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PARENTAL LEAVE REDUNDANCY: RESTRUCTURING WHILE AN EMPLOYEE IS ON PARENTAL LEAVE – A HARD PUSH?

Written by Jodi Sharman and Claire Perry on March 26th, 2014.

Do not let employees on parental leave out of your sight!  When restructuring a business, it is important to pay particular attention to employees whose employment may be affected while they are on parental leave.
 
Employees are afforded extra employment protections under the Parental Leave and Employment Protection Act 1987 (“Parental Leave Act”). It is an employer’s obligation not only to ensure that the redundancy is substantially justified and procedurally fair, but that it also meets the requirements under the Parental Leave Act.
 
The requirements are in place due to the legal presumption that while an employee is on parental leave, his or her position will remain open for the employee to return to. The added protections are also in place as employees on parental leave are deemed vulnerable. They can be overlooked by an employer and are in a difficult position to contest the rationale for a proposal to restructure as the employee will not be in the working or business environment at the time.
 
However, the employer has a defence to the legal presumption that the employee’s role will remain open for his or her return.  The defence is the occurrence of a genuine redundancy. Where a redundancy situation arises after the employer has already given notice that the employee’s position will be kept open, for the defence to succeed, there must be no prospect of the employer being able to appoint the employee to a position which is vacant and substantially similar to the position held by the employee.  Further, the employer must not prejudicially affect the employee’s seniority or superannuation rights.
 
In other words, if a restructure creates a position that is similar to the vacant position which is being disestablished, the employer should give preference for the role to the employee on parental leave. Note that if the employee’s role is being covered temporarily while the employee is on parental leave, it is still a vacant role. The same is true if the employee’s role has been absorbed by one or more staff members while he or she is on leave.
 
There is also an additional defence where an employee is dismissed during the period of 26 weeks beginning with the day after the date on which any period of the employee's parental leave ended.  The employer has to prove the redundancy is genuine, and the other elements above, as well as show that although the employer was prepared to offer the employee preference over other applicants for any suitable vacancy, no such vacancy ever arose.
 
The legal test, pursuant to the Employment Relations Act 2000, applies as well.  The test is whether the employer's actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred.
 
A redundancy must be genuine.  An employer is required to justify its business reasoning for the redundancy, why the employer decided upon the particular redundancy, and why any alternatives were rejected. In addition to substantive justification the employer must follow a fair process. This process must commence with a proposal to restructure, not a decision. No decision should be reached until meaningful consultation with all potentially affected employees (particularly any employees on parental leave) has taken place and the employees’ comments have been genuinely considered.
 
Although fair procedure is required in all redundancy situations, courts have been inclined to apply these procedural obligations far more stringently in cases where a redundancy has occurred while the affected employee has been on parental leave. The leading case authority on point, Lewis v Greene, states that an employer who is contemplating the redundancy of an employee on parental leave is bound to take extra precautions to ensure that the employee has an opportunity to be actively involved in the consultation process in a meaningful way that is at least equal to that of the employees who remain at work.  This could include going to the employee’s home for meetings instead of requiring him or her to come into the office and being flexible with timeframes so that the employee can be accommodated.  The employee may also require additional information relevant to the proposed restructure to get them up to speed on any business changes since they went on leave.
 
An employer has more stringent and onerous requirements if it proposes to make an employee who is on parental leave redundant. It would be prudent to seek advice or clarification early on in any restructuring process.
Topics: Employment Law
 
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