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A Pregnant pause

Written by Alison Maelzer & Sarah Holderness on July 30th, 2013.

A pregnant pause
 
In March 2013, The Observer reported that:
 
one in seven women surveyed had lost their job while on maternity leave; 40% said their jobs had changed by the time they returned, with half reporting a cut in hours or demotion.  More than a tenth had been replaced by the person who had covered their maternity leave.
 
The Observer pointed out that in the United Kingdom, it was unlawful to dismiss or otherwise disadvantage an employee for a reason related to pregnancy or parental leave, but nevertheless suggested that many employers were indulging in discrimination and then settling out of Court on a confidential basis.
 
This issue has received UK media attention in recent months due to a case involving a trainee solicitor in London who took a case to an Employment Tribunal accusing her former employee of unfair dismissal based on sex discrimination. 
 
In short, the employee was not offered permanent employment shortly after she found out she was pregnant.  She claimed that decision was made because of her pregnancy, while the employer alleged her “intellectual vigour” was the reason. 
 
The employee recently won her case in an Employment Tribunal – unfortunately, Employment Tribunals in the UK do not release written judgments like the Employment Relations Authority, so we do not know the exact reasons for that finding.
 
In addition, the Australian government has very recently asked the Australian Human Rights Commission to conduct an inquiry into workplace discrimination against employees taking parental leave, in particular its prevalence, nature and consequences.  
 
In New Zealand, the law also aims to protect the employment of pregnant women and/or those on parental leave.  In particular:
 
  • The Human Rights Act 1993 (“HRA”) prohibits discrimination on the grounds of sex (which includes pregnancy and childbirth) and family status (which includes having the responsibility for part- or full-time care of children); and
  • Under the Parental Leave and Employment Protection Act 1987 (“PLEPA”) no employer may terminate the employment of any employee by reason of her pregnancy, her indicating that she wishes to take parental leave, or during either her absence on parental leave, or the period of 26 weeks following the end of the parental leave.
A dismissed employee in the above circumstances could either:
 
  • Make a complaint under the HRA;
  • Bring a parental leave complaint under the PLEPA; or
  • Raise a personal grievance under the Employment Relations Act (“ERA”).
Does this mean that an employer can never dismiss a pregnant woman, and/or one on parental leave?  In a nutshell the answer is no – however employers need to be very careful to ‘cross every t and dot every i’ when following the process leading to dismissal.
 
Dismissal for redundancy
 
The starting point is that dismissing an employee because of her pregnancy is unlawful.  However the PLEPA recognises defences open to the employer in certain cases of redundancy during (and 26 weeks after) parental leave.  Below are three different sets of circumstances and the defence the employer may run for each.
 
1.         Dismissed in the first period of parental leave
 
If the employee is dismissed by reason of redundancy during parental leave which:
 
  • does not exceed 4 weeks; and
  • is the first period of parental leave taken by the employee in respect of the child; and
  • of which the employer has had the relevant period of notice that the employee wishes to take parental leave that dismissal will be lawful if the employer can show that:
  • a genuine redundancy situation arose after the employer told the employee that it could keep the job open when she went on parental leave; and
  • the nature of the redundancy situation means that there was “no prospect” of the employer being able to appoint the employee to a role which was vacant and substantially similar; and
  • during the period of parental leave, the employer had not prejudicially affected either the employee’s seniority or the employee’s superannuation rights.
  The “no prospect” of a suitable alternative test necessitates a higher standard of proof than would apply to an employee who is not covered by PLEPA.
 
2.         Dismissed in other periods of parental leave
 
In addition to the redundancy exception, if the employee is dismissed for redundancy in the case of other periods of parental leave, the employer may also have a defence if it can show that after it told the employee it could keep her job open, circumstances occurred meaning that a temporary replacement for her position was not reasonably practicable due to it being a key position in the business.  For this second defence, the employer must still be able to satisfy the two final bullet points above however.
 
3.         Dismissed following return from parental leave
 
If the dismissal for redundancy occurred during the period of 26 weeks following the end of parental leave, that dismissal will be lawful if the employer can show that:
 
  • it dismissed the employee due to redundancy of such nature that there was no prospect of the employer being able to appoint the employee to a substantially similar vacant position; and
  • during the period between the end of the parental leave and dismissal, the employer (despite being prepared to accord the employee preference over other applications) had been unable to appoint the employee to a substantially similar vacant position; and
  • during the period of parental leave and up to the dismissal, the employer had not prejudicially affected either the employee’s seniority or the employee’s superannuation rights.
General principles applicable to each
 
For all redundancies (not just those involving employees on parental leave), the courts recognise that it is the employer’s prerogative to organise and reorganise a business as it sees fit.  But, on the other hand, there is also a process that the employer must follow.  This process includes the duty to consult with the affected employee, consider alternatives to redundancy, provide relevant information, and, in the event a redundancy proposal is adopted, provide reasonable notice of termination.
 
Accordingly, as well as meeting one of the above-outlined defences in the PLEPA, to defeat a claim brought by the dismissed employee, the employer must also show that it has followed a good faith process.
 
The courts have been reasonably strict on employers in parental leave situations who seek to declare an employee’s position redundant after they have previously declared that they can hold it open.  The Employment Court in Lewis v Greene (2004) found that the obligation on an employer to conduct a fair procedure with active consultation increases when a person is on parental leave.  Furthermore, the Court remarked that “an employer who is contemplating the redundancy of an employee on parental leave is bound to take extra precautions to ensure that she has an opportunity to be actively involved in the consultation process in a meaningful way that is at least equal to that of employees who remain at work.”  In short, the procedural test is even more stringent when making a person on parental leave redundant.
 
Dismissal for good cause – such as misconduct, dishonesty or poor work performance
 
Despite the PLEPA’s protections, an employer’s right to dismiss the employee for good cause is unaffected.  If a complaint is brought under the PLEPA, the employer can argue that the dismissal was for a “substantial reason” not related to the pregnancy or the employee’s rights under the PLEPA. 
 
In our view
 
In the case of a redundancy situation, we suggest the following general recommendations for employers:
 
  1. If a redundancy situation exists before the employee goes on parental leave, do not simply undertake to keep the position open.  Instead, make the undertaking to keep the position open subject to any redundancy that may arise, or bite the bullet and complete a redundancy process before parental leave.
  2. If the role cannot be kept open, because it is a key position in terms of the legislation, or a redundancy situation has already arisen, say so – and ensure, as required by the PLEPA, that you advise the employee that you will, for the period of 26 weeks following the end of the parental leave, give the employee preference over other applicants for any position which is vacant and substantially similar to the position held by the employee at the start of the parental leave.
  3. If the redundancy situation arises after the employee goes on parental leave, be extra careful about following a good faith process to ensure the employee is actively involved and informed at every stage.  This will likely involve going above and beyond what would be a satisfactory process for an employee not on parental leave.
  4. Make sure you can point to evidence that a redundancy situation has arisen – for example financial data showing the position cannot be sustained.
In the case of a dismissal for good cause rather than redundancy (such as for misconduct), remember that although the employer may have a defence to a complaint under the PLEPA, the employee could still raise a personal grievance under the ERA for the dismissal.  A defence such as poor work performance would still have to be substantiated and fair procedure shown.
 
If you have any questions or concerns about redundancy or other dismissal processes when an employee is on or has just finished her parental leave, please don’t hesitate to contact us by phone on (09) 375 8699.
 
Topics: Employment Law
 
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