WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2019 WAIRC 00594

DELIVERED : Thursday, 1 August 2019

FILE NO. : M 180 OF 2018

CLAIMANT

AND

Builders Steel WA Pty Ltd

Respondent

CatchWords : INDUSTRIAL LAW – Alleged failure to pay redundancy pay – s 119 Fair Work Act 2009 (Cth) – Reason for termination of employment – Whether employer a ‘small business employer’ - Turns on own facts

Legislation : Fair Work Act 2009 (Cth)

Industrial Relations Act 1979 (WA)

Magistrates Court (Civil Proceedings) Act 2004 (WA)

Fair Work Regulations 2009 (Cth)

Case(s) referred to

in reasons : R v Industrial Commission of South Australia; ex parte Adelaide Milk Cooperative (No 2) [1977] 46 SAIR 1202

Hodgson v Amcor Ltd; Amcor Ltd v Barnes [2012] VSC 94

Mildren and Anor v Gabbusch [2014] SAIRC 15

Miller v Minister of Pensions [1947] 2 All ER 372

Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336

McShane v Image Bollards Pty Ltd [2011] FMCA 215

Sammut v AVM Holdings Pty Ltd [No2] [2012] WASC 27

Result : Claim dismissed

Representation:

Claimant : In person

Respondent : Mr Ron Martinovich (director)

REASONS FOR DECISION

1          Builders Steel WA Pty Ltd (the Company) employed Raul Aducal (Mr Aducal) as an estimator from 15 April 2015 to 7 August 2018 when his employment was terminated by the Company.

2          Mr Aducal originally claimed the Company failed to comply with the Fair Work Act 2009 (Cth) (FWA) when it failed to pay him three weeks payment in lieu of notice of termination (having only paid him one week) and failed to pay him a redundancy entitlement of seven weeks.

3          At the hearing Mr Aducal confirmed that the claim was limited to the Company’s failure to pay him redundancy entitlements pursuant to s 119 of the FWA.

4          Mr Aducal predicates the entitlement to redundancy on a conversation with Kim Spirkoski (Mr K Spirkoski), a director of the Company and Mr Aducal’s manager, on 7 August 2018 when he was informed that his employment was terminated due to a shortage of work, loss of clients and low volume.

5          The Company disputes the claim and says that Mr Aducal was terminated due to poor work performance and not because of redundancy or a reduction in staff numbers.

6          Schedule I of this decision sets out the law relevant to the jurisdiction, practice and procedure of this court in determining this case. Relevant to matters identified under the heading, ‘Jurisdiction’ in Schedule I of this decision, I am satisfied: the Company is a corporation to which paragraph 51(xx) of the Constitution applies and it is a ‘national system employer’; Mr Aducal was an individual who was employed by the Company and is a ‘national system employee’.

7          Accordingly, the National Employment Standards (NES) set out in Part 2-2 of the FWA apply to Mr Aducal and, if his claim is successful, s 119 of the FWA may entitle him to a redundancy payment.

8          A failure to pay redundancy pay is a contravention of the NES pursuant to s 44 of the FWA, which is also a civil remedy provision under s 539(1) of the FWA.

Section 119 of the FWA

9          An employee is entitled to redundancy pay if the employee’s employment is terminated at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone: FW Act, s 119(1)(a). The entitlement is subject to exceptions, exclusions, and provisions concerning variation of the entitlement and transfer of employment situations (discussed below).

10       The basis for the entitlement – because the employer no longer required the job to be done by anyone - draws upon a concept ‘redundancy’ formulated by Bray C J in R v Industrial Commission of South Australia; ex parte Adelaide Milk Cooperative (No 2) [1977] 46 SAIR 1202, 1205: ‘a job becomes redundant when the employer no longer desires to have it performed by anyone’. In Hodgson v Amcor Ltd; Amcor Ltd v Barnes [2012] VSC 94 [371], Vicory J identifies frequently encountered circumstances when a job may cease, including reorganisation (resulting in a job no longer being performed at all or being redistributed among other employees), mechanisation, change in demand or other reason, or the employer no longer desires to have it performed by anyone.

11       The quantum (amount) of redundancy pay is worked out using a table set out at s 119(2) of the FW Act. The effect is that for continuous service of at least:

• One year but less than two years, four weeks’ pay;
• Two to three years, six weeks’ pay;
• Three to four years, seven weeks’ pay;
• Four to five years, eight weeks’ pay;
• Five to six years, 10 weeks’ pay;
• Six to seven years, 11 weeks’ pay;
• Seven to eight years, 13 weeks’ pay;
• Eight to nine years, 14 weeks’ pay;
• Nine to 10 years, 16 weeks’ pay;
• At least 10 years, 12 weeks’ pay.

12       The entitlement to redundancy pay does not arise where the termination is:

• ‘Due to the ordinary and customary turnover of labour’: FW Act, s 119(1)(a).
• Of an employee who was employed ‘for a specified period of time, for a specified task, or for the duration of a specified season’ (discussed below): FW Act, s 123(1)(a).
• ‘Because of serious misconduct’ of the employee: FW Act, s 123(1)(b).
• Of an employee who is a ‘casual employee’: FW Act, s 123(1)(c).
• Of an employee who is an apprentice or to whom an industry-specific redundancy scheme applies: FW Act, s 123(4).
• Of an employee whose period of continuous service is less than 12 months: FW Act, s 121(1)(a).
• By an employer who is a small business employer: FW Act, s 121(1). A ‘small business employer’ is an employer who employs fewer than 15 employees: FW Act, s 23(1).

Evidence

13       For the most part the witnesses’ evidence was uncontroversial, save for the content of a conversation between Mr Aducal and Mr K Spirkoski on 7 August 2018.

14       Mr Aducal’s evidence is that during this conversation he was told by Mr K Spirkoski that his employment was terminated because of low volume, a shortage of work and loss of clients.1 He denied that he was told that the Company was dissatisfied with his work performance and attitude and coming to work late. He also denied that he was told in the weeks leading up to the termination of his employment that the Company was concerned about his work performance.

15       Mr Aducal said that he was aware the Company employed someone after his employment was terminated but he said this person was a ‘detailer’ which is not the same role as an ‘estimator’.

16       Mr Aducal admitted that he was not aware of any in-house changes and he was not aware if someone already employed by the Company had taken over his role and he had no knowledge if someone else was doing the role he previously occupied.

17       Mr Aducal referred to 17 people employed by the Company, but he admitted that he did not know the status of their employment.2 He accepted that some were casual employees and he admitted that people come and go from employment at the Company.

18       Mr K Spirkoski’s evidence is that the Company had issues with Mr Aducal’s work predominantly in the period leading up to the termination of Mr Aducal’s employment. He said he had numerous conversations with Mr Aducal about mistakes in his work. He accepted that he never issued a written warning to Mr Aducal and he never told him he would be terminated prior to terminating his employment.

19       Mr K Spirkoski agreed that he also made mistakes from time to time, but he said the Company’s issues with Mr Aducal’s work performance went beyond merely making mistakes. He said Mr Aducal’s poor attitude and poor timekeeping also resulted in his employment being terminated.

20       Mr K Spirkoski denied the termination of Mr Aducal’s employment was because of the loss of work or clients and said that within days of Mr Aducal’s termination the Company had employed another person. Mr K Spirkoski admitted this person was a ‘detailer’ to do draft work and he said that he (Mr K Spirkoski) assumed the role of ‘estimator’ previously undertaken by Mr Aducal. That is, Mr K Spirkoski said his role was previously to draft, but the Company employed another person to do the drafting work and he assumed the ‘estimator’ role along with Nelson Tiu (Mr Tiu).

21       Mr K Spirkoski said that there remained two estimators employed by the Company, he and Mr Tiu.

22       Mr Tiu works as an estimator for the Company. His evidence was directed to the work he undertakes as an estimator given to him by Cristian Spirkoski (Mr C Spirkoski), purchase manager for the Company.

23       Mr C Spirkoski’s evidence was consistent with Mr K Spirkoski’s evidence that the Company had issues with Mr Aducal’s work performance and he says he spoke to Mr Aducal on several occasions about mistakes in his work.3

24       Mr Aducal also referred to a letter from the Company dated 23 August 20184 which provides the reason for his termination, namely:

Due to low volumes of work, we could not continue with the errors being made by you in preparing quotes. Too many items and some quite costly were being missed and we were bound to supply at no cost to the customer. This was bought to your attention on several occasions.

25       In this letter signed by Ron Martinovich (Mr Martinovich), it also states the Company is exempt from redundancy due to the amount of full time employees on the books.

Small business employer exemption

26       One aspect of the Company’s denial of the requirement to pay redundancy pay is that it is a small business employer. In my view, where the Company alleges an exclusion from an obligation to pay redundancy pay the Company bears the onus to prove the basis for the exclusion.

27       Beyond Mr Aducal admitting that he did not know the employment status of the people he recounted in paragraph 8 of exhibit 1, there is no evidence before the court as to the actual number of employees employed by the Company or their employment status, whether it be full time or casual (and if a casual employee whether the employee is employed on a regular and systemic basis).

28       It was open to the Company to adduce such evidence, given that it must be within the Company’s records howsoever kept. It elected not to do so. Accordingly, I am unable to find to the requisite standard the number of employees employed by the Company at the time of the termination of Mr Aducal’s employment and, therefore, I am not satisfied the Company is a small business employer for the purposes of s 121(1)(b) of the FWA.

The reason for Mr Aducal’s termination of employment

29       I am satisfied that Mr Aducal’s employment was terminated on the Company’s initiative. This was not in dispute.

30       I am unable to fully reconcile the difference in the content of the conversation between Mr Aducal and Mr K Spirkoski on 7 August 2018. To some extent, other evidence is more consistent with Mr K Spirkoski’s evidence, particularly the letter dated 23 August 2018 and Mr C Spirkoski’s evidence.

31       While the letter dated 23 August 2018 refers to ‘low volumes of work’, it also refers to issues with Mr Aducal’s work performance. In the context of Mr K Spirkoski’s evidence that the errors and mistakes in the ‘low volume priced market’ were causing problems for the Company,5 the content of the letter is consistent with the reasons given by the Company and Mr K Spirkoski for the termination of Mr Aducal’s employment.

32       Further, and notwithstanding Mr K Spirkoski evidence that ‘[w]e reorganised our workload and employed another person into that department within that week’6 might suggest restructuring to reduce the number of estimators, when cross examined Mr K Spirkoski clarified that the person was employed as a drafter and he (Mr K Spirkoski) assumed the estimator’s role (from previously being a drafter).

33       Where Mr Aducal has no knowledge of the roles within the Company after his termination and in the absence of any other evidence, I cannot discount Mr K Spirkoski’s evidence that he assumed the job done by Mr Aducal and carries out this job with Mr Tiu. It is apparent that Mr K Spirkoski was significantly involved in checking the estimators’ quotes in any event.

34       Further, having regard to all of the evidence, I cannot discount the Company’s evidence that Mr Aducal’s employment was terminated due to poor work performance.

35       Therefore, I am not satisfied to the requisite standard that the termination of Mr Aducal’s employment was because the Company no longer required his job to be done by anyone where Mr K Spirkoski is one of two people doing an estimator’s job similar to when Mr Aducal was employed by the Company.

36       I find on the balance of probabilities that the Company terminated Mr Aducal’s employment because of concerns with his work performance.

Determination

37       Where I am not satisfied that Mr Aducal has proven to the requisite standard that his employment was terminated because the Company no longer required his job to be done by anyone, the Company is not liable to pay any entitlement under s 119(1) of the FWA.

38       Therefore, the claimant’s claim is dismissed.

INDUSTRIAL MAGISTRATE

D. SCADDAN

1 Exhibit 1 at [6].

2 Exhibit 1 at [8].

3 Exhibit 3.

4 Exhibit 1 at ‘RA006’.

5 Exhibit 2 at [14].

6 Exhibit 2 at [15].

Schedule I: Jurisdiction, Practice and Procedure of the Industrial Magistrates Court (WA) under the Fair Work Act 2009 (Cth): Small Claim Alleging Contravention of the FWA

Jurisdiction

[1]          An employee, an employee organization or an inspector may apply to an eligible state or territory court for orders regarding a contravention of the civil penalty provisions identified in s 539(2) of the FWA.

[2]          The Industrial Magistrates Court (WA) (IMC), being a court constituted by an industrial magistrate, is ‘an eligible State or Territory court’: FWA, s 12 (see definitions of ‘eligible State or Territory court’ and ‘Magistrates Court’); Industrial Relations Act 1979 (WA), s 81, s 81B.

[3]          The application to the IMC must be made within six years after the day on which the contravention of the civil penalty provision occurred: FWA, s 544.

[4]          The civil penalty provisions identified in s 539 of the FWA include the provisions of the National Employment Standards (NES): FWA, s 44.

[5]          An obligation upon an ‘employer’ with respect to the NES is an obligation upon a ‘national system employer’ and that term, relevantly, is defined to include ‘a corporation to which paragraph 51(xx) of the Constitution applies’: FWA, s 60, s 42, s 14, s 12. An entitlement of an employee is an entitlement of an ‘employee’ who is a ‘national system employee’ and that term, relevantly, is defined to include ‘an individual so far as he or she is employed by a national system employer’: FWA, s 60, s 42, s 13.

[6]          Where the claimant elects to use the small claims procedure as provided for in s 548 of the FWA, the IMC may not award more than $20,000 and may not make order for any pecuniary penalty: FWA, s 548(1)(a), s 548(2)(a).

Contravention

[7]          Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the court may make orders for an employer to pay to an employee an amount that the employer was required to pay under the FWA: FWA, s 545(3)(a).

[8]          The civil penalty provisions identified in s 539 of the FWA include:

• The NES set out in Part 2-2 of the FWA: FWA, s 539; s 44(1).  Those standards include obligations of employers to employees with respect to redundancy pay as set out sections 119 to 123 of the FWA.
• A modern award set out in Part 2-3 of the FWA: FWA, s 539; s45. Those standards include obligations of employers to employees with respect to rates of pay, ordinary hours of work, superannuation.
• Other terms and conditions of employment as set out in Part 3-6 of the FWA: FWA, s 539; s 535. Those terms and conditions include obligations of employers to employees with respect prescribed records under the Fair Work Regulations 2009 (Cth).
• An ‘employer’ has the statutory obligations noted above if the employer is a ‘national system employer’ and that term, relevantly, is defined to include ‘a corporation to which paragraph 51(xx) of the Constitution applies’: FWA, s 14, s 12. The obligation is to an ‘employee’ who is a ‘national system employee’ and that term, relevantly, is defined to include ‘an individual so far as he or she is employed by a national system employer’: FWA, s 13.

[9]          Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the court may make orders for:

• An employer to pay to an employee an amount that the employer was required to pay under the FWA: FWA, s 545(3).

In contrast to the powers of the Federal Court and the Federal Circuit Court, an eligible state or territory court has no power to order payment by an entity other than the employer of amounts that the employer was required to pay under the FWA. For example, the IMC has no power to order that the director of an employer company make payments of amounts payable under the FWA: Mildren and Anor v Gabbusch [2014] SAIRC 15.

Burden and standard of proof

[10]      In an application under the FWA, the party making an allegation to enforce a legal right or to relieve the party of a legal obligation carries the burden of proving the allegation. The standard of proof required to discharge the burden is proof ‘on the balance of probabilities’. In Miller v Minister of Pensions [1947] 2 All ER 372, 374, Lord Denning explained the standard in the following terms:

It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say 'we think it more probable than not' the burden is discharged, but if the probabilities are equal it is not.

[11]      In the context of an allegation of the breach of a civil penalty provision of the FWA it is also relevant to recall the observation of Dixon J said in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336:

The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences [362].

[12]      Where in this decision I state that 'I am satisfied' of a fact or matter I am saying that 'I am satisfied on the balance of probabilities' of that fact or matter. Where I state that 'I am not satisfied' of a fact or matter I am saying that 'I am not satisfied on the balance of probabilities' of that fact or matter.

Practice and procedure of the Industrial Magistrates Court: small claim

[13]      The FWA provides that ‘in small claims proceedings, the court is not bound by any rules of evidence and procedure and may act in an informal manner and without regard to legal forms and technicalities: FWA, s 548(3). The significance of this provision was explained by Judge Lucev in McShane v Image Bollards Pty Ltd [2011] FMCA 215 [7] in the following terms:

Although the Court is not bound by the rules of evidence, and may act informally, and without regard to legal forms and technicalities in small claim proceedings in the Fair Work Division, this does not relive an applicant from the necessity to prove their claim. The Court can only act on evidence having a rational probative force.

[14]      The IMC has experience of similar provisions. The Industrial Relations Act 1979 (WA) (IRA) provides that, except as prescribed by or under the Act, the powers, practice and procedure of the IMC is to be the same as if the proceedings were a case under the Magistrates Court (Civil Proceedings) Act 2004 (WA): IRA, s 81CA Relevantly, regulations prescribed under the IRA provide for an exception: a court hearing a trial is not bound by the rules of evidence and may inform itself on any matter and in any manner as it thinks fit: Regulation 35(4). In Sammut v AVM Holdings Pty Ltd [No2] [2012] WASC 27, Commissioner Sleight examined a similarly worded provision regulating the conduct of proceedings in the State Administrative Tribunal and made the following observations (omitting citations):

40 … The tribunal is not bound by the rules of evidence and may inform itself in such a manner as it thinks appropriate. This does not mean that the rules of evidence are to be ignored. The more flexible procedure provided for does not justify decisions made without a basis in evidence having probative force. The drawing of an inference without evidence is an error of law. Similarly, such error is shown when the tribunal bases its conclusion on its own view of a matter which requires evidence.

42 … After all, they represent the attempt made, through many generations, to evolve a method of enquiry best calculated to prevent error and elicit truth. No tribunal can, without grave danger of injustice, set them on one side and resort to methods of enquiry which necessarily advantage one party and necessarily disadvantage the opposing party. In other words, although rules of evidence, as such, do not bind, every attempt must be made to administer 'substantial justice'.

43 … The tribunal can obtain information in any way it thinks best, always giving a fair opportunity to any party interested to meet that information; it is not obliged to obtain such independent opinion, for instance, upon oath, and whether the cross-examination shall take place upon that opinion is entirely a question for the discretion of the Tribunal; it is not bound by any rules of evidence and is authorised to act according to substantial justice and the merits of the case.

44 … An essential ingredient of procedural fairness is the opportunity of presenting one's case.

45 … the right to cross-examination is viewed as an important feature of procedural fairness.

47 … Procedural fairness requires fairness in the particular circumstances of the case. While a right to cross-examination is not necessarily to be recognised in every case as an incident of the obligation to accord procedural fairness, the right to challenge by cross-examination a deponent whose evidence is adverse, in important respects, to the case a party wishes to present, is.