The relationship between the CEO and the Elected Members is crucial for the effective functioning of a council. However, personalities and circumstances can cause their relationship to be strained. The recent case of Matthews v Hargreaves (No.4) [2013] FMCA 4 demonstrates an extreme example of this relationship breaking down and how councils may fall foul of the proposed codes of conduct under the ICAC Act.

Mr Matthews was the CEO of the Shire of Shark Bay Council, Western Australia. He was diagnosed with Hepatitis C. Mr Hargreaves was an Elected Member of the Council who did not get along with Mr Matthews. It was a well-known fact that there was pre-existing tension between the pair.

In March 2008, Mr Hargreaves sent an email to his fellow Elected Members stating he understood “from a seemingly reliable source that Mr Matthews has Hepatitis C.” This email was one of many from Mr Hargreaves complaining about Mr Matthews until 2010, when Mr Matthews eventually resigned.

In the period prior to resignation, Mr Hargreaves told others, including residents, ratepayers and local media, about Mr Matthews’ illness.

This situation caused great distress to Mr Matthews. He took extensive sick leave and received workers’ compensation for his resulting depression and stress. Ultimately, he ceased employment with the Council pursuant to a commercial settlement, and in doing so, the parties signed a deed of release.

However, Mr Matthews filed a disability discrimination claim against Mr Hargreaves in the Federal Magistrates Court.

In his defence, Mr Hargreaves indicated that he did not disseminate the information about Mr Matthews’ health for ulterior reasons. Rather he provided the information because he felt that he had a duty to protect public health and he wanted to eliminate alleged “corruption” in the Council. Neither of these two grounds was proven in Court.

The Court found that Mr Hargreaves had breached the Disability Discrimination Act 1992 (Cth) because his actions constituted a significant detriment to Mr Matthews. Further, it was considered that, on the objective test, Mr Matthews was treated less favourably than a senior employee (subject to corrupt allegations) who did not have hepatitis C.

However, due to the deed of release previously signed by the Council and Mr Matthews, the claim of discrimination was held to be unsuccessful. The deed of settlement prevented Mr Matthews from making another claim against Council, which, when broadly, defined included Mr Hargreaves as an Elected Member.

Take Home Messages

Even though Mr Matthews’ claim did not succeed, it is timely reminder for all employers to ensure they have appropriate practices and policies in place to manage employees. Below are a few tips for employers to prevent discrimination occurring in the workplace:

  • Employers must keep (sensitive) medical information about employees confidential, unless there is reasonable grounds to dissemination this information to appropriate third parties;
  • Employers must be consistent in their approach when dealing with employees;
  • Employers must have comprehensive policies in place to prevent discrimination and harassment and adhere to them;
  • Employers should keep a record of employees who have had training in relation to these policies;
  • Employers must treat any complaint about discrimination or harassment seriously.

Furthermore, with the Commencement of the ICAC Act Councils must consider the impact of the Mandatory Code of Conduct and understand appropriate processes when dealing with alleged corruption. It is assumed that the Mandatory Code for Elected Members will be in finalized and in force in the coming months. Remember the ICAC intends his office will be open from 2 September 2013!