Court decision

Pregnant employee unlawful termination decision confirmed: employer ordered to pay $52,000 compensation

By Andrew Tobin / 25 August 2020

Key issues:

  • An Australian employer was ordered to pay $52,100 compensation to an employee who was pregnant at the time her employment was terminated.
  • On 21 August 2020, the Full Bench of the Fair Work Commission (Commission) in Compuworld Pty Ltd v Liu [2020] FWCFB 4250 refused permission to the employer to appeal against the original decision of the Commission on 22 May (Liu v Compuworld Pty Ltd [2020] FWC 2569).
  • The decision highlights the risk for employers associated with improper handling of the termination of employment for employees.
  • In short, the employer might have avoided liability through:
  1. having relevant policies and processes in place;
  2. engaging with the employee in a properly conducted consultation process; and
  3. employment contracts setting out terms and conditions of employment.

What happened?

Ms Liu was employed on a full-time basis for a little over ten years as a Receptionist/Accounts by Compuworld Pty Ltd (Compuworld), a family run business involved in sales of business equipment. On 30 November 2018, Ms Liu was given a letter by her employer terminating her employment by reason of redundancy. The letter also referred to the possibility of a casual position being offered to Ms Liu, however she did not accept the offer of casual employment. 

We represented the employee Ms Liu at all stages of the proceeding, including as advocate, at conciliation, the original arbitration and in defending the employer’s appeal. 

What were the issues?

Ms Liu alleged that unlawful adverse action had been taken against her when her employer terminated her employment, contravening the general protections provisions of the Fair Work Act 2009 (Cth) (FW Act). In particular, Ms Liu alleged that Compuworld took unlawful adverse action against her by dismissing her from employment:

  1. because she had exercised one or more workplace rights (to take personal leave for the purposes of attending medical appointments regarding her gestational diabetes); 
  2. because of her pregnancy or physical disability (gestational diabetes); and
  3. because of the disability suffered by Ms Liu as a result of the pregnancy – gestational diabetes.

Her alternative argument was that Compuworld took unlawful adverse action against her, with the same motivations, by threatening to alter her position to her prejudice by dismissing her from a full-time position and offering her casual employment.

At the time of her dismissal Ms Liu was pregnant and suffering from gestational diabetes. Prior to her dismissal, Ms Liu had raised issues in relation to her entitlement to take sick leave to attend pre-arranged medical appointments relating to her pregnancy and her gestational diabetes. Ms Liu asserted, and the Commission accepted, that the directors and managers of Compuworld knew that she was pregnant and that she intended to take maternity leave. She had also raised previous issues regarding her leave and award entitlements. 

The outcome

The Commission upheld Ms Liu’s application and awarded her $52,100 in compensation. The Commission found that, by dismissing her, the employer took unlawful adverse action against Ms Liu. 

The Commission found that at the time Ms Liu’s employment ended, she had workplace rights which she had exercised or proposed to exercise, being the right to paid leave, and the right to make an application for maternity leave. Ms Liu had sought to exercise those rights for the purposes of attending pre-arranged medical appointments with respect to treatment for pregnancy-related gestational diabetes, and by informing her employer on 30 November 2018 that she wanted to take maternity leave from end of February early March 2019. The Commission also found that the employer did not make Ms Liu the offer of casual employment.

Under the FW Act, the employer had to prove that it did not take adverse action against Ms Liu because of her pregnancy or gestational diabetes, or the fact she wished to take maternity leave. The Commission found that the employer failed to prove this. 

The employer argued that the fall in business revenue was the reason for Ms Liu’s termination. But this wasn’t enough to help Compuworld. While the Commission accepted that the employer’s economic situation was also a reason for the termination of Ms Liu’s full-time employment, it concluded that the prohibited reasons were substantial and operative factors influencing the adverse action, which was therefore unlawful.

Remedy – compensation not reinstatement 

Ms Liu did not seek reinstatement. This is because in her view the employment relationship had irretrievably broken down. 
She instead sought compensation for economic and non-economic loss. 

Economic loss 

Ms Liu was awarded $37,100 in compensation for past and future economic loss, unpaid superannuation contributions and for the Australian Government paid maternity leave scheme. 
Regarding past economic loss she was compensated for the period she would have remained employed but for her termination up to taking maternity leave, as well as her loss of access to the paid maternity leave scheme of 18 weeks.

Regarding future economic loss she was compensated for a further period of six months that she would have remained in employment, reduced by 15% for contingencies.

Non-economic loss 

Ms Liu was awarded $15,000 in compensation for hurt, distress and humiliation. While the Commission accepted the employer’s evidence that there were other non-work factors at play that contributed to her psychiatric condition, the Commission was clear that ultimate responsibility for her condition lay with her employer. It was the employer’s contraventions that contributed to Ms Liu’s condition and caused her distress.

The Commission accepted Ms Liu’s evidence that the termination caused her great distress at a point when she should have been able to enjoy a holiday and then return to work prior to taking parental leave. There was no warning or discussion with Ms Liu in regard to the financial position of the business. She was distressed by her inability to access paid parental leave, or to return to her pre-parental leave position. She should not have been placed in this position of financial and emotional stress prior to the birth of her child.

The appeal

Compuworld appealed the decision to a Full Bench of the Commission on multiple grounds. 

The Full Bench refused permission to appeal on 21 August 2020. They were not persuaded there was any arguable case that the decision was tainted by legal or factual error, or that the Commission’s discretion miscarried. 

The Full Bench found the matter turned on its own facts and that the appeal did not raise any genuine question of law or any issue of importance or general application. 

They were also not satisfied that it was in the public interest to grant permission to appeal, refusing permission.

What lessons were learned?

Ms Liu’s win, including the damages awarded, is an important reminder to employers to exercise caution when seeking to manage a pregnant employee, an employee with a disability, or an employee exercising workplace rights.

It is a timely reminder that each case ultimately turns on its own facts. 

What might the employer have done differently?

Compuworld’s refusal to concede knowledge of Ms Liu’s pregnancy from the outset, despite evidence to the contrary, was problematic. The employer’s failure to warn her or to discuss or consult with her regarding the company’s declining financial position or the possibility she may lose her employment, or to provide a separation certificate, also did not help. 

To mitigate the risk of employees bringing adverse action claims following dismissal, employers might consider:

  1. The relevance and suitability of policies and processes currently in place, whether they are easily accessible, and whether staff training is being provided. Clearly written and understood policies assist both managers and employees navigate common situations that arise in the workplace. 
  2. Good record keeping – it is key. 
  3. Applicability of award, enterprise bargaining agreement, the National Employment Standards, and relevant obligations. Consider consultation provisions about major workplace change carefully and follow procedure, before making staff redundant.
  4. Employment contracts setting out terms and conditions of employment. Changes in employment can be fluid, especially with long-term employees. Contracts should be in place with terms and conditions being revisited regularly.

How can we help?

Our Workplace and Employment team are ready to help you navigate your own particular circumstances, whether as an employer or employee. We can help you find your best way forward.

Andrew Tobin
Andrew is a Partner and the head of HopgoodGanim Lawyers’ Workplace and Employment practice.

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