Many employers are still facing difficult economic times and, when employees go off on maternity leave, employers are increasingly absorbing the work amongst existing staff rather than paying for additional cover. What happens if this creates a redundancy situation upon the employee’s return?
The recent judgement in SG Petch Ltd v English-Stewart (UKEAT) held that an employee’s redundancy dismissal after her maternity leave was not discriminatory but might have been automatically unfair.
Mrs English-Stewart (Mrs ES) was a part time manager. When she was due to return to work after maternity leave, she was informed that her work had been absorbed by others in the team and she was made redundant. Mrs ES brought sex discrimination and unfair dismissal claims.
The Maternity and Parental Leave etc Regulations 1999 (MPL Regulations) provide that an employee's dismissal will be automatically unfair where the following conditions are satisfied:
- The reason or principal reason for the dismissal is redundancy;
- The circumstances constituting a redundancy applied equally to one or more employees who had positions similar to that of the dismissed employee; and
- The reason or principal reason for the employee's selection for redundancy are reasons connected with the fact that the employee took, sought to take or availed herself of the benefits of maternity leave.
Employment Tribunal (ET) decision
Mrs ES’ claims were upheld by the ET which commented:
- The employer didn’t recruit a temporary employee to cover Mrs ES’ and her work was done by the remaining three members of her department. The employer consequently concluded that only three, not four, employees were required and therefore redundancy was a possibility;
- Mrs ES was the only employee who was singled out for redundancy. If the employer had carried out a fair redundancy process, it would have applied a matrix to the whole team;
- It had become apparent during Mrs ES’ maternity leave that there could be a reduction in staff by reason of redundancy. Therefore, Mrs ES’ dismissal must be on the ‘grounds of her maternity leave’ or ‘connected with her maternity leave’; and
- Mrs ES was made redundant because she had taken maternity leave and was therefore discriminated against. Further, the dismissal was automatically unfair under the MPL Regulations.
The employer appealed to the EAT.
Employment Appeal Tribunal (EAT) decision
The EAT rejected Mrs ES’ maternity discrimination claim and remitted to the ET on the issue of automatically unfair dismissal. The EAT held that:
1. Mrs ES was dismissed by reason of redundancy and not maternity leave as:
- The ET had found that work done by four employees could, in future, be done by three. Given this, the ET had been bound to conclude there had been a redundancy situation; and
- The EAT was of the view that because the ET had already found that the reason for dismissal was redundancy, the reason could not be maternity leave.
2. The question of automatically unfair dismissal should be remitted to the ET. Given that the reason for dismissal was redundancy and not maternity leave, the ET should have considered the three elements of regulation 20(2) (outlined above) to decide whether she had been automatically unfairly dismissed, as:
- whilst it was plain that Mrs ES was dismissed as redundant, it was not clear whether the rest of Mrs ES’ team held similar positions; and
- although, as a result of Mrs ES’ maternity absence, the employer had appreciated the need to cut back on staff, therefore the decision was connected with maternity leave. If the employer could have appreciated the need to cut back on staff irrespective of the maternity leave, then this section may not have been satisfied.
When the automatically unfair dismissal question is remitted to the ET, if the ET finds that the positions of the other three members of her team were similar to Mrs ES’, then her dismissal would be automatically unfair.
It is surprising that the EAT suggested that, where the reason or principal reason for an employee’s dismissal is redundancy, an ET is ‘bound to conclude’ that her dismissal was not on the grounds of maternity leave. Arguably, this cannot be right, as the discriminatory reason need not be the sole (or even the principal) reason for the employer’s actions. Therefore, this element of the EAT’s decision is open to future challenge.
There may be a genuine redundancy situation for unfair dismissal purposes but that does not mean that an employee’s selection cannot amount to discrimination. The important question is whether the employer’s decision to select Mrs ES for redundancy, and not include the other three, was influenced by the fact that she had gone on maternity leave.
This case acts as a reminder on the law in relation to redundancy and those on maternity leave. In summary:
- Following a fair process when handling redundancies is imperative. This includes correctly considering which individuals should make up a redundancy pool, applying fair selection criteria, consulting, and considering suitable alternative roles.
- If a redundancy situation arises during an employee's maternity leave, specific rules apply. If it is not practicable, by reason of redundancy, for the employer to continue to employ her under her existing contract, she is entitled to be offered a suitable alternative vacancy (where one is available). The employee on maternity leave is, therefore, given priority over other employees who are also at risk of redundancy, a rare example of positive discrimination.
- If an employee is dismissed during her maternity leave, the leave comes to an end. However, if she is entitled to Statutory Maternity Pay (SMP), she will continue to receive it for the remainder of the SMP period. This is because SMP is not dependent on remaining an employee as women who are or ‘have been’ an employee may be entitled to SMP.