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The $5.2 million Adverse Action Mistake

Victoria Quayle ||

It should go without saying that an employer must have a legitimate and valid reason to terminate an employee and must follow a procedurally fair process before such a decision is made.

An employer cannot merely exit an employee who has made a complaint or enquiry about their employment because an investigation process would be too difficult to conduct (from a time and cost perspective) or they don’t believe what the employee is alleging is true. If an employer throws a legitimate employee grievance or a complaint into the “too hard basket” and sacks the employee anyway, the legal exposure can be huge!

In Roohizadegan v TechnologyOne Limited [2020] the Court has awarded a former Senior Manager of company, TechnologyOne, over $5.2 million in compensation after he was unlawfully dismissed.

Mr Roohizadegan alleged that during his 10 years of service with TechnologyOne, he had experienced ongoing workplace bullying in the form of abusive language, victimisation, gas-lighting and other inappropriate conduct by his colleagues (persistent threats by colleagues that he would continue to be scrutinised until he left the workplace).

Mr Roohizadegan made a number of complaints about the treatment he was receiving from his colleagues and their bullying behaviour towards him. He also raised the issue of non-payment of incentives due to him under his employment contract.

Shortly after raising these concerns with TechnologyOne, Mr Roohizadegan was dismissed on the spot by the Executive Chairman.

The Executive Chairman told the Court that the reason he terminated Mr Roohizadegan’s employment was because he had received multiple complaints about Mr Roohizadegan’s workplace conduct. Some of these complaints included:

  • negative Seek reviews about Mr Roohizadegan’s interviewing style;
  • poor communication with staff;
  • Mr Roohizadegan informing staff that he was considering making a bullying claim and taking legal action against a co-worker;
  • Mr Roohizadegan commenting that his salary was not sufficient; and,
  • Mr Roohizadegan escalating his complaints directly to the Executive Chairman and not following the correct process.

Accordingly, and based on the above, TechnologyOne argued that it was justified in terminating Mr Roohizadegan because it lost trust and confidence in him.

In addition to recognising a failure of TechnologyOne to conduct a proper internal investigation to determine the veracity of Mr Roohizadegan’s complaints, Kerr J highlighted how the reasons used to justify Mr Roohizadegan’s dismissal were unsubstantiated. They were also incongruous with the alleged complaints made by his colleagues given Mr Roohizadegan was a recipient of a Chairman’s Award for being a top performer, was granted share options in the company and he had continued personal access to the Executive Chairman.

The Court found that TechnologyOne did not conduct a proper investigation into Mr Roohizadegan’s complaints. It was apparent that there was a connection between Mr Roohizadegan’s exercise of workplace rights (to complain and enquire about his employment terms) and the adverse action taken by TechnologyOne in terminating the employment. Therefore, TechnologyOne had contravened the general protections provisions of the Fair Work Act 2009 (Cth).

From a contract law perspective, TechnologyOne also failed to fulfil its obligations in respect of the payment of incentives to Mr Roohizadegan under his employment contract.

The Outcome

The Court ordered TechnologyOne to pay Mr Roohizadegan:

  • $2,825,000.00 for his future economic loss,
  • $756,410 to compensate his forgone share options,
  • $1,590,000 in damages for breach of contract,
  • $10,000 in general damages, and
  • $47,000 in penalties.

The Court also found the Executive Chairman accessorily liable and fined him $7,000 on the basis that he

“twice rejected professional HR advice that it would be unfair to dismiss Mr Roohizadegan on the basis of mere allegations. In the end, in Mr Roohizadegan’s instance his choice was to stand with the bullies rather than the bullied. To achieve effective deterrence, CEOs in like positions need to know that such temptations as he faced are to be resisted: and that there will be a not insubstantial price for failing to do so.”

**Please note that we understand that this decision is subject to appeal by TechnologyOne.

Key Lessons

Where an employee raises a grievance, the business should take it seriously and act in accordance with its grievance or complaint handling policy/procedure. It is prudent to comply with such terms, otherwise an employer may find itself in breach and exposed to further legal claims.

However, not every grievance raised needs to be formally investigated by an external third party (unless this is stated in the policy). Many complaints can be handled quickly, promptly and informally by speaking to the complainant and alleged together (if the circumstances warrant).

Where an employee raises a concern about his/her pay, setting some time aside with the employee and his/her manager/payroll to run through the methodology behind the calculations with the employee may alleviate their concerns.

Alternatively, complaints about bullying and harassment must always be taken seriously and be treated with the utmost sensitivity and confidentiality. In such situations, it may be wise to request the complainant put their complaint in writing, outlining the who, what, when, where, how, why; with a face-to-face interview to follow. The employee can and should be encouraged to have a support person present at such an interview. Be guided by your policy.

Once the allegations are known and particularised, an employer will need to speak to the alleged bullier/harasser and get their side of the story. Depending upon the complexity of the matter, interviewing witnesses and collating documentary evidence is also a must as this will assist in the decision-maker in determining whether the allegations are made on the balance of probabilities.

What is clear from the above case is that any allegations made by an employee need to be investigated to either legitimise what he/she is saying is true, and take the appropriate action against the individual/s involved or if the allegations made by the complainant are vexatious or malicious, action may also need to be taken against them from a disciplinary perspective.

Having a thorough investigation process will lay a solid foundation for an employer and set them up as much as possible to defend a claim if one is made.

If you require assistance regarding complaint investigation or termination of employment within your workplace, please do not hesitate to contact a member of Coleman Greig’s Employment Law Team, who would be more than happy to assist.

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