Australia: Parental leave and returning to work: when can employers legitimately refuse a request for part-time work?

Key Points:

Employees returning to work from parental leave have a statutory right to request part-time work, but an employer is not obliged to automatically accept the request.

It is one of modern life's great balancing acts: the need for employees to care for their children versus the legitimate business needs of their employers. Hopefully, in most cases, an accommodation is reached that is mutually acceptable, effectively reconciling potentially competing interests for the benefit of all.

On occasion, however, the consultation process on a suitable arrangement can reach an impasse which, if it can't be resolved, may precipitate the conclusion of the employment relationship.

In the recent Fair Work Commission decision of Ms Catarina Reale v Helloworld Ltd t/a Qantas Holidays and Viva Holidays Ltd [2015] FWC 7122, it was found that an employer had reasonable business grounds for refusing an employee's request for part-time work upon her return from parental leave.

While the Fair Work Act 2009 (Cth) entitles employees to request flexible working arrangements (such as changes in hours of work, patterns of work or location of work) and part-time work upon the return from parental leave, this does not always mean that an employee's request will be accepted, particularly if there are sound commercial grounds for an employer to refuse the proposed changes.

So when can an employer legitimately refuse an employee's request for part-time work, and what are the implications for an employer if the request is refused?

Part-time work and flexible working arrangements

Section 65 of the Fair Work Act provides that an employee can request a change in working arrangements if that employee is a parent, carer, has a disability, is 55 or older, is subjected to domestic violence or if the employee provides care or support to a member of the employee's immediate family or household who is experiencing violence from the member's family.

An employee who is a parent returning to work after taking leave in relation to the birth or adoption of a child (ie. maternity leave or parental leave) can request to work part-time, subject to the requirement that the employee has completed at least 12 months continuous service. If the employee is a casual employee, that employee will only be able to request part-time work if he or she is a long term employee that has a reasonable expectation of continuing employment on a regular and systematic basis.

An employer may, however, refuse an employee's request for flexible working arrangements or part-time work if there are "reasonable business grounds" for doing so.

"Reasonable business grounds" includes circumstances where:

• the new working arrangements would be too costly for the employer;
• the employer has no capacity to change the working arrangements of other employees to accommodate the arrangements requested;
• it would be impractical to change the working arrangements of other employees or recruit new employees to accommodate the requested arrangements;
• the new working arrangements would be likely to result in a significant loss in efficiency or productivity; or
• the new working arrangements would be likely to have a significant impact on customer service.

Ms Reale requests a part-time position

Catarina Reale was a Business Development Executive employed on a full-time basis by Helloworld Ltd.

Ms Reale was due to return to work in June 2015 from three contiguous periods of maternity leave which began in 2011. In preparation, she advised her manager that she was not able to commit to full-time work and that she would "like an opportunity to trial a temporary part-time role" in her current position or another similar role within the company "with a goal to return to full-time work within a year".

Her manager declined Ms Reale's request:

Ms Reale contested Helloworld's refusal, arguing that the enterprise agreement entitled her to seek part-time work upon her return from parental leave. Helloworld subsequently sought to confirm Ms Reale's return to work; Ms Reale then submitted a request to extend her parental leave. This request was also denied, and Helloworld told her she could either:

• accept the full-time position of Business Development Executive; or
• resign from her positon by providing written notice.

On 17 June 2015, Ms Reale informed Helloworld that she would be resigning from her position, albeit unwillingly, on the basis that the decision to resign had been "forced" upon her by Helloworld, in other words, a constructive dismissal.

Following the cessation of her employment, Ms Reale commenced unfair dismissal proceedings in the Fair Work Commission, relying upon section 386(1) of the Fair Work Act which provides that a person has been dismissed if:

Reasonable business grounds

While Senior Deputy President Hamberger sympathised with Ms Reale's predicament, it was ultimately concluded that Helloworld had reasonable business grounds for refusing to convert Ms Reale's employment from full-time to part-time, and that it was Ms Reale's personal circumstances, rather than the conduct of her employer, that had forced her to resign. Ms Reale's application was subsequently dismissed.

In coming to this conclusion, SDP Hamberger relied upon the following factors:

• the role performed by Ms Reale (Business Development Executive) provided support to a network of travel agents. These agents were consulted by Helloworld, and the feedback provided was that (on the basis of current business needs) the role was required on a full time basis;
• careful consideration was given to Ms Reale's request, however Helloworld found that no part-time roles or similar roles were available; and
• during Ms Reale's absence, the size of the business had been dramatically downsized and roles had been streamlined.

Things to remember when an employee asks for part-time work or flexible working arrangements

The Helloworld case serves as a reminder to employers of:

• the importance of ensuring employees are not disadvantaged when taking maternity or parental leave;
• the need to accommodate an employee's request for flexible working arrangements unless there are reasonable business grounds for declining it; and
• if there are reasonable grounds, the need to be able to clearly state what they are and provide cogent evidence to support them.

As with many employment-related matters, evidence-based decision-making is imperative. Some common mistakes that employers make are being influenced by false assumptions about what a role might entail or what a part-time employee is capable of contributing, relying on the notion of what the business has traditionally done rather than what can actually be done, and giving disproportionate weight to management preference for full-time employees.

The right process is also important. Following recent amendments introduced by the Fair Work Amendment Act 2014 (Cth) which came into effect on 27 November 2015, employers will now only be able to refuse an employee's request for an extension of unpaid parental leave if the employee has been given a reasonable opportunity to discuss the request, in addition to the other existing requirements.

Suffice to say the legal consequences of mishandling these matters can be significant (including unfair dismissal, adverse action and discrimination claims), let alone the broader damage to the reputation and morale of the employer.

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• Refusing an employee's request to return to work part-time constituted constructive dismissal

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.