Australia: Employer fined for making returning mother redundant

Last Updated: 4 September 2016
Article by Tim Greenall

It's an all too familiar scenario.

A valued employee takes her statutory entitlement to maternity leave and applies for a flexible work arrangement such as part-time work upon returning to work.

However, whilst the employee has been away on parental leave, there are many changes in the business and rather than making a successful return to work, the employee is greeted with the news that her position has been made redundant.

The returning mother has a return to work guarantee under the Fair Work Act 2009 which states that on ending unpaid parental leave, an employee is entitled to return to:

  • the employee's pre-parental leave position; or
  • if that position no longer exists – an available position for which the employee is qualified and suited nearest in status and pay to the pre-parental leave position.

In the case of Heraud v Roy Morgan Research Limited ([2016] FCCA 1797), the Federal Circuit Court has fined the employer $52,000 for denying the Applicant's request for flexible hours following her return from maternity leave, before then making her redundant.

Facts

The Applicant's pre-maternity leave position was National Customised Operation Director responsible for the overall management of large projects being undertaken by Roy Morgan, including the management and development of project managers working in the field.

Whilst the Applicant was on maternity leave, the employer lost major clients, which had a significant effect on the company's profitability. The employer decided that its future survival necessitated a reduction in its wages bill (which comprised over 70% of its total expenses).

The employer embarked on a major restructuring of its organisation, with a consequence that there were a large number of redundancies. However, as part of the employer's new organisational structure a Research Centre was created.

Whilst on maternity leave, the Applicant expressed an interest in prospective employment as a Project Manager in the new Research Centre. However, shortly prior to the expiration of her maternity leave, the employer denied the Applicant's request for a flexible working arrangement involving part-time work for a period of three months and terminated her employment on the ground of redundancy. This was despite the fact that another employee continued to act in the Applicant's pre-parental leave position for a further two months. That employee was then transferred to work in an operations role on various projects which formed part of the Applicant's previous duties, and was later appointed manager of the employer's call centre operations.

The Court held that despite the major restructure and the large scale redundancies that followed, the employer had created an expectation that the Applicant would be redeployed in the Research Centre on her return from maternity leave. This process ended when the employer terminated the Applicant's employment shortly prior to the expiration of her maternity leave.

Points to Note from the Court Decision

  1. It is a fundamental entitlement of an employee to take parental leave to care for a child and not be prejudiced or disadvantaged for exercising that right in the workplace.
  2. Prevailing community standards demand recognition of the fundamental entitlement of an employee to take parental leave to care for their child or children, safe in the knowledge that their employment in the future will not be prejudiced because they have exercised their right to take parental leave, including the right to request flexible work arrangements.
  3. In this instance, the employer took adverse action for a reason which included as a "substantial and operative reason", the returning mother's request for flexible work arrangements.
  4. The employer was fined $52,000 for "serious" contraventions and ordered to pay those penalties to the Applicant.
  5. The Applicant was also awarded $20,000 for the loss of enjoyment, loss of reputation and distress experienced in the wake of the dismissal as community standards now recognise the distress and suffering an employee will experience when those statutory rights are contravened by an employer.
  6. At the time of her dismissal, the Applicant was in a vulnerable position as she was on maternity leave with a young baby, seeking to return to work in a senior position which she derived substantial enjoyment from. Prior to the termination, the Applicant had occupied a position of responsibility and it is logical to assume her reputation and status was part of the enjoyment of employment.
  7. This decision acts as a deterrent to prevent any future or similar contraventions by like-minded organisations and to be seen by this employer as damaging to its reputation, and consequently, it will be minded to avoid future repetition of like contraventions.
  8. There is to be a further hearing to consider compensation for economic loss suffered by the Applicant plus penalty interest on that amount. Such assessment is to be based upon the assumption that but for the redundancy, the Applicant would have been employed full-time as a Project Manager within the new Research Centre for 52 weeks with a potential earning stream of $125,000 and prior to that, as a part-time employee working flexible work arrangements for three months.
  9. It was not accepted by the Court that the employer would have exercised its right to bring the Applicant's employment to an end in accordance with the contract of employment on the ground of redundancy consequent on the implementation of the major restructure. This conclusion was fortified by the fact that the employer had externally advertised for a Research Director in October 2014, some four months after the Applicant's employment was terminated.

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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.

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