Background
Mr Cruickshank (the Plaintiff), commenced employment with Priceline (the Defendant) on 28 April 2003 as a full time ‘Space Planner.’ In October 2004, he commenced the position of ‘Space Planner – Health Division,’ the Defendant being acquired by Australian Pharmaceutical Industries Limited. In August 2006, the Plaintiff was made redundant from this position. Less than a month later, he found his job advertised in the newspaper, performing largely the same duties but for less money. His total remuneration package was $101 150, he saw the job advertised for $75 000.
Case at first instance
The Defendant held that there were genuine operational reasons or reasons that included genuine operational reasons, for the termination of employment of the Plaintiff. They cited records of the financial year 2005/2006 where it appeared that they had significant financial discrepancies in their accounts. As a result of this it requested that the Australian Stock Exchange halt trading its shares. Share trading
was suspended voluntarily on 12 July 2006.
After the appointment of a new CEO in August 2006, it was announced there had been a $17.2 million financial discrepancy, taken as a loss of profit.
Share trading recommenced on 22 August 2006 and in October an immediate review of the Defendant’s structure and operations began.
There was to be a reduction in total employment costs, resulting in 32 positions being made redundant.
In the Plaintiff’s case, four space planners were reduced to two. The Plaintiff was earning more than the other space planners, hence, he was made redundant.
The Plaintiff argued that the situation was a sham, as he was replaced in exactly the same duties, for less pay. He believed that the situation was not primarily due to financial difficulties. He also stated that to accept the Defendant’s argument would be tantamount to accepting that any employer may replace an employee for operational reasons purely on the basis of reducing costs (providing it has a requirement to reduce costs).
Decision
Commissioner Eames of the Australian Industrial Relations Commission, heard the case at first instance.
Once again Carter v Village Cinema’s Australia Pty Ltd was cited. It was also noted that there have been previous decisions of the Commission such as Organ v Climate Technologies P/L and Prociv & ors v Bilfinger Berger Services (Australia) P/L. These cases have held that in cases of financial difficulties which deem it necessary to perform actions such as closing a factory line or business, terminations of
employment are logical responses to operational issues and constitute genuine operational reasons for termination.
The Commissioner was satisfied that the Plaintiff’s termination resulted from the Defendant’s financial difficulties and restructuring. He was not satisfied that there was any evidence to substantiate a ‘sham’ arrangement or inappropriate targeting of the Plaintiff.
They found that on the evidence, it seemed clear that had the Defendant’s financial situation been better the termination would most likely not have occurred. Hence the commissioner found for the Defendant in determining that the termination of employment occurred due to operational reasons.
Appeal
The Plaintiff then appealed the decision to a full bench of the Industrial Relations Commission.
The first ground, that the original decision was wrong, was dismissed. The question in this case was whether the Commission was ‘satisfied’ that the operational reasons were genuine. The bench stated that
unless the Respondent produces evidence of the reasons and persuades the Commission that they are genuine operational reasons, the jurisdictional objection on part of the Respondent will fail. They took the view that genuine must be defined as it was in Village Cinemas.
They also held that once the exclusion operates, this halts the examination as to whether the termination was harsh, unjust or unreasonable. The bench claimed that it was not clear whether Commissioner Eames correctly applied the test as set out in Village Cinemas, in regards to the operational reasons being genuine. They stated that this is to be ascertained by an examination of the reasons of the termination of
employment rather than by identifying a generalised operational requirement to reduce staff.
The court then examined General Motors – Holden’s Pty Ltd v Bowling, a High Court case. After examining this case, the bench decided that to ascertain the reasons for the decision to terminate an employee’s employment, it is necessary to focus on the reasons, if any, advanced by the decision maker. The court acknowledged that it would be unavoidable that the credibility of evidence given by the decision
maker may be an issue in some cases.
Where this occurs the Commission will be required to evaluate both the evidence of the decision
maker against the other evidence and the circumstances overall in the usual way. The bench also held that because Commissioner Eames did not indicate how important evidentiary conflicts were resolved or how he applied the statutory test, the reasons for the decision fell short of what is required.
Decision
The original decision was quashed and the appeal was upheld. The matter was to be reheard in Australian Industrial Relations Commissionagain, not to be heard by Commissioner Eames.