Parental Leave and Adverse Action

Conduct that is taken against an employee for a prohibited reason is adverse action. Adverse action can be a particularly common issue for employees that take parental leave.

Employers and employees need to understand what adverse action is in the context of parental leave. When employees understand what adverse action means, they can identify whether their employer has discriminated against them in the workplace. And they can then seek to protect their employment from adverse action.

On the other hand, employers need to understand what adverse action means to reduce the possibility of legal claims against an employer and the risk of fines or damages.

In this article, Farrah Motley, Director of Prosper Law and a workplace lawyer, explains parental leave. This article also explains when adverse action can occur in relation to an employee taking parental leave.

Taking parental leave is a workplace right

In Australia, all employees have the right to take parental leave. The National Employment Standards (NES) refer to the ten minimum employment entitlements that must be provided to all employees.

The NES includes parental leave and various other related benefits. Any employment contract, Award, or agreement cannot provide for entitlements that fall below that provided in the NES. The NES establish the minimum entitlements for parental leave.

Parental leave provisions refer to those that are birth and adoption-related, as well as the following entitlements:

• unpaid special maternity leave;
• ‘No safe job leave’ or safe job transferals for appropriate cases;
• return to work guarantees; and
• unpaid pre-adoption leave.

Unpaid parental leave

All employees get 12 months of unpaid parental leave – provided they meet the eligibility requirements. Moreover, the employee may take an additional 12 months of unpaid parental leave. However, they must send a written request at least four weeks before the end of the first period of unpaid parental leave.

An employee couple may take a separate period of up to 12 months. The term’ employee couple’ refers to two employees (not specifically from the same organisation) in a spousal or de-facto relationship. Employee couples can take a maximum of 8 weeks (paid and unpaid parental leave) simultaneously. This is better known as ‘concurrent leave.’ However, employees must take it in a minimum of 2-week blocks.

Paid parental leave scheme

The Australian government funds Parental leave pay (PLP) for a maximum period of 18 weeks. The scheme financially assists eligible employees when caring for a newborn or adopted child.

The employees receive paid parental leave at the national minimum wage rate, and it is subject to tax. Eligible employees may get their pay while on parental leave, but it does not extend the parental leave period. 

Employees can divide the PLP into two periods, a fixed period and a flexible period. 

Note: The flexible period begins as soon as the fixed period ends and the employee resumes work.

Employer-funded parental leave

Many employers who can afford to do so decide to help prospective parents welcome their newborns into the world. Employers provide additional benefits or entitlements through enterprise agreements, contracts, or workplace policies. Employer-funded parental leave does not affect an employee’s eligibility for the Government’s Paid Parental Leave scheme. Employees can avail of both schemes in addition to their unpaid parental leave period.

Pre-adoption leave

Pre-adoption leave is available to all employees planning on taking parental leave to welcome an adopted child into their home. This allows for two additional unpaid days to attend any relevant interviews.

Special maternity leave

Pregnant employees who are eligible for unpaid parental leave can also access unpaid special maternity leave if:

• they have a pregnancy-related illness;
• the pregnancy ends after 12 weeks due to miscarriage, termination, or stillbirth.

In the event of a pregnancy-related illness, the special maternity leave will finish once the baby is born or the sickness passes. For miscarriages, terminations, or stillbirths, employees are only expected to return to their role once they are fit to work. Further, Special maternity leave does not affect the amount of unpaid parental leave an employee can apply for.

Employee rights when returning to the workplace after parental leave

Once employees return to the workplace, they have certain rights after parental leave, which our workplace lawyers describe as follows: 

Right to return to the same job

An employee on unpaid parental leave shall have the right to return to the job she held before her leave, even if another person acts as a substitute. Employees transferred to a “safe job” or whose working hours have been reduced during pregnancy also have the same right.

Most contracts state that the right to return to the same job does not apply to those whose fixed-term employment contract ends while they are on unpaid parental leave.

If the job no longer exists or has changed, the employer must offer the returning employee another suitable job.

Right to breastfeeding in the workplace

Breastfeeding is a protected ground for discrimination. No employee should be made to feel uncomfortable at work, unsupported, or unable to breastfeed while at work. Employers are also responsible for providing adequate facilities or breaks to breastfeeding employees.

Right to Compassionate leave

All employees can take Compassionate leave (also known as bereavement leave). This includes those who are currently taking unpaid parental leave. Casual employees, however, must take this leave without pay. 

• a family member dies or becomes ill from a life-threatening illness or injury;
• a member of the household dies or becomes sick or develops a life-threatening illness or injury;
• a member of the immediate family or household is stillborn;
• employee or their spouse or partner (legal or non-legal) suffers a miscarriage.

Employees should contact a workplace lawyer as soon as they feel their employer is violating their rights.

What is adverse action when it comes to parental leave?

Adverse action means taking action against another person/entity when that party has a “workplace right.” In other words, an employer takes adverse action against an employee when it threatens, organises, or takes action by:

• dismissing the employee;
• injuring the employee in his or her employment relationship;
• altering the position of the employee to the employee’s prejudice; or
• discriminating against the employee in relation to other employees of the employer.

The list above sets out some examples. For further information regarding steps taken by an employer that may be adverse, talk to a workplace lawyer.

Discrimination because of pregnancy

Pregnancy discrimination that may amount to adverse action includes:

1. discharge an employee because she is pregnant;
2. demotion changes her position to her disadvantage because they are pregnant;
3. refusal to hire a prospective employee because of her pregnancy status, or 
4. discrimination against a prospective employee because of the terms of the employment offer.

Employers and employees should seek advice from a workplace lawyer to discuss what amounts to adverse action.

For detailed guidance on what a workplace right is, it is important to talk to a workplace lawyer.

Case law examples of adverse action during parental leave

Adverse action can commonly arise during the course of the employment relationship.

However, we are going to focus on scenarios where claims for adverse action can come when employees exercise their right to parental leave. Below, our workplace lawyer takes a look at some case law. These cases show how adverse action occurs when employees exercise their right to parental leave. 

Case law examples where the court found that adverse action had occurred

In Heraud v Roy Morgan Research Ltd [2016] FCCA 185, an employer was found to have taken unlawful adverse action against a female director on parental leave.

During the director’s parental leave, the employer restructured its business.

In February 2014, the director was notified in writing that her position as “National Customized Operations Director” would be changed to “Project Director Customized.” Her reporting line was changed, and she no longer had direct subordinates.

In May 2014, the Director requested temporary, flexible work arrangements to return to work part-time in early July 2014. A few weeks later, she was told that her request could not be granted because her position was scheduled for layoff.

The court ruled in favour of the director on three counts, finding that the employer had taken unlawful adverse action against her by:

1. not returning her to her pre-parental leave position (after determining that her old position was available until at least August 31, 2014) because she had taken maternity leave or for reasons that included;
2. withdrawing an offer to redeploy her to another position because, among other reasons, she had requested 
3. flexible work arrangements; and 
4. terminated her employment in June 2014 because, among other reasons, she had requested flexible work arrangements.

This case underscores the importance for employers to use transparent and genuine procedures when implementing changes and to ensure that the reasons underlying the change do not involve prohibited grounds. Such prohibited grounds may include an employee’s existence or exercise of a right in the workplace.

Case law examples where the court found that adverse action had NOT occurred

In Scullin v Coffey Projects (Australia) [2015] FCCA 1514, the employee’s wife gave birth to twins. The employee requested 12 months of parental leave to care for the children. The company denied this request but allowed the employee to take a mix of other paid and unpaid leave. When the employee returned to work after 12 months, the company offered him only part-time employment. One year later, the company dismissed the employee on the grounds of redundancy.

The employee filed a lawsuit claiming that the company:

1. took adverse action against him because he had workplace rights and family responsibilities to care for his twins;
2. recklessly made false or misleading statements about his workplace rights in violation of the Act;
3. violated the NES; and 
4. breached his employment contract.

The judge’s view of adverse action

The judge did not accept that the employer had taken adverse action or recklessly made false and misleading statements. However, he did find that the employer had breached the NES by not allowing the employee to take unpaid parental leave. Company policy required an applicant for parental leave to be the “primary carer” of a child. The NES contains no such requirement. 

Instead, the judge found that:

1. that by denying the employee the leave to which he was entitled under the NES, the company violated both the NES and the employee’s contract;
2. by allocating only part-time work after the employee’s return from leave (while his return to his full-time job would have been protected had he been granted unpaid parental leave), the company had caused the loss of the employee, who was denied the right to return to his full-time job at the end of his leave; and 
3. when redundancies occurred, the employee lost the opportunity to receive a redundancy package calculated on the basis of his full-time, rather than part-time, salary.

The outcome of the case

The company was ordered to pay the employee:

• the difference between his part-time and full-time salary from the date of his return from leave until the termination of his employment;
• an amount for the additional annual leave that the employee should have received if he had worked full time; and an additional amount for severance pay, which is the difference between what he would have received as a full-time employee and what he actually received as severance pay as a part-time employee.

This resulted in a total of $169,347.24 (less tax).

The company paid a penalty of $8,250 (25% of the maximum penalty) to the employee for violating the NES in a separate decision.

Mrs O vs Compuworld Pty Ltd

A female employee was awarded compensation after successfully arguing that she was terminated on the eve of commencing parental leave due to her pregnancy. The FWC determined that her employer took adverse action by dismissing her from a full-time position and offering her casual employment prior to her seeking medical attention relating to her pregnancy. She was awarded $50,000 in damages, including an amount of $15,000 for non-economic loss.

How can employers avoid taking adverse action when it comes to parental leave?

Managing employees on parental leave and their return to work remain a challenge for many companies. Employers need to be aware of their obligations when managing parents’ return to work after the birth of their children. The legal consequences of misconduct are significant. Such claims not only place a financial burden on a company. They can also be time-consuming and damage reputations. 

Employers often ask workplace lawyers how they can avoid taking adverse action on employers on parental leave. This is because the concept of adverse action is particularly tricky, as it is so open to interpretation. It would be ideal for employers to speak with a workplace lawyer before taking any action on an employee on parental leave.

However, here are some tips from our workplace lawyer for employers to reduce the risk of adverse action claims:

• understand the law and be aware of the potential for claims;
• keep clear documentation of the reason and rationale for the action. Note that most lawsuits against adverse action claims are unsuccessful;
• review and update your investigation and disciplinary procedures;
• review the reasons for making a decision before it is actually implemented;
• ensure fair and consistent policies and procedures are communicated to all employees when they start to work;
• maintain a handbook that specifies when and why action may be taken against an employee;
• remember that all documents are discoverable by FWA; and
• resolve the matter in the first place if at all possible.

What rights do employees have if their employer has taken adverse action because of parental leave?

Parental leave entitlement is a “workplace right” within the meaning of the law. Any adverse action taken by an employer against an employee because the employee is entitled to parental leave is unlawful. Employees should contact a workplace lawyer if they believe they have been discriminated against because of their parental responsibilities.

Companies may face claims for unfair dismissal, adverse action, and discrimination, as well as penalties for contraventions of the Fair Work Act 2009.

The Fair Work Act 2009 (Cth), provides protections to ensure that adverse action is not taken against employees because of their parental responsibilities. Employees who feel they have been discriminated against can file a complaint with the Fair Work Commission. 

Under the Fair Work Act, the maximum penalty for a single employer is roughly $13,320. The Court may make any orders it deems appropriate, including:

1. injunctions prohibiting the parties from engaging in certain conduct; or
2. compensation for the discriminated employer.

If an employee has been subjected to retaliatory treatment, the employee or the employee’s union may file a complaint with the QIRC. Where the employee has been dismissed, the complaint must be filed within 21 days of the effective date of the discharge. The employer will need to take independent action with help of a workplace lawyer to file a complaint.

Additional time limits may apply under extraordinary circumstances. A petition to the QIRC for an adverse action other than dismissal must be filed within 6 years of the action.

How can Prosper Law help?

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If you need to talk to a workplace lawyer, get in touch today.

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