17 September, 2016
What you need to know
- Failures in a workplace investigation are prone to claims of unfair dismissal or adverse action, resulting in scrutiny by the courts and tribunals. Poorly conducted investigations, without adequate consideration of the respondent's need for support, can also ground claims such as breach of a common law duty of care and may result in an order for damages against the employer.
- An employer has a duty to investigate alleged misconduct and a duty to support the employee whose conduct is under investigation, especially where the employer directs the employee not to attend work.
- Investigation documents and reports may face scrutiny in any proceedings.
What you need to do
- Provide procedural fairness to all people involved in an investigation, especially the respondent. Broadly speaking, this involves giving the respondent an opportunity to respond and the right to an unbiased decision.
- Frame allegations carefully so that they do not suggest a pre-determination of the issues. Factually identify the alleged behaviour and explain why that conduct would breach a particular code of conduct or policy. Adopt caution in characterising the alleged conduct using legal labels such as assault, theft and harassment.
- Take care when preparing for a potential dismissal. A pre-prepared letter may indicate a pre-disposed position.
- Where unfair dismissal risks exist, ensure compliance with the requirements in the Fair Work Act 2009, such as that the employee has a support person present if he or she wishes.
- Keep accurate and clear records of witness interviews and other investigation documents. These are likely to be required to be produced if the matter is litigated.
In this article, we summarise some key principles from recent cases on the conduct of workplace investigations. These cases highlight instances where an employer's failure to ensure procedural fairness has been successfully challenged.
Procedural failings override valid reason for dismissal
In two recent cases, the employer's failure to afford procedural fairness resulted compensation orders and rendered unfair an otherwise valid reason for dismissal.
Mischaracterisation of misconduct in letter of allegations
In Jimenez v Accent Group T/A Platypus Shoes (Australia) Pty Ltd [2016] FWC 5141 (5 August 2016), the applicant challenged his summary dismissal for serious misconduct from his role as store manager.
During the unfair dismissal proceedings, the Commission accepted that the employee's failure to record a sale of shoes to the employee's friend and place the cash immediately into the till amounted to serious misconduct, justifying dismissal on notice.
The procedural errors made by the employer have rendered what would have otherwise been an entirely fair dismissal with notice, to be an unreasonable
However, the Commission found the employer "mischaracterised this serious misconduct by describing it as theft". In circumstances where the sale was subsequently recorded and the cash returned to the till, the elements required to establish the criminal conduct of larceny could not be found.
The concept of the need to provide an opportunity to respond … is … predicated upon the decision-maker approaching the issues … with an open mind …. In this instance, the employer characterised the applicant's conduct as theft from the outset, and its subsequent treatment of any response provided by the applicant was contaminated by the predisposed view that it held.
Further, in correspondence with the employee, the employer described the misuse of the layby policy by the employee as "theft". The Commissioner expressed a strong view that it "may assist the employer if it refrained from using strong, inflammatory language particularly involving allegations of criminality."
Continued performance of work inconsistent with summary dismissal
The Commission also noted that the employer applied a level of severity to the alleged misconduct that was inconsistent with it permitting the employee to continue to work.
Pre-determination of findings
The employer notified the employee of his dismissal by a letter handed to him during a meeting. The letter erroneously referred to attendance at the meeting by the employee's solicitor, when in fact a friend had attended as a support person. Commissioner Cambridge found that the letter had obviously been pre-prepared and demonstrated that the employer had a predisposed position in respect of the allegations it was supposed to be evaluating with an open mind during that meeting.
The Commissioner also found that the employer had formed an early view of guilt when it deliberately deceived him about the purpose for the first investigation meeting and mischaracterised the misconduct as theft.
Meeting without notice is a practical denial of the opportunity to have support person
Finally, from a practical perspective, the employer’s "deceitful communication" about the purpose of the meeting where the allegations were first conveyed to the employee amounted to a refusal to allow him to have a support person.
This point was also made in Roelofs v Auto Classic (WA) Pty Ltd [2016] FWC 4954 where the employee was "ambushed" by the employer at the meeting to discuss allegations about accessing inappropriate swimsuit websites at work.
Failure to give reasons for termination or opportunity to respond
In Roelofs, the Commission was very critical of the employer's failure to provide an adequate opportunity to respond:
- the employee was not given details about the inappropriate website, when he was alleged to have access it
- the employee was not asked whether he had an explanation for the record on his internet browsing history; and
- the employee only became aware of the detail once the proceedings were commenced.
Multiple deficiencies in investigation process rendered dismissal procedurally unfair
In each case, the Commission found that the employee had been denied procedural fairness.
In Jimenez, the finding of misconduct regarding the failure to record the sale and put the cash in the till established a valid reason to dismiss the employee, with notice. However, the procedural errors in dealing with the serious misconduct and the less serious misdemeanours made the summary dismissal unjust and unfair. The Commissioner awarded an amount equal to one week's remuneration ($1,100).
In Roelofs, the Commission accepted that the employee did access the alleged website and this alone amounted to a valid reason for his dismissal. The Commission also found that multiple deficiencies in the employer's investigation process rendered the dismissal procedurally unfair and awarded the employee four months' pay as compensation (over $25,000).
Lack of human resources specialist a business choice
Interestingly, when considering the criteria in section 387(g) of the Fair Work Act 2009 in Jimenez, the Commission noted that an absence of a dedicated human resource specialist in a medium to large corporation was a "business choice" which did not excuse its deficient procedures.
Employer's duty of care extends to investigations
In Hayes & Ors v State of Queensland [2016] QCA 191, four managers commenced proceedings alleging their employer had breached its common law duty of care to provide adequate support in a hostile workplace, in particular during the investigation of bullying and harassment complaints.
The managers were subject to 200 bullying complaints, media attention and union picketing. However, after a lengthy investigation into the complaints, they were found to be unsubstantiated. The managers claimed that due to the employer's breach of its duty of care, they suffered serious psychiatric illnesses.
Employer failed to provide adequate support
The Court of Appeal considered the investigation process, and the lack of support the managers received when the complaints were made, and during the investigations.
The reasonable employer in the position of the respondent … could reasonably be expected to have known that prolonged workplace stress could detrimentally effect (sic) … employees performing work like the appellants' and that, if unsupported in the workplace, that stress could develop into mental illness.
The Court found a duty of care arose once the employer understood that the investigations would be substantial and protracted, and it had adequate information to determine that its employees were vulnerable or distressed leading up to and during the investigation process. The employer should have known the employees were vulnerable to psychiatric injury in the circumstances.
The Court found that there were several breaches of the employer's duty of care, which included:
- unsympathetic emails and communication restrictions;
- removing the managers from their roles without any support or explanation;
- not discussing the investigation process with the managers; and
- the employees not being assigned their own support person. The free counselling service provided by the employer to all employees did not discharge the employer's duty towards the managers.
Breach did not cause psychiatric illnesses
The majority held that the medical evidence did not support the claims that the breach of the duty of care caused the psychiatric injuries. There were significant discrepancies between the facts on which the medical expert proceeded and the facts that were proved at trial, so the Court could not determine that the breaches caused the psychological injuries.
Notably, if the managers had been successful in demonstrating that the breach of the duty of care had resulted in their psychiatric injuries, the minority judgement of Justice McMurdo noted that damages could have ranged between $731,000 and $315,000 per manager.
Order to produce investigation records
In Applicant v Respondent [2016] FWC 5006 (1 July 2016), the Applicant obtained access to workplace investigation documents relating to his alleged misconduct. He did this by relying on the Commission's power to order production under section 590(2)(c) of the Fair Work Act 2009. The Applicant sought the production of investigation summaries, records of interview and email communications about his alleged conduct.
The Respondent argued these documents were created for the dominant purpose of receiving legal advice from the Respondent's in house employment counsel and, therefore, were subject to legal professional privilege.
During cross examination, the Workplace Relations Advisor gave evidence that the documents would have been created whether legal advice was sought or not.
The Commission found that the documents were created in the normal course of a disciplinary investigation and for the purpose of putting allegations to the Applicant. The dominant purpose was for the inquiry into the complaint. The Commissioner noted that the fact a document is provided to a solicitor for advice is not determinative of the purpose for which it was created.
MAKING THE CASE: Insights from Geoff Giudice
These cases deal with internal investigations from a number of points of view and employers can draw some worthwhile lessons from them:
- Although a lack of procedural fairness is not always fatal in unfair dismissal cases, it may be fatal if errors in procedure lead the Commission to conclude that the employee did not engage, or may not have engaged, in the conduct which the employer relied upon
- In conducting an internal investigation, an employer may be liable in damages at common law if an employee under investigation is not given adequate support during the process and as a result suffers injury, including psychiatric injury; and
- Documents used in an internal investigation will not be protected by legal professional privilege just because lawyers have been involved in their production – the question is whether the dominant purpose for the creation of the documents was receiving legal advice.
Internal investigations require careful planning and implementation or they may create more problems than they solve.
For further information, please contact:
Marie-Claire Foley, Partner, Ashurst
marie-claire.foley@ashurst.com
