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Decision: Saad v Ada Evans Chambers Pty Ltd & Anor [2018] FCCA 1832 (9 July 2018)

Decision Date:  9 July 2018

Court/Tribunal: Federal Circuit Court of Australia

Presiding: Nicholls J

Parties:                       

Applicant                      Ms Patrycia Saad

First Respondent        Ada Evans Chambers Pty Ltd

Second Respondent    Mr Michael Maxwell

Introduction

The case of Saad v Ada Evans Chambers Pty Ltd & Anor is a recent cautionary tale for employers in knowing the obligations when an employee takes parental leave and there is a decision to restructure the business while the employee is on parental leave which will affect that employee.

It is important for the people who are making decisions and communicating business changes to be alert to these obligations and have a communication strategy ready to consult with employees at the relevant times about the changes and how they will affect the employees no matter how small your business.

The law in this area can be very confusing, given consideration must be given to mandatory obligations found in different places; under the National Employment Standards, in the Fair Work Act; in a modern award or enterprise agreement; and/or in an employment contract. Is it also possible that the obligations under each instrument might be slightly different.

It is always advisable to obtain professional advice and develop a plan before messages are communicated to employees.

In this case, the Applicant, Patrycia Saad (Patrycia), had claimed a number of contraventions of the Fair Work Act 2009 (Cth) (FWA) by her employer Ada Evans Chambers Pty Ltd (AEC) including breaches of the general protections provisions (section 340), breaches of sections concerning consultation with an employee on unpaid parental leave and return to work guarantee (sections 83 and 84) and contravening a modern award (section 45). Patrycia also claimed accessorial liability of the director and shareholder of the chambers, Michael Maxwell (Michael) (section 550).

Patrycia commenced proceedings in the Federal Circuit Court of Australia (FCC) against AEC and Michael seeking declarations, compensation and monetary penalties pursuant to sections 545 and 546 of the FWA.

In this article, we will concentrate on what the Court said regarding the consultation provisions under section 83 of the FWA and the modern award.

Background

Patrycia commenced employment as a full time legal secretary with AEC on 21 January 2002. Patrycia performed work for Michael.

Patrycia commenced a period of parental leave on 4 June 2012. Although Patrycia claimed she had extended her parental leave beyond the first 12 month period, it was determined by the Court that Patrycia had not extended her parental leave in accordance with the FWA so her parental leave finished on 3 June 2013. From 4 June 2013 she was on leave without pay until 28 October 2013 when her employment was terminated.

Changes to Michael’s case load and therefore AEC’s business had occurred during Patrycia’s period of unpaid parental leave, and eventually a decision was made to restructure and make the legal secretary position to Michael redundant. Patrycia’s duties were allocated to other employees.

Section 83 – Consultation with an employee on unpaid parental leave

Patrycia argued that AEC and Michael had contravened section 83(1) of the FWA which provides that:

  • If an employee is on unpaid parental leave, and
  • the employer makes a decision
  • that will have a significant effect on the status, pay or location of the employee’s pre-parental leave position
  • the employer must take all reasonable steps to give the employee information about, and an opportunity to discuss, the effect of the decision on that position.

The Court determined that section 83(1) does not impose an obligation on an employer to consult with the affected employee before any decision is made. It was also noted that to trigger the obligation under section 83, it is necessary for the employee to be on unpaid parental leave.

First decision – the restructure

The Court considered that AEC, through Michael, took reasonable steps to give Patrycia information of a general nature via a notice of the restructure of Michael’s practice and the impact on her pre-parental leave position both in December 2012 and during a face to face meeting on 4 April 2013 when Michael informed her that her position was no longer available. Therefore in relation to AEC’s decision to restructure the business, there was no contravention of section 83.

Second decision – termination of employment

In relation to the decision to terminate Patrycia’s employment, the Court held that Patrycia had completed her 12 months of unpaid parental leave on 3 June 2013 as no extension had been granted by AEC, and as such, the obligation imposed by section 83 of the FWA did not apply in relation to her termination on 23 October 2018.

Section 45 – Contravention of Modern Award

The industrial instrument governing Patrycia’s employment was the Legal Services Award 2010 (LSA).The LSA contains a consultation provision requiring an employer who has decided to implement major workplace change (including termination of employment) to notify any affected employee(s) and discuss the effects of the change with the employee and their representatives (if applicable).

Patrycia also claimed that AEC breached clause 8 (“Consultation”) of the LSA. This clause imposed an obligation on AEC to consult with Patrycia about the significant effect the restructure would have on her position.

The Court found that cl 8 focuses on the obligation of the employer to notify an employee when a “definite decision” has been made to “introduce major changes”’, with the consultation to provide the employee with a ‘genuine opportunity’ to ‘persuade and influence the ultimate decision’ made by the employer.

The obligation under clause 8 is only triggered when AEC had made a definite decision to introduce major change. They then had an obligation to hold meaningful discussions with Patrycia and give genuine consideration to any matters she raised.

The Court held that the relevant period for these circumstances began in or around June 2012 when Michael’s practice changed dramatically, and as such, he began to reallocate the tasks performed by his legal secretaries/administrative staff. The Court took the view that a ‘definite decision to introduce major changes’ came about on 21 September 2012 when Michael met with his accountant. No meaningful discussion was taken to have occurred in the period between 21 September 2012 and 20 March 2013 (including when Patrycia attended the chambers for a visit), and therefore Patrycia had no opportunity to discuss the proposed changes, which by that stage, had been implemented.

The Court found that AEC had breached clause 8 of the LSA, and therefore contravened a term of a modern award in breach of section 45 of the FWA. The Court also found that due to his active role in the process and decision making, that Michael was a ‘knowing participant’ and an accessory to the contravention, and therefore personally liable under section 550 of the FWA.

The amount of compensation to be awarded to Patrycia and the penalties against AEC and Michael are yet to be determined. (Watch this space)

Conclusion

The law in this area can be very confusing.

You might say “oh but consultation would not have really made any difference even in this case”. Time and time again however the Courts have confirmed the obligation to consult is not one that is flexible and the penalties for getting it wrong are very real.

Obtain professional advice before decisions are made to ensure you are aware of your obligations.  Plan out the way the process will be undertaken to ensure you don’t fall foul of the law.

Authors: Nicole Dunn, Veronica Lee and Juliette Talj