Tag: case law

A Cruickshank v Priceline Pty Ltd [2007] AIRCFB 513

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.

M Sperac v Global Television Services Pty Ltd (U2007/2991)

Background

From 2005, Ms Sperac (the Plaintiff) was an employee at Global Television Services (the Defendant) as an account manager, reporting to
the General Manager Victoria. In November 2005, Global decided to review its branch structure to improve the company’s economic performance. Mr Strouthos, (Chief Financial Officer, Company Secretary and Chief Operating Officer of Global) gave evidence that under the restructure, various branches and positions had been abolished. The Plaintiff’s position was made redundant, her client liaison duties were incorporated into a more senior sales management role and a more technically focused role of Project Services Manager was created in both Sydney and Melbourne. He also stated that the Defendant was constantly restructuring, as a business.

The Plaintiff argued that the redundancy story was a sham and her work and competence together with her commitments, put her into a position which was not redundant. She believed she was dismissed because she was ‘generally agitating for her rights.’ Hence there was no genuine operational reason for making her redundant. There was also evidence indicating that she may have been promised the new
project services supervisor role.

Case

The Court also examined Carter v Village Cinema’s Australia Pty Ltd in this case, in order to determine the jurisdictional test in this matter. The Commission found the submission that the Plaintiff was not redundant because there was a position to which she was promised is not relevant in a jurisdictional consideration. They would not take into consideration that she had been promised a new role. The only consideration was whether the change was for a genuine operational reason. It held that the treatment of the Plaintiff is not relevant and the organizational change is not a sham simply because she could have been treated better.

The Commissioner was satisfied that the changes made were genuine and not a sham. The restructuring was to improve the company’s economic performance and to streamline its operational functions.

Decision: Because the Commission was satisfied that the restructure was intended to address economic and operational issues it dismissed the Plaintiff’s claim.

Mr Brent Acworth v Boeing Australia Limited

Background

Mr Acworth (the Plaintiff) was employed at Boeing Australia Limited (the Defendant) as a software engineer from May 2004. His employment was terminated in February 2007 by way of Boeing’s acceptance of his resignation. The Defendant claimed that it terminated the Plaintiff’s employment because of genuine operational reasons. They maintained that the Plaintiff had refused a new role/assignment as was proposed and his current role was concluding due to the structure of the business.

There was no other work that he could perform for the Defendant. The Plaintiff held a Bachelor of Engineering (with Honours) in Software Design. He was originally employed as a Process Improvement
Engineer. The parties had a common law contract which stipulated that the company could vary duties or reassign the Plaintiff to an alternative role, as long as it was commensurate with his skill, knowledge and was comparable in nature with his previous roles.

It also stated that this may require the Plaintiff to work in other department/team/project/business unit or at another location to meet the demands of the business. His role in the project he was previously working on was finishing and he would be reassigned to another ‘comparable’ position within the business. He refused to accept the ‘comparable’ role he was offered. He was consulted between September 2006 and January 2007 about the prospective alternative position. He had also rejected two assignments offered to him from project managers.

The Defendant felt that they were best placed to evaluate whether the new position was effective and whether the Plaintiff met the essential criteria required for reassignment. They claimed the position was comparable employment because they had confirmed the Plaintiff’s competencies, in his previous experience with Boeing. The Plaintiff felt he was not sufficiently qualified for the role.

He also held that the position was located in Canberra, not in Brisbane where he was currently based. The Defendant then put forward that the Plaintiff had been assigned duties and roles in the past for which he did not hold the full requirements and had nonetheless completed the assignment.

Case

The Plaintiff made an application under s 643 (1) of the Workplace Relations Act 1996 (Cth) for relief for termination of his employment with Boeing Australia Limited. The full bench in Carter v Village Cinemas Pty Ltd v Carter was cited, which states that the operational reason relied upon by the employer need only be a ground or cause for the termination of employment. It need not be something that demands or brings about an obligation to terminate the employment of a particular employee.

Additionally the termination of employment does not have to be an unavoidable consequence of the operational reason for s 643(8) to apply. Therefore whether the employer could have done something other
than terminating the employee’s employment will generally be irrelevant.

The Commissioner determined from this case that a general operational reason did not have to be the only motivation for the dismissal, but it did have to be a ‘discrete’ reason. In the present case, the Defendant and Plaintiff fell into a dispute about whether the reassignment as offered, constituted comparable employment. The Plaintiff felt it was not.

Whether this constitutes genuine operational reasons so as to attract the exclusion at s 643 (8) of the act is the primary question to be determined. In Village Cinemas, the closing of the cinema complex and there no longer being a position of manager led to the termination of the Plaintiff’s employment. Hence it was the operational reason for the termination of employment.

The Defendant stated that the reason for the Plaintiff’s termination of employment was merely the inevitable consequence of his current project work coming to natural conclusion. They claimed that the cessation of the current project and the refusal to accept the reassignment was taken to be distinguishable circumstances consistent with s 643 (9).

The Commissioner stated that the unavailability of work only arises as an allegedly ‘genuine operational reason’ because the Plaintiff refused to accept the reassignment. The court found that, the reason for termination of the Plaintiff’s employment was his refusal to carry out a reasonable and lawful direction, which was consistent with the terms of his contract of employment. These terms were given by the
Defendant for the specific purpose of a further assignment of duties, and not the operational requirements of the business as such.

The contract of employment stated that the Defendant reserved the right to direct the Plaintiff to perform other duties as required by ‘variation’ or ‘reassignment’ and on terms consistent with their ‘qualifications, capabilities and experience.’ The Court decided that the Plaintiff was employed under a common law contract which contained no dispute resolution machinery and no readily accessible avenue by which a matter of difference ought to be resolved.

The Plaintiff did not believe that his offer of reassignment was comparable employment. On the evidence, the court did not hold this to be correct in terms of the location of the position and the programs that the position required the Plaintiff to use. The Defendant believed that while on paper, in the formal Position Description he may not have met all of the ‘essential criteria for the Reassignment Position, based on his previous experience and aptitude in performing different roles at Boeing, an assessment was made that he would be able to fulfil the requirements of the role.’

The court therefore held that because the reason for the termination of employment was the Plaintiff’s refusal to accept reassignment, it was not a genuine operational reason.

Decision: The Commission found for the Plaintiff.