Q. Due to a downturn in business the company has decided a section of our workforce will be made redundant. One employee whose position has been selected for redundancy is currently absent on 12 months unpaid parental leave. There is no other suitable position available although the company has consulted with the affected employee regarding options, such as redeployment.   
  
Because of the provisions of the National Employment Standard that refer to a return-to-work guarantee, our concern is whether an employee can be terminated in this circumstance when absent on unpaid parental leave. Is the employee’s position protected from redundancy because she is absent on parental leave (in this case maternity leave)?  
  
A.  An employee’s absence on parental leave does not offer the employee any greater protection from dismissal than if he or she was at work. In the case of the position becoming redundant, provided the selection criteria applied to determine which position(s) are selected for redundancy are objective, and the redundancy is based on meeting the operational requirements of the enterprise, a dismissal could be regarded as valid in the circumstance.  

The employer must provide the appropriate period of notice of termination and the appropriate redundancy pay under the National Employment Standards (where the company employs 15 employees or more).  

Note: Some modern awards and enterprise agreements diverge from the NES and may even require redundancy payments from small employers 

Best practise is to wait until the last few weeks of the parental leave to issue notice in case circumstance change and redeployment opportunities arise in the meantime. 
  

Protections   

An employee has statutory protections if the grounds for dismissal are based on factors which are considered discriminatory, such as family or caring responsibilities or the employee is on parental leave. If the employee has been selected for redundancy primarily because of their absence on unpaid parental leave, this would be regarded as discriminatory (s351 of the Fair Work Act — family or carer’s responsibilities) and would expose the company to a potential claim of unfair dismissal or adverse action under the general protections provisions. See Power v BOC Pty Ltd & Ors (No.2) [2017] FCCA 2387 (3 October 2017).  

 

Selection criteria  

The factors determining which positions are to be redundant should be based on objective criteria and should be known by employees in advance (as per the consultation provisions under the relevant modern award), such as through a company policy. The employer should select who is to be made redundant, referring to the skills, experience, training and performance of individuals compared to the current and future needs of the organisation. If, after such an assessment, employees are found to be comparatively equal, the period of service would be an appropriate factor unless some other pressing domestic issue is raised by the individuals concerned.  

Subjective criteria are open to abuse and could be used to target particular workers. Referring to factors such as “teamwork”, “know how”, “initiative”, “integrity”, “trust”, “credibility”, etc. should be avoided. It seems the problem about subjective criteria is not so much the fact of their adoption, but the burden they impose on those that have to apply them. See Pauline Ralph v Fortis Australia Limited - T4482 [2000] AIRC 682; (14 December 2000).   

For example, a company that used employees’ workers compensation status as a factor in determining which employees should be selected for redundancy was unsuccessful on appeal in an unfair dismissal matter taken by former employees. See Smith and Kimball v Moore Paragon Australia Ltd - PR942856 [2004] AIRC 57; (20 January 2004).  

 

Bottom line  

While an absence on parental leave does not offer the employee any greater protection from dismissal the factors determining which positions are to be redundant should be based on objective criteria to avoid any potential claim of discrimination or that the dismissal was unfair.