Sandra Farrell and Hans Continental Smallgoods Pty Ltd [2005] NSWIRComm 1102

Industrial Relations Commission of New South Wales

CITATION: Sandra Farrell and Hans Continental Smallgoods Pty Ltd [2005] NSWIRComm 1102

APPLICANT Sandra Farrell PARTIES: RESPONDENT Hans Continental Smallgoods Pty Ltd

FILE NUMBER(S): IRC5628 of 2004

CORAM: McKenna C

CATCHWORDS: Unfair dismissal - Restructruring - Bona fide redundancy also an unfair dismissal - Compensation ordered

Industrial Relations Act 1991 LEGISLATION CITED: Industrial Relations Act 1996

CASES CITED: Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HAC 10

HEARING DATES: 03/07/2005; 03/08/2005; 05/17/2005

DATE OF JUDGMENT: 06/23/2005

APPLICANT LEGAL REPRESENTATIVES: Mr J Law, agent

RESPONDENT Mr M Rogers, agent

DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

CORAM: MCKENNA C

23 June 2005

Matter No IRC 5628 of 2004

Sandra Farrell and Hans Continental Smallgooods Pty Ltd

Application by Sandra Farrell re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996

DECISION

[2005] NSWIRComm 1102 1 This is an application made pursuant to s84 of the Industrial Relations Act 1996 ("the Act") in which Sandra Farrell alleged her termination of employment with Hans Continental Smallgoods Pty Ltd amounted to a harsh, unreasonable and unjust dismissal.

Employment history 2 Mrs Farrell worked at the same office in Blacktown for 15 years for a number of different companies, most recently for Hans as its Senior Accounts Payable Clerk. In May 1990, Mrs Farrell began casual employment with Chisolm Manufacturing; she became a permanent part-time employee in 1993. Between March-August 1994, Mrs Farrell took what she thought was maternity leave. Mrs Farrell was informed (erroneously or unlawfully, it would appear) upon her return to work that her employment had been terminated and, as a result, her continuity for long service leave entitlements had been lost. Mrs Farrell continued to work for Chisolm until November 2000, when it was purchased by OSI International Foods. In March 2002, Mrs Farrell resigned from union membership and her position as union delegate when she was appointed to a salaried position with OSI. In 1993, OSI sold its operations to Hans. As part of the arrangements in connection with the transmission of business, Hans made an offer of employment to Mrs Farrell in a letter dated 25 November 2003. Mrs Farrell accepted that offer and began working for Hans in December 2003 under the terms agreed in the letter. 3 Mrs Farrell was employed in Hans's Bankstown office as Senior Accounts Payable Clerk. Mrs Farrell's employment with the company continued without incident until August 2004, whereupon it emerged the company had restructured its operations with the result that the work Mrs Farrell performed was to be performed from another of Hans's offices in Colmslie, Queensland. 4 Mrs Farrell's Blacktown-based position of Senior Accounts Payable Clerk disappeared in the restructure and Mrs Farrell was not offered the opportunity to relocate to Queensland along with the emigration of Hans's accounting functions from NSW to Queensland. Although the evidence was unclear on this point, it does not appear Mrs Farrell's position itself was moved to Queensland. That is, there was no evidence to indicate a position with a designated title of Senior Accounts Payable Clerk became part of the staff establishment in the Queensland office. Rather, it appears the work was under rearrangement as part of an integrating of accounting functions and, as a result, the work Mrs Farrell and other employees performed was centralised to the Queensland office as part of the restructure. One senior manager explained that under the changes an "Accounts Payable supervisor and an Accounts Payable clerical position were required for the Queensland office". There was no evidence anyone now holds a position with a designated title of Senior Accounts Payable Clerk, but new staff were appointed to accounts positions with other titles. 5 Mrs Farrell's case contended that Hans's mishandling of the redundancy gave it the additional characteristics of an unfair dismissal. In short, Mrs Farrell's case contended the company's handling of the matter was so poor that the circumstances amounted to an unfair dismissal as well as a redundancy. On the other hand, Hans's case contended the matter was dealt with in a timely and industrially appropriate way, and in a way designed to attempt to mitigate adverse effects on Mrs Farrell. In particular, Mr M Rodgers, Hans's agent, submitted the company did not dismiss Mrs Farrell; rather, it endeavoured to facilitate ongoing employment by offering an alternative position of Purchasing Officer. (The alternative position and the question of severance payments are considered more fully in a separate decision delivered today in IRC2005/5706). He further submitted the termination of employment was at the initiative of Mrs Farrell in that her refusal to accept the alternative position was akin to refusing a transfer. On one view, he submitted, there was no redundancy of Mrs Farrell's job within the company's business as it was simply transferred to Queensland. Although Hans gave notice of termination by redundancy in its letter of 31 August 2004, Mr Rodgers submitted that, properly characterised, the letter was a response to the real cause for the termination of employment, namely, Mrs Farrell's refusal to accept another position that was on offer. In the alternative, Mr Rodgers submitted that as Mrs Farrell refused an offer of suitable, alternative employment, the dismissal was not unfair. As a further alternative, Mr Rodgers submitted the termination of employment was not an unfair dismissal because it was a redundancy. 6 The evidence disclosed the following. As early as November or December 2003, restructuring was being discussed at a managerial level. For instance, the evidence of Nicholas Roach, Plant Manager, indicated "road shows" had been held where potential change was discussed between senior managers. Venthan Rasanyakam, who was both the Plant Accountant and Mrs Farrell's line manager, was informed at a meeting in late-November 2003 the business would be restructuring. The evidence of Jurie Fourie, General Manager - Human Resources, also confirmed there was discussion around that time of sections being moved to Queensland. Han's Human Resources Manager at Blacktown is Gary Schweizer. Mr Schweizer knew "very soon after the takeover" the accounting systems would need to be integrated; he understood that discussions were being held about how consolidation would work. Mr Schweizer did not hold any discussions about those changes, explaining "to concern people about their future at that stage would be reckless from an employer's point of view". 7 By May 2004, the company's plans to restructure were well advanced. In this respect, the evidence of Mr Rasanyakam indicated that, around late-May 2004, he was aware the company would be establishing a "shared service site" in Queensland. Mr Rasanyakam was by that time aware the company intended to consolidate all its accounts payable functions in Queensland. Under cross-examination, Mr Rasanyakam conceded that although he did not know the date the change would be implemented, he was told the restructure was going to happen. Despite being aware the decision had been made, Mr Rasanyakam did not communicate any information about the restructure to Mrs Farrell. In a vein similar to Mr Schweizer's concerns about not recklessly concerning employees with advice about changes, Mr Rasanyakam felt he should not "trouble" or "worry" employees with information about the restructure when he did not know the specific date for the implementation of the changes and because matters might linger. In any event, Mr Rasanyakam did not consider it was his role to advise Mrs Farrell about such matters. In this respect, Mr Rasanyakam explained his view that discussions about redundancy-related matters appropriately should be dealt with through Hans's human resources process rather than by him directly. Despite his human resources role, Mr Schweizer did not discuss the restructure with Mrs Farrell either. Mr Schweizer's view was that a definite decision had not been made and, thus, discussions would be premature. 8 Mrs Farrell first became that change was afoot when she received an email on 12 August 2004. The email was titled "New appointments & Changes in Accounts Payable/Accounts Receivable". Bronwyn Wood, Management Accountant, used the email to announce the appointment of an Accounts Payable Supervisor and an Accounts Payable/Accounts Receivable Clerk in Queensland. The email also advised that a third person was relocating permanently to the Accounts Payable section of the Colmslie site. Mrs Farrell was concerned about the advice in the email because of her role within accounts. Even after the announcement of the new appointments, no one within Hans's management saw fit to hold discussions with Mrs Farrell. Instead, Mrs Farrell initiated some inquiries of her own to try to ascertain what was happening. Mrs Farrell sent an email to Ms Wood seeking information about how the new appointments would affect the existing accounts staff and whether the existing staff would still have jobs. Mrs Farrell also opined to Ms Wood that it would have been more "tactful" to advise employees working in accounts of the changes before the email was sent. Ms Wood forwarded a reply to Mrs Farrell asserting the new staff had been recruited to assist with the volume of work. As Mrs Farrell noted in a further email, Ms Wood's email did not respond to the specific queries she had raised. 9 A further week passed after the announcement of the new appointments without any discussions or advice being provided to Mrs Farrell, even though she had copied the emails to several managers and had asked for further advice. Then, on 20 August 2004, Mrs Farrell was called on short notice to a meeting with Mr Schweizer and Mr Rasanyakam to discuss a "sensitive" matter. At the meeting, Mrs Farrell was relevantly advised of the following three matters: (1) Mrs Farrell's position of Senior Accounts Payable Clerk had been made redundant as the position had been filled in Queensland; (2) Hans had an alternative position for Mrs Farrell, namely that of Purchasing Officer; and (3) if Mrs Farrell did not accept the alternative position of Purchasing Officer, Hans would not pay Mrs Farrell any redundancy payment. 10 Mr Schweizer told Mrs Farrell to go home and discuss the position over the weekend with "hubby", which the applicant's agent, Mr J Law, characterised as an unprofessional put-down for an employee of 15 years' standing. On 23-25 August 2004, Mrs Farrell was absent from work on sick leave. During that stress-related absence on sick leave, Mrs Farrell was contacted twice about the alternative position - even though the company had not provided Mrs Farrell with the job description she had requested for the alternative position. 11 On her return to work on 26 August 2004, Mrs Farrell was provided with a job description. At a meeting that day and in subsequent meetings on 27 and 30 August 2004, Mr Schweizer reiterated his advice that if Mrs Farrell did not accept the alternative position she would not receive a redundancy payment. Mr Schweizer also clearly indicated to Mrs Farrell that if she did not accept the alternative position, she would, in his opinion, be resigning of her own accord. Mr Schweizer and Mr Rasanyakam likened Mrs Farrell's disinclination to accept the new job as refusing a transfer. On 31 August 2004, Mrs Farrell informed Mr Schweizer and Mr Rasanyakam she did not want to accept the alternative position. She had obtained professional advice about the matter in reaching that decision. Mr Schweizer signed a letter dated 31 August 2004, which was given to Mrs Farrell on 1 September 2004, giving notice of termination of employment to Mrs Farrell. The letter read as follows: Dear Sandra,