Pregnancy discrimination costs employer $235,000

In the recent case of Sagona v R & C Piccolo Investments Pty Ltd and Ors, the Federal Circuit Court has ordered the employer and its husband and wife owners to pay $235,000 to an employee who was found to have been discriminated against after she announced that she was pregnant.

Background

The Applicant in this matter had approximately 12.5 years of unblemished service as a photographer before the matters leading to her resignation arose.  Before this, there had been discussion of the owners’ retirement from the business at which point the Applicant and the owner’s son would become entitled to share profits of the business.    The owners were a husband and wife team who were joined as respondents to the proceedings.

In August 2012, the Applicant had a meeting with the Respondents and informed them that she was pregnant and that she would be taking some maternity leave.

At a meeting two days following the Applicant’s announcement, the Respondents told the Applicant that they were concerned about the direction of business and that the Applicant’s pregnancy would affect their plans to retire.  They also told the Applicant that they were concerned that once the Applicant had the baby that she would not be as dedicated to work, she would not be able to work late and that it would be at least 5 years until she would be fully dedicated to work again.

The Respondents then told the Applicant that she could continue in her current role until the end of the year but that she would need to take her long service leave after the summer holidays.  Further, they told her that if she then insisted on coming back to work after the holidays then she would need to come back in a ‘behind the scenes capacity’ and that it ‘was not a good look’ for customers to see a pregnant woman working in the business.  She was also told that she could not return to work on a part-time basis and that ‘it must be full-time. There’s no other choice’.

There were a number of subsequent conversations and discussions between the Applicant and the Respondents, with the Respondents seemingly becoming more unreasonable over time.  Evidence in the case included that the Respondents placed what the Applicant considered to be unreasonable performance expectations upon both her and their son to the extent that the sales figures that they required them to achieve had never been attained in the history of the business.  They also demanded that the Applicant work additional hours to meet the enhanced performance targets.  The Respondents threatened to wind down the business if the Applicant did not meet their sales requirements.

About a week later, the Applicant gave the Respondents a letter that indicated that said that she ‘loved her job and wished to continue working with the [business] but felt that they had treated her badly since she advised them of her pregnancy’. The letter highlighted that she had taken legal advice and reported her claims of discrimination to the relevant authority.  She also said that she was happy to do anything reasonable to help improve sales, but she would not agree to the new contract terms being demanded by the Respondents.

Tensions continued to escalate of over the next 7-10 days.  This eventually culminated in the Applicant attending for work on 20 September 2012, three weeks after announcing her pregnancy, and presenting a letter to the Respondents to the effect that she was terminating her employment contract because ‘she felt she had no alternative than to immediately resign from her employment’.

Decision

Judge Dominica Whelan of the Federal Circuit Court determined that the Applicant had been constructively dismissed from her employment, and that the dismissal had been for a prohibited reason within the meaning of the Fair Work Act 2009 (Cth).  Judge Whelan was satisfied that the Applicant had been injured in her employment by:

• The demand that she work additional hours;
• The refusal to allow her to work in her usual occupation, or in alternative duties, after the Christmas break;
• The refusal to consider a return to work on a part-time basis; and
• Abusive conduct which was directly related to her refusal to work additional hours and her letter complaining of discrimination.

Compensation

Judge Whelan determined that the Applicant’s economic loss arising out of the unlawful termination was $164,097, which included medical expenses.  She also awarded the Applicant $10,000 for non-economic loss related to her distress, hurt or humiliation.

Penalties

Judge Whelan then turned to consider whether civil penalties should be imposed on the Respondents in the circumstances.  The Respondents lack of contrition in relation to their conduct was a contributing factor to the imposition of a penalty.  Judge Whelan stated:

“The Respondents have shown no contrition with respect to their actions; indeed they continued to insist that the victim of the conduct was in fact the perpetrator and that they were ‘set up’ by her. … . In my view, the Respondents have shown a remarkable lack of insight into their own behaviour and its impact on the Applicant. As far as I am aware, they have taken no corrective action.”

Judge Whelan also determined that general deterrence for other employers should be a factor in determining the weight of penalty to be imposed:

“In this case I regard the conduct as being serious: 

• First, the demand that the Applicant work ‘all hours necessary’ could only be an unreasonable demand and one which employers should be discouraged to make; and

• Second, the capacity for women to continue in employment during their pregnancy and to be able to continue with their career after having a child are matters which as a society we consider should be protected.”

The Court ordered that the employing entity pay $45,000 for its contraventions, whilst the husband and wife were ordered to pay $8,000 each.   The penalties were ordered to be paid to the Applicant personally.

Lessons for Employers

The case is a fairly obvious example of adverse action taken because of a discriminatory attribute.  However, the case is noteworthy due to the fact that the husband and wife owners were included personally, and each were ordered to pay a penalty as a person knowingly involved in the contraventions.  In our view, this will continue to become a more common occurrence.

Employers should always exercise great caution and seek legal advice when managing an employee who possesses a discriminatory attribute that may be relied upon in a general protections or discrimination claim.