FEDERAL COURT OF AUSTRALIA

Shop, Distributive and Allied Employees' Association v Noni B Limited [2019] FCA 557

ORDERS

THE COURT NOTES THAT:

1.    The affidavit of Jessica Furolo affirmed 9 April 2019 states in paras 37 and 38:

'On Thursday 28 March 2019, I met with CEO of Noni B Group, Scott Evans and the CFO of Noni B Group, Luka Softa.

In the course of that meeting, Mr Evans, Mr Softa and I made a definite decision to reduce the rostered hours at underperforming retail stores across the Noni B Group as a result of continuing store sales decline (the March Decision).'

THE COURT ORDERS THAT:

1.    The respondents do by 26 April 2019 file a copy of the affidavit of Mr Evans affirmed 9 April 2019 excluding those parts which were not read on the application for an interlocutory injunction.

2.    Upon filing of the copy of the affidavit there be leave to uplift the affidavit of Mr Evans of 9 April 2019.

3.    Until 3 May 2019, the respondents are each restrained, whether by their officers, employees or agents, from giving effect to any notice of:

(a)    termination of employment;

(b)    alteration of hours of work; or

(c)    transfer of employment,

given to an employee by reason of the March Decision (as defined in the affidavit of Jessica Furolo affirmed 9 April 2019).

4.    Order 3 does not restrain or prevent the respondents from giving effect to a notice of redundancy, alteration of hours of work, or transfer of employment, where the employee confirms in writing that they wish this to occur.

5.    The costs of the application for an interlocutory injunction be reserved.

6.    The matter be listed for a further case management hearing at 9.45 am on 9 May 2019.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLVIN J:

1    The respondents are related entities that carry on a number of retail clothing businesses under different brand names. They have thousands of employees working in their stores. They say that they need to reduce the number of employees at a number of stores in order for those stores to be profitable.

2    In February and March 2019, the respondents reduced the rostered hours of employees at their stores resulting in a total saving of $12 million on an annualised basis. On 28 March 2019, a decision was made by the respondents to further reduce the rostered hours at what are said to be 'underperforming stores'. The likely impact of the decision is said to be that approximately 200 retail employee positions will be affected. All those positions are potentially redundant or likely to be affected by the required reductions in store hours. The further annualised costs saving that will be achieved by this further change is said to be around $3 million.

3    Employees working at the stores operated by the respondents are covered by the General Retail Industry Award 2010 (Award). The Shop, Distributive and Allied Employees' Association (Union) is entitled to represent employees to whom the Award applies. Two enterprise agreements have been entered into that apply to some of the employees. They are the Noni B Enterprise Agreement 2014 and the PGFG Enterprise Agreement 2013.

4    Clause 8 of the Award has detailed provisions about what is to occur if an employer of employees to whom the Award applies makes a definite decision to make a major change to matters concerning the workplace of the employee. It states, amongst other things, that:

8.1    If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:

(a)    give notice of the changes to all employees who may be affected by them and their representatives (if any); and

(b)    discuss with affected employees and their representatives (if any):

(i)    the introduction of the changes; and

(ii)    their likely effect on employees; and

(iii)    measures to avoid or reduce the adverse effects of the changes on employees; and

(c)    commence discussions as soon as practicable after a definite decision has been made.

8.2    For the purposes of the discussion under clause 8.l(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:

(a)    their nature; and

(b)    their expected effect on employees; and

(c)    any other matters likely to affect employees.

…

8.4    The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 8.1(b).

5    The enterprise agreements have clauses that are differently worded but to similar effect (in the sense that they provide for consultation if there is a definite decision to implement a major workplace change). The clause in the Noni B Enterprise Agreement is much shorter in form and has no express mechanism for the provision of information as part of the consultation. For present purposes, the differences between the three industrial instruments do not affect the issues that need to be addressed.

6    The Union claims that the respondents have breached the obligation to engage in the consultation provided for in the Award and the enterprise agreements. The definite decision said to give rise to an obligation to consult is a decision referred to in a letter from lawyers acting for the respondents to the National Secretary of the Union dated 29 March 2019 (Letter). The Letter said:

We write to advise that our client has today commenced consultation with employees concerning a review of its retail operations which will regrettably impact upon a number of employees, whose positions are to be made redundant.

Our client is undertaking a consultation process with each impacted employee, which will explain the nature and reasons for the changes, the available options for redeployment and other measures, if any, which the Company can make to avoid or minimise the impact upon employees. Retail staff whose roles will not be impacted by this process will also be advised of this in due course.

Please direct any questions concerning specific SDA members to the Company's HR Department …

Should you wish to discuss any other matter, we have instructions to accept service of any correspondence or request for information in relation to these matters and you can contact myself or Benjamin Gee, Partner by phone or email.

7    The Union claims that the respondents took immediate steps to implement the redundancies in respect of a group of employees without any consultation at all. Urgent interim relief was granted by the Court on 1 April 2019 to restrain the respondents from giving effect to the decision referred to in the Letter insofar as it concerned employees covered by the Award. Since then, the relief has been extended in time and expanded to apply to employees covered by the enterprise agreements.

8    After the interim relief was granted, the respondents communicated with a second group of employees in different terms. These later communications commenced on 3 April 2019. The new template for the communications was said to be written 'in conjunction with' the Union. An issue was raised as to whether the template was a communication that was sanctioned in any way by the Union but it is not necessary to resolve that issue at this stage of the proceedings. Unlike the first round of communications which were to the effect that the employees would be made redundant with immediate effect, the second group were told about a decision to reduce rostered hours at a number of stores and to make adjustments to staffing levels. The store at which the addressee worked was identified as one of the stores. In the communication it was said that all steps available to turn the position around had been taken. There was reference to an estimate of 200 positions being made redundant across the stores. The template said that 'we will consult with you and seek your views' and that all other employees likely to be affected were being consulted. It was also said: 'To be clear, a decision has not yet been made about this and will not be made until we have completed our consultation process'.

9    On 4 April 2019 an email was sent by the 'People and Culture Team' of the respondents to all employees. It said that following on from a consultation process update on 2 April 2019, 'we would like to advise that we are continuing to work with the Union (SDA) to review the redundancy consultation process'. It said that detailed information as to next steps would be provided within 24 hours.

10    The evidence for the respondents is that the next day, an email was sent to 'all impacted employees advising, amongst other things, that their options included':

a.    nominate for redundancy,

b.    accept reduced hours of work offered,

c.    elect to be considered for redeployment into an alternative available position, or

d.    continue consultation.

11    The template email was produced. It said:

Following on from the consultation on 29 March 2019, we would like to advise that we are now able to confirm the next steps in the process.

We are aware of how difficult this has been and we apologise for the delays and appreciate your patience.

Please find below 3 options for you to consider in moving through the next stages of the process. For the option that best suits your situation and circumstances, please follow the relevant link that will take you through to a form you can complete to confirm your choice.

12    The email then had three options each with provision for the recipient to 'click here to choose this option'. The first was 'select voluntary redundancy', the second 'redeployment new location' (with an annotation that it was to express an interest in being redeployed) and the third was 'need more advice' (with an annotation 'I am unsure and would like to see further advice, learn more detail about my options or simply wish to ask further questions about the process').

13    On 8 April 2019 there was a further communication with the Union in which 'the next stage of the consultation process' was described. It said the consultation would end that day at which time there would be a clear indication as to which employees had selected redundancy, redeployment, further consultation or did not make a choice (the latter being allocated to a further consultation process).

14    The respondents then say that they contacted the Union about a meeting to settle the consultation process with 39 employees who clicked on the 'need more advice' option. Affidavit material relied upon by the respondents describes a willingness to 'engage in a further consultation process' with impacted employees who did not click on the redundancy or redeployment options. This was said to include provision of the redundancy selection principles. Significantly, the 'consultation' described in the affidavit material focusses upon implementation of redundancy and redeployment. There is no evidence of any particular discussion about the way the change might be implemented that took place prior to the implementation of the change by seeking the election by particular employees to whom emails were addressed as to whether they will choose voluntary redundancy out of three options. For the employees in the first tranche, on the evidence before the court, the communications commenced with particular employees being told they were being made redundant immediately. On the evidence presently before the court, all the affected employees were 'consulted' by being invited to select redundancy, the possibility of redeployment or more advice.

15    In the above circumstances, the Union claims that consultation of the kind required by the three industrial instruments has not occurred. Rather, the steps taken by the respondents are properly described as an implementation of the decision to undertake redundancies and relocations without any opportunity for employees to provide any input as to how the change might be implemented.

16    By the original proceedings in this Court, the Union seeks declaratory and injunctive relief concerning the alleged breach of an obligation to consult as well as compensation and pecuniary penalties under s 545 and s 546 of the Fair Work Act 2009 (Cth). Pending the final hearing of those claims, the Union seeks a continuation of injunctive relief restraining the respondents from giving effect to the decision referred to in the Letter. The Union proposes orders in a form that would not prevent the respondents from giving effect to a notice of redundancy, alteration of hours of work, or transfer of employment, where the employee confirms in writing that they wish this to occur. In other words, the Union proposes that any injunction would not restrain voluntary redundancy or change of hours.

17    Otherwise, the form of order sought would restrain the respondents from giving effect to the decision including by giving notice of termination of employment, notice of redeployment, notice of alteration of hours of work or notice of transfer of employment, to any employee or employees.

18    On the evidence, voluntary redundancies have now been agreed with many employees. As the Union only seeks relief in respect of employees who do not choose voluntary redundancy, the continuation of the injunction will apply to about 50 employees. This is only about 25% of the redundancies to which the March decision relates.

19    For the following reasons, an injunction in the terms sought by the Union should be granted. However, it should not extend until trial. It should extend only for a further period which is sufficient for there to be further discussions in respect of those employees who have not accepted a voluntary redundancy. As matters presently stand, the claimed right of employees to be consulted before the implementation of any change cannot be further protected by an injunction that extends beyond a reasonable further period. A short further extension will give the employees who have not chosen voluntary redundancy time to understand what is occurring, to consider any reasons advanced by the respondents for what is occurring and to put to the respondents any matters they wish to advance concerning the change, to the extent that has not already occurred. However, in the events which have occurred, the point will soon be reached where there is no longer a status quo to be protected. The respondents will have proceeded by means of voluntary redundancy so far down the course of implementing the change that there is no real ability to preserve any aspect of the opportunity to be consulted in the manner claimed by the Union. For that reason, recognising that the Easter break is about to commence, the continuation of the injunction should only be until 3 May 2019. In reaching that conclusion I should not be taken to be concluding that the offering of voluntary redundancy without engaging in discussions is a course that would comply with the requirements of the industrial agreements. That is a matter that will fall for consideration at any final hearing. It is simply a recognition of what has in fact occurred.

20    The grant of an interlocutory injunction in an industrial law context is governed by the same principles as apply to such applications in other contexts: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Blue Star Pacific Pty Ltd [2009] FCA 726 at [21]. As to those principles, the following matters are of particular significance in the present case.

21    First, the respondents do not dispute that there is a serious question to be tried.

22    Second, on the basis of the materials currently before the court there is considerable merit in the claim that there has not been consultation of the kind required. There is no contention advanced at least at this stage to challenge the claim by the Union that there has been a definite decision of the kind contemplated by the industrial instruments. Rather, the respondents say that since the interim order was made 'the consultation process has been ongoing'. They describe what has occurred in the following terms:

To date, of the approximately 214 employees identified as being likely to be affected by the March Decision:

(a)    all of them have been notified of the March Decision and advised of its potential impact;

(b)    all have been placed on full pay and not been required to attend work to enable them to focus and engage in the consultation process;

(c)    all have received communications from management by email and either by phone or in person about the proposed changes and been invited to have further discussions with management about the impact of those changes, including measures to avoid or reduce any adverse affects on them;

(d)    all have been advised of alternative roles and given an opportunity to nominate for those they are interested in; and

(e)    all have had an opportunity to be represented during the process.

(footnote omitted)

23    The respondents say that consultation will continue by the following process:

(a)    conducting individual meetings with employees;

(b)    responding to feedback and queries from employees;

(c)    where appropriate, conducting townhall meetings;

(d)    creating and distributing guides and supporting materials for employees;

(e)    advising employees of the redundancy selection criteria it proposes to apply;

(f)    developing any additional consultation initiatives which assist employees;

(g)    after the injunctions are lifted, providing a final opportunity for employees to express a preference for redundancy or redeployment before making a final decision in respect of their employment.

(footnotes omitted)

24    The Union says that these steps are not discussions or consultation of the kind required. It says that once the March decision was made the respondents became obligated to:

a.    inform employees at the relevant stores that [they] intended to reduce staffing levels (i.e. amount of rostered hours) at those stores;

b.    provide relevant information in respect of this change (e.g. the number of hours to be reduced, and why);

c.    provide all employees with the opportunity to put forward suggestions as to how this could be implemented;

d.    give genuine consideration to these suggestions; and

e.    only then make a final decision as to how the reduction in hours was achieved.

25    The Union says that what the respondents have done instead is:

a.    without any input from employees, identified which positions it will either abolish entirely or restructure;

b.    communicated this to the targeted employees, providing them a choice between redundancy and potential (but not guaranteed) redeployment;

c.    removed those employees from the workplace (effectively precluding collective discussion or decision making) pending termination or redeployment; and

d.    utterly failed to have any discussions whatsoever with the remaining employees.

26    Employees governed by the Award and the enterprise agreements have been employed on terms that require discussions before the implementation of a definite decision to make a major change. The Award and the PGFG Enterprise Agreement each provide expressly that for the purposes of those discussions the affected employees should be given information about the change. It is reasonably arguable that a similar obligation arises under the Noni B Enterprise Agreement. The evident purpose of these obligations is that there be some form of engagement with employees before a definite decision is implemented. Further, it is to be an informed discussion. The case for the Union is that there must be an engagement about the manner in which the change may be implemented and its consequences for employees. The consultation process is not just informational. Nor is it a process by which employees simply get to choose between options formulated by the employer without consultation. Rather, it involves active engagement with the employer considering matters raised by employees concerning the change.

27    The submissions for the Union find substantial support in QR Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2010] FCAFC 150. In that decision, Keane CJ and Marshall J at [37] described the purpose of an obligation to consult of the kind provided for in this case as being:

… to ensure that, before the employer seeks to negotiate to alter the terms and conditions of employment, whether by inviting voluntary acceptance of an offer or engaging in compulsory processes of dispute resolution, employees will have a real opportunity to make suggestions on the subject matter raised for their consideration so that the suggestions might be considered by the employer before the processes of bargaining and offer and acceptance begin.

See also Gray J at [80].

28    Even if the discussions contemplated by the industrial agreements are informational only, contrary to the case advanced by the Union, they provide affected employees with a right to have explained to them the reason for a definite decision to make changes that will have a substantial effect upon them before those changes are actually implemented. It is a protection from sudden, unexplained changes with significant effect. The value of notice and discussion and its potential to limit the anxiety and distress that can arise when major changes are made with significant effects for employees should not be understated. As Rangiah J noted in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Electrix Pty Ltd [2018] FCA 1879 at [32], a case where similar issues arose, compensation is not likely to be an adequate remedy for a failure to perform a right to consultation because 'there is likely to be a personal and psychological impact upon any person as a result of forced unemployment'. Therefore, I do not accept the submission by senior counsel for the respondents that the rights in issue in these proceedings are procedural in character.

29    Third, despite the complaints of lack of consultation raised by the Union, on the evidence the respondents have pressed on with their course of implementing their decision in respect of identified employees rather than consulting in the manner described in the cases to which I have referred. If an injunction is not granted then the consultation for which the Union contends will not have occurred and employees will have been made redundant by the implementation of the March decision. Therefore, if the Union is successful at a final hearing, there will be no means by which orders might be framed that will deliver the nature of the consultation that the Union contends is required by the industrial instruments. In the events which have occurred and those foreshadowed by the respondents, the March decision will have been implemented as to a considerable number of employees who will have accepted voluntary redundancy. By voluntary, I refer to the fact that it will be the consequence of a choice made by the employee. It will be a choice which, on the evidence as it presently stands, will not have been made after matters of the kind that could be raised by way of the type of consultation for which the Union contends have been considered by the respondents. Therefore, there is a very real risk that a good claim to such a right will have been lost.

30    On the other hand, as I have said, the steps that have been taken by the respondents and the extent of employees who have accepted voluntary redundancies means that an ongoing injunction until trial will not serve the purpose of preserving the subject matter of the claim by the Union. A point will soon be reached where there is nothing further to be discussed because of the extent to which the decision has been carried into effect. The state of affairs that should have been the subject of the discussions for which the Union contends will have changed.

31    Fourth, the financial consequences to which the respondents point are not as significant as they maintain. As I have noted, the costs saving on an annualised basis that is expected from implementing the decision is $3 million. The additional costs associated with a short further extension of the injunction to enable further discussions with those employees who have not accepted voluntary redundancy will be a small fraction of those costs. It will ensure that the respondents do not bring the process to an end today which is the last date to which the respondents through senior counsel indicated there should be any extension.

32    Fifth, the respondents point to a line of credit that they say is available to meet termination costs that will no longer be available after mid-May 2019. However, the evidence is that the respondents only planned to draw on the facility to meet some of the termination entitlements and the extent to which that is the case was stated in the respondents' affidavits. Given what I have said about the extent of the employees who will be affected by the proposed restraint this matter does not weigh significantly against injunctive relief. In any event, the extension that I propose to order will not take matters beyond mid-May.

33    Sixth, it is said that the Mother's Day trading period is a crucial one for the respondents' stores. It is said that to maximize the ability to achieve a profit the cost reduction program needs to be completed so that there can be full focus on maximizing performance during the period and this will be assisted if there is rostering and staff stability. I note that, on the evidence, the respondents have chosen to allow all employees to remain on full pay but not attending work during the dispute. Given the fairly limited number of employees affected by the injunction in the context of the overall business of the respondents and the course that the respondents have adopted to date, it is difficult to see how the proposed terms of the injunction would have adverse consequences for Mother's Day trading especially as the respondents say they have planned to conduct that trading with less employees and affected employees are no longer at the workplace.

34    For all those reasons I will grant an injunction in the terms sought by the Union until 3 May 2019.

35    The Union also seeks an expedited hearing. For that reason, I will relist the matter for a case management hearing at which time consideration will be given to listing the matter for a final hearing. Parties can make submissions at that time as to whether the hearing should be expedited.

Associate:

Dated:    18 April 2019