Australian ruling finds employee dismissal unfair despite substantiated sexual harassment claims

In particular, the Fair Work Commission (FWC) said the employer’s investigation demonstrated a lack of independence, poor investigative techniques and inadequate interviewing processes, and was rushed.

The decision is another reminder for employers that workplace investigations must be conducted by impartial, qualified and fair investigators; and that procedural unfairness can outweigh even the most valid of reasons for an employee’s dismissal – for example, substantiated sexual harassment.

Background

The employee was a 59-year-old coal worker, who had an unblemished 38-year tenure with mining company BHP. He was the subject of sexual harassment allegations by other co-workers, which were investigated by a senior lawyer at one of BHP’s external legal providers.

The investigation was conducted within five days, with all three allegations found to be substantiated by the investigator. The employee was asked to attend a ‘show cause’ meeting three days after his investigation meeting, and dismissed half an hour after the show cause meeting.

The employee made an unfair dismissal application on the basis that the allegations were untrue, and that his dismissal was harsh because of his tenure and age.

Fair Work Commission’s findings

As required in unfair dismissal matters, the FWC made its own findings on the allegations against the employee. The FWC found two of the three allegations against the employee were substantiated, which constituted sexual harassment. Therefore, the FWC held that the employer had a valid reason for dismissal, noting the comments were “totally inappropriate” and “demeaning and outrageous”, despite being intended as a joke and not to cause offence.

However, the FWC criticised the employer’s investigation as lacking investigative rigour because of:

• lack of independence – the investigator was a lawyer of BHP’s external legal firm who remained in contact with senior employees of the employer during the investigation, and provided a draft copy of the report for review prior to its finalisation;

   

• poor investigative techniques – the investigator asked leading questions of witnesses, failed to spot inconsistencies in evidence provided by the complainants, and did not interview relevant witnesses;

   

• mode of interview – the meetings were conducted by videoconference and telephone, removing the ability for the investigator to evaluate body language, which is an important component of investigation interviews; and

   

• rushed process – the investigator admitted an investigation of this nature would usually take 20 days, but it was conducted in five days to ensure it was completed before a business sale.

The FWC also found that the dismissal was “basically instantaneous” after the show cause meeting, depriving the employee of a “full opportunity” to respond, including to seek legal or industrial advice and properly reflect on and respond to the allegations.

According to the decision the ’normal timeframe’ to respond to a show cause notice is seven days.  However, there is no rule or common practice supporting this finding, which seems to simply be an acceptance of the employee’s submission rather than being founded in prior decisions or recognised workplace practice.

Lessons for employers

One of the initial issues that employers must resolve when deciding to investigate allegations of employee misconduct is who should investigate. In making this decision, employers need to consider:

• impartiality – is the investigator sufficiently distanced from the participants to make an unbiased decision?

   

• proficiency – has the investigator got the skill and experience to conduct a reliable investigation?

   

• confidentiality – does the employer want the investigation to be covered by legal professional privilege?

   

• articulacy – can the investigator draft a concise and coherent investigation report, explaining their rationale for evidentiary findings, on which the business can rely?

Dismissal decisions made and executed by employers should also strike an appropriate balance between being timely and thorough without being rushed.

Co-written by Miles Leyden of Pinsent Masons.