Timing is Key

The decision to bring forward a redundancy by eight days has resulted in a ruling by the Federal Circuit Court that a company contravened the general protection provisions afforded under the Fair Work Act 2009 (Cth). In particular, the court found that a company, BOC ltd, took adverse action against a key customer accounts manager when it implemented a redundancy prior to her commencing on maternity leave.

The ruling is a cautionary reminder to employers seeking to implement a restructure likely to impact employee’s who have, or have proposed to exercise, a workplace right.

THE FACTS

The applicant was employed as a customer accounts manager in a Mount Isa office of BOC ltd (‘BOC’).

The applicant was due to commence maternity leave on 6 November 2015. In accordance with BOC’s paid parental leave policy, the applicant would have been entitled to 21 weeks paid parental leave.

In October 2015, a “whole of Department Review” took place, which resulted in the decision to implement eight redundancies across the key customer accounts area. Relevantly, BOC decided to merge the accounts manager position in the Mount Isa and Townsville office.

After BOC’s general manager made the decision to retain the Townsville manager’s position, the applicant’s position was made redundant on 4 November 2015.

The applicant subsequently commenced proceedings against BOC alleging that she was terminated because she was due to commence maternity leave, and further that BOC discriminated against her because she was a pregnant woman, in contravention of sections 340 and 351 of the Fair Work Act 2009 (Cth) (‘the Act’) respectively.

THE FINDINGS

With respect to the reason for BOC’s restructure, Judge Vasta found it was a “business decision” and not a “prohibited reason” under the Act. BOC lead consistent evidence about the decision to implement the restructure, which had included a whole-of-company review, and numerous meetings within the “upper echelon” of the key customers account team. Judge Vasta also noted that at the time of his judgement, the former duties of the applicant were still being performed by the Townsville manager.

It then fell to Judge Vasta to consider why the accounts manager was selected for redundancy, and whether such a reason was prohibited or discriminatory.

BOC provided evidence that the decision to retain the Townsville manager over the applicant was because the Townsville manager had recorded 15 years of service (over the applicant’s 3 years), and had been responsible for larger accounts than the applicant.   

Judge Vasta noted, consistent with the High Court authority of Board of Bendigo Regional Institute of Technical and Further Education v Barclay[1], that the general manager’s unequivocal and reliable evidence would have ordinarily discharged the onus of proof requisite in an adverse action claim. However, the case was further complicated by the applicant’s explicit claim that BOC took adverse action against her by terminating her employment on 4 November 2015 rather than 12 November 2015.

There was clear evidence that BOC had decided to implement all redundancies on the latter date. However, the company’s general manager decided to bring forward the applicant’s redundancy to prevent her from incurring unnecessary stress. Judge Vasta accepted that this decision was made (though ignorantly) in the interests of the applicant, and did not constitute discrimination under section 351 of the Act. 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.

Relevantly, under section 84 of the Act, 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.

On this basis Judge Vasta determined that BOC “[altered] the position of the applicant to the applicant’s prejudice” in accordance with the definition of adverse action under the Act.[2] In doing so, BOC breached section 340.  

“I find that the Applicant was made redundant not because of a prohibited reason but I find that the date of her redundancy was brought forward because of a prohibited reason”.

Judge Vasta has adjourned the matter and ordered parties to make submissions as to the applicant’s damages, and whether pecuniary penalties should be ordered against BAC.

THE LESSONS

• When seeking to implement a restructure, ensure that there is a strong business case, and that if necessary, sound and consistent evidence could be lead to demonstrate the decision making process;
• The decision to implement a redundancy should not be influenced by an individual’s personal circumstances;
• Give due consideration to the timing of a redundancy, and ensure that this is not influenced by factors external to the business case;
• When considering a restructure likely to impact employees who have, or who have proposed to exercise, a workplace right, consider seeking legal advice. Furthermore, when considering making an employee redundant who has, or is due to, commence parental leave, consider the implications of section 84 of the Act; and
• Always consult with impacted employees in accordance with the consultation provisions under any applicable Award or Enterprise Agreement.

Power v BOC Ltd & Ors [2017] FCCA 1868

[1] [2012] HCA 32; (2012) 248 CLR 500 [45].

[2] Fair Work Act s 342.