The Roy Morgan case highlights the many pitfalls of not managing within strong people management practice principles when it comes to restructures and redundancy. We discuss this case and the learnings, to ensure our readers don’t fall foul of the law (especially start-ups or SME’s).
We are often asked to assist businesses of all sizes to help plan and manage restructures. We regularly come across managers/executives and even HR consultants for that matter, who don’t truly understand their obligations under law.
Whilst we are all for expedition of situations, we would not recommend doing so at the cost of solid process and high quality, high touch engagement with their employees.
The case in brief
A director on maternity leave won an adverse action claim against Roy Morgan. The director had her request for flexible working hours denied and her redundancy brought forward by the business working through a ‘genuine’ restructure.
Under legislation (return to work guarantee) an employee returning from maternity leave is entitled to be returned to their pre-maternity leave position, or if that position no longer exists, a suitable available position. A suitable alternative position is a complex issue and includes considerations such as: a position that they are qualified to perform, that is similar in skill requirement, status and pay grade.
Whilst the Court accepted that Roy Morgan was undergoing a genuine restructure which meant that the returning mother’s position would cease to exist, it found that they failed o comply with the return to work guarantee by their decision to expedite her redundancy. In addition, the maternity cover remained in the role for two months after the date on which the mother was due to return to work, and they were redeployed to another position within the business which would have been suitable for the returning mother.
When considering requests for flexible working arrangements, an employer may only legally refuse on two grounds under the Fair Work Act (FWA):
- The employee does not meet the eligibility criteria for a request or
- There are ‘reasonable’ business grounds
However, even if those two conditions are met legitimately, the employee, may still have a potential claim of discrimination on the ground of family responsibilities. Sometimes, depending on the circumstances, a trial period is a useful way to determine the workability of a request before making a final decision regarding the request.
This case highlights a number of lessons:
- Always ensure you get quality HR advice before taking action. If the situation is unduly complex, we would also recommend obtaining employment law advice as well.
- Always consult proactively with employees in potential redundancy situations (even if they are on maternity or sick leave)
- Make sure flexible working requests are considered fully. We suggest always consider requests in full and make solid business case decisions about those requests, having given consideration to all the circumstances with the mother and the business. In our experience, flexibility of approach and solid employee engagement process can often find a win-win solution (including trial periods)
- Do NOT redeploy contractors or temps into potential suitable alternative roles until all possibilities have been explored with ‘affected permanent employees’
When you take into account the PR issues when things go wrong, such as this case, and the negative impact on employee engagement, getting this stuff wrong can create enormous issues for a business.
The perceptions and engagement levels of the ‘survivors’ (those left behind in the aftermath of restructures) tend to become negative quickly. This often results in an exodus of the best people in your business. If you have a reputation for poor execution within the business (whether perceived or real), you create a multitude of additional problems for your business than the initial problems related to the need to restructure in the first place.
Let’s face it, restructure and redundancy are often unavoidable. Therefore, phenomenal execution that leads to the best possible outcome in the situation has massive pay-offs!
It is unfortunate that many employers fall into the poor execution category, and that can often be easily avoided.
The point here is, IF IN DOUBT, seek advice, BEFORE taking action!
It is worth noting that, Employers can face penalties of up to $54,000 for a breach of the FWA, and $10,800 for an individual “involved in” the contravention (whether HR or a manager/director of the business).
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This article is intended to provide commentary and general information. It should not be relied upon as comprehensive or legal advice. Formal legal advice may be necessary in particular transactions or on matters of interest arising from this article. The HR Experts International is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission in this article.