Eastern Commercial Lawyers

Parental leave/Flexible work requests

Unilateral change to an employee’s role by an employer potentially amounts to constructive dismissal giving rise to a claim for compensation for an employee.

The recent decision in Fair Work Australia (“FWA”) of Maria – Anna Owens v Allied Express Transport [2011] FWA 1058 serves as a warning to employers not to unilaterally change an employee’s employment contract against a backdrop of requests for parental leave and flexible working arrangements. In this decision, a national courier company was ordered to pay $25,000 to an employee for unfair dismissal under the Fair Work Act 2009 (the “Act”).

Background

An employee (the "Applicant") commenced employment with the employer ("Allied") in January 2010 as a Customer Service and Accounts Manager; a role which required her to travel extensively using her own car to visit clients. In April 2010, the Applicant informed Allied that she was pregnant, and they mutually agreed that she would take maternity leave from the end of October. As the Applicant's pregnancy progressed she became easily tired, and in August asked her employer whether she could "come off the road". A few days later, Allied notified her that a change in role would result in a reduction of $10,000 p.a. to her salary. This was because the car allowance would no longer be payable. However according to the Applicant the car allowance was $5,000 p.a. and therefore any revised offer of employment should only be reduced accordingly. The Applicant immediately rejected the loss of $10,000.

The Applicant acknowledged that coming off the road and change in role would involve a reduction in salary, principally due to losing the car allowance. However she was reminded by Allied that coming off the road remained an option rather than a requirement. At no time during these discussions were details about the new role or reduction in salary concluded.

Shortly after, Allied decided to transfer the Call Centre and Customer Services management duties to an alternate employee and advised relevant staff of the change. This was not discussed nor agreed to with the Applicant. The following day, Allied's Human Resource Manager gave the Applicant a letter in the form of a new employment contract "confirming" a transfer to the role Telephonist and Customer Service effective from two days earlier. The salary package was $60,000; $10,000 less than her original salary package. The Applicant declined to sign the letter and walked out of the meeting very distressed, and after consulting with her obstetrician took three day sick leave.  

When she returned to work, the Applicant was given a new and revised letter from the HR Manager purporting to confirm a new salary package - this time $52,000. The Applicant also refused to sign this letter. Again, Allied did not discuss this further change with the Applicant prior to this occasion. The Applicant worked the remainder of the week and then took planned annual leave. While on leave she sought legal advice and subsequently made an application before FWA alleging unfair dismissal under the Act.

Arguments before FWA

The Applicant argued that there was an agreement in principle to move to a less onerous role, however at no time was there an agreement as to the details of that role or the reduction in salary. Further, the Applicant argued that the change in role and the significant reduction in salary were unilaterally made by the employer which combined with the manner of introduction was such that she was entitled to treat her employment relationship as being at an end and for such to be considered as the initiative of the employer.

Allied argued that the changes were consensual and designed to accommodate her desire to "come of the road" in the immediate period before commencing maternity leave.  Allied further argued that the new role and salary remained an option and that she could at any time have insisted on resuming her substantive role. Allied therefore argued that there was no dismissal at its initiative; rather it was an attempt by the Applicant to retain her full salary whilst changing duties.

The decision of FWA

The Applicant was found to be dismissed unfairly under the Act because:

1.    the conduct of Allied was objectively analysed and found to be of such a nature that resignation was the probable result or that the Applicant had no effective or real choice but to resign;

2.    the termination was at the initiative of Allied;

3.    there was no basis to change the Applicant's role or salary package; and

4.    there was a lack of application of reasonable human resource practices.

This decision tells us that Employers must:

• consult with, have adequate communications and transparent and fair dealings with employees throughout any process;
• ensure that any change in role, duties and salary package of an employee is appropriately considered based on the employee’s capacity and performance. Any fundamental changes should be mutually agreed.
• provide a clear and full position description as part of any employment contract to avoid any misunderstanding as to the terms of engagement.
• create and maintain full and accurate records of material discussions and events that take place throughout negotiations.
• Employers faced with these situations are encouraged to seek specialist legal advice in an effort to avoid “constructive dismissal” or discrimination on grounds of Parental leave/Carer’s entitlements

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