Would you make a new mother redundant while on parental leave from her employment?

You may have read the headline “Roy Morgan Research acted unlawfully when it made a new mother redundant”:  The Age.  This is not the kind of publicity any business wants, particularly when the business promotes itself as family friendly and supportive of women.

There is no doubt that financial and competitive pressures require businesses to adapt and implement change.  These are challenging times for all, particularly where it involves the loss of jobs.  It can be even more difficult when those changes impact on a new parent’s job. 

In this bulletin we review the recent case of Heraud v Roy Morgan Research Limited [2016] FCCA 185, examining how employers are expected to manage workplace restructuring whilst balancing its obligations to an employee on parental leave. 

The facts

Ms Heraud was a senior employee at Roy Morgan Research.  She took parental leave in September 2013 and planned to return to work on 2 July 2014. 

From December 2013, Roy Morgan was confronted with significant external factors impacting on its profitability and viability requiring it to rearrange its structure.

In early May 2014, Ms Heraud went to work for a “keeping in touch” day.  That day she was briefed on proposed changes to a company structure, including that her role would be made redundant.  Redeployment options were discussed.  Two days after that meeting, Ms Heraud requested a flexible working arrangement to return to part time work.

At the time, another employee (X) had been working in Ms Heraud’s role whilst she was on leave.  About a week later, Roy Morgan decided to bring forward the redundancy of Ms Heraud’s role to 27 June 2014.  Roy Morgan decided “it is most sensible to maintain [X] in the role in an acting capacity and to make the role redundant now”.  X continued to work in that role for a period until 31 August 2014 and then secured other employment at Roy Morgan; Ms Heraud’s employment on the other hand was terminated after redeployment for her was withdrawn.

Ms Heraud made a number of claims against Roy Morgan under the Fair Work Act 2009, including that it:

• failed to consult her about the workplace changes before the decision was made;

• failed to return her to her role or a restructured role on 2 July 2014;  and

• took adverse action against her because she exercised a workplace right to make a request for flexible working arrangements.

Roy Morgan argued that it only took action because of a commercial necessity to restructure the business.  It said it made more sense to keep X in Ms Heraud’s role before it was eliminated.

The law

Employers have two significant obligations that it owes to employees on parental leave:

• Consultation - s83 of the FW Act requires an employer to take “all reasonable steps” to consult with an employee on unpaid leave where a decision has been made which will have an effect on the status, pay or location of the employee.  The employer must give the employee information about, and an opportunity to discuss, the effect of the decision.

• Return to work guarantee - s84 of the FW Act provides that on ending unpaid parental leave an employee is entitled to come back to the job they had before going on leave.  If their job no longer exists or it has changed then they have to be offered a suitable available job that they are qualified and suited to work in and which is nearest to their old job in pay and status.

Employees, including employees returning from parental leave can request for flexible working arrangements: see s65 of the FW Act.  An employee may request a change in their working arrangements because they have responsibility for the care of a child who is of school age or younger.  An employer can refuse the request but only on reasonable business grounds.

Employers can never:

• take adverse action against an employee for exercising a workplace right, such as seeking to return to work from parental leave or making a flexible work request;  and

• discriminate against an employee because they have responsibilities as a carer.

The Court said

There was no question that to maintain profitability and viability, the company had to restructure.  However, those business imperatives do not authorise unlawful actions.

The Court rejected Ms Heraud’s complaints about a lack of consultation, saying:

… these provisions do not require an employer to consult with an affected employee prior to a relevant decision being made.  Although the section is headed “Consultation with employee on unpaid parental leave”, the ordinary meaning of the words of the section itself support this construction.  Subsection 83(1)(b) contemplates an employer who “makes a decision”; in other words, the decision has already been made.  Further, s.83(1) of the Act uses the phrase “give the employee information” and not the word “consult.”  In context, therefore, the obligation under s.83(1) of the Act on an employer is to take all reasonable steps to give an employee (on maternity leave) information about decisions it has made, which will have a significant effect on the employee’s pre-parental leave position.

The Court however found that when Roy Morgan refused Ms Heraud’s request for flexible working hours and instead brought forward her redundancy, it acted unlawfully because she had made that request. 

Under the FW Act, Ms Heraud was entitled to return to her pre-parental leave position or, if it no longer existed, to another suitable position.  The failure to return her to her pre-parental leave position after 2 July 2014, even only for two months, was adverse action (and a breach of s84).

By not offering Ms Heraud redeployment, Roy Morgan had also failed to comply with its obligations.  In particular, they had created an expectation that Ms Heraud would be redeployed to another role, but then withdrew the offer.  Section 84 required much more effort from Roy Morgan.  Unable to explain why it had withdrawn redeployment, and why it had not made proper efforts to look for other roles, the Court found Roy Morgan’s actions were unlawful.

Lessons learnt

The management of an employee on parental leave need not be difficult.  Take the same steps that you would take when consulting with an employee not on parental leave.  Prudent management may require consultation with an employee on parental leave prior to making decisions even though the obligation is about providing information after decisions have been made. 

Consider, separately, requests for flexible working arrangements.  In this case, Roy Morgan’s first obligation was to return Ms Heraud to her role or find another role.  Then the flexible work request ought to be considered on its merits.

Most importantly, be consistent in approach.  Roy Morgan changed its tact on receipt of the flexible work request.  No change was needed.  It had a temporary employee to cover maternity leave and there was no reason why Ms Heraud could not return to her role, even if it was to be made redundant soon after.  An employer’s obligations to employees on parental leave are not hollow, or to be cast aside for business convenience.

If you have any questions regarding this article, please contact Darren Gardner.

Author: Deanna Oberdan

Contributing partner: Darren Gardner