HR - Alternatives to challenging workplace investigations

The standard of workplace investigation expected of employers is increasing. Further, employees are using alternative legal processes to challenge workplace investigations.

Many employers are aware of the case Nikolich Goldman Sachs JB Were Services Pty Ltd [2006] FCA 784, as it relates to company policies. It also highlights important lessons in investigating workplace grievances, and in particular, the requirement to resolve factual disputes, make clear findings and the importance of a formal framework.

Mr Nikolich worked as a client financial adviser for Goldman Sachs JB Were. In Canberra, advisers service a portfolio of clients, the success of which impacts on their remuneration. Mr Nikolich formed a team of advisers to improve the level of customer service.

When one of the team members left, Mr Nikolich understood that the departing employee’s clients would continue to be serviced by the remaining team members. However, Mr Nikolich’s manager, Mr Sutherland, reallocated the clients largely outside the team (partly to himself). Mr Nikolich lodged a formal complaint about the reallocation and alleged victimisation and intimidation by Mr Sutherland following the reallocation.

The grievance was handled by an HR manager based in Sydney. She immediately contacted Mr Nikolich and arranged a telephone conference. Mr Nikolich was unsure what outcomes he sought, although he wanted something done and did not want his position jeopardised.

The HR manager checked the reallocation with senior management, who said it was appropriate for the branch manager to allocate clients. However, Mr Sutherland handled the reallocation poorly and morale was suffering as a result. Around August 2003, the HR manager sought a response from Mr Sutherland, who denied most allegations. Mr Nikolich subsequently raised a new complaint about Mr Sutherland allegedly transferring one of Mr Nikolich’s clients to himself.

In December 2003, the HR manager provided written outcomes of the investigation. She acknowledged a lack of transparency. However, she determined that: management’s decision to reallocate the clients was “appropriate”; there was no attempt by Mr Sutherland to intimidate or cause stress to Mr Nikolich; and Mr Sutherland had stepped down from his management role.

In relation to the second complaint about a client transfer, a finding was made that there was no evidence to support the claim.

Mr Nikolich suffered a depressive condition, which led to the termination of his employment. He brought a claim for breach of contract in the Federal Court. The Federal Court found that the handling of Mr Nikolich’s complaint was “extremely inept” because there was no recognition of the seriousness of the complaint (an alleged abuse of power), the HR manager should have travelled to Canberra to conduct interviews (if necessary, a venue should have been hired for interviews to ensure confidentiality) and no effort was made to resolve the factual conflict between Mr Nikolich and Mr Sutherland. In particular, key witnesses were not interviewed.

The process was found to be in breach of the company’s grievance handling procedure and the employee was awarded $515,869 in damages. The employer is currently appealing the decision.

Another case, DET v Sinclair No 2 [2006] NSWWCCPD 163, demonstrates the importance of making fair work arrangements during an investigation. Interestingly in this case, Mr Sinclair did not challenge the termination of his employment. Rather, he brought a stress claim about how the investigation was conducted.

Mr Sinclair was a school teacher. He was informed of an allegation of improper conduct towards a student, but no details were provided. He was immediately transferred away from teaching duties. He was directed to have no contact with any student from the school, even through an intermediary. No details of the allegations were provided for nine months. Mr Sinclair claimed psychological injuries arising from the investigation process. He successfully lodged a workers’ compensation claim.

Mr Sinclair was later dismissed when two charges of misconduct were proven. Upon termination, DET (Department of Education and Training) ceased paying workers’ compensation benefits, claiming that the stress was caused by reasonable action with respect to discipline and was thus exempt under section 11A of the Workers Compensation Act.

The Workers Compensation Commission found that there were two elements of DET’s investigation that were unreasonable, being the delay in providing details of the allegations and the ‘no contact’ direction. While no contact with the complainant and key witnesses was likely to be reasonable, a blanket rule was unreasonable, particularly without any details of the allegations being given. The Commission reinstated Mr Sinclair’s compensation benefits.

source: humanresourcesmagazine.com.au