Rawady v Davenport Industries Pty Ltd [1996] IRCA 521

DECISION NO:521/96 CATCHWORDS

INDUSTRIAL LAW - UNLAWFUL TERMINATION - VALID REASON - OPERATIONAL REQUIREMENTS - REDUNDANCY. Industrial Relations Act 1988 (Cth) s170EA.

RAWADY v DAVENPORT INDUSTRIES PTY LTD VI96/1112

Before: MURPHY JR Place: MELBOURNE Date of Hearing: 25 OCTOBER 1996 Date of Judgment: 25 OCTOBER 1996 IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY

VI96/1112

BETWEEN:

PAUL ALEXANDER RAWADY Applicant

AND

DAVENPORT INDUSTRIES PTY LTD Respondent

BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 25 OCTOBER 1996 MINUTES OF ORDERS THE COURT ORDERS THAT: 1. The application is dismissed. Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY

VI96/1112

BETWEEN:

PAUL ALEXANDER RAWADY Applicant

AND

DAVENPORT INDUSTRIES PTY LTD Respondent

BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 25 OCTOBER 1996 REASONS FOR DECISION Delivered ex tempore - revised from the transcript The applicant's employment was terminated on 14 December 1995. He seeks a remedy under s170EA of the Industrial Relations Act 1988 ("the Act"). He alleges that the respondent did not have a valid reason to terminate his employment. The respondent is in the clothing industry. In the approach to the 1995 Christmas season it suffered a significant downturn in sales. In the period leading up to Christmas management was looking at ways of saving money. In October and November the question of compulsory redundancies to achieve cost-savings was considered. Mr Vogel, who was then the General Manager of Operations of the respondent, considered different management structure configurations to achieve staff savings. He formed the view that saving could be achieved by the elimination of a number of positions. He sought advice from his employer association as to the appropriate process. The applicant is aged 32 and was employed as second in command in the warehouse. Mr Green was Warehouse Manager. Mr Green reported to Mr Vogel. Underneath the applicant were a number of team leaders. The respondent also employed a number of permanent full time staff in the warehouse and engaged casuals for peak periods. Mr Vogel considered the option of eliminating the applicant's position and moving to a flatter management structure in the warehouse. This would involve Mr Vogel accepting extra duties, as well as Mr Green and another supervisor, Ms White. Also, team leaders were expected to take more responsibility. In November or early December Mr Vogel obtained approval from Mr Davenport, the Managing Director of the respondent, to proceed to discuss redundancies. On 11 December he consulted the applicant and advised him that his position was being considered for redundancy. Mr Green was present at the meeting. Mr Green was asked around that time about how the warehouse would operate without the applicant. After this meeting on 11 December, Mr Green fought to retain the applicant on the staff of the respondent. He mentioned that he personally was going on leave in January and that there was to be a move to other premises in March. The applicant made an extensive submission to Mr Vogel detailing his achievements with the respondent and, in a sense, bidding for his position. There was a brief discussion between the applicant and Mr Vogel about the submission on 13 December and Mr Vogel undertook to consider it. The representations made on behalf of the applicant, and by himself, were to no avail and on Thursday, 14 December, the applicant was told he was redundant and paid his award entitlements. Has the respondent discharged its onus of proof? The authorities make it clear that the court will not sit in the managerial chair. The decision to terminate an employee's employment on the grounds of operational requirements must be a logical response to the employee's operational requirements. It was suggested that the decision was capricious because at December it was clear that there was adequate work for the applicant until March. Mr Green was not told that the applicant was being considered for redundancy until the decision to make him redundant had been made. Further, Mr Davenport did not give evidence to the Court. Mr Isles, counsel for the applicant, also noted that there was no give and take in the consultation process in the period from 11 December in that it had no effect in changing the mind of the respondent in relation to the applicant or any of the other employees. I am satisfied that the respondent has discharged its onus of proof in this proceeding. There was clear evidence from Mr Vogel as to the operational pressures on the respondent to reduce costs. He went through a considered process that led to the decision to adopt a new structure. The new structure might have been one of a number of options available to the respondent but that is a matter for the respondent. The respondent consulted with the applicant. It did not accept his representations. That decision was not capricious. The option of making everyone work harder was a reasonable one and was open to the respondent. The applicant has a high opinion of his contribution to the respondent. This was not disputed by it. The requirements of the Act are that he not lose his livelihood as a result of a capricious act. Here, regrettably, the respondent saw its operational requirements as involving a structure that did not have a place for the applicant. It consulted him about that matter but maintained its earlier tentative conclusion. I am satisfied that the respondent had reasonable grounds for reaching the conclusion it did. It follows that it had a defensible reason for its decision. The applicant has not made out any breach of the Act and the application therefore must be dismissed. I certify that this and the preceding three (3) pages are a true copy of the reasons for decision of Judicial Registrar Murphy as recorded in the transcript and revised by the Judicial Registrar.