FEDERAL COURT OF AUSTRALIA
Sterling Commerce (Australia) Pty Ltd v Iliff [2008] FCA 702
EMPLOYMENT LAW – maternity leave – failure to reinstate – breach of the Workplace Relations Act – imposition of the maximum penalty – whether penalty is manifestly excessive
DISCRIMINATION LAW – discrimination on grounds of sex, maternity leave or family responsibilities – applying a comparator
Sex Discrimination Act 1984 (Cth)
Workplace Relations Act 1996 (Cth); s 347, Sch. 1AAPESMA v Skilled Engineering Pty Ltd (1994) 122 ALR 471
Australian Bank Employees Union v National Australia Bank Ltd (1989) 31 IR 436
Australian Opthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435
Australian Workers’ Union v Bluescope Steel Ltd [2007] NSWIRComm 1002
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410
Clark v Chief of Defence Force (1999) 59 ALD 506
Commonwealth Bank of Australia v Finance Sector Union of Australia (2007) 157 FCR 329
Csomore v Public Service Board of New South Wales (1986) 10 NSWLR 587
Dinsdale v R (2000) 202 CLR 321
FJ Walker Ltd v Thomas Francis Casey [1989] FCA 409
Fox v St Barbara Mines Ltd [1998] FCA 621
Granada Tavern v Smith [2008] FCA 646
House v The King (1936) 55 CLR 499
Kelly v Fitzpatrick (2007) 166 IR 14
Kioa v West (1985) 159 CLR 550
Markarian v R (2005) 228 CLR 357
O’Neill v Medical Benefits Fund of Australia (2002) 122 FCR 455
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
Purvis v State of New South Wales (Department of Education and Training) (2003) 217 CLR 92
R v Tait and Bartley (1979) 24 ALR 473
Rana v University of South Australia (2004) 136 FCR 344
Riverwood International Australia Pty Ltd v McCormick [2000] 177 ALR 193
Seymour v Stawell Timber IndustriesPty Ltd (1985) 9 FCR 241
Thomson v Orica Australia Pty Ltd (2002) 116 IR 186STERLING COMMERCE (AUSTRALIA) PTY LTD (ACN 078 743 665) v BELINDA ILIFF
VID 1211 OF 2007
GORDON J
21 MAY 2008
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1211 OF 2007
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN:
STERLING COMMERCE (AUSTRALIA) PTY LTD (ACN 078 743 665)
Appellant
AND:
BELINDA ILIFF
Respondent
JUDGE:
GORDON J
DATE OF ORDER:
21 MAY 2008
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1. The appeal is dismissed.
2. The cross appeal is dismissed.
3. The Appellant is to pay 80% of the Respondent's costs of the appeal.
4. There be no order as to costs on the cross-appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1211 OF 2007
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN:
STERLING COMMERCE (AUSTRALIA) PTY LTD (ACN 078 743…
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Details
- Case
- [2008] FCA 702
- Decision Date
CaseChat Overview and Summary
In Sterling Commerce (Australia) Pty Ltd v Iliff, Ms Iliff appealed against the findings of Burchardt FM who rejected her claims that Sterling Commerce had discriminated against her on the grounds of sex, maternity leave or parenthood and that she was entitled to reinstatement and full backpay as a result of this discrimination. The court was required to determine whether Sterling Commerce had indeed breached the Sex Discrimination Act (SDA) by failing to reinstate Ms Iliff to her former position, and whether Ms Iliff was entitled to reinstatement and full backpay.
The court found that Sterling Commerce had not breached the SDA. The court reasoned that the company had a legitimate reason for not reinstating Ms Iliff, namely the expansion into the financial services industry in the Asia-Pacific region (APO), which required different skills and qualifications. The new job description was not fabricated to exclude Ms Iliff but reflected the evolving duties relating to the APO finance sector. The court also found that Ms Iliff had not suffered any detriment as a result of the alleged discrimination, as she had not been formally notified of the termination of her employment and had not applied for the new position.
The appeal was dismissed, and the cross-appeal was also dismissed. The appellant was ordered to pay 80% of the respondent's costs of the appeal, while there was no order as to costs on the cross-appeal. The decision highlights the importance of having a legitimate reason for not reinstating an employee on their return from maternity leave and the need for the employer to act in good faith.
The court found that Sterling Commerce had not breached the SDA. The court reasoned that the company had a legitimate reason for not reinstating Ms Iliff, namely the expansion into the financial services industry in the Asia-Pacific region (APO), which required different skills and qualifications. The new job description was not fabricated to exclude Ms Iliff but reflected the evolving duties relating to the APO finance sector. The court also found that Ms Iliff had not suffered any detriment as a result of the alleged discrimination, as she had not been formally notified of the termination of her employment and had not applied for the new position.
The appeal was dismissed, and the cross-appeal was also dismissed. The appellant was ordered to pay 80% of the respondent's costs of the appeal, while there was no order as to costs on the cross-appeal. The decision highlights the importance of having a legitimate reason for not reinstating an employee on their return from maternity leave and the need for the employer to act in good faith.
Orders
Orders of the court
1. The appeal is dismissed.
2. The cross appeal is dismissed.
3. The Appellant is to pay 80% of the Respondent's costs of the appeal.
4. There be no order as to costs on the cross-appeal.
Background
Background to the litigation
In the Federal Magistrates Court, Ms Iliff was not wholly successful. Burchardt FM rejected Ms Iliff’s contention that:1.Sterling Commerce had breached the SDA because it had discriminated against her on the grounds of sex, maternity leave or parenthood in failing to reinstate her to her former position (Issue 4); and2.Ms Iliff was entitled to reinstatement to her former position and full backpay as a result of the contravention by Sterling Commerce of the SDA (Issue 5).Ms Iliff cross-appeals on each of these issues.FACTS Before turning to consider the issues on appeal and cross-appeal, it is necessary to say something about the facts of this case and, in particular, the conduct of Sterling Commerce. As I have noted, Sterling Commerce did not challenge any finding of fact of Burchardt FM. Without in any way diminishing from the extensive findings of fact of Burchardt FM and recognising that any summary is in danger of inaccurately reflecting what was found, the key findings of Burchardt FM may be summarised as follows:1.Ms Iliff commenced working part time for Sterling Commerce in March 2002. Her salary was about $50,000 per annum. In April 2003, Ms Iliff was promoted to Marketing Manager. Her job description described the role as “Marketing Specialist-Australia”. Her salary was $80,000 per annum. On 1 April 2004, Sterling Commerce increased Ms Iliff’s package to $86,400 comprised of a base salary of $82,000 and a target incentive of $4,400. Ms Iliff was also entitled to superannuation at a rate of 9% of her base salary. 2.In mid April 2004, Ms Iliff told Mr Vulcan, her superior, that she was pregnant. Arrangements for her maternity leave were discussed by Mr Vulcan and Ms Iliff on 15 September 2004. An email from Ms Iliff to Mr Vulcan on the same day recorded that:a)a Marketing Coordinator would be employed to work 4 days per week on a 6 month contract from January to June 2005 to replace Ms Iliff; andb)Ms Iliff proposed to return to work for 1 to 2 days per week in April to June 2005 increasing to full time by the end of December 2005.3.After obtaining legal advice, Mr Vulcan replied on 19 October 2004 approving Ms Iliff’s proposal saying he would be happy to accommodate Ms Iliff’s requests wherever he reasonably could. The approval was, however, qualified. It went on to say that he would need to continue to evaluate the arrangement against the ongoing and changing needs of the business. In particular, Mr Vulcan could not at that time anticipate what, if any, changes would occur to the structure of the marketing operations. Mr Vulcan asked Ms Iliff to contact him at least four weeks before she intended to return to work so that Sterling Commerce could “re-evaluate the situation and discuss a suitable structure for [Ms Iliff’s] return to work at that time”. On 26 October 2004, Ms Iliff replied stating that if agreement could not be reached, she proposed to return to work in exactly the same position and for the same hours. Mr Vulcan did not respond. 4.Towards the end of 2004 and the beginning of 2005, Sterling Commerce decided to branch out into the financial services industry in the Asia-Pacific region (APO). Ms Iliff was involved in the early stage of the expansion before she went on maternity leave and, in fact, met Mr Simon Lacey who had been employed by Sterling Commerce as an expert in the financial services industry. The expansion took place in the ordinary course of business and would have occurred regardless of whether Ms Iliff went on maternity leave.5.In early December 2005, Ms Iliff and Mr Vulcan interviewed Ms Paula Matthews. It was agreed that Ms Matthews would commence as a contractor. Ms Matthews commenced work in early December 2004 pursuant to a contract that was due to be reviewed in April 2005. Ms Iliff went on maternity leave on 10 December 2004 and her first child was born on 10 January 2005. 6.Ms Matthews was perceived by the senior management of Sterling Commerce to be a superior employee. In terms of formal qualifications there was no disparity between them. Ms Iliff did have less experience than Ms Matthews. However, if Ms Iliff had not gone on maternity leave, there is no reason her employment would not have continued. 7.By early February 2005, Mr Visscher (a marketing manager based in Singapore and at that time employed by a Singaporean subsidiary of the global Sterling Group) wanted to employ Ms Matthews and Mr Vulcan agreed. From March 2005, Mr Visscher was formally appointed to be the marketing head of APO. Both Mr Vulcan and Mr Visscher wanted to provide support to Mr Lacey. The need to provide support was both “pressing and present”. In late January / early February 2005, Mr Vulcan and Mr Visscher discussed using Ms Matthews in that capacity. 8.By 7 February 2005, Mr Vulcan sought to extend Ms Matthews’ hours of work. It was agreed that she would work an extra one to two days per week for about three months. On 25 February 2005, Mr Visscher emailed Mr Vulcan about Ms Matthews’ rates and went on to ask “When is [Ms Iliff] coming back?” No response to that email was in evidence. 9.On 15 March 2005, Ms Iliff met Mr Vulcan at his office. She wanted to return to work 4 days per week. Mr Vulcan told her there had been a restructure and the reporting arrangements had altered. Mr Vulcan said Mr Visscher would contact her about her return to work arrangements.10.On 16 March 2005, Mr Vulcan sent Mr Visscher and the in house legal adviser (Mr Soughan) an email recording his discussion with Ms Iliff. The email records that it was Mr Visscher who was to discuss Ms Iliff’s future with her. Nothing further occurred until 30 March 2005 when Mr Vulcan sent another email to Mr Visscher stating he needed to talk to him about Ms Iliff and Ms Matthews. The issues were clearly interrelated in Mr Vulcan’s mind. 11.Mr Vulcan was restricted in the number of people he could employ at any one time. The head count was strictly controlled from the United States. He could not employ two people to do one person’s work. Some time in early April 2005, Mr Vulcan and Mr Visscher agreed that Ms Matthews would be the person they retained. It was a foregone conclusion that the job would be offered by Sterling Commerce to Ms Mathews and they wanted her to take it. 12.However, as late as 1 April 2005, an organisation chart issued by Sterling Commerce after the restructuring showed Ms Iliff as the marketing specialist for Australia reporting directly to Mr Visscher. The restructuring per se was therefore not the reason her position was made redundant.13.On 20 April 2005, Ms Iliff sent an email to Mr Vulcan indicating she intended to return to work one day per week in May or June 2005. The email was forwarded to Mr Visscher and Mr Soughan and from the terms of that email it is clear that the further employment of Ms Matthews was seen by Mr Vulcan as directly interrelated with Ms Iliff’s return. 14.Sterling Commerce did not contact Ms Iliff until 26 April 2005. On 26 April 2005, Ms Iliff met Mr Vulcan again in his office. Mr Vulcan told Ms Iliff her position was to be made redundant under the proposed restructure. After the meeting, Mr Vulcan sent an email to Mr Soughan, Mr Visscher and others stating that Ms Iliff wanted a copy of the new position description along with information about how she could apply for that position and information about the redundancy of her current position. 15.Mr Vulcan was too busy to deal with Ms Iliff and did not get back to her. 16.By that date, Mr Vulcan had clearly formed the view that he did not want Ms Iliff to return to work but wanted to keep Ms Matthews instead. The reason was that he felt Ms Matthews was better qualified. 17.On 4 May 2005, Mr Vulcan did send an email to Mr Visscher asking him to let Ms Matthews know of Mr Visscher’s intentions about further work for Ms Matthews because she was likely to accept a different role. 18.At the same time, Sterling Commerce was preparing a new job description for what was felt to be the new job. The new job description was created first by Mr Visscher. He sent a proposed job description for the position of Marketing Manager-Australia to Mr Vulcan which contained a number of differences to Ms Iliff’s previous position description. The minimum qualifications were a degree in marketing or 7 to 10 years of related experience. Ms Iliff possessed both. It also contained requirements relevant to the evolving duties relating to the APO finance sector. 19.Mr Vulcan replied stating “Looks good … to make this more of a change to the existing do we need to make more of an emphasis including the title around this being a regional role and not just an Australian role … I know you mention both.” (emphasis added). Burchardt FM found, and I agree, that Mr Vulcan consciously sought to distinguish the new description from Ms Iliff’s former position at a time when it was clear to Sterling Commerce that Ms Iliff was likely to take issue with what was happening to her, with a desire to produce a document that would sustain Sterling Commerce against legal challenge and when there was no need for the job description to be different. However, Burchardt FM did not find that the change in job duties was fabricated after the event. 20.On 17 May 2005, Ms Iliff sent Mr Vulcan a further email about her return to work. Ms Iliff complained she had heard nothing for 3 weeks about the proposed restructure. She asserted she wanted to return to work under the original arrangement - 1 day per week followed by 4 days per week from late July. She asked Mr Vulcan and / or Mr Visscher to contact her. 21.Later that day (17 May 2005), Mr Vulcan wrote to Ms Iliff telling her she was redundant with effect from 3 June 2005. The letter said there were no other suitable roles for her. The letter invited her to apply for the new position of “Marketing Manager, Financial Services Solutions APO”. However, the letter went on to state that “I [Mr Vulcan] do not consider the role of Marketing Manager, Financial Services Solutions APO to be a suitable alternative position for your current role”. Finally, the letter stated Ms Iliff would be paid a redundancy payment of $22,211.54 gross less tax. However, the letter stated that “[t]his offer is conditional upon you signing a release in terms suitable to Sterling Commerce which confirms that you have no further claims against Sterling Commerce and that you have returned all company property”. 22.On 18 May 2005, Ms Iliff wrote to Mr Vulcan seeking clarification. She asked whether the position or any other position in the new marketing structure was part time / job share eligible and asked for a break down of the proposed termination payment. The answer to the first question was “no”. The proposed termination payment was broken down. It comprised Ms Iliff’s statutory entitlement to 4 weeks pay in lieu of notice and a further redundancy payment.23.On 1 June 2005, Mr Vulcan wrote again to Ms Iliff. He repeated that her position “is to be made redundant”. The letter recorded that Ms Iliff had not responded to requests for a meeting and provided a final opportunity for Ms Iliff to meet Mr Vulcan. The letter concluded by stating that “if you [Ms Iliff] elect not to take advantage of this opportunity, I [Mr Vulcan] will have no option but to formally advise you of the fact that your position has been made redundant and effect a termination. Obviously, if this decision is made, you will be paid appropriate termination payments and any statutory entitlements”.24.Ms Iliff was never formally notified that her employment with Sterling Commerce had ceased. Ms Iliff never went back to do any further work for Sterling Commerce. Ms Iliff never executed the release and was never paid any termination payments or statutory entitlements. Ms Iliff did not apply for the new position. 25.Ms Matthews was a contractor. Sterling Commerce was under no obligation to renew her employment contract. In late August 2005, Ms Matthews entered into a formal contract of employment with Sterling Commerce. 26.Sterling Commerce knew of Ms Iliff’s maternity leave entitlements. It had sought and obtained legal advice from as early as October 2004. Mr Vulcan and Mr Visscher, senior employees of Sterling Commerce, did not honour Ms Iliff’s entitlements for reasons wholly unrelated to any misconduct or inadequacy on the part of Ms Iliff. They made a commercial decision in order to increase profit and to improve their own career prospects.27.Sterling Commerce did what it did to Ms Iliff deliberately. Ms Iliff’s position still existed and she should have been reinstated to it. It was no oversight. Sterling Commerce sought to hide its tracks by the manipulation of the new job description. It showed no contrition and did not submit otherwise. Although this was Sterling Commerce’s first contravention of the WR Act, the course of conduct was unattractive and in part dishonest.28.The effect upon Ms Iliff was dramatic. She has not progressed in her career.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
GORDON J
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Ratio Decidendi
Legal Principle Established
Established by: GORDON J
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