Australia: The parent trap – Adverse action, parental leave and redundancy

Strictly speaking, it is not unlawful to make an employee redundant whilst they are on parental leave. However, employers may find themselves in hot water following a redundancy if the employer's reasons for doing so are found by a Court to be:

  • because the employee exercised a workplace right (e.g. the right to take parental leave or request flexible working arrangements); or
  • based on a prohibited ground of discrimination (e.g. family responsibilities).

In this article, we:

  • examine the recent Federal Circuit Court decision in Heraud v Roy Morgan Research Ltd [2016] FCCA 185 (Roy Morgan) where an employer was found to have engaged in adverse action when it made an employee's position redundant whilst they were on parental leave;
  • consider another recent decision that came to the opposite conclusion in similar circumstances; and
  • discuss some practical tips to keep your organisation out of the 'parent trap'.

BACKGROUND - ADVERSE ACTION IN A NUTSHELL

Under Part 3-1 of the Fair Work Act (FW Act), an employee may be protected from dismissal or for any other adverse action, such as a demotion or selection for redundancy, if they are able successfully to argue that a reason for the action was:

  • because they exercised (or proposed to exercise) a 'workplace right' 1 (e.g. the right to take parental leave); or
  • because of a 'prohibited attribute' (e.g. pregnancy).

The case law in this area has confirmed that:

  • the 'workplace right' or 'prohibited attribute' does not have to be 'the main' or only reason for a claim to succeed, it just needs to be one of the reasons;2 and
  • where an employee has established that they suffered some form of adverse action (and they allege that a reason for this was the exercise of a workplace right) the employer bears the onus of proving to the court that the exercise of that workplace right was not the reason, or one of the reasons, for the alleged 'adverse' action.3

THE FACTS OF ROY MORGAN

  • Ms Heraud was the National Operations Director for Roy Morgan.
  • In September 2013, Ms Heraud took 39 weeks' maternity leave and was due to return to her job in July 2014.
  • Between December 2013 and January 2014, Roy Morgan suffered a significant decrease in revenue due to the loss of major clients and the entry of a new direct competitor into the market.
  • On 5 May 2014, the employer advised Ms Heraud that an appropriate redeployment option for her was within the newly created Research Centre.
  • On 7 May 2014, Ms Heraud emailed her request for flexible working arrangements (FWA) to her employer.
  • The HR Director then prepared a redundancy proposal in the first half of May 2014, recommending that the employee's position be made redundant and that the proposed date for the redundancy be brought forward:
  • It is proposed that the role is made redundant at the end of July 2014. However, (the Applicant) has requested a FWA to commence 2 July 2014 with a RTW proposal of 20 hours p/wk. Given this, it is most sensible to maintain Euan [the maternity leave replacement employee] in the role in an acting capacity and to make the role redundant now, so that we can discuss redeployment opportunities with [the applicant] that might best suit her FWA request. [Court's emphasis].4

  • On 20 May 2014, Roy Morgan informed Ms Heraud that the Research Centre positions would no longer be offered to her and that her role would be formally made redundant.
  • On 27 May 2014, Roy Morgan responded to Ms Heraud's request for FWA stating that Roy Morgan would not be able to approve the request, as it did not know which role she may or may not be undertaking.
  • On 27 June 2014, Ms Heraud's employment was terminated.

THE EMPLOYEE CLAIMS

Ms Heraud made an application under Part 3-1 of the FW Act alleging seven different forms of adverse action by Roy Morgan. These included that it had engaged in adverse action (e.g. failing to consult with her, not returning her to her role and terminating her employment), because of prohibited reasons/workplace rights (e.g. family responsibilities, pregnancy and the right to request parental leave/FWA).

THE COURT'S DECISION

The Federal Circuit Court held that the employer engaged in adverse action in relation to three of the seven allegations, namely:

  • in deciding not to return the employee to her pre-parental leave position;
  • in deciding not to make any research positions available (after creating an expectation that the employee would be redeployed); and
  • in terminating the employee's employment for the reason (or reasons including that) she had requested FWA.

The Court expressly noted that:

  • the HR Director and General Manager of Operations were no longer employed by Roy Morgan (noting that the hearing was heard over one year after Ms Heraud's employment was terminated);
  • Roy Morgan provided no explanation as to why both decision-makers were not called to give evidence;
  • Roy Morgan provided no other evidence in relation to the decisions made by the relevant parties; and
  • the absence of any evidence in relation to those decisions meant that Roy Morgan had failed to discharge the reverse onus.

The matter is listed for a further hearing in April 2016 when the appropriate penalty and relief will be determined.

THE COFFEE PROJECT CASE

Of course, not all claims related to an employee's parental status will succeed, as is evidenced by the decision in Scullin v Coffee Projects (Australia) Pty Ltd [2015] FCCA 1514 (Coffee Projects).

THE FACTS

In Coffee Products:

  • In 2012-13 Mr Scullin took 12 months' unpaid leave to care for his newborn twins.
  • Mr Scullin mistakenly took unpaid leave rather than parental leave because Coffee Projects' Parental Leave Policy stated that to take parental leave, he had to be 'the child's primary care giver' (compared to the FW Act requirement that the employee 'has or will have a responsibility for the care of the child').
  • Following Mr Scullin's return from unpaid leave he was advised that he could continue to be engaged by Coffee Projects, but only on a part-time/casual basis.

THE CLAIMS

Mr Scullin made a number of claims against his employer, including alleging that the change to his role (to part time/casual) constituted adverse action, and that Coffee Projects had breached the National Employment Standards under the FW Act by not providing him with unpaid parental leave and failing to return him to his pre-leave position.

THE DECISION

Unlike Roy Morgan, in Coffee Projects the employer was able to:

  • discharge the reverse onus by requiring the HR Advisor and other decision-makers to provide evidence and be cross-examined in Court as to why the relevant decisions were made; and
  • satisfy the Court that the reasons for the decision to change Mr Scullin's employment to part time, was not because the employee exercised his workplace right to take parental leave but because of a misunderstanding as to entitlements and a misapprehension that a new contract needed to be issued.

Notably, while Coffee Projects was not found to have engaged in adverse action, it was found to have breached section 83 of the FW Act by failing to recognise Mr Scullins' entitlement to unpaid parental leave and to return him to the same position following his return from 'parental leave'. Mr Scullin was awarded almost $170,000 to compensate for these failures.

PRACTICAL MATTERS

Whether you will win or lose an adverse action case will depend on the evidence of your decision-makers

The Roy Morgan and Coffee Projects decisions clearly demonstrate the importance of careful selection of decision-makers and ensuring that you have substantial evidence from them and/or their contact details if/when they leave your organisation.

Make sure your policies are up to date

Coffee Projects also serves as a timely reminder that it is important to ensure that your policies and procedures have been updated to reflect the current state of the law.

CORRS' TIPS TO AVOID ADVERSE ACTION EXPOSURES

To discharge the reverse onus and defend adverse action claims:

  • Prepare for the decision-making process
    • Carefully select your decision-makers
    • Make sure your decision-makers are aware of their obligations and responsibilities and your organisation's potential liabilities
    • Make sure your decision-makers take notes of meetings/record the reasons for their decisions
    • Where possible, limit the number of decision-makers
  • Manage the claim
    • Collate the evidence early (i.e. obtain evidence as soon as the claim comes in)
    • Keep in contact with decision-makers and other potential witnesses to ensure that you can get access to them if you need to later on

WANT TO KNOW MORE?

Corrs runs practical workshops to assist clients to avoid adverse action and train their managers and officers on how to effectively manage employee relationships.

Footnotes

1 Section 340, FW Act.

2 See section 360, FW Act and the decision discussed in: http://www.corrs.com.au/publications/corrs-in-brief/the-new-untouchables-does-adverse-action-mean-that-some-employees-are-immune-from-dismissal/.

3 Section 361, FW Act.

4 [2016] FCCA 185, at [233]-[236].

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.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.