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When the Schou just doesn’t fit: implications for discrimination law after State of Victoria v Schou

Feature Articles

Cite as: (2005) 79(11) LIJ, p. 46

A Victorian Court of Appeal decision on indirect discrimination seems out of step both with decisions in other Australian jurisdictions – including the High Court – and with the policy of maintaining work/life balance, especially for women in full-time work.

By Fiona Knowles and Penny Dedes

In 2004 the Court of Appeal handed down its decision in State of Victoria v Schou,[1] which is the most recent court decision on indirect discrimination in Victoria.

The Court overturned a second decision of the anti-discrimination list of the Victorian Civil and Administrative Tribunal (the Tribunal), which had found that it was discriminatory not to allow the complainant, Ms Schou, to spend some time working from home while her young son was sick.[2] Until it was overturned, the Schou case had been considered a landmark anti-discrimination case. The Tribunal decisions had found that the indirect discrimination provisions of the Equal Opportunity Act 1995 (Vic) (EOA) required employers, where reasonable, to adopt alternative work practices to cater for the needs of those protected by the EOA, in this case those with parental or carer responsibilities.[3]

The main issue on appeal was the reasonableness of requiring Ms Schou to work full-time on site in light of her proposal to work at home via modem for a limited period until her son’s health improved. The Court found that in assessing reasonableness, one needs to have regard not only to the impact on the complainant but also the impact on the employer, in particular the impact if the whole workforce sought the same kind of accommodation. Naturally, the Court found that the requirement to attend work, as applied to the workforce as a whole, was a reasonable one. The majority suggested that an “alternative”, such as the modem proposal, is only relevant if it is equally feasible to the employer’s needs as is the requirement. In our opinion, however, this analysis is at odds with the High Court’s test in Waters v Public Transport Corporation[4] (Waters) that a less discriminatory option must be taken into account. Furthermore, other case law does not support the proposition put forward by the Court of Appeal.

Given that the Schou decision represents the Court of Appeal’s most recent consideration of indirect discrimination, it is timely to consider how indirect discrimination might develop in Victoria post Schou and to examine how the Schou case has been judicially applied.

Indirect discrimination under the EOA and the Waters decision

The decision in Schou turns on an interpretation of s9 of the EOA dealing with indirect discrimination. Indirect discrimination involves conduct, or a practice, which may appear to be neutral but which in fact has the effect of disadvantaging people with the particular attributes protected under the EOA. A central qualification of indirect discrimination is that the practices or requirements must be “not reasonable” in all the relevant circumstances.[5]

The relevant High Court authority on the question of reasonableness in indirect discrimination is Waters. If the requirement is “appropriate and adapted” to the respondent’s objectives this will be strong grounds in support of its reasonableness. Just as important, however, in the determination of reasonableness is the availability of a less discriminatory alternative or whether the activity in question might reasonably be achieved without imposing the discriminatory requirement.[6]

The Schou litigation

Deborah Schou was a long-term employee in the Department of Parliamentary Debates, engaged first as a Hansard reporter and then as a sub-editor. Sub-editors edited the reporters’ material on computers. On sitting days sub-editors would be required to work very long hours. After giving birth to her second child, Ms Schou returned from maternity leave in 1993 to her full-time position as a sub-editor. Unfortunately, her son suffered from chest infections, asthma and separation anxiety when she was working long hours. The medical advice was that his health would improve within a year or two.

Ms Schou had difficulties juggling caring for her son with the long hours. In 1994 she commenced negotiations with the Department to temporarily change her working conditions. Management told her that she could not work part-time, so she asked to spend some time working from home. In August 1996 the Department agreed to install a modem line to Ms Schou’s home to enable her to do some work from home until her son’s health improved. The Department, however, did not install the modem and Ms Schou resigned.

At first instance the Tribunal found that the attendance requirement was not reasonable, in particular because the modem proposal was workable.[7] On appeal the Supreme Court remitted the matter to the Tribunal with a direction to focus on the reasonableness of the attendance requirement, rather than the reasonableness of the modem proposal.[8] The Tribunal again found that the attendance requirement was not reasonable because the job was essentially desk bound and because the modem proposal was feasible.

On a further appeal, the Court of Appeal overturned this decision and dismissed the complaint. The Court found that the reasonableness of the attendance requirement should be considered independently of the modem proposal. The question then turned to the relevance of “alternatives” to the usual work practices. A significant feature of the Court of Appeal’s decision is the majority’s narrowing of the type of situations in which a complainant can rely on viable alternatives to the “standard” way of doing things.

In the leading judgment, Phillips JA found that the existence of an alternative will only be relevant in very limited circumstances. This is where the alternative is “as efficacious” or “equally suited” to the employer’s end. Phillips JA found that it was “plain beyond argument” that the modem proposal was not as efficacious as the attendance requirement for the employer.[9]

In our submission the weight given to alternatives by Phillips JA is not supported by any other case law and is inconsistent with the Waters test on the availability of a less discriminatory alternative.

Neither is this aspect of the decision consistent with the provisions of s9 of the EOA itself, which sets out specific factors to be taken into account when assessing reasonableness – such as the impact of the requirement on the complainant and the cost of alternatives. Moreover, if this reasoning were followed literally, it would almost render redundant the issue of alternatives, as modifications to standard practices will almost always carry some cost or inconvenience, for example workplace adjustments for people with disabilities.

Post Schou cases

One of the first cases to specifically consider Schou was the NSW Administrative Decisions Tribunal’s decision in the case of Reddy v International Cargo Express,[10] which considered the issue of reasonableness in indirect discrimination under the Anti-Discrimination Act 1977 (NSW). In this case, Ms Reddy, who before returning from maternity leave had been employed as a managing customs broker, sought to return to work after a period of maternity leave on a varied arrangement. She wrote to her employer in advance explaining that she would have difficulty working full-time on account of her carer responsibilities and suggesting a variety of alternatives such as part-time work, some work from home or altered start and finish times to fit in with crèche hours. The Tribunal found that the employer dismissed Ms Reddy’s alternatives without any real consideration of them and upheld the complaint.

In response to arguments from the respondent that, as was pronounced in Schou, the existence of a practical and feasible alternative did not make the requirement to work full-time unreasonable, the Tribunal agreed but emphasised that “it is abundantly clear from the authorities that the availability and feasibility of an alternative/s cannot be ignored”.[11]

Following the decision handed down in Schou, the Full Federal Court considered the issue of reasonableness in indirect discrimination in Catholic Education Office v Clarke.[12] The Full Court upheld an earlier single judge decision of the Federal Court that the Catholic Education Office (CEO) had indirectly discriminated against the applicant, a hearing impaired student, on the grounds of disability under the Disability Discrimination Act 1992 (Cth). The CEO had imposed a requirement that the applicant attend school without the use of an Auslan interpreter. The Court found that the requirement was not reasonable because there was a feasible alternative available, that is, providing an Auslan interpreter.

As was observed in the Reddy decision, the Court noted that the fact that there is a reasonable alternative does not itself establish that the requirement is unreasonable. Rather, if there is a less discriminatory feasible alternative, this is a factor to be taken into account, together with the respondent’s reasons for the requirement, when weighing up reasonableness.

Importantly, the alternative of providing the Auslan interpreter was not equally suited to the school’s needs as was its requirement because the alternative placed a burden on the CEO. Nonetheless, the applicant was successful. This case, while it purported to apply to Schou, managed to reach a conclusion that would not be possible if the Court had literally followed the test that an alternative must be “as efficacious” to the respondent’s needs.

This case represents a significant difference in approach between the Court of Appeal and the Federal Court.

The Federal Court has retained the potential for indirect discrimination to address substantive inequality by acknowledging that a requirement which is reasonable in its generality may not be reasonable as it applies to the particular circumstances of the applicant and some burden on the respondent to accommodate the applicant may be required.

It remains to be seen whether the fact that the case was about the provision of education, rather than in the area of employment, bears on this difference.

A future for work/family balance in Victoria?

The Schou decision applies a counterintuitive approach to the test for indirect discrimination under the EOA.

Increasingly, this means employees in genuine need of flexibility or adjustments in their working arrangements encounter significant difficulty in pursuing a successful remedy under anti-discrimination law.

More specifically, as was noted by Driver FM in Howe v Qantas Airways Limited,[13] it is beyond contention that women have the predominant role in caring for young children.[14] Accordingly, a full-time work requirement is likely to disproportionately affect women.

A restrictive approach by the courts when applying concepts of reasonableness to the workplace effectively locks out women with family responsibilities from equal participation in the workforce.

In the absence of reforms to anti-discrimination laws simplifying the test of reasonableness in indirect discrimination, rights and obligations in this area may need to be found elsewhere.[15] Industrial law has emerged as a timely alternative with the AIRC’s Family Provisions decision in August 2005. This test case aims to introduce an award provision giving employees who need assistance reconciling work and family responsibilities a right to request their employer to:

  • extend simultaneous unpaid parental leave up to a maximum of eight weeks;
  • extend unpaid parental leave from 1 year up to a maximum of two years; and
  • allow them to return from parental leave on a part-time basis until the child reaches school age.

Notably, this right is circumscribed by the familiar test of reasonableness, in that an employer may refuse such a request on reasonable grounds related to the effect of the extended leave or part-time work arrangements on the workplace or the employer’s business.

The grounds cover a range of issues such as cost, lack of adequate replacement staff, loss of efficiency and the impact on customer service. These factors are similar to considerations relevant when assessing reasonableness under anti-discrimination laws. In formulating a “right to request”, the AIRC showed its preference for a simple approach but also built in a trial period to review the award provision’s effectiveness for both employers and employees.

This provision, however, has not been adopted in the federal government’s new “Fair Pay and Conditions Standards” announced in October 2005. Instead, the parental leave provision will remain the same as the existing standard under the Workplace Relations Act 1996 (Cth) of up to one year’s unpaid parental leave. Furthermore, parental leave will no longer be able to be included in new awards.

More generous parental leave provisions in existing awards will, however, be able to be retained. Therefore, the new parental leave provision will need to be inserted into awards over the coming months in order for it to be able to be an award condition.

The parties were, at the time of writing, in disagreement over the length of notice required to be given when exercising the right to request.

Even if the parental leave provision does not make it into awards, we consider that it could still be used as the basis of a negotiated clause in enterprise agreements or AWAs.

Conclusion

The use of extended parental leave provisions in enterprise bargaining agreements or through award variation may provide a more systemic response to the needs of workers with family responsibilities, when compared to the piecemeal effect of decisions under anti-discrimination laws.

Whether the industrial arena under the new federal IR laws will provide any solution to balancing work and family remains to be seen.

In the meantime, the EOA and federal anti-discrimination statutes continue to articulate the principle of substantive anti-discrimination for workers, students and service recipients with protected attributes. In light of recent decisions in other jurisdictions on the test of reasonableness since the Schou decision, it will be interesting to see how the test is applied to future Victorian workplace contexts, in particular under the EOA.

These issues will be aired in the High Court as it has recently granted special leave to appeal an indirect discrimination case dealing with issues of reasonableness under the Anti-Discrimination Act 1977 (NSW).[16]

In any event, employees unable to obtain their employers’ agreement to vary work arrangements in order to meet family responsibilities face a difficult choice in pursuing a work/family balance which allows them to participate in the workplace on an equal footing.


FIONA KNOWLES is a senior associate at Holding Redlich in its employment and industrial relations group. She is a member of the LIV Discrimination Law Committee and Workplace Relations Executive.

PENNY DEDES has worked in a number of legal and advisory roles within government and statutory authorities. She is currently on secondment to the Department of Justice.


[1] State of Victoria v Schou (No 2) [2004] 8 VR 120; [2004] VSCA 71 (Phillips, Callaway and Buchanan JJA, 30 April 2004). For a more detailed discussion of this case see F Knowles, “Misdirection for indirect discrimination” (2004) 17 AJLL 185.

[2] Schou v Victoria [2002] VCAT 375 (unreported, Judge Duggan V-P, 24 May 2002).

[3] Schou v State of Victoria (Department of Victorian Parliamentary Debates) (2000) EOC 93-100 at 74,417. The case was also significant in its assessment of damages in that the Tribunal had awarded Ms Schou $161,307.40 for economic loss, which, had the case been upheld, would have been the highest award of damages in the anti-discrimination jurisdiction: Schou v State of Victoria (Department of Victorian Parliamentary Debates) Decision on Relief (2000) at 74,431.

[4] (1991) 103 ALR 513.

[5] The test of indirect discrimination in the EOA looks at whether a disproportionate number of people with a relevant attribute cannot comply with a given requirement, condition or practice as opposed to people without the attribute; see s9(1) EOA. Alternatively, under the Sex Discrimination Act 1992 (Cth) (SDA) the test is whether a person is disadvantaged by the requirement, condition or practice; see ss7B and 7C of the SDA.

[6] Waters, per Brennan J at 535.

[7] T MacDermott and R Owens, “Recent cases: equality and flexibility for workers with family responsibilities: a troubled union?” (2000) 13 AJLL 278.

[8] State of Victoria v Schou (2001) 3 VR 655. See: K Lee Adams, “Recent cases: a step backward in job protection for carers” (2001) 29 AJLL 29.

[9] Schou (2004) at para 37.

[10] [2004] NSWADT 218.

[11] Note 10 above, at para 88.

[12] [2004] FCAFC 197.

[13] [2004] FMCA 242.

[14] At para 115.

[15] The prospect of legislative reform of anti-discrimination law in Victoria has been flagged in the Attorney-General’s Justice Statement 2004-2014. However, specific law reform options are outside the scope of this article.

[16] The State of New South Wales v Amery [2005] HCA Trans 366, 27 May 2005 (S487 of 2004). This case has been set down for hearing in the High Court on 15-16 November 2005.

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