Logovik v Kestrel Coal Pty Ltd [2015] FWC 2883: Decision in Favour of Employer

In Logovik v Kestrel Coal Pty Ltd [2015] FWC 2883 (28 April 2015), the Fair Work Commission (the Commission) has ruled in relation to an employer’s obligation to consider redeployment of retrenched employees where positions may exist in associated entities.

Bevan Logovik (the Applicant) made an application pursuant to s 394 of the Fair Work Act 2009 (Cth) (the Act) for an unfair dismissal remedy alleging that the termination of his employment from Kestrel Coal Pty Ltd (the Respondent) was harsh, unjust or unreasonable.

Background

The Applicant was employed as an operator/maintainer at the Kestrel Underground Coal Mine under the Kestrel Coal Workplace Agreement 2009 (the Agreement).

There were three other related applications which were heard jointly, by consent, with the same application, being U2014/13399 -Tony McDonell, U2014/13401 - Daniel Stickley and U2014/13402 - Leslie Cochrane.

The four employees who were made redundant by the Respondent and it was argued that their redundancy was not genuine because Kestrel failed to consider them for redeployment to positions which existed in associated entities.

The Respondent was one of a number of subsidiaries of the Rio Tinto Coal Australia (RTCA) Group which itself was a subsidiary of Rio Tinto Ltd. In its decision, the Commission focussed on the level of managerial control and managerial integration across the associated entities. The Respondent was the only underground coal mine operation within the RTCA group. The employees who brought the claim for unfair dismissal were three operator maintainers and one electrician.

Redeployment of Employees or Redundancy?

The consideration of opportunities for redeployment by an employer is relevant to whether there is a genuine redundancy. The Act sets out that in determining whether a redundancy is a “genuine redundancy” there are three matters to consider:

• the employer must no longer require the work to be performed by the employee because of changes in operational requirements;
• an employer must comply with award or enterprise agreement requirements to properly consult with employees about their redundancy; and
• there is no genuine redundancy if it would have “been reasonable in all the circumstances” to redeploy the person in the employer’s enterprise or in the enterprises of associated entities.

Before making their arguments regarding redeployment, the Applicants pointed to the increased use of contractors in preference to permanent employees as evidence that their job was still required to be performed. The Commission confirmed that the use of contractors can sometimes be relevant to the question of whether a job is available. However, in this case the contractors’ work was generally short-term and not the same as that of the retrenched employees. The use of contractors was not automatically demonstrative that the work of the employees was still required.

The Commission’s Decision

Much of the Commission’s decision focused on whether it was reasonable to redeploy the Applicants to associated entities, such as those which were also subsidiaries of the RTCA or even other entities which formed part of the larger Rio Tinto Ltd. The employees’ union argued that it was reasonable to consider the Applicants for redeployment to other RTCA and non-RTCA associated entities.

Regarding redeployment within RTCA entities, the Commission ruled that the positions within RTCA had been properly canvassed and that there were none available. The Commission noted that an employer must investigate redeployment opportunities on the date of the redundancy and not after.

Lack of Communication by Employer

It was held that even though they had canvassed redeployment opportunities in RTCA entities before making their employees redundant, The Respondent had failed to properly communicate to the employees that no vacancies for redeployment existed. 

Commissioner Spencer highlighted that the level of managerial integration across the entities was an important consideration and relied on the principles [at para 32] of Ulan Coal Mines Ltd v Honeysett and Ors [2010] FWAFB 7578. Whilst there was some shared support services between Rio Tinto Ltd entities, recruitment decisions were made by each separate entity themselves. There was no “overall managerial control by one member of the group” nor did the Respondent have power to influence decisions about recruitment in other non-RTCA entities.

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No deployment where no manager control – Article from justitia.com.au

Logovik v Kestrel Coal Pty Ltd [2015] FWC 2883 (28 April 2015)