Can someone on parental leave be made redundant?

Analysis

Can someone on parental leave be made redundant?

When a position becomes redundant while an employee is absent on unpaid parental leave, there are a number of matters you must address.

When a position becomes redundant while an employee is absent on unpaid parental leave, there are a number of matters you must address.

These include the criteria applied when selecting an employee for redundancy, what other positions were considered by the employer when investigating redeployment, and what statutory protection an employee has when their position is made redundant while on unpaid parental leave.

Selection criteria — redundancy
 
An absence on parental leave does not offer employees any greater protection from dismissal than if they were at work.
 
However, an employee whose dismissal relates only to being absent on parental leave could seek relief under unfair dismissal laws, general protections laws, under the FWAct, or alleged discrimination contrary to the relevant Commonwealth, state or territory discrimination law, for example, the Sex Discrimination Act 1984 [Cth].
 
The most common reason for dismissal while absent on parental leave is when an employee’s position becomes redundant. Provided the selection criteria applied to determine which position(s) are selected for redundancy are objective, and the redundancy is based on meeting the operational requirements of the enterprise, a dismissal would be regarded as valid.

Relevant factors
 
The factors determining which positions are redundant should be based on objective criteria and should be known by employees in advance (as per the consultation provisions under the relevant modern award), such as through a company policy.
 
The employer should select who is to be made redundant, referring to the skills, experience, training and performance of individuals compared to the current and future needs of the organisation.
 
If, after such an assessment, employees are found to be comparatively equal, period of service would be an appropriate factor unless some other pressing domestic issue is raised by the individuals concerned.
 
Conversely, subjective criteria are open to abuse and could be used to target particular workers. Referring to factors such as teamwork, know-how, initiative, integrity, trust, credibility etc should be avoided. It seems the problem with subjective criteria is not their adoption, but the burden they impose on those that have to apply them.
 
For example, a company that used employees’ workers compensation status as a factor in determining which employees should be selected for redundancy was unsuccessful on appeal in an unfair dismissal matter taken by former employees.
 
See Smith & Kimball v Moore Paragon Australia Limited PR942856 [2004] AIRC 57.
 
Return to work guarantee
 
Under the FWAct (s84), the ‘return to work’ guarantee entitles an employee to return to their former position. If that position no longer exists, the employee is entitled to return to an available position for which the employee is qualified and suited and which is nearest in status and pay to their former position.
 
If no role exists, there is no obligation on an employer to create a role. However, the obligation to return the employee to another available role is quite broad, and is only limited by the requirement to be nearest in status and pay.
 
The courts have usually determined an "available position” is one for which the employee is qualified and suited nearest in status and pay to the pre-parental leave position by asking whether an employee having the qualifications and experience in question would seriously consider taking that position.
 
Replacement employee
 
There is also a requirement under the FWAct (s84A) that the employer notifies the person who replaces the employee on parental leave that the position is temporary, and subject to their return.
 
Is there a suitable equivalent job? — examples

Offer of overseas posting
 
In a matter before the Federal Circuit Court, a female manager on parental leave was made redundant because operational reasons meant her position no longer existed — not because she had taken the leave. Nor was the employer obligated to offer her a job available in Singapore at the time, because it was not a suitable equivalent job to her former one. 
 
The company retrenched two women after deciding to no longer manage its Asia-Pacific and Japanese operations in Australia for employment cost reasons. Both employees claimed they had been dismissed because of their family/carer responsibilities and were, therefore, subjected to adverse action. The employer successfully defended both claims.
 
In this case, the former senior finance manager had taken eight months' approved parental leave. When she contacted her employer to arrange her return to work, she was told her job had been eliminated to reduce costs.
 
The employee argued her taking of parental leave was the real reason for dismissal, and that was a prohibited reason. She further claimed the employer breached legislation by not offering her an alternative job available in Singapore.
 
The employer was obligated to advise the employee another job was available in Singapore and it did so. It did not matter the company in Singapore was a separate legal identity, provided the employer had the capacity to make it available.
 
However, the job in Singapore was not close enough to the employee’s former job in terms of status, skills required and remuneration to have obligated the employer to offer it to her.
 
The onus was on the employee to prove the Singapore position was an equivalent one  she would have accepted if offered it, but she did not provide evidence of either. The Court concluded it was not a suitable alternative job and the redundancy was genuine for operational reasons.
 
The employer was able to defend the claim of adverse action by demonstrating the duties of the pre-parental leave position no longer existed. 
 
Work allocated to other employees
 
This is the second case involving the same employer that successfully defended claims of adverse action after making an employee redundant while on parental leave.
 
In this case, the Federal Circuit Court held the employee’s parental leave was not a reason for the employer’s decision to retrench her. The tasks of her job had been allocated to other employees and her position no longer existed.
 
Although it might have been arguable the tasks would not have been reallocated if the woman had not taken leave, the Court concluded the employer, when faced with a need to reduce costs, would have reached the same conclusion and made the same decision.
 
See Turnbull v Symantec (Australia) Pty Ltd [2013] FCCA 1771 (1 November 2013); Lai v Symantec (Australia) Pty Ltd [2013] FCCA 625 (28 June 2013)
 
Return to work  — job 71 kilometres away
 
The Federal Court of Australia heard a matter in which the company offered an employee on her return from parental leave a position in a store that was 71 kilometres from her place of residence. The FCA determined the employer had breached the FWAct in the following manner:
  • A contravention of s44(1) of the FWAct, by contravening s84 of the FWAct by reason of the failure to return the employee to her pre-parental leave position;
  • A contravention of s44(1) of the FWAct, by contravening the requirement in s83 of the FWAct by reason of a failure to take all reasonable steps to give the employee information about, and an opportunity to discuss, the effect on her pre-parental leave position of the employer’s decision to appoint another employee as permanent manager in her current position;
  • A contravention of s351(1) of the FWAct, by injuring the employee in her employment and/or altering her position to her prejudice by not returning her to her pre-parental leave position at the end of her parental leave, because of her pregnancy and/or her family and carer’s responsibilities; and
  • A contravention of s351(1) of the FWAct, by discriminating between the employee and the replacement employee, when appointing the replacement employee as permanent, and when attempting to transfer the employee to alternative and more distant positions because of the employee’s pregnancy and/or her family or carer’s responsibilities.

See Fair Work Ombudsman v Tiger Telco Pty Ltd (in liq) [2012] FCA 479 (9 May 2012)

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