Melbourne fashion house Scanlan & Theodore wins unfair dismissal case after employee claims she was made redundant because of pregnancy

Melbourne-based fashion house Scanlan & Theodore has won an unfair dismissal case brought against it by an employee it made redundant after she fell pregnant.

In March 2012, Monica Schultz, then a merchandising manager at Scanlan & Theodore’s Melbourne head office, informed her manager she was pregnant. A month later, she told the company she would be taking maternity leave later that year.

In June, Schultz took sick leave for a few days. However, after this, she alleged that she began being treated “with disdain” by her managers.

Later that month, Schultz was called to a meeting with general manager Sener Besim and account manager Robyn Armstrong. She believed this meeting was to discuss her maternity leave arrangements, but when she arrived, was told she was being made redundant for financial reasons.

She asked whether this was because of her pregnancy, to which Besim replied it was not. In his account of the meeting, he admitted he was “offended” by the question.

The meeting ended on a sour note, and on September 17, Schultz applied for unfair dismissal.

In her application to the Federal Court of Australia, she alleged Scanlan & Theodore breached the Fair Work Act by first trying to limit her leave to six months, and then terminating her employment to prevent her from exercising her right to parental leave.

Judge John O’Sullivan however, disagreed with this.

In his judgement, he cited a number of reasons for his decision, such as the fact that Scanlan & Theodore had experienced “diabolical” sales numbers in recent months, had already made several employees redundant, had warned of further redundancies before making Schultz redundant, and had a history of supporting women take maternity leave and come back to the workplace.

“There was substantial and objective evidence in support of the respondent’s position that the reason for the decision to terminate the applicant’s employment was solely redundancy,” O’Sullivan said, adding that the evidence does not support viewing this, as claimed, as some sort of veil to hide another reason for Schultz being fired.

Rachel Drew, an employment lawyer at Tresscox, says dealing with maternity leave is one of the most complex decisions for employers.

“Here, we had a combination of a pregnant employee who had taken some sick leave that had nothing to do with the pregnancy, a business still trying to make arrangements about her maternity leave, and a business with declining sales figures.

“It appears to be a business in which there is a lot of change going on. There’s no fixed structure and no fixed number of managers – people’s roles appear to be always changing to meet the needs of the market. And that appears to be what genuinely happened here. There were a number of changes in the business – even this employee’s history shows she was offered two promotions in just the 18 months she worked there – that make it likely that when a change occurs, it’s for a genuine reason rather than being a thin veil to hid adverse action.”

Scanlan & Theodore also had a history of supporting its 95% female staff while they took maternity leave. In its application to the court, it gave details of no less than nine women who had taken maternity leave at the company since 2009.

“The fact that an employer has a good history of complying with their obligations in regards to different sorts of leave is going to be helpful, and will influence a Court’s decision,” Drew says.

“That doesn’t necessarily mean every good employer will be fine. Every case is examined on its own facts. In this case, the facts supported the employer.”