Redundancy Was Genuine in Substance, but Consultation Was Not Undertaken

Case: Papathanasiou v HBS Group Pty Ltd [2013] FWC 6838
Commission: Fair Work Commission
Member: Deputy President Gooley
Decision date: 11 September 2013
Outcome: Unfair dismissal application dismissed
Applicant representative: A. Dircks, Just Relations

Overview

The Fair Work Commission dismissed an unfair dismissal application brought by a 70-year-old carpenter whose employment ended as a construction project wound down.

Deputy President Gooley found that the employer had genuine operational reasons to reduce the number of carpenters at the site. However, the employer failed to comply with its enterprise agreement obligations to consult about the major workplace change.

Despite that failure, the Commission concluded that the dismissal was not harsh, unjust or unreasonable. Consultation would not have changed the outcome: the project was ending, and the employee would not accept a change to his employment arrangements that would allow him to work at other sites.

The decision demonstrates that a failure to consult can mean a redundancy is not “genuine” under the Act, but does not automatically establish that the dismissal was unfair.

Background

Mr Christos Papathanasiou worked for HBS Group Pty Ltd, a construction company specialising in restoration and renovation of historic buildings.

He was a carpenter who had performed various work for HBS since 2009. During his most recent engagement, he worked at the GPO restoration project from October 2011 until his employment ended on 16 August 2012.

Mr Papathanasiou submitted timesheets and invoices containing his ABN and was paid an hourly rate. He was not paid during periods when there was no work. He considered himself a casual employee.

HBS contended that he was a subcontractor. That jurisdictional objection had previously been dismissed, with the Commission finding that Mr Papathanasiou was an employee and protected from unfair dismissal.

HBS argued that his employment ended because the GPO project was winding down and fewer carpenters were required. Mr Papathanasiou alleged that he was dismissed because he complained about unpaid superannuation and being asked to sign blank toolbox meeting documents.

Was the job no longer required?

Deputy President Gooley accepted the evidence of HBS directors that the GPO project was coming to an end and that the employer no longer needed the same number of carpenters.

The project was not ongoing, and the number of employees required on site decreased as practical completion approached.

Mr Papathanasiou argued that other employees should have been selected for redundancy or that employees should have remained at the site for a shorter period. The Commission found there was no evidence supporting the suggestion that HBS should have retained all carpenters for longer.

The Commission also noted that the selection process for individual employees was not relevant to determining whether the dismissal was a genuine redundancy under s.389.

Deputy President Gooley concluded that the employee’s job was no longer required because of changes in HBS’s operational requirements.

Consultation obligations

The enterprise agreement required consultation about major workplace changes likely to have a significant effect on employees, including termination of employment or relocation.

HBS argued that the end of a construction project was not a major workplace change and that it was not required to consult.

The Commission rejected that argument. The ending of the GPO project was a major change likely to affect employees through relocation or termination.

HBS had given employees general information that the project was ending. Evidence was accepted that:

In May 2012, employees were told that the timber work at the GPO would finish in two to three months.
At a toolbox meeting on 16 June 2012, workers were told that carpentry work was coming to an end.
Relocation to other sites was discussed as a way to reduce the impact of the change.

However, HBS did not consult with Mr Papathanasiou after the definite decision was made to reduce staffing and terminate his employment on 16 August 2012.

The Commission therefore found that HBS had failed to comply with its consultation obligations. The redundancy was not genuine within the meaning of the Act.

Redeployment

The Commission considered the difficulties surrounding redeployment.

Mr Papathanasiou had been paid in a manner resembling a subcontractor arrangement. HBS said that this arrangement could not be continued on other sites, where employees would need to be placed “on the books”.

Mr Papathanasiou had been asked in May and August 2012 to move onto wages but had refused. He said he did not understand that this meant he could not be redeployed to other projects.

The Commission did not make a definitive finding on whether redeployment was reasonable, as the failure to consult was sufficient to establish that the redundancy was not genuine.

Was the dismissal unfair?

The Commission considered the statutory criteria in s.387.

The dismissal was not related to the employee’s conduct or capacity, so the criteria concerning a valid reason, notification and opportunity to respond were neutral.

The Commission also considered the employee’s age, his long experience in the construction industry, his desire to continue working and the circumstances of the termination.

Alleged retaliation

Mr Papathanasiou argued that the real reason for his dismissal was his complaints about superannuation and occupational health and safety.

The Commission was not satisfied that the evidence established this.

The employer had told employees that the GPO project was ending before the superannuation dispute arose. The Commission also found no sufficient evidence that the directors knew of the employee’s alleged refusal to sign blank toolbox forms.

The Commission concluded that the employment ended because the work at the GPO was coming to an end.

Failure to consult and the outcome

Deputy President Gooley described the failure to consult as serious.

However, the Commission concluded that consultation would not have changed the outcome. The work was ending, and employees would either be terminated or relocated. Mr Papathanasiou would not accept the change in employment conditions required for work on other commercial sites.

In all the circumstances, the Commission found that the dismissal was not harsh, unjust or unreasonable.

The unfair dismissal application was dismissed.

Significance

The decision illustrates the distinction between a genuine redundancy and an unfair dismissal:

Operational change: The employer must establish that the job is no longer required because of changes in operational requirements.
Consultation: Failure to comply with applicable consultation obligations can mean the redundancy is not genuine.
Selection: The selection of a particular employee for redundancy is generally distinct from the statutory genuine redundancy test. A prohibited reason for selection may raise separate general protections issues.
Redeployment: The employee’s willingness to accept reasonable changes to employment arrangements may be relevant to redeployment.
Unfairness: A failure to consult does not automatically mean that the dismissal is harsh, unjust or unreasonable. The Commission considers all relevant circumstances, including whether consultation could have affected the outcome.

The case is a useful example of a dismissal that was not a genuine redundancy because of a consultation failure, but was nevertheless found not to be unfair.

Representatives

Applicant: G. Dircks, Just Relations.
Respondent: N. Simpson, HBS Group Pty Ltd.