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Employment Update – July 2017 – Real Estate Agency awaits compensation order after dismissing an employee because she was pregnant.

A real estate agency in Victoria will wait until a further hearing in October to find out Judge Riley’s decision as to compensation, after it unsuccessfully defended proceedings in the Federal Circuit Court brought by a former administrative assistant (‘Applicant’).  The Applicant alleged that she had been terminated by the real estate agency due to her being pregnant (among other reasons).

Background

The Applicant was dismissed in the final hour of the final day of her 6-month probationary period.  Critical, to the Applicant’s case was her evidence that during the termination meeting with two of the Directors of the Employer, the decision making Director (‘Director’) said to her:

“Due to your current circumstances, your employment has become unreliable and we have decided not to continue with your employment.”

The Applicant had commenced employment with the commercial real estate agency in December 2015.  She discovered that she was pregnant in January 2016, and informed the Director of her pregnancy at the end of what she claimed was a successful 3-month probationary period discussion in March 2016.  The Director admitted that he was surprised by the news, and at the meeting asked the Applicant when she was due and when she would be taking maternity leave.  The Applicant provided him with that information.

Between that 3-month probationary meeting and when she was dismissed 3 months later, the Applicant took a total of seven days of sick leave due to morning sickness, and provided a medical certificate relevant to those absences.  She also took four days’ annual leave to attend pregnancy related medical appointments during that 3-month period.

The Applicant conceded that she was late for work six or seven times during the same 3-month period, although she said she was only five or 10 minutes late and would make up the time at the end of the day.  The Director confirmed that he understood that public transport had caused the Applicant’s tardiness on those occasions.  The Director also conceded that he had not raised any performance concerns with the Applicant the month following her advice to him about her pregnancy, and had therefore not given her the opportunity to improve in relation to any performance concerns he had.

In a further board meeting, at the end of April 2016, the minutes from that meeting noted:

“[The Applicant is] 6 months 6 June. Situation needs to be dealt with.”

The Director indicated that at that meeting the directors discussed the Applicant’s performance, and that he raised that:

  • he was disappointed that the applicant had not achieved a satisfactory standard of performance, and that there had been a pattern of failures to attend work punctually; and
  • he was losing confidence that the applicant’s performance and punctuality would improve.”

The Director then said that one of the other Directors had indicated that the situation with the Applicant should be resolved before the end of her probationary period.

Judge Riley made an interesting observation relative to the board meeting minutes on this occasion:

“Interestingly, the minutes of the board meeting on 29 April 2016 specifically say that one staff member was not firing at this stage (presumably meaning he was not very energetic) and another staff member was MIA again and taken off property listings (presumably meaning that he was missing in action, in the sense of not performing, and was moved as a result). There was no performance based or other explanation in the minutes of why the situation regarding the applicant needed to be dealt with.”

The board then met again at the end of May 2016.  Judge Riley noted that the minutes with respect to the Applicant, simply stated:

“[Applicant] 6 months 6 June need to arrange a meeting.”

The Director admitted that by the time of the May board meeting, he had made a decision to terminate the Applicant for reasons of poor performance and poor punctuality.  At the May board meeting he told the other Directors about his intended course of action and they agreed with that course, and it was confirmed that another of the directors should attend the meeting with him.  It was agreed the meeting would take place before the end of the Applicant’s probationary period.

The Director rejected that the Applicant being pregnant, or that she intended to take maternity leave, and/or and had taken sick leave from time to time was contemplated in his decision to terminate her.  In support of this position, the Director pointed to the fact that another employee in 2015 had notified him during her probationary period that she was pregnant and that her maternity leave was accommodated on that occasion.

The Director conceded that during the termination meeting, he at no time raised with the Applicant any performance concerns, except to say that she was unreliable.  Despite conceding that he said she was unreliable, the Director denied that he stated:

“Due to your current circumstances, your employment has become unreliable and we have decided not to continue with your employment.”

The other director who attended the meeting said he had no recollection of the Director referencing the Applicant’s ‘current circumstances’.

Claim

The Applicant subsequently commenced a general protections claim, alleging that the real estate agency took adverse action against her (by terminating her employment) because she:

  • exercised her workplace rights to take annual leave and personal leave; and/or
  • because she was pregnant; and/or
  • because of her sex; and/or
  • because she was temporarily absent from her work on account of illness or injury.

Additional evidence

As part of her evidence to support her claim that the real estate agency had taken adverse action against her because of her pregnancy, the Applicant noted that the minutes of a previous meeting of the Directors in January 2016, and in relation to a different pregnant employee, had recorded that:

            “Bec is pregnant and her attendance record is bad.”

Decision

In relation to the allegation that the Director terminated the Applicant because of her sex, Judge Riley rejected that argument, stating:

“… six months before dismissing the applicant, the respondent employed her, obviously knowing that she was a woman. It makes no sense that the respondent would have dismissed the applicant because she was a woman when a few months previously the respondent had employed her, knowing that she was a woman.

On the facts established in this proceeding, and taking into account the reverse onus, I do not accept that the respondent dismissed the applicant because of her sex. (The prohibition on sexual discrimination would seem to apply more naturally to circumstances where a prospective employer refused to employ a person of a particular sex.)”

However, Judge Riley was not so forgiving in relation to the allegation that the Applicant was terminated because she was pregnant.  On this point, Judge Riley opined:

“I find that [the Director] did say at the dismissal meeting:

Due to your current circumstances, your employment has become unreliable and we have decided not to continue with your employment.

I consider that the words, Due to your current circumstances, could only have referred to the applicant’s pregnancy.

It beggars belief that [the Director] would have said that the applicant’s employment had become unreliable on the basis that she was a little late for work on six or seven occasions in a three month period in combination with some formatting issues that he had not previously raised with her in a formal manner. It is also preposterous that the applicant could have been dismissed for not sometimes not picking up discrepancies in valuation figures. The primary responsibility for that sort of error obviously lies with the valuer who prepared the report.

I consider that the respondent has failed to discharge the reverse onus in relation to the pregnancy ground. That is, I consider that a significant and substantial reason for the respondent dismissing the applicant was her pregnancy.”

Judge Riley then also made a finding that the employer had terminated the Applicant because she had taken leave (and related to a pregnancy related illness).  To this end, His Honour stated:

“The respondent argued that the fact that it did not formally raise performance issues with the applicant may be significant in an unfair dismissal case, but said this is an adverse action case. That is so. However, the failure to raise performance issues with the applicant during the course of her employment does tend to undermine the credibility of the allegations about her performance which were raised for the first time after her dismissal.

It is also significant that the respondent dismissed the applicant during the last hour of the last working day before her probation period ended. If the applicant’s performance had genuinely been bad enough to dismiss her, the respondent could have been expected to dismiss her much earlier. This circumstance also tends to undermine the credibility of [the Director’s] disavowals.”

Having found that the real estate agency has contravened the general protection provisions of the Fair Work Act 2009, Judge Riley confirmed that he will hear further submissions from the parties before any orders are made.

Lessons for Employers

This case is another example of what employers should not do in terms of approaching employees who have exercised a workplace right, including where the employee has confirmed that she is pregnant.  The real estate agency will now undoubtedly face an order for the payment of compensation to the Applicant, and the Company and Director(s) may be subject to penalties.

If there were genuine performance concerns with the Applicant’s performance, then those concerns should have been addressed with the employee in a formal manner and contemporaneous to those performance concerns arising.  If the real estate agency had taken steps to formalise its performance concerns with the employee at the time those concerns arose (if at all), then it may have been in a better position to defend the claim.

That being said, there are numerous pieces of legislation that seek to protect employees in circumstances where they reveal to the employer that they are pregnant, and employers need to be extremely careful in acting against an employee in such circumstances.  In all such circumstances, we recommend that an employer seek legal advice, so that an employer can properly understand its risks before proceeding to undertake any consideration of termination of employment.

Lisa Aitken, Managing Director