How a failure by management to act on complaints can impact on the defence of an unfair dismissal claim

A recent decision of the Fair Work Commission highlights how important it is for employers to act promptly when inappropriate workplace conduct is brought to the attention of management.

The facts

Moustafa Hassan v Australia and New Zealand Banking Group Limited (2013) FWC 3848 (Hassan's Case) involved an unfair dismissal application arising from Mr Hassan's termination in July 2012 for alleged misconduct. ANZ first notified Mr Hassan that a complaint had been made against him in January 2012, which consisted of 8 alleged instances of inappropriate workplace behaviour. After conducting a lengthy investigation, ANZ concluded that all the allegations had been substantiated. These relevantly included:

1. Writing "get stuffed" on an employee's leave application and tearing it up in front of him;
2. Referring to team members by their ethnicity; and
3. Remarking on female colleagues' appearance and attractiveness.

Significantly, many of the allegations for which Mr Hassan was dismissed had previously been brought to ANZ's attention in 2010 and 2011. An investigation was conducted into the allegation about the destruction of the annual leave form, during which Mr Hassan admitted to the conduct, describing it as a joke. No record was kept of Mr Hassan's admission and no action was taken by ANZ in respect of the incident. The allegations about Mr Hassan commenting on female colleagues' appearance were also raised in a bullying complaint made against Mr Hassan, but an investigation found they could not be substantiated.

Mr Hassan argued that his dismissal was harsh, because ANZ had prior knowledge of this conduct, but took no disciplinary action against him, nor provided him with any training in appropriate workplace conduct.

The decision

Deputy President Gooley ultimately found that Mr Hassan's dismissal was not harsh, unjust or unreasonable and therefore not unfair. However, she expressed significant concerns about ANZ's failure to take action to correct Mr Hassan's behaviour when it was first brought to management's attention, commenting:

"...the Respondent [ANZ], by taking no action earlier, had failed to educate the Applicant [Mr Hassan] in a practical way, about his obligations under the policies. Its failure to intervene earlier contributed to the failure of the Applicant to understand what acceptable workplace behaviour was."

The crucial consideration in the Deputy President's conclusion that the dismissal was not unfair was Mr Hassan's complete lack of remorse and refusal to take responsibility for his actions. This was in contrast to 2 other employees found to have breached ANZ's Code of Conduct during the course of the investigation into Mr Hassan, both of whom acknowledged and apologised for their conduct and undertook to correct their behaviour in future. The Deputy President stated:

"Had the Applicant had any insight into the inappropriate nature of his conduct, I would have considered the Respondent's decision to terminate him in circumstances where it had not intervened earlier to remedy inappropriate workplace behaviours, harsh."

Lessons for employers

Hassan's Case highlights how even sophisticated employers with dedicated human resources teams can be exposed to legal action by failing to manage inappropriate workplace conduct in a timely fashion. In order to limit exposure to possible legal action, employers of all sizes should consider implementing the following measures for managing workplace conduct:

1. Create and maintain a comprehensive Code of Conduct, addressing issues such as sexual harassment and bullying and setting out a procedure for the making and investigation of complaints;
2. Provide training to all staff about the terms of the employer's Code of Conduct and appropriate workplace behaviour;
3. When conducting an investigation into a workplace complaint, ensure detailed notes are taken of any interviews conducted, for future reference;
4. Where complaints are substantiated, ensure appropriate disciplinary action is taken (e.g. formal warning, additional training, demotion, dismissal etc).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.