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Kathryn Dent, Director and Erin Lynch, Associate

As the end of year looms and staff become relaxed in anticipation of the holiday season, some inappropriate workplace behaviours may either emerge or be displayed at various events.

Such behaviour will require an employer to “investigate”. The level of investigation, and the resources devoted to it, will depend on how the behaviour comes to the employer’s attention and the nature of the (mis) behaviour. Regardless of these factors, that is whether the investigation is formal or informal, and the complaint similarly, it is crucial that employers get this investigation right as it will form the basis for any disciplinary decisions made and will come under scrutiny if the employee later challenges your decision.

This article is designed to be a practical guide to investigations having regard to practices recently considered by Fair Work Australia.

Best Practices in Investigations

Any investigation process is likely to incur a certain level of cost, time and risk. If an employer is conducting a workplace investigation, then five key actions are to:

1. ensure all of the allegations are set out to the employee the subject of the complaint;

2. conduct all processes in a manner that complies with any applicable organisational policies and ensures all parties involved are respected (which includes agreements as to confidentiality and not victimising others) and have an opportunity to state their version of events;

3. provide a comprehensive report of the steps you have taken, the findings you have made, and the recommended course of action;

4. clearly identify whether the allegation is made out or not and provide evidence in support of a conclusion; and

5. provide suggestions, if any, for improving investigatory procedures.

Internal vs External investigations

Whether reference to an external investigator (such as a lawyer) is warranted will generally depend on the nature of the behaviour being investigated. External investigations where you seek to attract legal professional privilege over the investigation by engaging lawyers are more suitable for sensitive matters or if the matters are serious and may result in litigation or generally if an independent view is required where there is more likely to be freedom from bias or conflict of interest.

If an internal investigation is undertaken then it is preferable to separate the role of decision- maker from investigator and it is imperative that the investigator has the appropriate skill-set, knows and appropriately applies, your organisation’s policies and procedures. The investigator should avoid simply following a checklist which will limit the information and evidence being considered. The investigator should always provide procedural fairness to those involved and seek advice where required to ensure the organisation’s actions are appropriate.

Repercussions of inadequate investigations

There are four mains repercussions resulting from inadequate investigations that make adequate investigations a necessity, they are:

1. the risk that the dismissal will be challenged as unfair due to the employee being investigated not being afforded procedural fairness (and if found to be unfair, remedies in result of that – reinstatement, re-employment or compensation);

2. the time and costs of litigation to the business, including adverse publicity;

3. any lack of uniformity in disciplinary proceedings resulting in employees being treated differently in relation to similar allegations; and

4. low morale in the workplace and the lack of confidence in management.

Cases

The recent cases below demonstrate the importance of employers carrying out thorough and independent investigations.

In Narwal v Aldi Food Stores Pty Limited1 Mr Narwal’s employment was summarily terminated after he took goods from the store he managed without paying. Aldi Food Stores Pty Limited (“Aldi”) claimed that Mr Narwal had acted dishonestly and viewed his actions as misconduct.

When Mr Narwal returned to work two days later he was alerted by Aldi management that he had not paid for the goods. Mr Narwal paid for the goods immediately. Nonetheless, the Area Manager summarily terminated Mr Narwal’s employment.

Fair Work Australia (“FWA”) found that there was no basis for summarily dismissing Mr Narwal. FWA was critical of the Area Manager’s actions and stated that he had “completely failed to properly investigate and consider the important implications of the suspended docket”. Further, FWA formed the view that Aldi had failed to “satisfy even a basic level of proof upon which to find that the [store manager] acted dishonestly or committed theft”.

In this case the investigation was inadequate. The seriousness of the conduct was mitigated by the employer allowing him to work after having knowledge of his activities. An employer will be deemed to condone the conduct if they do not act swiftly in response. The investigation failed to address all relevant evidence.

In Jones v Commission for Public Employment2 Jones was a parole officer who failed to disclose during her recruitment that her husband was a parolee. Jones lodged an unfair dismissal claim after being terminated on the grounds of serious misconduct. The termination letter stated that “an investigation into your alleged conduct was not warranted”.

It was held that although there was a valid reason for dismissal, Jones was unfairly dismissed. The dismissal was unfair as the employer did not afford the necessary procedural fairness. The investigation was held to be inadequate as:

  • the opportunity to respond by letter was not sufficient;
  • Jones was given a time limit to respond in writing;
  • the employer failed to investigate the alleged conduct; and
  • the allegation was based on information obtained from elsewhere, not the investigation.

By contrast, an adequate investigation was confirmed to have taken place in Jalea v Sunstate Airlines3. In this case Jalea lodged an unfair dismissal claim after being terminated for misconduct. Jalea’s manager lodged a complaint after Jalea responded in an inappropriate manner to suggestions that she undergo mediation due to conflict with a colleague. The complaints were investigated through several witness interviews and written correspondence whereby allegations were put to Jalea allowing her an opportunity to respond. At the conclusion of the investigation Jalea was forced to either transfer to a Sydney base with a first and final warning or have her employment terminated. Jalea’s employment was terminated for failing to respond to the offer of transfer or attend meetings, for use of inappropriate language, failing to follow a reasonable direction and using force to enter her manager’s office.

The dismissal was upheld as valid based on the serious nature of Jalea’s conduct which on several occasions clearly breached the organisation’s policy. The investigation was deemed sufficient as it provided procedural fairness and complied with company policies. The investigation was adequate as:

  • notice was provided ahead of the meeting;
  • the HR manager was not experienced in investigations;
  • the investigation engaged an extensive process of appeals consistent with the policy;
  • it was not relevant that witness statements were not signed, nor that all witnesses were not spoken to; and
  • it was not flawed merely because it could have been performed better and that Jalea was unhappy with the outcome.

In Tokoda v Westpac4 the employee submitted a medical certificate which did not contain the doctor’s provider number. When Westpac telephoned the doctor, the doctor stated that he had not provided the certificate and that Ms Tokoda has not visited his surgery.

An investigation was carried out which resulted in Ms Tokoda being terminated. During the investigation Ms Tokoda alleged that she had been bullied. Westpac investigated the bullying complaint and it was deemed to be unsubstantiated.

It was held that the dismissal was not unfair as there was a valid reason for termination. Fair Work Australia formed the view that Ms Tokoda’s evidence was unconvincing and not credible. The investigation findings by the Area Manager of the Retail Branch Network were upheld. Ms Tokoda appealed to the Full Bench. The Full Bench upheld the decision reafirming that her behaviour constituted serious misconduct.

The investigation was adequate as:

  • all relevant parties were interviewed;
  • Tokoda was informed about the outcome of the investigation and the reasons;
  • the investigator admitted that one of the complaints related to another employee’s error;
  • the termination was made after the investigation; and
  • there was a valid reason for the termination not related to the complaints made.

Also see our related article on Sharma v Bibby Financial Services Australia Pty Ltd5 in this publication.

These cases are a stark reminder that proper processes must be followed in the investigation of complaints in order to defend legal proceedings which may arise from the decisions implemented as a result of an investigation’s findings.


  1. [2012] FWA 2056
  2. [2012] FWA 7069
  3. [2012] FWA 1360
  4. [2012] FWA 5379
  5. [2012] NSWSC 1157

 

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Cara Seymour, Senior Associate and Kathryn Lewis, Graduate Associate

We frequently hear that cases of bullying and harassment at work are on the increase. Most studies suggest a figure of 1 in 5 or 1 in 6 people experiencing some form of bullying or harassment in the workplace.

In all likelihood, it is not so much that human behaviour has changed for the worse but that increased awareness of what is and what is not acceptable conduct at work is generating a higher rate of reporting of incidents that may constitute bullying or harassment.

As the body of case law in this area grows, it is instructive to look at these decisions to understand what the terms “bullying” and “harassment” mean so you can identify and to the extent possible, eliminate, the kinds of behaviours that cause harm to people and create legal risk in your workplaces. Last year the Productivity Commission estimated the effects of workplace bullying to be costing between $6 billion and $36 billion annually.

Minimising the risk of bullying and harassment requires good grievance procedures that aim at fair, confidential and timely resolution of complaints. However individual complaint-based mechanisms or policy documents are never enough to engender cultural change throughout workplaces. Broader strategies such as training and awareness raising programs, mentoring and positive leadership also need to be considered.

Bullying – what is it?

There is no legislative definition of “bullying” however, case law and those government organisations responsible for administering work, health and safety (WHS) laws have provided us with the following key elements:

  • A repeated pattern of behaviour that is;
  • Inappropriate, unreasonable and possibly aggressive; and,
  • Poses a risk of physical and/or psychological harm.

Other features of bullying are that it is unwelcome and targeted at a particular person/s even if the subjective intention of the person was not to bully. While the power relationship between the person who is bullied and the person bullying may not necessarily be obvious, at the heart of bullying behaviour is an abuse of power.

Bullying encompasses inappropriate behaviours that range from extremely overt and aggressive to the more subtle passive aggressive forms such as:

  • Physical assault
  • Verbal abuse/yelling
  • “Initiation Rites”
  • Malicious teasing and making someone the brunt of pranks or practical jokes
  • Excluding or isolating employees
  • Giving employees impossible assignments, consistent heavy workloads and unrealistic timeframes
  • Assigning meaningless tasks unrelated to the job
  • Deliberately withholding information that is vital for effective work performance
  • Consistent non-constructive criticism of work product
  • Psychological harassment such as the “silent treatment”, gossip and rumours
  • Favouritism and unfair allocation of tasks.

Bullying and performance management

Confusion about what constitutes bullying most often arises in the context of performance supervision and management, disciplinary action and allocations of work. Reasonable work allocation in compliance with systems and the requirements of a worker’s role, performance supervision and management are not bullying, nor are the decisions to counsel or warn a worker when performance issues arise.

There is a rising incidence of employees raising bullying and harassment complaints in response to performance management, so it is important to distinguish the differences between bullying behaviours and what is termed as “reasonable administrative action” or even reasonable disciplinary and management action.

Case example

Recently, an employee with an existing stress-related depressive disorder had her case upheld on appeal to the Federal Court. The issue before the Administrative Appeals Tribunal had been whether the employer was liable for the employee’s psychological condition pursuant to section 14 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (Act). Her illness was diagnosed after she received a series of promotions. She took leave and on returning from leave found that her job had been restructured and that her workload had, in her estimation, tripled. Following a group meeting, her manager called her aside for a one-on-one impromptu meeting during which the manager accused her of having a “negative attitude” and said:

I don’t see you having a role in corporate clients and possibly anywhere in the organisation”.

The appeal first considered the correct interpretation of ‘reasonable administrative action taken in a reasonable manner in respect of the employee’s employment’ as that phrase appears in section 5A(1) of the Act. The Federal Court confirmed the Tribunal’s finding that the employer’s action was unreasonable due to the “tension-charged” nature of the one-on-one meeting and coupled with the failure to give the employee any notice of the serious issues being raised.

It held that the impromptu meeting was causative of an aggravation of the Respondent’s pre-existing condition.1

Cyber Bullying

New technology has created a more public platform for bullying and harassment which has been termed “cyber bullying”. The characteristics of cyber bullying are the same as bullying but the medium is through the internet, mobile phone and most often social networking sites. The intent must be to cause emotional distress and there must be no legitimate purpose to the communication.

Easy access to digital devices has the effect of allowing bullying to extend beyond the workplace and into home life, sometimes with devastating effect. Victoria has responded to workplace bullying introducing legislation amending the Crimes Act 1958 (Vic) with what is colloquially known as “Brodie’s Law”. This followed the death of 19 year old Brodie Panlock who was severely bullied at work. A coronial inquest found that this treatment directly resulted in her death. The enactment widens the definition of the existing crime of stalking to workplace and cyber bullying. The maximum penalty is 10 years imprisonment.

Examples of cyber bullying behaviour include: posting demeaning and humiliating photos, sexual remarks or threats and posting comments that defame or ridicule.

Harassment

Unlawful workplace harassment is any form of behaviour that is unwelcome and targets a person because of a ground prohibited by discrimination legislation such as sex, race, disability and age. Behaviour amounts to harassment if a reasonable person in the position of the perpetrator would have anticipated that the person at whom the behaviour is directed, would be offended, humiliated or intimidated by that behaviour. Under discrimination legislation, sexual harassment is specifically defined to encompass an “anticipation of the possibility” that the sexual conduct would cause offence to the person.

Workplace harassment and sexual harassment can be a one off incident or a pattern of behaviour. The intention of the person is not a relevant consideration and the person claiming to have been harassed does not have to say “no” to the conduct to prove that it was unwelcome. The scope of behaviour considered as harassment includes offensive jokes, suggestive or sexual remarks, repeated unwelcome sexual invitations, racist or ageist remarks, imitating someone’s accent & repeated questions about someone’s personal life. It may include non-verbal behaviour: suggestive or aggressive looks or stares, offensive hand and body gestures, invading someone’s personal space, distributing sexually explicit or racist or sexist emails and displaying offensive or sexually explicit posters.

Lessons from the case law

One of the big mistakes employers make, is mixing personal comments or opinions with performance review or attacking the person instead of their performance. Focus your feedback on the requirements of the role and support underperformance with objective data related to duties consistent with the role. That is not to say that particular personality styles and maintaining personable relationships is never core to success in certain positions. In client service industries, the ability of an employee to maintain relationships is crucial to success. In another recent case an employee’s failure to build and sustain relationships with internal and external service providers and two internal managers was found to be a valid reason for dismissal of an employee. The employee made a bullying claim after the problems with relationships with two managers but this was not upheld and the reason for termination that he was not a good company fit was accepted by the court.2

Best practice is to remain focused on the requirements of the position and to direct all comments to that end. Pay attention to your oral and written communications and consider the impact of the email and mobile messages that you send. For example, avoid adopting an impolite or sarcastic tone or sending a barrage of emails or texts raising performance issues. If you usually address workers a certain way, maintain the same level of communication when discussing performance issues. Don’t let your frustration with an employee’s failure to perform to expectations translate into unfair treatment of that person.


  1. National Australia Bank Limited v KRDV [2012] FCA 543 (28 May 2012)
  2. Stevenson v Air Services Australia [2012] FMCA 55 (1 February 2012)

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Kerry West, Associate

People + Culture Strategies recently successfully acted for a client to secure over $1.4m in a case before the Supreme Court of New South Wales.

The case concerned the termination of that senior executive’s employment following sexual harassment allegations and highlights a number of important issues for employers, namely, the importance of conducting adequate investigations and the ramifications of an unsatisfactory workplace culture.

The Facts

The executive was employed as the Sales Director of Bibby Financial Services Australia (“Bibby”) from 2002 – February 2009. In accordance with the Sales Director’s contract, the Sales Director was entitled to a one- off “special bonus” of up to $1.4m. However, shortly before the special bonus was due, Bibby terminated the Sales Director’s employment on the basis of serious misconduct relating to allegations of sexual harassment. The allegations included inappropriate touching, inappropriate comments and unwelcome attention.

The allegations of sexual harassment had been made by another employee who was employed by Bibby for three months and claimed that the sexual harassment caused him to leave his employment with Bibby.

In January 2009, Bibby conducted an investigation into the allegations of sexual harassment which involved interviewing a number of employees in the Sales Director’s team. None of the employees interviewed supported the claims of sexual harassment. Importantly, at this time, the Sales Director had not been made aware of the allegations, nor was he interviewed as part of the investigation.

Despite this, on 4 February 2009, the Sales Director was called to a meeting where he was told that:

Your conduct is unbecoming of a director…If you do not resign we will terminate your contract. This process is not a negotiation. We do not have to tell you anything.”

The Sales Director was then sent a Deed of Release containing an offer of notice and a pro rata amount of the special bonus, which he rejected. Bibby then took steps to terminate the Sales Director’s employment for serious misconduct and did not pay the Sales Director’s notice or the special bonus.

After proceedings were initiated by the Sales Director, Bibby also sought to rely on conduct of the Sales Director that had been discovered post-termination. This conduct related to the taking of ecstasy tablets and failing to disclose a potential conflict of interest.

The Findings

There were two key issues for the Court to decide. Firstly, had the Sales Director’s employment been validly terminated on 4 February 2009 and, secondly, if the Sales Director’s employment had been validly terminated, had the Sales Director engaged in conduct discovered post-termination which amounted to serious misconduct?

The Court held that Bibby decided to terminate the employment of the Sales Director on 4 February 2009 and the allegations of sexual harassment or other serious misconduct were not upheld. Therefore, the Sales Director was entitled to the special bonus and six months of notice. The Court noted that:

the Defendant had decided to terminate the plaintiff in full knowledge of the allegations of serious misconduct. It decided not to rely upon those matters or proceed towards termination… The Defendant decided to terminate the plaintiff without cause by termination…

In coming to this view the Court took into consideration:

  • that the Sales Director was told the termination of his employment was “not a negotiation”;
  • comments that were made to the Sales Director about Bibby’s loss of trust and confidence;
  • that the Sales Director was directed not to return to the office, contact staff or contact clients; and
  • that the Sales Director’s salary was stopped (although later reinstated).

The Court also considered whether any of the conduct discovered post- termination could be used to justify a termination on the basis of serious misconduct.

In relation to emails evidencing drug taking, the Court found that the conduct of the Sales Director could only be viewed in the context of Bibby’s policies, procedures and corporate culture. Bibby’s Drug and Alcohol Policy provided that in the event of an incident involving drugs or alcohol, Bibby would intervene and offer assistance. In such circumstances, the Court found that the Sales Director’s employment would not have been terminated summarily on the basis of sending emails referencing drug use.

Further, the Court found that at that time the emails were sent, Bibby had a corporate culture which tolerated heavy drinking and condoned and paid for the use of dating and escort services and strip clubs as part of the business. Bibby’s workplace culture meant that the Sales Director’s conduct was no more damaging to the company’s reputation than Bibby’s Managing Director attending lap dancing venues and/or strip clubs with clients and/or suppliers. The Court stated that:

It appears that the environment in the defendant’s office was such that in those years it is questionable as to whether the plaintiff’s conduct on the two occasions in 2003 and/or 2004 would bring the defendant’s reputation into any further disrepute than would the Managing Director’s conduct in attending lap dancing venues and/or strip clubs with clients and/or suppliers.

The Court also considered whether the Sales Director had failed to disclose a necessary conflict of interest.

The Court held that while there may have been a lapse in judgment, it did not justify dismissal for serious misconduct.

Key Learnings for Employers

The case sends a strong message to employers to ensure that:

  • Investigations should be conducted by persons who are experienced and competent, in many circumstances, an external independent investigator should be engaged.
  • Obtaining evidence corroborating the allegations is important, in the absence of such evidence, employers should be cautious of making adverse findings.
  • Procedural fairness must be followed – any employee being investigated should have all of the allegations put to them and be provided with a reasonable opportunity to respond.
  • Policies and procedures can be onerous and, as such, should be carefully drafted and reviewed to ensure the policies and procedures are not unnecessarily onerous.
  • The corporate culture of an organisation should be regularly audited; appropriate behaviour and culture training should be provided to all employees and managers regardless of their seniority.