Maternity leave breaches can get you in hot water

Employer obligations on parental entitlements are clear – and the courts are not reluctant to flex disciplinary muscle. By PETER VITALE

By Peter Vitale

Maternity leave

Employer obligations on parental entitlements are clear – and the courts are not reluctant to flex disciplinary muscle.

The Federal Court has confirmed the imposition of the maximum available penalty on a company found guilty of failing to meet its obligation to return an employee to her pre maternity leave employment.

Sterling Commerce (Australia) was fined $33,000 by the Federal Magistrates Court for what was described by the court as “unattractive and in part dishonest” conduct.

Sterling’s marketing manager Belinda Iliff went on maternity leave in December 2004 and was due to return to work in April 2005. Sterling had engaged a contractor to perform Iliff’s duties while she was on leave, and later offered the contractor full-time permanent employment in a new position that had been created as a result of a restructure of the business.

When Iliff sought to return to work, she was advised that her position no longer existed and that her employment would be terminated for reasons of redundancy.

The court found that the employer made a conscious decision to employ the contractor in preference to Iliff because the business could not justify employing both, and Sterling had decided that the contractor was a more valuable employee. While it rejected the suggestion that the restructure was a sham, it was found that her position was not in fact redundant and that Sterling Commerce had “sought to hide its tracks by the manipulation of the new job description”.

In the circumstances, the employer had breached its obligation under the Workplace Relations Act to return the employee to the position she held immediately before commencing maternity leave. Or, if that position no longer existed and there were other positions available for which Iliff was qualified and capable of performing, then to appoint her to this position.

Sterling’s appeal against the size of the penalty was rejected by the Federal Court.

The case highlights the critical importance to employers to ensure they meet the entitlements of employees returning from parental leave. Often, employers are faced with circumstances in which they have failed to notify the replacement employee that the position they are filling is a temporary contract, and that the employee on leave is entitled to return to that position at the conclusion of parental leave.

As in this case, employers can also find themselves with a temporary employee who they assess as more highly skilled and preferable to the employee on leave. Employers may view these circumstances as presenting a difficult management decision; to ensure they retain the person they perceive as the better employee. As the decisions of the Federal Court and the Federal Magistrates Court demonstrate, any course other than re-employing the person returning from parental leave is fraught with risk.

Other aspects of the case also bear warnings for employers. Although Iliff failed in her cross claim against Sterling that it had breached the Sex Discrimination Act, similar circumstances can, and indeed have, led to a court finding an employer in breach of anti-discrimination legislation.

For example, in the case of Thomson v Orica Australia, the court found that the employer’s negative attitude to maternity leave was a reason for refusing to re-engage the employee and awarded compensation against the employer.

The lessons for employers:

  • Be aware of your obligations to employees who want to take parental leave.
  • Make sure you prepare for a return to work as soon as the employee takes leave.
  • Keep replacement employees fully informed about their status and your obligations.


Peter Vitale is the principal of CCI Victoria Legal


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