Recent decisions by the various industrial commissions and the courts indicate that employers will need to meet a higher standard when relying on fi ndings from workplace investigations which result in termination of employment or damage to the employee.

We have also seen employees going beyond unfair dismissal applications to use alternative legal avenues to dispute termination of their employment and to obtain compensation. This means that risks are increasing for employers and it is even more important to get the investigation right.

In recent cases in NSW and South Australia, the courts implied into contracts of employment the duty of trust and confi dence, including in relation to how workplace investigations were conducted. While there is no precedent involving the Australian Public Service (APS) at this stage, there is no reason why such a duty would not apply to APS employment contracts.

In the case of Russell v Trustees of Roman Catholic Church for Archdiocese of Sydney (2008) 176 IR 82, Russell was investigated for alleged misconduct and his employment was terminated. He was also charged by police in relation to the same incident and was ultimately acquitted. The NSW Industrial Relations Commission then dealt with the termination of employment and reinstated Russell. Russell sought damages and legal costs in relation to the termination of employment in the New South Wales Supreme Court. Russell claimed, amongst other things, that his employer had acted in a way that was likely to destroy or seriously damage the relationship of trust and confi dence between himself and the employer. Russell claimed that the investigation had been unfair, in particular, that the investigator had conducted a telephone interview with a witness rather than a face-to-face interview, and that this prejudiced him.

On appeal, the NSW Court of Appeal confi rmed that the duty of trust and confi dence can be implied into an employment contract, however the duty does not apply to the actual termination of employment. The implied duty will, however, apply in relation to the circumstances around the termination of employment, such as the investigation.

In the South Australian case of McDonald v South Australia (2008) 255 LSJS 279; (2008) 172 IR 256, the Court found that the employer, the Department of Education and Children’s Services, had breached the implied duty of trust and confi dence owed to McDonald in relation to the performance of his role. Importantly, the Court determined that the employer’s breach included a failure to investigate McDonald’s grievances which he had attempted to raise with the school principal and area superintendent, including seeking clarifi cation of his role and making repeated requests for meetings.

Similarly, it is clear that internal policies and procedures dealing with investigations will form part of the contract of employment, absent any specifi c exclusion in the contract.

In the Full Court of the Federal Court Appeal decision of Goldman Sachs JBWere Services Pty Ltd v Nikolich (2007) 163 FCR 62 (which was reported in our December 2007 edition of D-brief ), the employer’s failure to comply with its own OHS policy, which stated that it would provide a “healthy working environment”, was found to be a breach of Nikolich’s employment contract because the policy was found to be imported into the employment contract. Nikolich was successful in suing for damages arising from his resultant psychological injury.

The Full Court found that in this case, based on the particular wording of the policy, a policy setting out the company’s grievance process was not imported into the contract of employment and therefore the failure to follow that process by the employer was not a breach of the contract.

Importantly, the Full Court left open whether a grievance policy, and the process for investigating grievances contained in the policy, can be imported into a contract of employment. This has signifi cant implications for circumstances where internal policies and procedures on grievance handling are not followed.

Employees have obligations too

It is important to remember that employee conduct during the investigation process can be a critical consideration.

The Australian Industrial Relations Commission considered the mutuality of the duty of trust and confi dence in the Full Bench case of Streeter v Telstra Corp Ltd (2008) 170 IR 1; (2008) EOC 93-488. In that case, the Full Bench of the AIRC held that an employee who lied during a misconduct investigation had destroyed the relationship of trust and confi dence between the employee and employer to such an extent that the employer had a valid reason for the termination of her employment.

Getting the investigation right

When it comes down to it, a workplace investigation must be defensible and the investigator and decision-maker must be able to explain and justify the outcome.

These are some considerations that a good workplace investigation will take into account:

  • choose the right investigator – is it appropriate to use an internal or external person?
  • the investigator must understand the scope of the investigation and the terms of reference
  • is the investigator familiar with policies, procedure, collective agreement and legislative obligations?
  • determine how witnesses are to give evidence and ensure that all relevant people are interviewed
  • ensure that, if requested, support persons are available for interviews
  • ensure that all allegations and material evidence is put to the person being investigated including anything new that comes to light during the investigation
  • follow up evidence put by the person being investigated, including witnesses
  • consider all of the relevant evidence on the balance of probabilities:
    • explain why or why not allegations are substantiated or not substantiated;
    • explain why you prefer the evidence of one person over another
  • consider sanctions if required. For example, consider mitigating circumstances, consistency with other decisions and contrition, and
  • “health check” the investigation and report before fi nalising.