Was the wife even an employee of the business?
In 2012, when a husband and wife co-founded a company that bought and sold phone cases and other electronic gadgets, the wife began working for the company. The husband disputed the wife’s assertion that she co-founded the company with him. He asserted that the wife began working for the company in 2016 and produced a contract of employment signed by the wife and dated 2016.
In response, the wife asserted she was the first employee of the business and had signed the contract of employment only when they started taking investors on board the company. She in turn produced a contract of employment signed by her husband that stated the husband began working for the business also in 2016.
The Fair Work Commission found that while the couple started their business in 2012 and began working for their business at that time, they signed contracts of employment only when they organised as a corporation with other investors.
What was the wife’s role and duties in the business?
The husband downplayed the wife’s role in the business saying that she could not have co-founded or co-run the business as she was a mum at home with their kids and only helped out occasionally in the business when they had a wholesale business.
The wife asserted that she has held a variety of roles in the business as evidenced by the tasks and duties enumerated in her employment contract which included: marketing, business planning and customer service, product development and product testing. She also performed tasks related to sales including packing orders. She created content for their website and created product instruction manuals, brochures, promotional and demonstration videos.
The Fair Work Commission held that the wife’s work benefited the business and pointed to the fact that in 2014, the wife appeared on the Sunshine TV program explaining their product line. This video of the wife on the program was used by the business in its promotional and instructional videos on Youtube.
The wife insisted she was dismissed because of the breakdown of the marriage
The couples’ marriage broke down. The wife stated that when her marriage broke down, the husband made her redundant but she claims the redundancy was not genuine. In June 2020, her husband informed her that he was dismissing her from her employment in the business because their marriage was over and he did not wish to work with her any longer.
The wife was locked out of the business
Five months later, in November 2020, the business moved to a new office and the wife was not provided a key to the new work premises. The husband sent the wife text messages warning her that if she wanted a war, he will come after her with everything and spend every last cent he had on it. The husband also had multiple conversations with others saying he would hire people on Upwork to do the wife’s job.
Was there genuine redundancy when the wife’s duties were performed by another employee?
In January 2021, the husband told the wife that she was no longer needed and was fired from her job. She was to be replaced by the husband’s friend. This was proof, according to the wife, that her dismissal was not a genuine redundancy as her tasks were still required by the business and someone else has been hired to fulfil those tasks in her place.
The employer’s burden of proof
The FWC explained that in cases where the employee claims that there was no genuine redundancy, the employer has the burden of proving that the employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the enterprise. There can be no genuine redundancy if it would have been reasonable under the circumstances for the wife to be redeployed in the employer’s enterprise or an enterprise of an associated entity of the employer.
Tests to determine whether wife’s role was no longer required
To determine whether the duties of the wife in her particular role or position are no longer required to be performed by anyone because the company’s operational requirements have changed, the job of the wife must be distinguished from her duties.
No genuine change in the operational requirements of the business
The FWC found that it could not be satisfied that on the balance of probabilities, the husband no longer required the wife’s job to be performed by anyone or that there were changes in the operational requirements of the employer’s enterprise.
The husband was evasive and unable to produce the evidence that supported his claims against the wife. He could not produce the evidence to prove his assertions that the business was operating at a loss. The husband even admitted that the wife’s duties were contracted out.
Was the redundancy valid if no redundancy benefits were paid to the wife?
And even if it were true that she had been made redundant, she had not received any redundancy payments. The husband said he could not pay redundancy entitlements to his wife as the company was not in a good financial position because of the pandemic. And the wife had not been paid her redundancy entitlements was because she had not returned the company car.
The husband testified he had to make huge cutbacks as a result of cashflow issues. Other members of staff had been let go or had agreed to work part-time as the business could no longer afford to keep staff full-time. The wife countered this assertion by providing the financial statements prepared and signed by the husband. The value of the business was about $16.5 million.
Was the redundancy valid redundancy without an offer of redeployment in an alternative role?
The wife said that the husband had never offered her redeployment in a lower-paid role in the business or any other role. And when the husband asserted that the wife did not know how to conduct the business or that she had conducted the business poorly, the wife replied by saying that the husband has shut her out of any business activity for months, withholding important information from her, all to prevent her from doing her job.
No effort to redeploy the wife in another role in the business
The FWC found the husband unwilling to even consider redeploying the wife to another position. The applicant was the wife and co-owner and co-founder of the business. She had an interest in the success of the business both as an employee and as a part-owner of the business. The wife performed a wide range of tasks outside her marketing duties. Surely, there could have been some work that she could have done. She could have been asked to work at reduced hours as all the other employees had been.
Can redundancy be resorted to as a solution to cash flow issues?
The husband argued that there were no other suitable roles in the company which the wife was qualified to perform. Her duties had also been distributed to other employees of the business. The wife had the biggest salary on the staff and she drove an $80,000 company car. The husband asserted that he had to make the wife redundant to ease the cashflow issue as she had the highest salary.
The FWC found that while it may be true that companies reorganise their business structure as a measure to check cashflow issues, the fact remained that the husband was unable to prove that the business was having cashflow issues.
The husband was also unable to prove that because of the cashflow issues or business downturn, the wife’s duties remain but operational changes resulted in fewer employees being required to perform the same duties. He was unable to prove that a structural change has eliminated the need for the specific duties of the wife and the husband has found another way to have those duties performed. All these circumstances point to the conclusion that there was no genuine redundancy.
Could the redundancy be a dismissal for cause in disguise?
The couple had a heated discussion and the wife questioned her husband about his online behaviour, especially the internet searches he has conducted on the office laptop. The husband then told the wife that she was fired. On 2 March 2021, the husband notified the wife that her position would be made redundant and gave her 3 weeks’ notice that her employment would end. Hence, this application for unfair dismissal by the wife.
Dismissal for cause negates a redundancy
The FWC opined that when an employee is dismissed for cause, then it is usually not a case of redundancy. Generally, the conduct of the employee is not relevant in redundancy. When there had been no change in the operational requirements because of restructuring, reorganisation, change of role, change of the composition of a workforce or a reduction in employees and the wife can show that she was removed from the business but she had been replaced by another employee who performed the same or substantially the same duties, the dismissal may not be a redundancy.
Absent a genuine redundancy, was the dismissal unfair?
With the finding that there was no genuine redundancy, the FWC then determined whether the wife’s dismissal was for valid cause or if it was harsh and unreasonable.
The FWC found that the failure or refusal of the husband to redeploy the wife in another role may have been based on their separation and eventual marriage breakdown. The husband did not present any defence against the wife’s application for unfair dismissal, either when he had the burden of proving that the dismissal was for a valid reason.
The FWC found no valid reason for the wife’s dismissal from employment. The husband took the pandemic and the consequent business downturn to disguise his dismissal of his estranged wife as a redundancy. This made the dismissal unfair.
The wife was locked out of the office prior to her dismissal. This was completely inappropriate considering that the wife was a co-owner of the business. Instead of reducing the wife’s work or her work hours, the husband locked out the wife from the workplace. This was harsh.
The wife was a long-serving employee who had invested her own funds and skills in the establishment and growth of the business. Dismissing her without paying her the entitlements she deserved made her dismissal unfair and harsh.
The wife was dismissed from employment in 2021 and not when the business had a veritable slump in 2020. The dismissal was not based on any valid ground that was related to the wife’s capacity or conduct.
The FWC ordered the payment of compensation ruling that the wife’s prayer for reinstatement was inappropriate and it was motivated by the desire to protect her interest in the business which is not within the power or authority of the FWC to do. The wife was awarded $27, 068.65 less tax and superannuation contributions of $2, 571.50.
Maria Ranchod v Dog and Bone Holdings Pty Ltd T/A Dog & Bone [2021 FWC 6093 (12 October 2021) http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FWC/2021/6093.html
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