Business Protection versus General Protections – Redundancy and The Pregnant Employee

A recent case demonstrates that an employer can successfully defend making a pregnant employee redundant provided that the organisation is able to demonstrate that the reason for the retrenchment was not related to pregnancy but instead to other (non-discriminatory) considerations such as a business’s financial performance.

The Case

The Federal Circuit Court recently decided that Scanlan & Theodore did not take adverse action against a pregnant employee when they made her position redundant. The Company successfully demonstrated that the reason for the termination of the employee’s employment was a “diabolical” sales season and a significant downturn.

The former merchandising assistant, Ms Schultz alleged that the Company decided to terminate her employment soon after she announced her pregnancy. Further, she claimed that the Company had treated her differently and unfavourably, subsequently making her role redundant because she intended to take parental leave.

The Court rejected all of Ms Schultz’s arguments and accepted Scanlan & Theodore’s evidence that the reason to terminate the employment was financially driven.

In defending the case, representatives for Scanlan & Theodore produced comprehensive financial reports which clearly demonstrated that the reason for making the employee redundant was the company’s declining financial position owing to “diabolical” sales.

Lessons for Businesses

This decision emphasises the importance of having objectively demonstrable, non-discriminatory reasons as the basis for the reason of restructuring and redundancies in order to defend against claims of discrimination.

Employers should also be aware of their consultation obligations to employees prior to implementing redundancies.

If you are in the process of planning or implementing a restructure, contact HR Legal for advice as to how to best manage the legal risks.

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.