such criticism was made of Mr Maione by Mrs Funtulis until such time as she was informed, in mid-October 2021 of the decision to make her role redundant. That is, it appears to me that Mrs Funtulis and Mr Maione worked reasonably well together, and I am not satisfied that Mr Maione unfairly embellished any concerns he had about Mrs Funtulis’ performance. If Mrs Funtulis did not think Ms Strong could be objective given some interpersonal conflict between the two, no such criticism could be made of Mr Maione. In fact, during the hearing, Mr Maione impressed me as a quiet, gentle manager, with demonstrable care, empathy and respect to Mrs Funtulis.

[133] The weight of Mr Maione’s commentary as to Mrs Funtulis’ strengths and weaknesses is considerable. He did not, by late September 2021, think that Mrs Funtulis had the appropriate skills, particularly interpersonal skills, to satisfactorily perform one of the two available roles.

[134] I consider it disappointing that the door to Mrs Funtulis convincing the Respondent that she could perform either of the two roles was shut to her so early in the communications. I consider it to have been harsh. She was told from the outset that the Respondent did not consider she could perform either of those roles. That was unfair to Mrs Funtulis. She was entitled to have commenced discussions with the Respondent with the possibility of being redeployed open, not shut to her. It is clear from the communications with her that the Respondent had already made up its mind that she would not be offered one of the two roles.

[135] The issue of reduced remuneration for the roles is one that does not support the Respondent’s position. Mrs Funtulis was never asked if she would consider a role paying approximately 22% less than the Grade 7 role. On the evidence discovered during the hearing, the Australian arm of the Respondent has been very successful in having displaced employees paid remuneration at the higher level when their classification has been reduced.

[136] While I am satisfied that it was harsh and unfair to Mrs Funtulis to be deprived of the opportunity of convincing the Respondent she could be redeployed into one of the two available roles, and the issue of the pay grade being lower than her existing pay grade was not something that was insurmountable, I have had regard to Mrs Funtulis’ subsequent conduct from the moment she was informed on 14 October 2021 of her role being redundant.

[137] It is to be expected that an employee, upon being informed their role is to be made redundant, will experience a wide range of emotions. I often explain to parties that I too was once made redundant in a role in which I had worked for nearly 14 years. It can be a distressing, painful and confusing time. The toll on an individual learning such news ought to be delicately handled. As I earlier stated, Mr Maione struck me as a gentle manager, and I have no doubt he conducted himself properly at the meeting of 14 October 2021 in the most caring, sensitive and genuine way possible.

[138] Mrs Funtulis was, it is fair to say, confused on 14 October 2021. She corresponded that she understood from the meeting that she could choose one of the two roles and keep her higher remuneration, or accept a redundancy. She sought to be paid 100 weeks’ severance instead of 25 weeks. She was, so soon after learning of the news, seeking to negotiate a significantly higher severance package than she was entitled to.

[139] Regrettably, by that evening, Mrs Funtulis had commenced to use inflammatory language in the numerous emails she began to send. She stated that she considered it disgusting that she was receiving phone calls from people who had learned that she was being made redundant, and then to Mr Edwards said that the lack of confidentiality was unacceptable and she considered she was being bullied to take a redundancy when the job still exists. In making such a statement to Mr Edwards, Mrs Funtulis was clearly complaining about Mr Maione and Ms Hart.

[140] A meeting occurred on the morning of 15 October 2021. I accept the Respondent’s evidence that Mrs Funtulis interrupted the expected flow of the meeting. Mrs Funtulis’ own email to the Respondent on 15 October 2021, providing her account of the meeting demonstrates that she was requiring the Respondent to offer to her more options including job opportunities or a better redundancy package.

[141] I consider Ms Hart’s correspondence of 15 October 2021, following the meeting, to have been appropriate. I note that Ms Hart explained that the Respondent did not consider there were suitable roles for redeployment, including the reason that the roles would report into a grade the same level as Mrs Funtulis’ grade 7 role. What is clear is that that person is Ms Strong.

[142] By the afternoon of 15 October 2021, Mrs Funtulis was sending further emails, asserting that she had been subject to unprofessional and unethical behaviour, and she had been belittled. Reference was made to a fictitious legal representative. Mrs Funtulis’ correspondence was, in my view, inappropriate on this issue.

[143] I consider Ms Hart’s correspondence to Mrs Funtulis on 18 October 2021 at 1:30pm to appropriate, considerate and professional.

[144] Disappointingly, Mrs Funtulis’ correspondence that afternoon descended into the unprofessional. Her suggestion that because Ms Hart was demonstrably unwell meant she might be incoherent was nasty and snide. Mrs Funtulis then suggested that her current position is still available. I accept this would have been alarming for the Respondent to learn that despite everything she had been told in the days prior, Mrs Funtulis was insisting her role was still available and not redundant.

[145] In correspondence sent the next day, Ms Hart informed Mrs Funtulis all of the reasons why the Respondent did not consider she was suitable for the two available roles. Mrs Funtulis was not invited to demonstrate why she considered she could perform those roles.

[146] The following day, on 20 October 2021, Mrs Funtulis went, in my view, nuclear. She threw all sorts of insults the way of Ms Hart and Mr Maione, including:

  • “I understand this is a difficult time for you and your not feeling the best however insulting my intelligence is a new low for you.”
  • “…are they aware and supportive with the unethical and unprofessional behaviour that you two are contacting yourselves towards me and most likely others?”
  • “I thank you for confirming that we are not under the modern award or an enterprise agreement. (would that apply that I can start litigations for blackmail, bulling, harassment etc for yourself & Jamie as individuals????)”
  • “To this day Jessica and Jamie you have failed to provide appropriate information as requested, you have continued to blackmail and harass me into taking a voluntary redundancy and have advised that irrelevant to any comments or feedback that I make towards the new structure it will make no difference as the decision has already been made. Most of all you have made a mockery of something that could have been very simple and dealt with professionally.”

[147] Not surprisingly, Mrs Funtulis’ outrageous allegations, including blackmail, triggered a response from the Respondent’s legal team, inviting Mrs Funtulis to provide detail of her allegations. Mrs Funtulis responded and was ultimately dismissed on account of her position being redundant several days later.

Determination of s.389(2)

[148] On the evidence before the Commission, I conclude that the Respondent was unjustified in concluding so very early that Mrs Funtulis could not be redeployed into one of the two available roles. Mrs Funtulis ought to have been afforded all opportunity to extensively discuss the roles and the remuneration attached to the roles, with the Respondent keeping an open mind as to her suitability to perform the roles. An organisation the size of the Respondent will, it is hoped, reflect on its future practices.

[149] I conclude, however, that the manner in which Mrs Funtulis conducted herself from 14 October 2021 until when she learned of her dismissal was, to a large degree, extraordinary, hysterical, and unbalanced. Her conduct towards Ms Hart and Mr Maione was unfair and unprofessional. The accusations she made ought not to have been made.

[150] Although I consider that the Respondent had already concluded that there was no suitable role to redeploy Mrs Funtulis into, and this was premature and unfair to Mrs Funtulis, I am satisfied that her subsequent conduct tipped her into the position of never being suitable for redeployment in either of the two available roles. This is so because Mrs Funtulis would, in my view, never accept the validity of the Respondent’s decision to make her role redundant, and would agitate hostility to those managers she would need to continue to work with and had insulted; Ms Strong and Mr Maione. Where Mrs Funtulis said during the hearing that she could work cooperatively with them, having observed Mrs Funtulis, I do not accept that she could. Mrs Funtulis had, in fact, threatened to involve Ms Hart and Mr Maione in litigation and name them individually.

[151] Furthermore, I agree with the Respondent’s assessment that Mrs Funtulis lacks relevant interpersonal and communication skills required for the two roles and these are not skills that she could gain. Having observed Mrs Funtulis’ communication style, which I consider to be quite combative and aggressive, I accept Mr Maione’s evidence that he struggled with Mrs Funtulis when they met over recent years, with her, at times, and not all of the time, talking over him in meetings. I accept the Respondent’s evidence that Mrs Funtulis would not have been able to competently partner with the business in the way the Respondent required of the roles.

[152] While Mrs Funtulis was entitled to attempt to convince the Respondent that she could meet the requirements of one of the two roles, I am satisfied that if the Respondent had considered Mrs Funtulis’ views on the matter, the Respondent would have reasonably concluded that these skills are lacking and are an important requirement of the role.

[153] As for any available overseas roles, I accept that the Respondent was not interested in having that work performed in Australia, and I consider that approach to be reasonable.

[154] For the above reasons, I am not satisfied that it would have been reasonable in all the circumstances for Mrs Funtulis to have been redeployed within the Respondent’s business or any of its associated entities.

Conclusion

[155] The jurisdictional objection that the dismissal was a case of genuine redundancy requires two affirmative elements and one negatory element which must be satisfied, so as to establish whether a dismissal was or was not a case of genuine redundancy.

[156] For all of the reasons set out above I am satisfied that Mrs Funtulis’ dismissal was a case of genuine redundancy because, as of 1 November 2021, when Mrs Funtulis learned of the dismissal:

  • The Respondent no longer required Mrs Funtulis’ job to be performed by anyone because of changes in the operational requirements of its enterprise;
  • The Respondent was not required to consult with Mrs Funtulis as she was not covered by a modern award or enterprise agreement; and
  • It would not have been reasonable in all the circumstances for Mrs Funtulis to be redeployed within the Respondent’s enterprise or the enterprise of an associated entity.

[157] The application is dismissed.”

Funtulis v John Deere Limited (Australia/New Zealand) (2022) FWC 1398 delivered 3 June 2022 per Hunt C