The decision of the Federal Circuit Court in Heraud v Roy Morgan Research Ltd provides some 'how-not' to guidance about making redundant an employee on parental leave. 

Background

In late 2012 the employee commenced work as a middle management employee with Roy Morgan Research Ltd (the Company). The employee commenced a period of approximately 9 months parental leave in September 2013. In October 2013, Roy Morgan announced a restructure of its business as a result of the loss of major clients and a competitor in the market. 

In March 2014 (whilst still on parental leave), the employee was notified in writing by way of a letter to her home address that her role was to be made redundant. The employee called her manager and discussed further the implications of this change. She subsequently met with another manager to discuss potential redeployment opportunities - of which one appeared viable. Two days after this meeting, the employee made a request for flexible working arrangements on her return to work in late June 2014. 

Following this request, the Company determined that the potential redeployment opportunity was no longer available. Further, it took no steps to identify other redeployment opportunities (if any) or discuss this with the employee. Instead, a recommendation was made in late May / early June 2014 (ultimately accepted by the decision maker at the Company) that the employee be retrenched and that the retrenchment be brought forward to immediate effect. The timing of the employee's retrenchment was particularly relevant, as her role was required until late August 2014 (as evidenced by the fact that an employee continued to act in that role after the employee's retrenchment date).

The employee alleged her employment had been terminated not because of a genuine redundancy but for prohibited reasons and made a claim against the Company in the Federal Circuit Court. The employee alleged the Company had breached the adverse action provisions of the Fair Work Act on a number of bases, including:

  1. by making her redundant and not to returning her to her pre-parental leave position (or a suitable alternative position), because she had exercised her workplace right to take maternity leave / request flexible working arrangements; and
  2. by withdrawing redeployment positions previously offered to the employee because she had exercised her workplace right for flexible working arrangements.

Outcome 

The Federal Circuit Court determined that the Company had breached the Fair Work Act by:

  • the Company, on determining that the employee was to be made redundant, bringing forward the employee's notified retrenchment date, in circumstances where another employee performed the employee's role in an acting capacity for a further 2 months, after the employee's retrenchment date.
  • creating an expectation of redeployment for the employee and then withdrawing this option, after the employee had asked the Company to provide flexible work arrangements on her return to work; and
  • failing to identify (or consider) other redeployment opportunities taking into account the employee's request for flexible work arrangements, or to discuss these other options (if available) with the employee.

The outcome in this case was compounded by the fact that the relevant decision makers did not give evidence in the Court proceedings directly responding to the argument that the employee's parental leave / request for flexible working arrangements were not reasons for the above conduct. This left it open for the Court to infer, based on the documentation before the court and the employee's evidence, that the reasons for decision were for prohibited reasons.

What does this decision mean for you? 

  • Once you've made a decision to make a role redundant, have you notified the employee on parental leave of the decision and provided information to the employee regarding the impact of that decision?
  • Have you consistently managed the restructuring process focused on the overall operational outcomes you wish to achieve or have you changed course midway through the process? If you have changed course, can you demonstrate that the reason for this change was not because an employee was on parental leave / requested flexible work arrangements? Have you spoken to the employee about the changes and the reasons for the change?
  • Have you objectively assessed the redeployment opportunities available to employees on parental leave / returning to work on flexible work arrangements and communicated with the employee about these opportunities (if any)?
  • Does your documentation align with the above? 

Postscript

In July 2016, the Federal Circuit Court awarded a $52,000 penalty against the Company for breach of the Fair Work Act adverse action provisions.