The Federal Circuit Court has ruled a senior executive who was investigated, following anonymous allegations of misconduct was not the victim of unlawful adverse action, finding that among other things, the investigation itself was not “adverse” and that other action taken by the employer was not taken for a prohibited reason as alleged.

What does this mean for employers?

Any disciplinary action which the employer proposes to take against the employee needs to be based on strong, direct evidence of relevant misconduct, which needs to come from the decision-maker in order to displace the assumption that the adverse action was taken for a prohibited reason.

Employers should also take note of the fact that in some cases the institution of an investigation could in or of itself constitute adverse action, in that it could injure an employee in their employment. As such, care should be taken when instituting investigations, in particular, only those individuals who need to be aware of the investigation should be advised of it and investigations should remain as confidential as is practicable.

Facts

The Applicant was employed by Doutta Galla Aged Services Ltd (Doutta Galla), an aged care provider, as a Director of Residential Care.

Over the course of a number of years rumours had circulated and anonymous complaints had been made about the Applicant. These included rumours that he had a personal interest in a company that provided services to Doutta Galla and that he was recruiting for roles in the organisation without following the proper recruitment and selection procedures. Previous investigations had not uncovered sufficient evidence to take any action at that time.

Matters came to a head in August 2012 when an anonymous email was sent to “All Staff”, the Board and some outside entities, using the Doutta Galla computer system, which contained complaints about the Applicant and made allegations against him.

While the CEO would not agree to the Applicant’s request for the Doutta Galla computer system to be shut down to prevent further dissemination of the email, he gave evidence that he had instructed his IT department to do all that it could to recall the email and prevent dissemination as far as possible. A letter was then also sent to staff advising them to ignore the unauthorised email and advising them that the system had been hacked.

Thereafter Doutta Galla instructed an independent investigation to investigate both the allegations about the Applicant and how the computer system had been compromised. Around the same time, the Applicant contacted a whistleblowing organization and subsequently the police about the matter. He also, it was alleged, interfered with the investigation and tried to conduct his own investigation. During this period the Applicant also took stress leave.

The independent investigation resulted in a report being provided to the Board, which subsequently led to the Board recommending that the Applicant’s employment be terminated. This recommendation was followed by the CEO on the basis that the Applicant had, according to Doutta Galla’s evidence, interfered with the investigation and defied the Doutta Galla’s instructions on a number of matters both relating to the investigation and the recruitment and selection issues. In essence, it appears that some of the matters giving rise to termination arose because of the contents of the investigation report (dealing with the original anonymous allegations), and others, because of the Applicant’s conduct since the anonymous email was distributed.

The Litigation

The Applicant brought proceedings in the Federal Circuit Court. He alleged that, among other things, Doutta Galla’s email to all staff advising them to ignore the original anonymous email, the independent investigation and the dismissal each amounted to unlawful adverse action which was taken on the grounds of him exercising his workplace right to make a complaint or inquiry in relation to his employment. In the case of the dismissal he also argued that this occurred because of his temporary absence due to stress and/or the making of a workers compensation claim.

The Fair Work Act 2009 (Cth) (the Act) makes it unlawful for an employer to take “adverse action” (which includes dismissal, but also any other action which injures the employee or alters the employee’s position to his/her prejudice) because of a number of prohibited reasons. These prohibited reasons include exercising a ‘workplace right’ which is defined to include making a complaint or inquiry in relation to the employment and a temporary absence due to illness or injury. The employer bears the onus of proving that the employee exercising their workplace right to make a complaint or inquiry in relation to the employment and/or the temporary absence, was not a substantial and operative cause of the dismissal.

The Applicant argued that the following steps he had taken amounted to a complaint or inquiry in relation to his employment a:-

  • request by him to the whistleblowing organisation to conduct an investigation;
  • complaint made to the whistleblowing organisation about Doutta Galla’s failure to remove the original offending email from its computer system;
  • complaint made to the police and the statement he made to the police; and
  • complaint to the CEO about the letter Doutta Galla sent to all staff advising them to ignore the original email.

He contended that a number of actions constituted unlawful adverse action. These included the:

  • independent investigation;
  • letter Doutta Galla sent to all staff advising them to ignore the original email;
  • recommendation by the Board that he be dismissed; and
  • termination of his employment.

The Decision

The trial judge (Whelan J) found that:

  • she was not satisfied, on the evidence, that there was a complaint to the whistleblowing organisation about Doutta Galla’s failure to remove the original offending email from its computer system;
  • at most, the contact with the whistleblowing organisation about their ability to conduct an investigation, could be said to be an inquiry about their capacity to conduct an investigation (and therefore not an inquiry in relation to Applicant’s employment); and
  • the complaint made to the police and CEO about the letter that Doutta Galla had sent to staff were complaints for the purposes of the legislation.

However, the judge went on to find that:

  • while the institution of an investigation by an employer can constitute adverse action, it will depend on the circumstances of each case;
  • it would have been surprising if the employer in this case had not instituted an investigation;
  • in this case, based on the particular facts, the institution of the investigation by the employer did not constitute adverse action;
  • the letter Doutta Galla sent to all staff advising them to ignore the original email did not constitute adverse action; and
  • the recommendation by the Board that the Applicant be dismissed and the termination of his employment did constitute adverse action but this action was not taken because of a prohibited reason (i.e. it was not taken because the Applicant made a complaint or inquiry in relation to his employment or because of his temporary absence). Rather, the judge concluded that she was satisfied that the reasons advanced by the CEO for the termination were genuine and real concerns, and that those reasons did not include the reasons alleged by the Applicant.