1 Fair Work Act 2009 s.394—Unfair dismissal Alan Matvikov v Dale Air Pty Ltd (U2023/10438) DEPUTY PRESIDENT COLMAN MELBOURNE, 25 JANUARY 2024 Unfair dismissal application – whether genuine redundancy – compensation [1] Alan Matvikov has made an application for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Act). From December 2022 until 3 October 2023, Mr Matvikov was employed by Dale Air Pty Ltd (company) as a plumber and gasfitter. He was dismissed for reason of redundancy. Mr Matvikov contends that his position was not redundant and that his dismissal was unfair. He seeks compensation. The company contends that the dismissal was a case of ‘genuine redundancy’ for the purposes of s 389 of the Act and that in any event the dismissal was not unfair. [2] The question of whether a dismissal was a case of genuine redundancy is one of the four preliminary matters that s 396 of the Act requires the Commission to decide before considering the merits of an unfair dismissal application. As explained below, the dismissal was not a case of genuine redundancy, because the company did not comply fully with its consultation obligations under the applicable award. As to the other preliminary matters, I note that the application was made within the 21-day period prescribed by the Act; Mr Matvikov was a person protected from unfair dismissal; and the Small Business Fair Dismissal Code was not applicable because the company was not a small business employer at the time of the dismissal. [3] Mr Matvikov’s evidence was that on 18 July 2023 he sustained an injury at work, and on 27 July 2023 he reported this to his manager. On 26 September 2023 he submitted a WorkCover application. On 3 October 2023, Mr Matvikov received a letter from the company’s managing director, Stephen Dale, which stated: ‘Dale Air regrets to inform you that due to the industry headed (sic) towards Refrigeration and away from Gas, as a result of the Victorian Government announcement earlier this year, your position as Plumber and Gas Fitter has been retrenched.’ [4] Mr Matvikov said that this letter was the only correspondence he received from the company regarding the termination of his employment, and that he was not consulted about his redundancy as required by the Plumbing and Fire Sprinklers Award 2020 (Award). Mr [2024] FWC 215 DECISION [2024] FWC 215 2 Matvikov said that he believed the real reason for his dismissal was the fact that he had sustained a workplace injury. He said that his employer had not wanted to cover the costs of his injury and had dismissed him a relatively short time after he had reported his injury to management. [5] Mr Matvikov’s evidence was that one week after his dismissal, he saw an advertisement placed by the company on the jobs website ‘Seek.com’ seeking to hire refrigeration mechanics. He said that the company did not tell him that it had a need for refrigeration mechanics and that he would have been happy to undergo any necessary retraining to be able to undertake this work. He said that in his opinion it would have taken him some six weeks of training, perhaps less, to reach the required level to perform such work. [6] Mr Matvikov said that on 23 October 2023, his representative wrote to Mr Dale asking why his position was retrenched when there was a need for refrigeration mechanics. In his response, Mr Dale stated that Mr Matvikov’s skills related to gas systems and evaporative cooling and that the company’s work was now focused on refrigeration reverse cycle systems. Mr Dale further stated that the perception in the market was that natural gas would be turned off in the near future and that while this was not in fact true, he and the business had to pivot to reverse cycle systems quickly. Mr Matvikov said that, given Mr Dale acknowledged that the market’s perception that gas would be turned off was wrong, he was even more surprised that he had been retrenched. He said that he found Mr Dale’s reasons for making him redundant to be contradictory. [7] Mr Dale gave evidence that Mr Matvikov was made redundant because of the reduction in the company’s plumbing and gas work following the Victorian government announcement in July 2023 that it would end incentives to upgrade to high efficiency gas heating and that it would prevent new homes from being connected to natural gas. Mr Dale said that this had caused a massive change to the company’s business. Because of the government announcement, the market had changed. The nature of the company’s work was now predominantly refrigerated reverse cycle systems. The company needed fewer gasfitters and more refrigeration mechanics. Mr Matvikov was not a refrigeration mechanic. His work for the company had involved installing gas heating and evaporative cooling systems. This work was drying up. Mr Dale said that he had several discussions with Mr Matvikov about retraining and that Mr Matvikov had indicated that he wanted to continue the work that he had been doing. Mr Matvikov denied this and said that he told Mr Dale that he was willing to retrain. [8] Mr Dale’s evidence was that the company placed its advertisement for refrigeration mechanics because this was the type of worker it required. While there were still employees doing the gas plumbing work previously undertaken by Mr Matvikov, there was much less of this work, and there would be more redundancies to come. Mr Dale said that Mr Matvikov’s dismissal was not related to his WorkCover application or his injury. Mr Matvikov was made redundant because the nature of the company’s work had changed in a matter of months and it no longer needed his position because of these changes. Mr Dale said that Mr Matvikov had been the ‘last on’ and was therefore the ‘first off’. Consideration [9] Section 389 states that a person’s dismissal was a case of genuine redundancy if the person’s employer ‘no longer required the person’s job to be performed by anyone because of [2024] FWC 215 3 changes in the operational requirements of the employer’s enterprise’ (s 389(1)(a)), and the employer complied with any obligation in a modern award or enterprise agreement to consult about the redundancy. Section 389(2) states that a person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or that of an associated entity. If a person’s dismissal was a case of genuine redundancy, the dismissal cannot have been unfair (see s 385). [10] I accept the evidence of Mr Dale about his reasons for dismissing Mr Matvikov. The company needed fewer gasfitters. This was because of the significant change in the market following the Victorian government announcement in July 2023 about residential gas use. Mr Dale was a credible witness. His evidence was clear and persuasive. It is hardly surprising that the market, and the works being sought by the company’s customers, would be affected by the government’s gas announcement. Contrary to the suggestion of Mr Matvikov, there is no contradiction between Mr Dale’s decision on the one hand to make him redundant because of the change in the market and his statement on the other hand that the market was wrong to understand that gas would be turned off. What affects the company’s business is market perception, not whether that perception is correct. It is market perception that affects demand for services. There was a marked reduction in the company’s requirement for the type of work performed by Mr Matvikov. I reject the suggestion of Mr Matvikov that his dismissal was related to his injury or his WorkCover claim. Mr Dale denied this. I believe him. I find that the company did not want Mr Matvikov’s job done by anyone because of changes in its operational requirements. [11] I accept the evidence of Mr Dale that he discussed retraining with Mr Matvikov and that Mr Matvikov told him that he wanted to keep doing what he was doing. I prefer Mr Dale’s evidence to that of Mr Matvikov on this point. But even if Mr Matvikov had expressed interest in retraining and redeployment, that does not mean that this could or should have occurred. The company had seen a significant reduction in its need for gasfitters. Other workers would also need to be retrained. Mr Matvikov was the most recently hired and Mr Dale considered it appropriate that he be the first off. There is nothing wrong with such an approach. Mr Dale said that the gas-fitting work has continued to dry up and that there will be more employees who will be made redundant. I accept this. In all the circumstances, I do not consider that it would have been reasonable for the company to redeploy Mr Matvikov within its enterprise. Mr Dale said that the company has no associated entities. I accept this. There is no indication to the contrary. [12] This brings me to the question of consultation. Clause 30 of the Award required the company to consult with Mr Matvikov about major change, including termination of employment. Clause 30.1 requires an employer to discuss such change with affected employees, including measures to avoid or reduce adverse effects. Clause 30.2 states that for the purposes of such discussions the employer must give the employee information in writing including in relation to the nature of the change and its expected effect. I accept Mr Dale’s evidence that he had discussions with Mr Matvikov about his termination, including at toolbox meetings. However, Mr Dale acknowledged that the company did not provide Mr Matvikov with information in writing, as required by clause 30.2 of the Award. The termination letter cannot be regarded as constituting such information, nor can the correspondence that was sent by the company to Mr Matvikov’s representative after his dismissal. Because the company did not [2024] FWC 215 4 comply fully with its Award consultation obligations in relation to Mr Matvikov’s redundancy, the dismissal was not a ‘genuine redundancy’ for the purposes of s 389 of the Act. [13] It does not automatically follow from this conclusion that the dismissal was unfair. Rather, the Commission must proceed to consider the merits of the unfair dismissal application, taking into account the matters in s 387(a) to (h). It is well-established that redundancy is not a ‘valid reason for dismissal related to capacity or conduct’ (s 387(a)), because in a redundancy situation the employee’s capacity and conduct are not at issue. Rather, the reason for redundancy is to be considered under s 387(h), ‘any other matters the Commission considers relevant’. A dismissal that is not a genuine redundancy within the meaning of s 389 may nevertheless have occurred for a legitimate reason. That is the case here. The company did not need Mr Matvikov’s position to be performed by anyone because of changes in the market and in the demand for work. It is also relevant to note here my finding that it would not have been reasonable to redeploy Mr Matvikov. [14] As to the other matters in s 387, I note that Mr Matvikov was not notified of any valid reason for dismissal related to capacity or conduct, however he was notified of a good and legitimate reason for dismissal. Mr Matvikov did not have an opportunity to respond to the reason for his dismissal, however this is tempered by the fact that the changes in the market had been raised with employees at toolbox meetings, and the fact that Mr Dale had discussed retraining with Mr Matvikov. The dismissal did not relate to performance. Mr Matvikov was not denied a support person. In respect of the considerations in ss 387(f) and (g), there is no evidence that the size of the employer’s enterprise or an absence of human resources specialists impacted the procedures followed in effecting the dismissal. As to s 387(h), it is relevant to take into account that Mr Matvikov was not consulted about his redundancy in the manner contemplated by the Award, as he was not provided with relevant information in writing for the purposes of discussions about the proposed changes. I do not consider that this affected the outcome. However, Mr Matvikov was entitled to receive relevant information in writing. This would likely have had the effect of softening somewhat the impact of the company’s decision to make him redundant. Because of this factor I consider that the dismissal was unfair. [15] It is necessary to consider the question of remedy. The Act contemplates two remedies: reinstatement and compensation. Reinstatement would plainly not be appropriate because other redundancies are likely, and because Mr Matvikov is not presently able to undertake refrigeration work. As to compensation, s 392 requires the Commission to take certain matters into account. There is no indication that compensation would affect the viability of the employer’s enterprise (s 392(2)(a)). Mr Matvikov had one year of service (s 392(2)(b)). Section 392(2)(c) directs the Commission to take into account the remuneration that the person would have received or would have been likely to receive if the person had not been dismissed. This requires the Commission to consider what would have occurred if the person was not dismissed, and in particular how long the person would have remained employed. Given the fact that the company did not need Mr Matvikov’s position, I consider it likely that, had Mr Matvikov not been dismissed on 3 October 2023, he would have been dismissed a very short time later. I assess this hypothetical situation from the standpoint that any subsequent dismissal would have occurred according to law. If the company had made Mr Matvikov redundant in full compliance with the consultation provision in the Award, it would in my view have taken less than one week. This marks the outer limit of reasonable compensation in this case. [2024] FWC 215 5 [16] If Mr Matvikov had not been dismissed on 3 October 2023, I consider that he would have been dismissed before 10 October 2023 in any event. At the time of his dismissal, Mr Matvikov had a certificate of incapacity for work for the period from 2 to 9 October 2023 for reason of ‘bilateral scapular / thoracic pain for inx.’ He would therefore not have worked during this period. Mr Matvikov’s final payslip indicates that he had 6.13 hours of sick leave remaining for the year to date. Mr Dale’s evidence was that Mr Matvikov had no other sick leave accrued from the previous year. During the additional period that Mr Matvikov would likely have remained employed had the Award been complied with fully, he would have been paid 6.13 hours of sick leave at the rate of $38.4615 per hour: $235.77. To this should be added 11% superannuation, which gives a figure of $261.70. This is the appropriate amount of compensation. Conclusion [17] Although the dismissal was not a case of ‘genuine redundancy’ within the meaning of s 389, it nevertheless occurred for a good and legitimate reason. The company did not want Mr Matvikov’s job to be done by anyone. Despite this, because the company failed to consult with him in full accordance with the Award, the dismissal was unfair, but only in that respect. Having regard to the matters in s 392, the appropriate amount of compensation is $261.70. An order is issued separately in PR770652. DEPUTY PRESIDENT Appearances: A. Matvikov for the applicant S. Dale for the respondent Hearing details: 2024 Melbourne 22 January Printed by authority of the Commonwealth Government Printer <PR770650>