BOC (a supplier of gas, equipment and safety products) has been found to have breached the general protection provisions of the Fair Work Act and ordered to pay $57,843 (made up of lost leave payments and court-imposed penalties of $20,000) after the Federal Circuit Court held that bringing forward the date of a pregnant employee’s redundancy, so that it took effect shortly before the employee went on paid parental leave, was adverse action taken for a prohibited reason. This case demonstrates that decisions in respect to redundancy must be made carefully to ensure compliance with the Fair Work Act even in circumstances where the employer may have an employee’s best interests at heart and genuinely believes that the right thing is being done by the employee.

Redundancy of pregnant employee costs company $60k

The Federal Circuit Court found that while there was a genuine business case for the employee’s redundancy, the company’s decision to bring the redundancy forward amounted to unlawful adverse action taken because she was due to exercise her workplace right to take parental leave.

In accordance with BOC’s paid parental leave policy, the employee would have been entitled to 21 weeks paid parental leave.

As a result of the decision to bring forward the redundancy, the employee lost her right to parental leave (including a portion of the company’s paid parental leave) and the return to work guarantee.

• Background:

The Employee’s redundancy was one of eight redundancies arising from a business restructure.

The employee claimed that there was no business case for redundancy and instead her termination occurred because:

• she was about to take parental leave; and
• she was discriminated against on the basis of:
  • gender;
  • pregnancy; and
  • future family responsibilities.

The Court accepted that the company had a genuine business need for restructuring and that a business case for the redundancy had been made after a review of the company as a whole. The Court determined that the selection of the employee for redundancy was not discriminatory.

The company’s general manager decided to bring forward the applicant’s redundancy to prevent her from incurring unnecessary stress, so she wouldn’t need to attend the workplace during parental leave to be told, and so that she would be aware of it before she returned from maternity leave.

However, the consequences of bringing the redundancy forward meant that the applicant could not rely on the protection afforded under section 84 of the Act whereby an employee who takes parental leave is entitled to return to their pre-leave position, or where it no longer exists, a

suitable alterative position.

The Court accepted that the general manager believed he was acting in the best interests of the employee by informing her of her redundancy prior to her going on maternity leave.

Notwithstanding that, it was ultimately concluded that the Employer had brought forward the redundancy date for a prohibited reason, that being due to the employee commencing parental leave on a particular date.

The Court determined that BOC altered the position of the employee in accordance with the definition of adverse action under the Act.

• Lessons for Employers:

When seeking to implement a restructure, employers should ensure that there is a strong business case and that consistent evidence could be provided to demonstrate the decision making process;

When considering a restructure that is likely to impact employees who have proposed to exercise a workplace right employers should:

• seek advice to minimise the risks
• consider the timing of a redundancy and
• ensure that this is not influenced by factors external to the business case.

In this instance the Court also pointed out that the breach may not have occurred if the general manager had consulted the company’s human resources experts.

When dealing with redundancies employers should always consult with impacted employees in accordance with the consultation provisions under any applicable Award or Enterprise Agreement.

It is important to remember that the law does not care if a decision is made in the best interests of an employee. If that decision is made for an unlawful reason, it is still unlawful.

If you are an Employer who is implementing a restructure or considering making an employee redundant, contact Savvy Human Resources Brisbane Ballina or Sydney.

About the author: Craig McFadden is the founding director of Savvy HR. Craig's clear, practical counsel and ability to influence others into action and to rethink traditional HR practices with a business oriented lens, has gained him credibility with CEOs and executive leaders and he is frequently called on to serve as a strategic partner with the primary focus of defining, building and influencing the talent within leadership teams to drive business objectives.