28/07/2015

A Federal Court decision highlights some key lessons for employers when an employee announces their pregnancy.

The facts

Ms Sagona worked in a photography company.  The two managers who were also the owners of the company expressed their intention to retire at the beginning of the year from the company, leaving the running of the company to Ms Sagona and their son.  

Ms Sagona announced her pregnancy over halfway into the year and had a series of meetings with the owners about her maternity leave and future working arrangements within the company.

During these meetings the owners of the company were concerned that Ms Sagona’s maternity leave would impact negatively on their retirement plans and they thought that Ms Sagona would not be as dedicated to work once she had the baby.  It was alleged the owners suggested that when Ms Sagona was further along in her pregnancy she could not attend sales appointments or photoshoots as this was “not a good look” for customers.

In addition, the owners required Ms Sagona to increase her working hours in order to meet the required sales targets and if these targets were not met within the specified time frame Ms Sagona’s remuneration was to be reassessed and restructured.

The owners further asserted that it was unworkable for Ms Sagona to return to work on a part time basis.
Ms Sagona alleged that she had been forced to resign due to the actions of her employer.

The court had to determine whether adverse action against Ms Sagona was taken, and whether the provisions of the Fair Work Act were breached.

The Fair Work Act 2009 (Cth) (FWA)

Under the FWA, an employer must not take adverse action against an employee because of that person’s race, colour, sex, age, physical or mental disability, family or carer’s responsibilities or pregnancy.  

Adverse action under the FWA includes action where the employer dismisses the employee.  The situation where an employee is “dismissed” includes the scenario where an employee has been forced to resign due to conduct of their employer.

The decision

The court said that the employer’s actions lead to the dismissal of Ms Sagona.  One of the reasons for the employer’s actions was Ms Sagona’s pregnancy and they were therefore, in breach of the FWA.  The court awarded damages of $174,000 and further imposed a penalty of $45,000 to be paid by the company and $8,000 each to be paid by the two individual owners.

Lessons

As an employer, be wary of any assumptions made about an employee being unable to return to work and perform their duties on a part time basis after having a baby.  Make sure any opinions formed are based on objective evidence and seek the opinion of an expert or specialist if relevant.

This case also highlights the potential for not only damages to be awarded, but additional penalties imposed upon both the company itself and each individual owner of a company.  

It is also a reminder of how careful an employer’s actions and comments need to be in response to this kind of situation to ensure that the FWA is not breached.  If an employer is ever unsure of how to act in response to this situation, it is best to seek independent advice for guidance.

For further information, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.