In a much anticipated decision, on Friday, 30 April 2004 the Supreme Court of Victoria (Court) provided significant guidance on the issue of flexible work practices to employers regarding their treatment of employees with family responsibilities.
The Court determined that it was reasonable for an employer to require a Hansard sub-editor employee to attend work rather than work from home. While the decision was clearly based on the unique job, it provides principles that will assist employers assessing requests for flexible working arrangements by using the principles of indirect discrimination.
The Court also overturned the employee's award of damages of $161,307.40 which was the current highest award of damages under equal opportunity laws in Australia.
Ms Schou commenced employment with the State of Victoria in January 1979. The State of Victoria employed Ms Schou on a full-time basis as a Parliamentary sub-editor of Hansard. From 1993 Ms Schou was a parent to two children. Her younger child was sick with recurrent infections and asthma and after his birth Ms Schou increasingly found caring for her young child and the long sitting hours of Parliament very difficult. Ms Schou requested an alternative arrangement whereby a modem line (at a cost of $2,500) would be installed between Parliament House and her home, allowing her to work from home for two days a week when Parliament was in session. Her employer agreed, but the modem proposal was never implemented. Ms Schou resigned on 1 November 1996.
In 1997, Ms Schou complained of indirect discrimination to the Equal Opportunity Commission of Victoria under the Equal Opportunity Act 1995 (Vic) (Act). In 2000, the Victorian Civil and Administrative Tribunal (Tribunal) awarded Ms Schou record damages in excess of $160,000 after finding that her employer discriminated against her on the basis of her status as a parent and carer. In September 2001, the Supreme Court of Victoria granted the State of Victoria's appeal against the Tribunal's decision. The matter was then sent back to the Tribunal for re-hearing. After the re-hearing the Tribunal concluded that the requirement for Ms Schou to physically attend work was not reasonable, and the complaint was upheld.
The State of Victoria successfully appealed to the Court of Appeal, and its decision was handed down on Friday, 30 April 2004.
There have been many cases to date alleging that an employer's failure to accommodate a request for flexible working arrangements (such as part time, job share, remote work or altered hours of work) constitutes indirect discrimination on the basis of sex or family responsibilities.
Section 9 of the Act provides that indirect discrimination occurs if a person imposes, or proposes to impose, a requirement, condition or practice:
- that someone with an attribute does not or cannot comply with
- that a higher proportion of people without that attribute, or with a different attribute, do or can comply with, and
- that is not reasonable.
This definition of indirect discrimination is basically consistent with the definition under all State, Territory and Federal equal opportunity legislation.
The Court of Appeal decision
The attendance requirement
The Court of Appeal agreed that the question was whether the conduct of the State of Victoria constituted indirect discrimination.
The Court of Appeal accepted that:
- by not accommodating her request for work from home, the State of Victoria had imposed a condition or requirement that Ms Schou attend work full-time on site at Parliament during sitting days
- for the period from 1996 until mid-1997, due to her current responsibilities as a parent and carer, Ms Schou could not comply with the requirement or condition that she attend work full-time (this inability was resolved by mid 1997)
- a higher proportion of employees who were not parents or carers could comply with the requirement or condition.
The decision for the Court of Appeal was whether the requirement that Ms Schou attend work full-time on site at Parliament during sitting days was reasonable.
Ms Schou argued that the attendance requirement was not reasonable, in light of her alternative proposal that she work at home via a modem, which was of inconsequential cost to her employer.
Justices Phillips and Buchanan (with Justice Callaway dissenting), found the Tribunal had erred in determining that the requirement to attend work full-time on site at Parliament during sitting days was unreasonable.
The majority found that the Tribunal in the re-hearing were 'seduced by the argument' that because the modem proposal was a reasonable alternative, that the condition or requirement for attendance on site during the sitting days was itself not reasonable.
The correct test to be applied in determining whether or not indirect discrimination had occurred was to first consider the requirement itself, independently of any alternative. The reasonableness of the condition or requirement is then to be considered with regard to the alternatives.
The Court also found that the onus was on the employee to establish that the requirement was unreasonable.
The test applied
In applying this test, the majority considered the arguments advanced by the employer in support of the reasonableness of the requirement, including:
- strict time constraints applied to the work
- the need for interaction between all staff members to produce accurate reports quickly (within two to three hours)
- the small size of the team, and the burden of an increased work load for workers who remain on site if one of them attempted to work from home
- security of documentation could be at risk
- there was a potential difficulty with rectification of equipment failures
- working from home meant more limited access to resource material
- there were possible audio-equipment limitations if telephones were used rather than directly listening to recordings, and
- possible difficulties in liaising with Parliamentary members working from home.
The Court concluded that, on the basis of the above factors, 'so far from being not reasonable, the attendance requirement was perfectly reasonable'.
In considering the influence, if any, of the alternative proposal, the majority concluded that it was not equally suited to the requirements of the job. The modem proposal was not as efficacious or as suited to the task of being a sub-editor as the attendance requirement itself and therefore did not render the requirement unreasonable.
Implications for employers
While this latest Schou decision brings welcome support of the right of employers to impose reasonable requirements, such as attendance requirements, without the need to accede to alternatives that do not meet their business needs, the implications for employers must be considered carefully.
- This decision fits into a long line of cases on flexible working arrangements which, to date, have mostly favoured employees. In essence, to avoid discrimination claims, employers must be able to identify what their requirement is for a particular role and demonstrate that the requirement is reasonable in all the circumstances. Employers should have in place a clear and consistent process to consider all relevant factors to determine whether any requirement that employees work in a particular way is reasonable. This is usually done by first identifying the inherent requirements of a role and considering any obstacles to the role being done flexibly. Employers should consider any accommodations they can make to allow the role to be done as efficiently as occurs if the requirement is met. Careful consideration of whether the alternative is equally suitable must be undertaken. Failure to do so risks discrimination claims being successful.
- Employers will need to exercise caution when assessing the reasonableness of their requirements. In this case, the Court paid particular attention to the circumstances of the particular case, before reaching its conclusion. For example, the Court of Appeal gave weight to the fact that interaction between employees and the tight timeframes within which the work had to be produced necessitated employees to be on-site.
- Employers need to be wary that employee groups will argue that the decision can be easily distinguished, as it turned on the unique working environment of Hansard sub-editors. The work of sub-editors was deemed to be 'highly skilled and unique'. Successful discrimination claims may be made in other situations, such as for larger employers, where the work undertaken is not as unusual.
- The Court acknowledged that a good employer could consider from time to time specific requests of a particular employee to depart from the general rule, for example for emergencies and the like. In this case, he acknowledged that Ms Schou's concerns were of a short term nature and to meet a temporary problem. Justice Phillips states that 'the recognition of the need to admit exceptions is a matter for proper management, not anti-discrimination legislation'.
- It is possible that in future, applications of this kind will instead be made under industrial legislation alleging that any termination was unfair or harsh, unjust or unreasonable. Indeed, if Ms Schou had made a claim of unfair dismissal, the relevant Commission may have found that the employer should have accommodated her for a limited period, particularly due to the small cost to her employer, and temporary nature of the alternative solution. It may have found that the failure to do so rendered the termination harsh, unjust or unreasonable. Of course, there are compensation limits to unfair dismissal legislation which do not apply to the anti-discrimination jurisdictions.
- Managers and human resources staff would benefit from training to ensure that they do not prematurely assess a requirement as unreasonable, without sufficient regard as to whether the alternative is equally suitable. Many of the flexible work cases to date have evidence of managers expressing their personal view that an alternative arrangement would not work before any legitimate consideration of a request is made. Such statements are highly prejudicial to employers.
- This case also demonstrates why it is important to have internal equal opportunity complaint processes to handle any complaints of discrimination made by employees internally. A period of almost eight years has passed since Ms Schou resigned, including two Tribunal and two Supreme Court hearings, until Friday's decision was handed down. The time and cost involved in this process was undoubtedly significant for both parties.
- Employers should also be aware the Ms Schou has the right to appeal this decision to the High Court of Australia for further determination.
Clients with any queries regarding the decision and its implications should contact one of the Freehills ER partners.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific cirucumstances.