Employers should consider engaging independent third parties when conducting investigations in the workplace to maintain a level of impartiality and transparency.

Workplace investigations can be complex, difficult to navigate and fraught with legal and cultural risk. This can be particularly so in the case of bullying complaints.

Behaviour that is characterised as "bullying" can lead to claims under the Sex Discrimination Act (Cth), work health and safety legislation, and perhaps most significantly, the anti-bullying regime under the Fair Work Act 2009 (Cth) which entitles a worker who can establish he or she has been bullied at work to apply to the Fair Work Commission for an order to stop the bullying conduct.

A key consideration in the context of a bullying investigation, and for that matter any workplace investigation, is whether it should be handled internally or externally by an independent, objective third party.

In a recent decision of the Fair Work Commission, Xiaoli Cao v Metro Assist Inc; Rita Wilkinson [2016] FWC 5592, it was held that appointing an objective third party to investigate complaints might be a prudent step to adopt where an employee "vigorously asserts" that an internal investigation would be compromised by bias or a lack of transparency.

The bullying complaint

Ms Cao, an employee of Metro Assist Inc, claimed she had been bullied at work by her manager.

She lodged a formal grievance with Metro's CEO, alleging that her manager had acted in an aggressive and belittling manner towards her, and had exhibited other unruly behaviour including repeated and persistent undue criticism, demeaning sarcasm and exhibiting "mistrust resulting in [the employee] having a low self-esteem". This was later followed by further claims of bullying.

Two investigations into Ms Cao's complaints

Metro conducted two separate investigations into Ms Cao's complaints. Both investigations were handled internally by Metro's CEO and Human Resources team, and involved a number of interviews. During the course of the investigations, Ms Cao was afforded opportunities to ventilate her complaints and put her position.

It was ultimately concluded, following both investigations, that her allegations were unfounded. Metro nonetheless engaged in external meditation sessions with Ms Cao, following which (after submitting medical advice) her reporting arrangements were changed and she was offered sessions with an independent psychologist (to be paid for by Metro).

Ms Cao was dissatisfied with the outcome of Metro's investigations, and subsequently lodged an application with the Fair Work Commission seeking an order to stop bullying under section 789FC of the Fair Work Act.

When to engage an independent third party?

Deputy President Sams concluded that the Manager had taken reasonable management action in her treatment of the Employee, and that no bullying conduct had occurred. Rather, it was concluded that Ms Cao's:

"… dogged, single-minded belief in the righteousness of her cause of action, no matter what the result of any investigation of her complaints, particularly those conducted by the employer, was [the reason why] she was not prepared to accept any outcome, unless it unequivocally vindicated her complaints".

While the Fair Work Commission agreed with Metro's submissions that the bullying allegations were not substantiated, that Metro's internal investigations "were fair, reasonable and transparent" and that engaging an external investigator would not have changed this outcome, Deputy President Sams nonetheless recommended that:

"…where an employee vigorously asserts that an internal investigation into bullying allegations will lack transparency or independence, it may be prudent for the employer to engage an independent third party to conduct the investigation".

Internal or external ‒ that is the question

The decision of whether an investigation is conducted on an internal or external basis must be made against the backdrop of an employer's obligation to ensure that investigations are conducted in an objective, fair, timely and thorough manner.

While there are some advantages to conducting an investigation internally, including the fact that the internal investigator is likely to have a sound knowledge of the employer's policies, practices and workplace culture, this needs to be balanced against the risk of an employee asserting that the investigation process is unfair or biased. Such perceptions can arise due to a range of factors including personal and professional relationships between staff members, internal political considerations, power imbalances and issues of competence and resourcing. Of course, as is sagely noted by Deputy President Sams, the fact the perception exists doesn't make it true in substance.

Engaging an independent third party to carry out an investigation can assist employers in balancing the interests of all parties to ensure the investigation is not only conducted appropriately, but perceived to be as such. It's an application of the well-known aphorism, "not only must justice be done, it must be seen to be done".

Key points for employers contemplating an investigation

When an investigation is being contemplated, these are some questions to be considered:

  • Can the investigation be conducted internally in a fair, impartial and thorough manner (and will such an investigation also be perceived to have those qualities)?
  • Are there applicable internal policies or procedures in place? If an investigation is conducted, whether it be internal or external, the employer will need to ensure compliance with these policies or procedures.
  • Is the scope and duration of the investigation carefully defined and does it match the seriousness of the complaint or conduct and its potential consequences?
  • What is the interaction between legal advice and the investigation? For example, is the complaint likely to give rise to litigation and have issues of privilege been properly considered?