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Australia – Pregnant Pause: Return To Work Guarantee Versus Genuine Redundancy Redeployment.

18 November, 2013

 

Legal News & Analysis – Asia Pacific – Australia – Labour & Employment

 

Turnbull v Symantec (Australia) Pty Ltd [2013] FCCA 1771


Roy v SNC-Lavalin Australia Pty Ltd [2013] FWC 7309


WHAT YOU NEED TO KNOW

 

  • Employers’ obligations where an employee is returning to work following parental leave may be much wider than some employers previously understood.
  • A recent decision of the Federal Circuit Court suggests that for the purpose of the return to work guarantee following parental leave in the Fair Work Act, a position is “available” where it is “within the power” of the employer to make the position available. This is a broad formulation of an employer’s return to work obligations. It requires employers to consider opportunities in associated entities, similar to the obligations in the case of genuine redundancy.
  • The genuine redundancy exception to the unfair dismissal regime in the Fair Work Act contains an express obligation to consider redeployment to an associated entity. A key issue in this test is the degree of managerial integration between the relevant entities including whether there is overall management control by one member of the group.
 

WHAT YOU NEED TO DO

 

  • Employers should review their processes for return to work following parental leave to ensure they consider positions overseas (for international businesses) and positions within associated entities, particularly where entities are part of a centrally managed corporate group or where management authority is shared between entities.
  • Where the position of an employee returning from parental leave is no longer available, employers should inform the employee of the existence of an available relevant position and offer that position to the employee.
  • Employers should ensure managers are aware of both the return to work guarantee for employees returning from parental leave and the genuine redundancy exception from unfair dismissal.
 

Are your managers aware of the breadth of redeployment obligations?


Two recent decisions of the Federal Circuit Court and the Fair Work Commission in differing circumstances have highlighted redeployment obligations.

 

Return To Work Guarantee

 

In Turnbull v Symantec (Australia) Pty Ltd [2013] FCCA 1771, the Federal Circuit Court considered an employer’s obligations under the return to work guarantee for employees who have taken parental leave. The Court found that where an employee’s position no longer exists, an employer will have an obligation where it is “within the power of the employer” to make a position available. Positions overseas or within separate legal entities may be within power.

 

This case concerns an employee who was employed by a member of the Symantec group. The employee was based in Sydney, whilst her line manager was based in Singapore.

 

The employee took 8 months parental leave, during which time her workload was redistributed to existing employees. Around the time the employee was to return from leave, the employer group undertook a cost cutting initiative. The employee’s line manager recommended eliminating two financial controller positions in Australia, including the employee’s position. As a result, the employee’s position became redundant.


The employee claimed her retrenchment was:

 

  • Adverse action taken for a prohibited reason under the general protections provisions of the Fair Work Act; and
  • A breach of the return to work guarantee in the National Employment Standards (set out in section 84 of the Act).
 

Adverse Action Claim


The employee claimed that her employer had taken adverse action against her by retrenching her because she had taken parental leave, in breach of section 351 of the Act.
In finding against the employee, the Judge held that the reason for the employee’s dismissal was that the employee’s position was no longer required. This was evidenced by the successful redistribution of her duties to other employees, which had occurred while she was on parental leave.


The Judge noted that had the employee not taken parental leave it may not have become apparent that her tasks could be re-allocated. However, the Court was required to determine the actual reasons for the termination. Those reasons were that her role was no longer required.


Section 84 Claim – Return To Work Guarantee


The National Employment Standards provide that an employee returning from unpaid parental leave is entitled to return to:

 

  • the employee’s pre-parental leave position; or
  • if that position no longer exists – an available position for which the employee is qualified and suited nearest in status and pay to the pre-parental leave position.
 

The employee claimed that the employer group had an available position that she was qualified and suited to fill, but which was not offered to her. That role was Commissions Team Manager in a related entity in Singapore.


In considering the employee’s claim, the Judge examined the operation of section 84 in detail. His Honour considered that the section obliges an employer to inform the employee of the existence of an available relevant position and to offer that position to the employee.


Meaning Of “Available Position”


The employer argued that for a position to be “available” it must be one within the employer’s business, not a separate legal entity. However, the Judge found that such a restrictive meaning ignored the commonplace features of large and moderate scale businesses operating in Australia. His Honour found that whether a position overseas or a position in a separate legal entity is an “available position” depends on whether it is within the power of the employer to make that position available.


The Judge found that the employer in this case had power to make the position available because:

 

  • employees of other companies in the group had been shown to have authority to make decisions concerning employees of the employer company. (eg the employee’s own line manager was an employee of a related entity in Singapore and the Commissions Team Manager role had previously been moved from Australia to Singapore); and
  • some operations of the employer group companies were managed as a group by senior managers employed by the Singapore entity.
 

However, the Court found that whilst the position was available, the evidence did not show that the position was one for which the employee was suited.


Accordingly, the employee’s claim under section 84 also failed.

 

Genuine Redundancy Exception To Unfair Dismissal

 

In Roy v SNC-Lavalin Australia Pty Ltd [2013] FWC 7309, the Fair Work Commission considered the test for what constitutes reasonable redeployment in an associated entity for the purposes of the genuine redundancy exception in the unfair dismissal regime. The Commission has previously held that this involves a question of whether there is managerial integration between the relevant entities including whether there is “overall management control” by one member of the group (Ulan Coal Mines Limited v Honeysett & Ors [2010] FWAFB 7578). The Roy decision considers the issue in the context of overseas positions.

 

The employee was a Brisbane-based senior designer. Over a period of six months the employer had reduced its headcount by more than 50%. The employee was made redundant as part of this process, along with all other senior designers in Australia.

The employee claimed he had been unfairly dismissed and he should have been redeployed to one of the positions advertised by the employer group of companies in the USA or Canada.


The employer argued that the employee’s dismissal was a genuine redundancy under section 389 of the Act and that it was not reasonable in the circumstances for the employee to be redeployed.


Whether Redeployment Is Reasonable

 

The evidence before the Commission was clear that there were no available positions in Australia into which the employee could have been redeployed.


In finding that it would not have been reasonable to redeploy within an associated entity overseas, the Commission considered the fact that:

 

  • the employer had never held out that it had a facility for redeploying redundant employees to overseas locations;
  • redeployment involves significant relocation expense for the employer;
  • that there was no overriding central managerial control of the employer group of companies (as per the Ulan Full Bench decision); and
  • the entities operated their own human resources functions.
 

The Commission dismissed the employee’s claim.

 

Comparing The Obligations

 

Whilst these decisions considered different sections of the Act, they dealt with similar questions for employers about redeploying employees whose positions no longer exist.

 

The return to work guarantee under the Act has not previously been judicially considered in such detail. The Symantec decision has established what appears to be a broad test for determining whether a position in a separate entity should be considered available.


Employers should be aware of the broader test which seems to apply when dealing with employees returning from parental leave.


The table below sets out the relevant considerations in applying the two redeployment tests.

 

  Genuine redundancy exception

 

Return to work guarantee
When obligation arises

 

To minimise the risk of an unfair dismissal claim, an employer should consider redeployment to an associated entity Employee returning from parental leave

 

Nature of obligation Whether it would be reasonable to redeploy the employee, including within an associated entity Return to work to pre-parental leave position, or if the position no longer exists, to an available position for which the employee is qualified and suited and which is nearest (comparable) in pay or status with the pre-parental leave position
  Whether redeployment is reasonable includes consideration of the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job in relation to the employee’s residence and the remuneration offered May involve similar considerations
Availability of the position A key issue is the degree of managerial integration between the relevant entities including whether there is overall management control by one group member The key issue is whether it is within the power of the employer to make the position available, including in an associated entity
Providing the position It will not be sufficient to advise employees to apply for positions for which selection is based on merit The employer should inform the employee of the existence of an available relevant position and offer that position to the employee

 

The Australian Human Rights Commission is currently conducting a national review looking at pregnancy and return to work. The Supporting Working Parents: Pregnancy and Return to Work National Review has opened an employer-directed online submission process to expand consultation with employers. Details can be found on the Commission’s website at www.humanrights.gov.au/pregnancy-discrimination.

 

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For further information, please contact:

 

Marie-Claire Foley, Partner, Ashurst
[email protected]


Abigail Cooper, Ashurst
[email protected]

 

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