Australia: Employers, have you got your workplace culture right?

Last Updated: 2 May 2014
Article by Brett Feltham and Emily Slaytor

It has long been accepted that a positive and accountable workplace culture will translate into greater productivity, happier and more motivated staff and overall improved business performance. Culture should be treated like any other key performance indicator in an organisation.

Furthermore, from an employment law and workplace relations perspective, while a professional and positive workplace culture can act to safeguard an employer against an adverse finding, the failure to develop, and enforce, such a culture (including having in place appropriate workplace policies) can significantly undermine an employer's managerial prerogative, as a Queensland based building company recently discovered.

In Cronin v Choice Homes (QLD) Pty Ltd, the company's existing work environment and culture led to a finding by the Fair Work Commission that a senior manager was unfairly dismissed, despite the fact that the senior manager had engaged in misconduct by sending an "ill-considered" and "offensive" email to all staff.


The Chief Executive Officer of the employer in this matter, Choice Homes, purchased a Lamborghini motor vehicle on the occasion of his 20 year anniversary with the company.

This was announced via an email to the members of a group termed "AllStaff" (which comprised all the staff of Choice Homes) by a management employee, congratulating the CEO on his 20 years' service to the company and the purchase of his new car.

Not long after the first email was sent, Choice Homes' financial controller, Mr Cronin, responded to the "AllStaff" group.

The subject line of his email stated:

"RE: Congratulations – I actually found his original resume too !!"

Attached to this email was a fake resume for the CEO taken from the "Lamebook" website.

The resume listed the CEO's hobbies and interests as including "excessive masturbation".

Immediately upon seeing this email, the CEO contacted the company's legal advisers who then attended the company's premises and summarily dismissed Mr Cronin that same day by handing him a termination letter on Choice Homes' letterhead. No investigation into the incident was conducted and Mr Cronin was not given any opportunity to respond before being dismissed.

The issue in this case was whether Mr Cronin's conduct in sending the email was serious misconduct justifying his summary dismissal or whether the dismissal by Choice Homes was harsh, unjust and unreasonable.

While used in a different context in t he Fair Work Act 2009 (Cth) and the Fair Work Regulations 2009 (Cth), "serious misconduct" is defined as, amongst other things, "wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment."


Deputy President Asbury agreed that generally, an employee who sends an email inferring that a Company Director is a "wanker" will be "found to have engaged in misconduct". The Deputy President also agreed that the email was "ill-considered, and personally offensive" to the CEO .

However, the Deputy President went on to find that, in light of all the circumstances of the case, the email did not establish a valid reason for the dismissal of Mr Cronin.

There was a significant amount of evidence given during the hearing which established that the work environment at Choice Homes was one where "employees regularly and habitually exchanged emails, the content of which ranged from light hearted jest to hard core pornography." Even female employees were active participants in the email exchanges.

The evidence also established that "senior managers who should have known better were active participants in these exchanges, and that little if anything was done to stop this behaviour."

The Deputy President accepted Mr Cronin's evidence that the email was intended as a joke and said that "on an objective basis, no reasonable person could have perceived the email in any other way."

The CEO 's assertion that the email constituted sexual harassment was not sustainable in light of the evidence that was put before the Commission.

The Deputy President found that the CEO reacted to the email in a way that was disproportionate to its gravity and that there was no evidence "that any staff member was personally offended or affronted by the reference to masturbation in the email."

While the Deputy President acknowledged that it was not necessary for someone to be offended by an objectively inappropriate email in order for disciplinary action to be taken against the person who disseminated it, she found that the staff members who gave evidence of being offended by the email which led to the dismissal "were shown to have regularly and systematically disseminated material which on any objective view was much worse than the email which resulted in Mr Cronin's dismissal."

She found the suggestion that female employees would take offence at the email to be "ludicrous when consideration is given to the active involvement of female staff of Choice Homes in circulating highly offensive material."

There was further evidence presented to the Commission which established that:

  • there was an email group at Choice Homes that called themselves "the Porn Stars" that was administered by the IT Manager
  • the CEO had routinely failed to discipline other staff members about inappropriate emails, and
  • the CEO had failed to summarily dismiss staff members who had engaged in other instances of serious misconduct previously.


The Deputy President held that the manner in which the dismissal was effected was completely unjust and offered Mr Cronin no opportunity to apologise or to attempt to retain his employment.

She considered the fact that Choice Homes did not have an IT policy in place and stated this

"is not a case where an employer has a firm and well established policy about use of its electronic communications system for the dissemination of in appropriate material and dismissed an employee for breach of that policy." [emphasis added]

Ultimately, the Deputy President found that the dismissal was unreasonable because

"the conclusion that the email was inappropriate because it contained sexually explicit material, could not reasonably have been reached in circumstances where the reference to masturbation was clearly not sexual and where there was a workplace culture of distributing and disseminating emails that tick every box in the spectrum of highly offensive material including hard core pornography, sexism and racism and where more serious misconduct engaged in by other employees did not result in dismissal. The dismissal was also unreasonable because on any objective view, the email sent ... was intended as a joke."

Mr Cronin was ultimately awarded $77,800 in compensation which was reduced by 20 per cent in light of his contribution to the situation in which he found himself.


This case highlights the importance the Fair Work Commission places on the environmental and cultural context in which behaviour takes place in the workplace when considering whether there has been a valid reason for a dismissal.

As the culture of Choice Homes was not one where management immediately and consistently addressed the types of behaviour engaged in by its employees, its arguments against the actions of Mr Cronin were significantly undermined and were ultimately able to be successfully challenged by him.

Indeed, Choice Homes' management team actively participated in the type of behaviour it was seeking to use as the basis for Mr Cronin's dismissal.

Ultimately , if an employer in similar circumstances to Choice Homes has workplace policies in place that:

  • contain clear guidelines about what behavioural standards are expected of staff
  • unambiguously prohibit the types of conduct engaged in by the employees in this matter
  • set out the consequences in the event a policy is breached
  • all staff are trained in and understand, and
  • are consistently enforced by management in a timely manner,

it is unlikely that the Fair Work Commission will find a dismissal to be unfair for a material breach of those policies

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.

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