Adams, Rosemary v N G K Stanger Pty Ltd [1997] FCA 620

FEDERAL COURT OF AUSTRALIA INDUSTRIAL LAW - Termination of Employment - operational requirements - consultaton Workplace Relations Act 1996 ss.170DE(1), 170EA CASES:

Jones v Minister for Mineral and Energy (1995) 60 IR 304

Brackenridge v Toyota Motor Corporation (1995) 67 IR 162

Thomas v Ralph Lynch trading as Bellingen Grocery (IRCA, unreported, Wilcox CJ, 20 December 1996)

Westen v Union des Assurance de Paris (IRCA, unreported, Madgwick J, 23 December 1996)

Nettlefold v Kym Smoker Limited (1996) 69 IR 370

Kerr v Jaroma Pty Ltd (1996) 70 IR 469

Carydias v The Greek Orthodox Community (IRCA, unreported, 20 February 1996) North J

ADAMS -v- N G K STANGER PTY LTD No. VI-1261 of 1997 Ryan JR Melbourne 30 June 1997

FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI-1261 of 1997 B E T W E E N : ROSEMARY ADAMS Applicant AND N G K STANGER PTY LTD Respondent MINUTES OF ORDERS Judicial Registrar Ryan 30 June 1997 THE COURT ORDERS: 1. That the application be dismissed. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI-1261 of 1997 B E T W E E N : ROSEMARY ADAMS Applicant AND N G K STANGER Respondent Ryan JR Melbourne 30 June 1997 REASONS FOR JUDGMENT (Delivered Ex Tempore) The Applicant seeks compensation in a claim of unlawful termination of employment. She was employed as an accounts payable clerk in the Respondent's finance or accounts division. The Respondent company is a joint venture between the Japanese based NGK and Stanger, a small but established Australian manufacturer of switch gear. Industry changes, especially privatisation of electricity production and supply, have adversely and severely affected the Respondent company. The Respondent asserts that the termination of the Applicant's employment and that of 13 other employees resulted from the necessary restructure of the Respondent's business. The Applicant appeared on her own behalf. Mr Ironmonger appeared for the Respondent. Mr Ironmonger called evidence from the Chief Executive Officer, the Accountant and a Human Resources Manager. Mr Limbourn was appointed as Chief Executive Officer in May 1995. He gave evidence of · reductions and changes to the management structure as represented by organisation charts in February 1995 and January 1996 and by a proposed organisation identified in March 1996 and towards which the company still aims, (exhibits R1 to R3) · a year to date loss in July 1995 of $387,000 against the year to date budgeted profit of $515,000 (exhibit R4) · an actual operating loss for calender year 1995 in excess of $1,350,000 (exhibit R5) · an operating loss in calender year 1995 from January to May 1995 of $570,000, that is $114,000 a month (exhibit R8) · asset reductions, reduced manufacturing, outsourcing and job reductions outlined at a company meeting 6 December 1995 (exhibit R5) · substantial costs and staff reductions, staged scaling down of the company and a redundancy process all outlined at a company meeting in January 1996 (exhibit R6) · no redundancies of direct labour as at March 1996 but some redundancies identified in March 1996 as in near future with an agreement in process with the union still to be achieved as at March 1996. Mr Limbourn also gave evidence as to the termination of the Applicant's employment, but I will come to that later. Mr MacArthur, an accountant in private practice, gave evidence of · his appointment on contract in September 1996 effectively as the accountant to the Respondent's business · his work reviewing staff and financial systems · the retrenchment of the then in-house accountant in September 1996 · the merging of accounts payable, accounts receivable and banking and the resultant appointment of a qualified accountant as finance officer with responsibility for the working account, the cash management account and the Yen account, accounts receivable, debt collection, overseas invoices, customs clearance, shipping costs, all taxation drawings and all reconciliation including reconciliation of payroll to general ledger · the employment of the finance officer on a contract for six months. · the likely continuation of the finance officer on term contract depending on performance and on the effectiveness of the restructure · reduction of the finance division from four persons to two persons plus Mr MacArthur himself, working in a supervisory role as accountant to the respondent · the use of a trainee in a subsidised position to carry out more menial filing, telephone and administrative tasks as the second person in the smaller finance division. Mrs Noonan, as Ms Thomas, was employed by the Respondent from October 1995 to March 1996 as Human Resources Manager. Ms Noonan gave evidence of · the establishment of work teams throughout the Respondent's organisation · the use of teams to improve productivity and to communicate substantial and constant restructure · the formation of an administration team which included the Applicant and was initially known as the Hub team and later amalgamated with the technical support team to become the Net team · the involvement of all teams in preparing questions and answers on restructure and especially on redundancies and attention paid in January/February 1996 to redundancies by the support Tap Plate Machine and Hub teams (exhibit R10) · the attendance of the Applicant at meetings of the Net team and the attention given by the Net team to essential organisation functions at the meetings on 5 February, 22 February and 22 March 1996 · the attention given by the Net team to efficiency review of functions on 4, 19 and 26 April and 10 and 31 May · expected reduction of office staff discussed at the Net team meeting on 12 April · outsourcing discussed at the Net team meeting on 19 April. · specific discussion of accounts and administration functions at Net team meeting 10 May · a reference in the minutes of the Net team meetings of 10 and 31 May that "accounts are still waiting for the finance and administration manager to be appointed before they start looking at their efficiency" Mrs Noonan also gave evidence of her attendance at a meeting with the applicant and Mr Limbourn on 18 November 1996 when the Applicant was advised that her position of accounts payable clerk was to be abolished forthwith. As Mr Limbourn was clearly responsible for this decision, the Court directed that he be recalled to give evidence of the termination. Mr Limbourn stated that in November, following discussions with Mr MacArthur, he determined that the restructure outlined by Mr MacArthur in his evidence, should be put in place and after a briefing from Mrs Noonan, (Ms Thomas as she then was), he advised the Applicant in the terms outlined in the letter of termination. The first four paragraphs of that letter read as follows: "As you are aware NGK Stanger is undergoing a major restructure in order to return to profitability and adjust to the opportunities of the future. The level of sales forecast for the foreseeable future is such that it is necessary to make some immediate organisational changes. Part of the organisational changes involve the finance section where modern accounting practices, utilising high level computer skills, are being introduced to provide a better service to customers. As a result of this, your position of accounts payable clerk will be abolished and the retained elements of the function incorporated into a broader, higher level position. Unfortunately I am unable to offer you alternative employment within the company. You will be paid in accordance with the redundancy provision of two weeks pay for each continuous completed year of service. Your last day of service will be 18 November 1996 and as such you will also be paid four weeks in lieu of notice. Graham Limbourn, Chief Executive Officer." The Applicant gave evidence that she had worked for four different financial controllers and had always done her accounts payable work and any other work allocated to her to the best of her ability and that she had reason to believe that a temporary person was put on to do the accounts payable work as soon as she left. It is difficult with an unrepresented Applicant, but the Court accepts that Ms Adams is contesting the existence of a "valid redundancy" because she believes that her position was not made redundant and that someone else was immediately employed to do the work she had performed. Firstly, there was no evidence to support this claim other than hearsay evidence of a statement recently made to the Applicant by Jill Iliffe, who was apparently accounts receivable clerk when the Applicant left on 18 November. Even if the Court was to admit this hearsay evidence, and the Court is prepared to accept that Ms Iliffe did express a view that the Applicant was replaced, there is no actual evidence that the Applicant was replaced as accounts payable clerk. The Court is satisfied that the finance division was restructured and the accounts payable and receivable functions and other functions were merged. This is a clear case of a restructure based on legitimate and urgent operational requirements and a termination for valid reason, in the "operational requirements" sense, as outlined in Jones v Minister for Mineral and Energy (1995) 60 IR 304, Brackenridge v Toyota Motor Corporation (1995) 67 IR 162, Thomas v Lynch trading as Bellingen Grocery (IRCA, unreported, Wilcox CJ, 20 December 1996) and Westen v Union des Assurance de Paris (IRCA, unreported, Madgwick J, 23 December 1996). A question still lies to be answered as to whether this was a fair and just termination of employment in the terms of Nettlefold v Kym Smoker Limited (1996) 69 IR 370 and objectively justified in terms of Kerr v Jaroma Pty Ltd (1996) 70 IR 469. The question is, was there adequate consultation with the Applicant and was consultation required? In Carydias v The Greek Orthodox Community (IRCA, unreported, 20 February 1996) North J commented at 40: "The need to consult is not a rigid requirement, the extent to which it is required, how it is to be satisfied and even whether it is required at all, depend on the circumstances of the case." In my view, consultation was required here. The consultation could have been more direct and more personal and more immediate. The consultation was adequate but far from optimal in the context of the company presentations to staff (including to the Applicant) in December 1995 and January and March 1996 and the Applicant's attendance at Net team meetings in March, April and May 1996. In my view, more direct consultation with the Applicant in September/October or early November, would have been a far more appropriate way of preparing her for redundancy and providing her with an opportunity to argue other options. However, as in the case of Leddicoat v Schiavello Commercial Interiors (SA) (IRCA, unreported, von Doussa, 18 October 1995), there were no other options and more immediate and detailed consultation would have altered nothing. I have concluded that there was adequate consultation and that the applicant must have known redundancies were likely to affect the finance division and quite possible her position. In the circumstances, I find that her termination was for valid reason and that the payment in lieu of notice was more than adequate and the severance payment was adequate, not generous but adequate. In the circumstances, the application must be dismissed. MINUTES OF ORDERS THE COURT ORDERS: 1. That the application be dismissed. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules. I certify that this and the preceding 4 pages are a true copy of the reasons for judgment of Judicial Registrar Ryan. Associate: Dated: 10 July 1997 The Applicant represented herself.