DECISION NO:136/97 CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - UNLAWFUL TERMINATION - VALID REASON - OPERATIONAL REQUIREMENTS - REDUNDANCY - whether selected on the basis of CONDUCT AND PERFORMANCE - OPPORTUNITY TO RESPOND. Workplace Relations Act 1996 (Cwth) ss170DC, 170DE, 170EA. Westen v Union Des Assurances De Paris (unreported, Industrial Relations Court of Australia, Madgwick J, 17 December 1996); Thomas v Ralph Lynch t/as Bellingen Grocery(unreported, Industrial Relations Court of Australia, Wilcox CJ, 20 December 1996); Kenefick v Australian Submarine Corporation Pty Ltd (No. 2) (1996) 65 IR 366. LENOWRY v J J RICHARDS & SONS PTY LTD VI96/2528 Before: MURPHY JR Place: MELBOURNE Date: 15 APRIL 1997 IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI96/2528 BETWEEN: REG LENOWRY Applicant AND J J RICHARDS & SONS PTY LTD. Respondent BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 15 APRIL 1997 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 VI96/2528 BETWEEN: REG LENOWRY Applicant AND J J RICHARDS & SONS PTY LTD Respondent BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 15 APRIL 1997 REASONS FOR DECISION Delivered ex tempore The central issue in this proceeding for a remedy under s170EA of the Workplace Relations Act 1996 (Cwth) was whether the respondent had a valid reason to terminate the applicant's employment. The respondent's case was straightforward. It purchased three business refuse runs in late 1995 and early 1996. The applicant drove a truck on one of those runs. The respondent purchase an additional run in May 1996. The respondent has various productivity indicia that apply to its operations. In late August 1996 it formed the view that it was achieving insufficient profitability from the carts section of its business. It decided to amalgamate seven runs into six by redistributing the applicant's run primarily to another run that was handled by a Mr McDonald. It was further decided to redistribute other parts of the applicant's run to other trucks that operated out of the Dandenong depot. The evidence of Mr Gray was that the choice to eliminate the applicant's run was on the basis that the La Trobe University campus, a central part of the applicant's run, was a discrete area that Mr McDonald had some familiarity with. Further, Mr McDonald's truck already operated from a depot at Coolaroo, and the arrangement of sending the applicant's truck from Dandenong to Bundoora each day was inefficient. Before the decision to reallocate the applicant's run was taken the question of terminating Mr O'Brien, who conducted another run, was considered. This was rejected on the basis that the applicant's run involved a large chunk of work at La Trobe that Mr McDonald had some knowledge of. To switch the applicant to run No. 99, Mr O'Brien's run, would require a fair amount of training as it was a different type of run, being a large number of small pick-ups. Mr Gray gave evidence that the respondent made the decision to choose the run rather than the person. He said the respondent compared the work records of the applicant and Mr O'Brien, and because they were similar, he was "...not able to make a decision on that basis." At the time of the decision the respondent had ten employees undertaking a new contract that was to commence with the Dandenong Council in October. Mr Gray did not consider offering the applicant a position there because the respondent already had that crew being trained. On 2 September the applicant was called in and advised that his run was to be reallocated and that his position was redundant. He was to finish on 13 September. Mr Gray advised the applicant that he would look around for other positions for him within the respondent during the notice period. The applicant advised Mr Gray that if he obtained other employment during the period he would need to leave immediately. A couple of days later the applicant advised Mr Gray that he thought he had obtained another position and sought to leave on Friday 6 September. On that day the applicant was paid two weeks' pay in lieu of notice and two weeks' redundancy pay. The two payments were at his ordinary rate of pay and thus were about half his weekly rate of pay. Has the respondent discharged its onus of proof? I was referred to a number of decisions on the application of the term "valid reason" in s170DE(1) of the Act. Authorities such as Westen v Union Des Assurances De Paris (unreported, Industrial Relations Court of Australia, Madgwick J, 17 December 1996) and Thomas v Ralph Lynch t/as Bellingen Grocery(unreported, Industrial Relations Court of Australia, Wilcox CJ, 20 December 1996) indicate that the court is to scrutinise whether the decision to terminate is objectively justified on the material before the court. In that sense the court is scrutinising the managerial and business decision making of the respondent. Here I accept the evidence of Mr Gray that the respondent believed that the elimination of one run would improve its productivity. The fact that the increase in productivity has been only marginal does not deprive the employer's decision of its validity. It was the second stage of the decision that was under attack by counsel for the applicant. She submitted that the decision to terminate the applicant's employment had been made on performance grounds and thus infringed s170DC of the Act and the principles in Kenefick v Australian Submarine Corporation Pty Ltd (No. 2) (1996) 65 IR 366. The basis of this submission was the evidence of Mr Gray that the respondent rejected the idea of eliminating Mr O'Brien's run because it would require additional training for another person to pick up that run. She submitted that it was thus a conclusion that the applicant was less suitable to be retrained that underlay the decision to terminate his employment. This submission does not sit easily with other evidence of Mr Gray that the decision was not made on the basis of a comparison of performance, but was made on the basis of which run was easiest to reallocate. This leads to a further consideration as to how to characterise what happened here. Counsel for the applicant submitted that this was a situation where the applicant was selected from a pool of seven potentially redundant employees. On one view of the case that was open, but on a proper analysis the applicant was the only redundant cart driver. He was the only one because the decision, I am satisfied, was taken on the basis of eliminating one run and not on the basis of a wholesale reallocation of all runs. It is true that there was a reallocation of the applicant's run, but the decision to eliminate the applicant's run was taken first because it emanated from Dandenong; and secondly, it contained a single substantial chunk of work, namely, La Trobe University. It follows from this that the principles of selection from a pool of potentially redundant employees do not apply here. This was a case of one employee being surplus as a result of a reorganisation that was open to the respondent as a measure to increase its productivity. In that sense the employer has discharged its onus of proof that it had a valid reason based on its operational requirements. The next issue is whether the employer has acted in a way that, in all the circumstances, allows the termination of the applicant to be characterised as justifiable or defensible. Here I pay a particular attention to two matters: first, the offer by Mr Gray to allow the applicant to work out his notice period; and secondly, the offer, which I accept was genuine, to look for other jobs for the applicant within the respondent during that period. As a result of the applicant believing he had found another job he left on 6 September. I accept, however, at that time the offer by Mr Grant was still extant. The decisions in Thomas and Westen (above) are not directly applicable here. In Thomas the applicants were not given the opportunity to contribute to the reasons which underlay the termination. Here the respondent did not consult the applicant about the elimination of the run, but it did take measures to ameliorate the effect of the decision. In Westen there was no evidence of a search for an alternative position for a long serving employee made surplus as a result of a reorganisation. Here, I accept the evidence of Mr Grant that there was a search for an alternative position here. None was available at the time the applicant left during the period of his notice. Clearly every decision to terminate an employee for redundancy will have an impact on that employee. The issue, however, is whether the employer has discharged its onus of proof that the decision was valid or justified. Here I am satisfied that it has discharged its onus of proof and I must dismiss the application. I certify that this and the preceding four (4) pages are a true copy of the reasons for decision of Murphy JR as recorded on transcript and revised by the Judicial Registrar. Associate: KAREN HALSE Dated: 15 April 1997 APPEARANCES Counsel appearing for the applicant: MS RACHEL DOYLE Solicitors for the applicant: SLATER & GORDON Appearing for Respondent MR GRAEME HITCHELL, employee of the respondent. Date of Hearing: 15 APRIL 1997 Date of Judgment: 15 APRIL 1997