21 December 2018

Costly mistake: employer pays sizeable compensation after relying on sloppy investigation

This article was written by Jedda Bamford.

An employer was forced to pay close to the maximum compensation for dismissing an employee for reasons that were based on an inadequate investigation and incorrect characterisation of the employee’s misconduct.

Key impacts

  • Getting to the bottom of an allegation, including understanding its context and establishing the course of events that actually took place, is key to identifying whether a well-founded basis exists for concluding that an employee has engaged in serious misconduct.
  • It is critical to correctly classify issues with employee conduct and performance to avoid mischaracterising a performance issue, potentially remediable through human resources or leadership support, rather than assuming “serious misconduct” has occurred.

Facts

Christopher Ward, an employee of Reece Australia Pty Ltd (Reece), was summarily dismissed in May 2018 for reasons including a “pattern” of five separate allegations of unacceptable behaviour involving racial discrimination and an abuse of power. Reece received written statements in relation to the allegation and met with Mr Ward to put the allegations to him and allow him to respond.

Outcome

Senior Deputy President Hamberger preferred the evidence of Mr Ward over that of the staff member most closely involved in three of the allegations, finding her evidence largely “self-serving and implausible” and he determined these allegations not to be true. In particular, he noted concern with the “gloss” or characterisation that the staff member had applied to these allegations, which Reece had “almost completely” accepted.

Finding that two of the allegations occurred and amounted to misconduct, but not serious misconduct, SDP Hamberger took into account the circumstances in which they arose, including a customer making offensive and inflammatory remarks about women and Mr Ward intervening to de-escalate the situation.

SDP Hamberger concluded the misconduct was not serious enough, either separately or together, to amount to a valid reason for Mr Ward’s dismissal, and that in reality, Mr Ward was having difficulty managing the team of employees reporting to him and distinguishing between the roles of friend and manager. However, as a large employer with specialist human resources expertise, Reece should have viewed this as a performance issue and provided additional support to improve Mr Ward’s leadership skills.

Mr Ward was awarded $32,000 plus superannuation in compensation, which was close to maximum.


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