Australia: Adverse action and pregnancy discrimination – liability of directors

Last Updated: 3 March 2012
Article by Tim McDonald

In a recent decision, the Federal Court of Australia decided that a company (Wongtas) and its two director's had contravened the General Protections Provisions of the Fair Work Act ('FWA') and record-keeping regulation contained in the Fair Work Regulations 2009.

As a consequence of the contraventions, the Court fined each of the two director's $11,880.

The facts

An employee of a printing business was discriminated against by the business' two directors on the grounds of pregnancy and gender. The discrimination suffered by Ms Ye included, a requirement that she train her 'replacement' who had been brought into work four months before she was due to have time off to have her unborn baby; being assigned to manual labour, namely, packaging duties instead of being returned to her former, usual role of office duties upon returning from sick leave after having had a miscarriage; and being told by one of the Director's that 'many employees resign when they fall pregnant and then stay at home in bed' in reply to a complaint she made about being assigned packaging duties.

As the employment relationship continued to deteriorate, Ms Ye received a warning letter regarding her performance, she refused to sign it and contacted the Fair Work Ombudsman (FWO) to discuss her rights and receive some guidance. On one occasion, Ms Ye tried to discuss with one of the Director's her concerns that she was being 'treated unfairly and underpaid.' Her attempt at discussions was met with a considerable amount of aggression. She was yelled at by one of the Director's and told "she would not be returning to office duties."

A period of one month lapsed between Ms Ye's enquiry of the FWO and when their inspectors attended the worksite to issue a Notice to Produce on the two directors.

In this time, Ms Ye was relocated to banner-making duties but was subsequently removed after the visit - she was informed by one of the directors that he was not happy about her complaint.

On 7 December 2009 Ms Ye received written notice from one of the director's advising that her last day of employment would be 22 December 2009 within it was a reference to her 'resignation'. Ms Ye never resigned or indicated any intention to resign. Ms Ye received further notice on 22 December again referring to her resignation and enclosing two pay slips.

Ms Ye was denied a copy of her leave records when she requested them.

The penalties

Prior to the Court's hearing in relation to penalties, the two directors 'admitted and acknowledged the facts above and that they had aided, abetted, counselled, procured, induced by their acts were knowingly concerned in or a party to breaches by Wongtas' of the Fair Work Regulations and the General Protections Provisions in the FWA.

Both directors were fined for the contraventions following their admissions. The FWA provides that 'a person who is involved in a contravention of [the Act] is taken to have contravened [the Act themselves].' By their admissions and acknowledgements it is clear that both director's were involved in a contravention of the Act.

Accordingly, the Court fined both directors the total sum of $11,880 each.

How did the Court arrive at the penalty figures?

In this case the Court gave consideration to a number of factors when determining the appropriate penalty to be handed down for contraventions of the FWA.

Some of the factors the Courts will consider in determining penalties include:

  • The nature and extent of the conduct leading to the breaches
  • The circumstances in which the conduct took place
  • Whether general or specific deterrence is required
  • Whether there is remorse and / or contrition of those in breach
  • At what time during the proceedings an admission or acknowledgement is made of the breach(s) if at all
  • Whether or not the breaches arise out of the same or similar circumstances so that it can ensure that the penalty 'fits' the offence.

In this case the Court said that 'the breaches represent a gross violation of [Wongtas' and it's directors] obligations under the Fair Work Act and that the conduct.... establishes that they engaged in abusive action against Ms Ye.'

The Directors argued that there existed cultural issues which gave rise to their conduct. They argued that they had 'traditional beliefs about pregnancy and the need for rest and protection of pregnant women.' However, when the Court considered this it said that holding of traditional beliefs 'cannot prevail over the statutory requirements relating to personnel under the FWA – they constitute no excuses under the FWA.'

After considering all of the above the Court decided to 'impose a penalty which will provide a salutary reminder not only to [the Directors] but also... those engaged in the employing of personnel that compliance with FWA is mandatory.'

The Court found that the penalty for each breach should be two-thirds of the maximum penalty. This figure was then reduced by a discount of 10% because the Director's admitted and acknowledged they contravened the Act before a full hearing to prove the breaches had commenced.

A further 10% discount was given because each of the contraventions arose from the same circumstances – Ms Ye's pregnancy and gender.

The maximum penalty for a single breach of the General Protections Provisions is $6,600.

The Directors were each fined $3564 (2/3's of the maximum reduced by 20%) for each of the three breaches of the Act.)

The maximum penalty for a breach of the Fair Work Regulations (Record Keeping Provision is $2,200. The Directors were each fined $1188 (2/3's of the maximum reduced by 20%) for the single breach of the regulations).

Lessons for employers

  • Actions against employers on the grounds of discrimination are no longer limited to being brought under the various pieces of discrimination legislation
  • Adverse Action provisions also provide a remedy for discriminatory conduct
  • Directors of companies can also be found guilty of Adverse Action and can be fined if they are found to be "involved" in the contravention of the General Protections Provisions
  • Where an employers / directors conduct is called into question with respect to whether or not it contravened the Act, there is a reverse onus of proof. This means that it is up to employers / directors to prove why they acted in a certain way.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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