How are pregnant employees in California protected in the event of a redundancy?

Both federal and California laws provide numerous safeguards to protect pregnant employees before, during, and after childbirth. Protections include prohibitions against discrimination during hiring and employment, and against termination based on pregnancy or pregnancy-related conditions, even if legitimate bases also exist for the employer’s conduct. When federal and California laws differ, the employer must provide the greater protection.

General rights and protections owed to a pregnant California employee

Federal and California laws explicitly prohibit discrimination in any term or condition of employment based on pregnancy, childbirth, or other related conditions and require an employer to provide reasonable accommodations (e.g., under the Americans with Disabilities Act, job restructuring, part-time or modified work schedules, reassignment, etc.; under California’s Fair Housing and Employment Act, a temporary transfer, upon the pregnant employee’s request and her doctor’s advice, to a less strenuous or hazardous position).

But generally, neither federal law nor California law require creation of an additional otherwise unplanned position or the opening of a position by discharging another employee, transferring a more senior employee, or promoting an otherwise unqualified employee. Generally, the reasonableness of an accommodation turns on whether it creates an undue hardship, something not easily established and that may, in part, turn on the employer’s size and pocket-depth.

Additionally, both federal and California laws generally afford a pregnant employee at least 12 weeks of leave, the right to retain employer-provided health insurance during leave, and the right to return to the same or a comparable position at the leave’s conclusion.

Under the Family and Medical Leave Act (FMLA), an employer having 50 or more employees within 75 miles of the employee requesting leave must provide 12 weeks of unpaid leave for pregnancy, childbirth, and newborn-child bonding, provided the employee has been employed for at least one year and worked at least 1250 hours in the last 12 months.

Certain California employees may receive up to seven months total leave, with reinstatement to the former or comparable, position. The seven-months protection includes a 12-week leave provided by the California Family Rights Act (CFRA), which uses the same 50 employees/75 mile radius/1,250 hours worked during the previous 12 months considerations, and four months under the Pregnancy Disability Leave Law (PDL), which provides broader coverage, to employers with five or more employees regardless of hours worked or length of service.

Although the FMLA, CFRA, and PDL leaves are all unpaid, the employee may receive compensation through an employer or individual short-term disability insurance plan or State Disability Insurance (SDI) programs and Paid Family Leave (PFL) benefits.

What happens in the event of layoffs, position elimination or other termination?

Liability risks may make an employer generally hesitant to terminate a California employee who is pregnant or on pregnancy-related leave.

Although both federal and California laws prohibit discriminatory terminations, neither unconditionally prevents a discharge from employment during pregnancy or while on leave.

Employment termination is generally permissible where the employee would not otherwise have remained employed, such as in the event of a layoff or position elimination. A cautious employer may limit its exposure to unnecessary liability by considering a few concepts:

(1) Treat pregnant employees as if they were not pregnant

Pregnancy antidiscrimination laws generally aim to maintain equal treatment among employees, regardless of difference or disability. In an anticipated layoff or job elimination situation, an employer should not base any decision on pregnancy or pregnancy-related conditions, but should use only legitimate business considerations—such as attendance or disciplinary records, skills, seniority, or other legitimate factors (e.g., a collective bargaining agreement), preferably objectively verifiable.

If an employer lays off or discharges a pregnant employee for a legitimate business reason (e.g., workforce reduction) and not her pregnancy, the termination should not be problematic. That said, the prudent employer will obtain legal counsel before making such a determination.

(2) Standardize the treatment of all employees receiving disability benefits

Pregnancy antidiscrimination laws are also generally interpreted to require any pregnancy or pregnancy-related disability to be treated the same as other temporary disabilities and, in some circumstances, other temporary inabilities to work that the employer accommodates.

For instance, an employer may not exclude pregnancy from income-protection programs (e.g., disability insurance or sick pay plans) that cover other temporary disabilities. Moreover, if any employer provides longer than a four-month leave period to other short-term disabilities, it must increase the pregnancy disability period to match.

There also may be no negative discrepancies in the provision of paid leave, seniority accrual, or other benefits afforded to pregnant employees and other disabled employees.

In short, when an employer makes difficult personnel decisions to ensure effective business operation, proceeding in a standardized and equitable manner and obtaining sound legal advice should reduce liability exposure.

*Created with assistance from Sara Matteson

Do employees who are pregnant or on maternity leave enjoy special protection on redundancy?

It is not unlawful in itself to make an employee redundant who is pregnant or on maternity leave. This means that, subject to the special protection enjoyed in respect of alternative employment referred to below, the fairness and lawfulness of the redundancy dismissal will be determined in the same way as other redundancy dismissals. So, as long as redundancy is the real reason for dismissal, the dismissal is carried out fairly and the rules on alternative employment are followed, there will be no liability for unfair dismissal.

However, if the selection of the employee for redundancy is because she is pregnant or on maternity leave, this would give rise to claims for automatic unfair dismissal and direct discrimination. Pregnancy and maternity discrimination might also occur if the employer does not adequately consult with the employee because she is on maternity leave.

In addition, employees on maternity leave enjoy priority for alternative employment in a redundancy situation. This means that where an employee who is on maternity leave is selected for redundancy, she is entitled to be offered suitable alternative employment, if it is available, in priority over other potentially redundant employees.

Redundancy dismissal and entitlement to statutory maternity pay

If an employee is entitled to statutory maternity pay (SMP) at the time she is dismissed for redundancy, she will continue to receive SMP for the remainder of the SMP period. This is because receiving SMP is not dependent on remaining an employee throughout the payment period. This applies whether the reason for the dismissal is redundancy or not.

Redundancy pay

An employee who is made redundancy whilst on maternity leave is entitled to a statutory redundancy payment as if she were not on maternity leave. This is because any periods of absence due to maternity leave are ignored for the purposes of calculating the payment due.

Suitable alternative employment

As outlined above, if a redundancy situation arises whilst an employee is on maternity leave and it is not reasonably practicable “by reason of redundancy” for her employer to continue to employ her under her existing contract, the employee is entitled to be offered a suitable alternative vacancy (where one is available) to start immediately after her existing contract ends. This includes any vacancy with an associated employer.

The new employment must involve work which is both suitable and appropriate for the employee, and the terms and conditions as to the capacity and place in which she is to be employed, and the other terms and conditions must be substantially no less favourable than under her original contract.

This gives employees on maternity leave priority over other employees also at risk of redundancy and is a rare example in the UK of lawful positive discrimination. Failure by the employer to comply with this obligation would make the dismissal automatically unfair dismissal, and could also constitute discrimination on grounds of pregnancy and maternity.


Compensation for unfair dismissal is subject to a statutory cap but there is currently no limit on the compensation which may be awarded for discrimination.


Sweeping Changes to Ontario’s Labour and Employment Laws Proposed in OCW Final Report

Today the Government of Ontario released the much anticipated Changing Workplaces Review Final Report.  As special advisors C. Michael Mitchell and the Honourable John C. Murray note in their report, this is the first independent review in Canada to consider specific legislative changes to both employment standards and labour relations in a single process.  Their sweeping recommendations for changing both the Ontario Employment Standards Act, 2000 (“ESA”) and the Labour Relations Act, 1995 (“LRA”), if adopted, would usher in a new array of workplace rights in the province.

The 420-page Final Report includes over 170 recommendations on a wide range of issues, including specific recommendations to the following:

  • expand the ESA definition of “employee” to include dependent contractors;
  • change the ESA managerial exemption to a “salaries plus duties” test;
  • increase paid vacation to three weeks after five years of employment;
  • disclose employee lists and contact information to unions when they have support of approximately 20% of the employee in the bargaining unit;
  • add provisions to the LRA to address the consolidation and amendment of bargaining units;
  • revise the LRA to incorporate a model of broader-based bargaining for franchisees;
  • deem temporary help agency employees performing work for clients of the agency to be employees of the client for the purposes of the LRA; and
  • expand LRA successor rights to apply to building services industries (security, food services and cleaning)

While the foregoing, and more, will be the source of real consternation for many employers, it is noteworthy that the special advisors have also recommended repealing the requirement to obtain Ministry consent to work 48 to 60 hours a week, leaving the overtime threshold at 44 hours in a week, and preserving the secret ballot process for certification with some modification.

Significantly, in addition to the specific recommendations, the special advisors have recommended consolidating the ESA, LRA and the Occupational Health and Safety Act under a single Workplace Rights Act, subject to a process of independent review every five to seven years.  The consolidated Act would be comprised of three parts entitled: Rights to Basic Terms and Conditions of Employment, Rights to Collective Bargaining, and Rights to a Safe and Healthy Workplace.

Stay tuned — in a short statement releasing the Final Report, Minister of Labour Kevin Flynn stated that the government will be announcing its formal response to the Final Report recommendations within the next week.


How should the directors’ fees of Non-Executive Directors be treated for tax purposes?

Historically there has been some uncertainty on the tax treatment of fees paid to a Non-Executive Director (NED). SARS has recently issued two Binding General Rulings (rulings), the purpose of which is to set out SARS practice. Taxpayers are not bound by these rulings because they do not constitute law. SARS however is bound by the rulings, which creates certainty for taxpayers .

There are two possible tax consequences which NEDs could face in relation to their directors fees. The first relates to employees tax and the second to value-added tax (VAT).

The rulings note that if a director is not subject to the control or supervision by the company as to the manner in which the NED’s duties are performed or to their hours of work, the directors’ fees will not be regarded as remuneration and will not therefore be subject to employees’ tax (PAYE).

The rulings go on to state that if the directors fees paid to a NED are not subject to employees tax. The NED will be considered to be an independent contractor . When this is the case, the NED will be regarded as carrying on an enterprise for VAT purposes and will be required to register for VAT if the amount of the fees exceeds the compulsory VAT registration threshold of R 1million in a twelve month period.

NEDs are not considered to be employees under the common law rules. As a result NEDs are considered to be independent contractors who must register for VAT if their fees exceed the R1 million threshold.

The rulings are effective from 1 June 2017 until they are amended or withdrawn. The rulings are silent on the tax treatment which is to apply prior to 1 June 2017. A NED who has received directors’ fees that have exceeded the VAT registration threshold and has neither accounted for VAT or employees’ tax for periods prior to 1 June 2017 should take further advice on their position.

This article was written by Dale Cridlan,  a Director at Norton Rose Fulbright South Africa

Negative vetting as a ground for automatic termination of a contract of employment

Employers are entitled to include a condition in a contract of employment that a person’s appointment is subject to a positive vetting and screening process and, if the outcome is negative, the contract will terminate automatically.

In the Labour Appeal Court decision of Nogcantsi v Mnquma Local Municipality and Others (2017) 38 ILJ 595 (LAC), Mr Nogcantsi’s appointment as a security officer to the municipal manager was subject to a positive vetting and screening process conducted by the Municipality. The vetting process revealed pending charges against him for defeating the ends of justice, interfering with police officers whilst on duty and attempted murder. Mr Nogcantsi’s contract terminated automatically.

The LAC found that it was not the act of the Municipality which produced the negative vetting result and consequently caused the condition to be fulfilled resulting in the automatic termination. Instead, the negative outcome of the vetting was constituted by information which was patently and objectively negative of and concerning Mr Nogcantsi’s suitability for the position. The automatic termination did not amount to a dismissal as it was not triggered by an act of the Municipality with the intention of ending the employment relationship.

The LAC further found that the vetting condition did not prevent Mr Nogcantsi from exercising his right to security of employment conferred on him by the Labour Relations Act 1995 (the Act). (Although the Act does not explicitly provide that security of employment is a right, the Constitutional Court found in NEHAWU v University of Cape Town 2003 (3) SA 1 (CC) that security of employment is a core value of the Act and is dealt with in Chapter VIII of the Act which regulates unfair dismissals.) Not only had Mr Nogcantsi freely and voluntarily agreed to the vetting process and to an automatic termination if it yielded a negative result, but the condition was material to his suitability for the position of a security officer. Such a condition could be reasonably likened to the condition in a contract of employment as a pilot or chauffeur that a valid pilot’s or driver’s licence must be produced.

This decision demonstrates that a conditional contract of employment is a commercial reality and that the law does not prevent employers from including vetting conditions in their contracts of employment.

This article was written by Brian Denny,  a Director at Norton Rose Fulbright South Africa

Changes to the Occupational Health and Safety Act 2004 (Vic)

The WorkSafe Legislation Amendment Bill 2017 (Vic) (the Bill) amends the Occupational Health and Safety Act 2004 (Vic) (OHS Act), along with others including the Dangerous Goods Act 1985 (Vic). The Bill has received its second reading in the Legislative Assembly and is listed for resumed debate on 24 May 2017.  If passed, the Part dealing with the OHS Act is intended (according to the explanatory memorandum) to come into operation on 1 July 2017 and the remaining provisions at least by 21 March 2018 (if not proclaimed).

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Disability Discrimination on recruitment

It is not only employees who have the right to claim discrimination: Applicants for employment can also be discriminated against. Employers must therefore ensure that any recruitment process is not discriminatory.

A recent case of Government Legal Service –v- Brookes considered a recruitment process to the Government Legal Service (GLS).  Applicants to that service are required to sit a psychometric test known as the Situational Judgement Test (SJT).  The claimant contacted the GLS in advance and informed them that she was likely to find the multiple-choice format of the SJT particularly difficult because of her Asperger’s Syndrome. She suggested adjustments that could be made, but was informed that an alternative test was not available, but that she would be entitled to additional time at a later stage.  As a result she completed the SJT and narrowly missed the pass mark and so did not proceed to the next stage of the recruitment process.

The individual claimed indirect disability discrimination, discrimination arising from a disability, and a failure by GLS to make reasonable adjustments and was successful in the employment tribunal.

The first ground of appeal to the EAT related to the indirect discrimination claim. To prove indirect discrimination the claimant needed to show that the “provision, criterion or practice” (PCP) (i.e. the requirement that all applicants pass the SJT) put a group of individuals who had Asperger’s Syndrome at a disadvantage compared to those who did not have the syndrome. It was also necessary to show that the claimant herself was at such a disadvantage and it was this part of the tribunal’s decision that was appealed.

The EAT held that the employment tribunal had been entitled to conclude (from medical evidence and an assessment of the claimants background and experience) that the PCP placed the claimant herself at a disadvantage. No alternative theory had been put forward by GLS as to why she had failed to achieve the pass mark and therefore it was possible for the tribunal to conclude, on a balance of probabilities, that it was as a result of the format of the test.

The second ground of appeal was whether the requirement to sit the SJT in the form of multiple choice questions was unjustified both for the indirect discrimination claim and also in determining the reasonable adjustments that the employer should make.

The EAT held that it was not possible to justify the process as being a proportionate means of achieving a legitimate aim. Whilst the EAT acknowledged that it was necessary for the GLS to test an applicant’s competency, this was not the only means of doing so as an alternative form of assessment (namely short narrative responses) was available. The argument in respect of the reasonable adjustments was similar; given the scale and duration of the recruitment process and the resources of the GLS, an alternative option could have been available.

Employers should therefore take care in establishing the testing process. Although psychometric testing is often used to provide a level playing field and to avoid human intervention or judgment, if an employer is asked to make an adjustment to the assessment process for recruitment which could be processed without affecting the validity of the test, then it should be carefully considered.

Minimum wage increase in Québec: some employers are flexing their muscles

On May 1, 2017, the minimum wage in Québec was raised from $10.75/hr to $11.25/hr. Although not as substantial as the increases that have recently been implemented in other North American jurisdictions, this raise is still significant when compared with the average annual increase implemented in the province for the past 10 years.

Some employers seem to take this situation as an opportunity to reorganize their employees’ working conditions in the name of profitability. For example, it has been reported in the media that some employers have decided to stop offering the usual 15-minute coffee breaks (which have to be paid) during a 7-hour shift, replacing such breaks with a 30-minute lunch break, which does not have to be paid, pursuant to the Québec Labour Standards Act. It goes without saying that this tactic is not very popular with the affected employees because it results in them having less money in their pockets, even with the $0.50/hr raise…

Before enforcing such measures, employers should carefully evaluate the potential impacts on their workforce: from mass resignations to constructive dismissal claims to unionization campaigns, not to mention bad publicity, it might be safer to hold still for the time being.

Reinstatement of employees following disingenuous consultation

The Fair Work Commission has recently made orders reinstating four employees whose employment had been terminated for reason of redundancy. The decision is a timely reminder of the importance of employers ensuring that they consult in a meaningful and genuine way with affected employees in a redundancy situation, where those employees are covered by an award or other industrial instrument.

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Enterprise bargaining – minor technical deficiencies can derail the whole process

If your business is considering making an enterprise agreement, you must strictly comply with the procedural requirements of the Fair Work Act 2009 (FW Act) and ensure you use the newly amended Notice of Employee Representational Rights. For those who have already commenced bargaining, small mistakes made during the bargaining process may mean the parties’ agreement cannot be approved and the entire bargaining process must start all over again, which can be very costly and frustrating for all parties.

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