Unfair dismissal, consultation and redundancy

 

This extract from an unfair dismissal decision of the Fair Work Commission is a very good working example of the way in which the Commission deals with the implications where an employer fails to comply with the consultation obligations in a modern award (or enterprise agreement for that matter)’

“Obligations to consult

[30] Clause 37 of the Award provides as follows:

“37. Consultation about major workplace change

37.1 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.

37.2 For the purposes of the discussion under clause 37.1(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.

37.3 Clause 37.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.

37.4 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 37.1(b).

37.5 In clause 37 significant effects, on employees, includes any of the following:

(a) termination of employment; or

(b) major changes in the composition, operation or size of the employer’s workforce or in the skills required; or

(c) loss of, or reduction in, job or promotion opportunities; or

(d) loss of, or reduction in, job tenure; or

(e) alteration of hours of work; or

(f) the need for employees to be retrained or transferred to other work or locations; or

(g) job restructuring.

37.6 Where this award makes provision for alteration of any of the matters defined at clause 37.5, such alteration is taken not to have significant effect.”

[31] The Award requires the employer to notify employees who may be affected by a definite decision that is likely to have significant effect by the proposed changes. This clause anticipates that the employer will consult with employees likely to be affected prior to the implementation of the decision and the information is to be provided in writing. The purpose of consultation prior to the termination of employment is that the employer’s decision may be influenced through consultation. Significant effects in consultation clauses include a termination of employment.

[32] Ms Strakevski gave evidence that the notification requirements were met during the meeting of 7 October 2021 at 1:00pm. As there is no evidence to dispute her evidence, I do accept that there were discussions as detailed by Ms Strakevski. However, the Award clause does require the provision of information in writing consistent with clause 37.2. In my view Mimosa had failed to comply with the technical requirements of the Award and consequently s.389(b) of the Act.

[33] I am satisfied that Mr Cremona’s employment was terminated due to reasons of redundancy, however, failure to comply with the technical requirements of the Award clause means that the genuine redundancy provisions in the Act do not exclude Mr Cremona from protection under the unfair dismissal provisions. I now consider the relevant provisions of s.387 of the Act.

Was the termination unfair?

[34] Section 387 of the Act requires me to consider the following matters:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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 FWA considers relevant.”

Was there a valid reason? (s.387(a))

[35] The termination was due to redundancy due to the restrictions on the building and construction industry. The restrictions prevented work in occupied premises and Mr Cremona’s work relied on the capacity to perform warranty work on completed and occupied homes. Mimosa determined that it best to let affected employees go, rather than have them remain stood down without pay, not knowing when the restrictions would be lifted and when it could usefully engage Mr Cremona. Mimosa did not fill Mr Cremona’s job and even though an employee currently performs the role of supervisor, the role includes duties unrestricted to occupied homes. 5 Mr Carasavidis gave evidence that at the time the Applicant was made redundant, Mimosa filled a supervisor role in the on-site construction area of the business. Mr Carasavidis stated that while the performance of warranty work had been affected by Covid-19 restrictions, the construction area of the business remained in operation at the time the Applicant was made redundant. Ms Strakevski corroborated Mr Carasavidis’ evidence that restrictions prevented the performance of the business’ warranty work. Ms Strakevski gave evidence that at the time of the Applicant’s redundancy, Mimosa advertised positions in areas of the business unaffected by the restrictions, however the Applicant was unsuitable for the advertised roles.

Notification and opportunity to respond (ss.387(b) and (c))

[36] The matters in Section 387(b) and (c) of the Act deal with whether there was procedural fairness in respect of a reason for dismissal related to the Applicant’s capacity or conduct. Mr Cremona’s dismissal was not due to performance or conduct.

[37] Nevertheless, I observe that he was not notified of the decision to implement redundancies until the day he was invited to a meeting on 7 October 2021. The evidence of Ms Strakevski was that the discussion provided Mr Cremona the opportunity to advise whether he had alternative suggestions or comments requiring consideration regarding a decision to make the position redundant. She gave evidence that the discussion did not identify any alternative positions, nor that Mr Cremona required further time to consider the situation. In the absence of any evidence to the contrary I accept this evidence, however the Award provision does require matters to be put in writing. Further, despite the evidence that Mr Cremona appeared to understand the decision and the ultimate outcome of the discussion, I do consider that Mr Cremona should have been afforded a consultation process more than the 15 minutes of discussion. Unless industrial instruments provide a detailed and lengthy process, a few days to a week is a reasonable timeframe for genuine consultation in circumstances such as in this matter.

[38] However, ss. 387 (b) and (c) relate to procedural fairness in respect to capacity or conduct and therefore due to the reason for the dismissal I consider this matter neutral with respect to whether the dismissal is harsh, unjust or unreasonable.

Support person (s.387(d))

[39] Mimosa did not advise Mr Cremona of the purpose of the meeting, other than to say it was a HR matter. Ms Strakevski gave evidence that an opportunity was made for Mr Cremona to express his preference to have a support person and he did not request to have a support person. It is not required that Mimosa offer the opportunity, rather, it is required that Mimosa do not deny the opportunity for a support person. In this case, Mr Cremona was not aware of the purpose of the meeting but was aware that it was a meeting with HR and his immediate manager. Having considered the evidence of Ms Strakevski I consider this a matter not in Mr Cremona’s favour with respect to whether the dismissal was harsh, unjust or unreasonable.

Unsatisfactory performance (s.387(e))

[40] The dismissal did not relate to unsatisfactory performance, so this matter is not relevant to my consideration. I regard this a neutral matter in terms of whether the dismissal was harsh, unjust or unreasonable.

Size of the enterprise and human resource management (s.387(f) and (g))

[41] Mimosa is not a small business, and the dismissal was managed by human resources. Ms Strakevski gave evidence of the decision and process, and while there was a technical breach of the Award clause, the breach of process is unlikely to have affected the outcome of redundancy. For this reason, I consider this matter a neutral consideration.

Other matters (s.387(h))

[42] Mr Cremona made a conscious decision not to give evidence. During the programming, Mr Cremona was encouraged to tender a witness statement while discussions were had regarding process and his obligation to advance his case. He made it clear that he would not be giving evidence. It appears that the strategy adopted was to make submissions and expect the Respondent to prove that the dismissal was not harsh, unjust or unreasonable. This approach is mistaken as there is no reverse onus of proof. During proceedings, Mr Cremona made statements that the Respondent provided no evidence and he was reminded that he was required to tender evidence. I also observe that rather than tendering or referring to accepted authorities, bar one decision, he relied on various website extracts containing commentary from sources unknown. I do not accept this material as reliable evidence in support of his application.

[43] I do not consider Mr Cremona’s approach to have been naïve but rather a measured strategy considering that he had initially been legally represented and had obviously spent time researching the Commission’s website and various other websites.

[44] Mimosa’s letter of termination makes reference to the payment of 2 weeks’ notice paid in lieu. 6 The contract of employment contains a minimum period of notice consistent with the National Employment Standards of 1 week for less than 1 year of continuous service. Having the opportunity to assess the 2 payslips tendered in evidence by Mimosa, the payment of 2 weeks in lieu of notice from the date of dismissal is not provided for, rather the payslip covering the pay period ending on 11 October 2021 refers to a payment of 54.28571 hours of ordinary time. This is more than the 1 week of minimum notice required but less than 2 weeks of notice as stated in the letter of termination of employment. The other payslip tendered in evidence relates to the pay period of 24 September to 7 October 2021 and includes 22.8 ordinary hours and 22.8 hours of annual leave.

Conclusion regarding harsh, unjust or unreasonable

[45] Taking into account the matters referred to above, I am satisfied that the process of termination of Mr Cremona’s employment by Mimosa was deficient as it failed to comply with the technical Award requirement in a redundancy process. However, the outcome being a dismissal was unlikely to be different given the circumstances of the industry restrictions on working in occupied homes to which Mr Cremona’s work was intrinsically linked. In the absence of any evidence from Mr Cremona, I accept the evidence of Ms Strakevski and Mr Caradavidis that there was a valid reason for the dismissal and the process of dismissal was as detailed by Ms Stakevski.

Remedy

[46] Mr Cremona is not seeking reinstatement but 26 weeks of compensation, despite having been out of work no more than 4 weeks after his dismissal. Mr Cremona did not provide any evidence of remuneration earned or lost income.

[47] Reinstatement of Mr Cremona is not practicable, not because he has found alternative employment in a like position elsewhere, but because of the breakdown in the relationship since Mr Cremona filed his application. Mr Caradavidis described the loss of respect in the relationship due to the manner in which Mr Cremona behaved and Ms Stakevski challenged Mr Cremona’s disrespectful approach during her cross examination. Mr Cremona’s approach indicates that the relationship is not retrievable and while not a small business, if Mr Cremona was reinstated he would be required to work closely with the Mimosa representatives directly affected during the proceedings. In the circumstances, I consider that an order for compensation would be appropriate.

[48] In considering compensation I am required by Section 392(2) of the Act to consider the following:

“(2) In determining an amount for the purposes of an order under subsection (1), FWA 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 FWA considers relevant.”

[49] No submissions were put forward by Mimosa regarding the impact of any order on the viability of the enterprise. I have taken into account the size of the enterprise.

[50] Mr Cremona’s period of employment is not significant. He submits that the position would have taken him into retirement. No evidence was tendered to support this. I do consider the submission mere speculation and do not give it any weight.

[51] Had Mimosa complied with the technical aspects concerning consultation, the process would not have been more than a week of further employment.

[52] Mr Cremona provided no evidence of income, remuneration received or efforts made to mitigate his loss. He did admit to being out of work for no more than 4 weeks. This period is not significant. However, Mimosa’s evidence of the payslips does confirm payment of 54.28571 hours paid, 16.28571 hours short of the 76 hours (or 2 week’s notice) it submits that it paid to Mr Cremona.

[53] I make no deduction for misconduct as this consideration is not relevant and I make no deduction for failure to provide further mitigating evidence.

[54] I have calculated a compensation figure of $989.09 gross, which represents the balance of the 1 week of notice that should have been paid as stated in the letter of termination, and this reflects the 1 week at most, to cover the consultation period had Mimosa complied with the Award clause.

[55] Orders 7 will be issued concurrently with this decision requiring the payment of this compensation less appropriate taxation within 7 days.”

Cremona v Mimosa Homes Pty Ltd – [2022] FWC 618 – 24 March 2022 – Yilmaz C