Armstrong v Mayne Nickless Ltd [1996] IRCA 189

DECISION NO: 189/96 CATCHWORDS Industrial Law - Termination of Employment - Redundancy - remedy not appropriate - valid reason - harsh unjust unreasonable. Industrial Relations Act 1988 ss 170DE(2), 170EA, 170EE. Kenefick & Ors -v- Australian Submarine Corporation Pty Ltd (26/3/96, Unreported, Judgment No 103/96) Quality Bakers of Australia Limited -v- Goulding (1995) 60 IR 327 No. QI 95/1436 BELINDA NATALIE ARMSTRONG -v- MAYNE NICKLESS LTD (ACN 004 073 410) trading as ONLINE DISTRIBUTION SERVICES CORAM: LINKENBAGH JR PLACE: BRISBANE DATE: 10 MAY 1996

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY No. QI 1436 of 1995 BETWEEN: BELINDA NATALIE ARMSTRONG Applicant AND: MAYNE NICKLESS LTD (ACN 004 073 410) trading as ONLINE DISTRIBUTION SERVICES Respondent CORAM: LINKENBAGH JR PLACE: BRISBANE DATE: 10 MAY 1996 REASONS FOR JUDGMENT This is an application pursuant to the provisions of Section 170EA of the Industrial Relations Act 1988 in which the applicant seeks a remedy in respect of the termination of her employment by the respondent on 8 December 1995. I find the facts as follows: · The applicant commenced employment with the respondent on 7 December 1992 in a clerical capacity. By 8 December 1995 the applicant was employed at a site known as shed 4, Hendra, in Brisbane. Her job was described as "Administration Assistant" at the Clerk Grade 5 level and a wage of $521.58 per week. The applicant underwent substantial training during 1995 and moved up in salary from Grade 3 to Grade 5. · The applicant's duties were to provide administrative support to the Administration Supervisor and there was no issue regarding her conduct or performance. · Shed 4 is a small part of Online Distribution section of then Mayne Nickless Ltd business operations. · Sheds function overall as autonomous profit centres, each set up to serve the distribution requirements of particular customers. · The staff at each shed consists of warehouse and administrative personnel. · The respondent expects that each shed will operate efficiently, each shed has a separate budget and the financial viability of each shed is assessed independently of the other sheds. · In about September of 1995 the respondent became concerned about the financial performance of Shed 4 and set about identifying the factors causing that performance to decline. · The respondent decided that the number of employees at the shed exceeded its needs. · The respondent restructured the administrative positions at shed 4 and then identified those staff best suited to each position in the new structure. · The changes were effective from 8 December 1995. · The respondent determined that three positions would no longer exist, they being those of Administrative Assistant, a person on the front desk and the pallet officer. · The occupant of the former Pallet Officer position had previously worked in the warehouse and he was offered an alternative position there, which was made available because it was performed by casual labour prior to 8 December 1995. · The employment of the occupant of the former front desk position, Ms Elbourne, was terminated on 8 December 1995 on the basis that she was a casual employee who had been engaged only a few weeks before 8 December 1995. On 8 December 1995 the respondent realised that Ms Elbourne was actually a full time employee and revoked the decision to terminate her services, relocating her to the warehouse, to a position which had been filled to that date by a casual employee. · The employment of the applicant was terminated on 8 December 1995, there being no position identified by the respondent for which she was qualified in its Queensland operations. · The respondent planned the re-structure of the of the positions and the selection of personnel without any consultation with the relevant Union or staff likely to be affected, although extensive internal discussions were held and consideration was given to redeployment within the respondent's operations in Queensland. · The general trend within the respondent's business activities as at 8 December 1995 was of 'downsizing' and 'non-recruitment'. · The decision was communicated to the applicant at about 9.00am on 8 December 1995. She was asked to come to a private office and met with the Distribution Centre Manager and the National Operations Manager and was handed a letter informing her of the respondents decision. · The applicant was paid 3 weeks pay in lieu of notice and 9 weeks pay as a redundancy payment. · The applicant was surprised and shocked by the news of her redundancy and was escorted to her car. · The separation certificate provided to the applicant shows "shortage of work" as the reason for termination. · There was a position vacant for an Administrative Assistant at the respondent's premises at Coopers Plains as at 8 December 1995. It was advertised internally on 1 December 1995 with applications closing on 11 December 1995. The applicant did not apply for the position and it was not offered to her. · The respondent determined before 8 December 1995 that she would not have been suitable for it as the respondent's policy was to upgrade the qualifications for such positions to include some tertiary accounting training, which the applicant did not have. · Since 8 December 1995 there have been further changes in the structure of the respondent's business, including abolition of the position of Administration Assistant at the Coopers Plains premises. · The applicant filed this application on 15 December 1995. The applicant conceded at the hearing that the respondent had cause to be concerned as to the economic aspects of the business at Shed 4 in late 1995, and that some action was necessary. Her substantial argument was that the respondent was in breach of Section 170DE(2) of the Act in that, if there was a valid reason for the termination of her employment, it was nevertheless harsh unjust or unreasonable. I find on the evidence before me that there was a valid reason based on the operational requirements of the respondent's business for the restructuring which took effect on 8 December 1995. The evidence shows that once the efficiency short comings of Shed 4 were identified, management senior to the management of Shed 4 took responsible steps to remedy those short comings, in the interests of the respondent's business operations. The manner in which the company put its decisions into effect was, however, flawed. The employer must balance its entitlement to conduct its business as it thinks best, against its obligations under the Act, and as the Full Court of this Court confirmed in Kenefick & Ors -v- Australian Submarine Corporation Pty Ltd (26/3/96, Unreported, Judgment No 103/96), the respondent "should justify" its decisions. The obligation to consult with the employee concerned was confirmed by Justice Beazley in Quality Bakers of Australia Limited -v- Goulding (1995) 60 IR 327. Each case turns on its own facts and the requisite level of consultation will be determined by the particular circumstances. In this case there was no consultation at all, with either the applicant or her Union, as to the re-structuring process, the selection of the applicant for redundancy, or the possibility of redeployment within the respondent's operations in Queensland. The respondent unilaterally decided that it had no further need for the applicant because she was unsuitable for, or would not want, the vacant position at Coopers Plains. It is likely, on the evidence, that consultation with her would not have led to a different result, but it would certainly have afforded her a degree of fairness which is required by Section 170DE(2), and would have reduced the impact of the final decision on her. I find that the respondent is in breach of Section 170DE(2) and therefore turn to the question of remedy. The 15 January 1996 amendments to Section 170EE, which qualify the availability of a remedy in the terms "if the Court considers it appropriate in all the circumstances of the case", apply. But for those amendments I would have been obliged to follow the decision in the Quality Bakers Cases. This is a case in which there are circumstances which render the availability of a remedy inappropriate. There was a valid reason for the redundancy. The error into which the respondent fell was as to procedure, and the evidence indicates that it is likely that the termination would have taken effect in any event. The only realistic redeployment options, on the evidence before me, were the job at Coopers Plains and the warehouse job to which Ms Elbourne was transferred. The applicant was not given the opportunity to apply for either job, but she did not have the desired accounting qualifications for the former and it has since been abolished Ms Elbourne had some prior experience in a warehouse, whilst the applicants training and work history was in the clerical field, and I find it is likely that if there had been a comparative selection process in relation to a warehouse job, the applicant would not have been the successful candidate. I also note the applicant's evidence that she would have seen that job as a short term proposition if she had been transferred to it. Whilst the Court will not condone the making of generous redundancy payments by an employer as a means of "buying" an employer's way out of breaches of the Act, such payments are one of the "circumstances of the case" which must be taken into account since the 15 January 1996 amendments to the Act. In this case, the applicant received 3 weeks pay for each year of service, and there is no suggestion in the evidence that the respondent acted from any improper motive in making the payment. I am satisfied that in all the circumstances of this case no remedy under Section 170EE is appropriate, and I make the following Orders and Declarations: I ORDER THAT the identity of the Respondent be changed by consent to Mayne Nickless Ltd (ACN 004 073 410) trading as Online Distribution Services. I DECLARE THAT: 1. The respondent is in breach of the provisions of Section 170DE(2) of the Industrial Relations Act, 1988. 2. Pursuant to the provisions of Section 170EE (1) and (2) it is not appropriate to make any order for reinstatement of the applicant or payment of compensation. I certify that this and the preceding seven (7) pages are a true copy of the reasons for judgment of Judicial registrar Linkenbagh. Associate: Renee Cauchi Date: 17 May 1996 Appearances: Representative of the Applicant: Mr John Wilson Australian Municipal Administrative Clerical and Services Union. Counsel for the Respondent: Mr A Honeman-Wren Solicitors for the Respondent: Freehill Holingdale & Page.