Australia: Misconduct investigations: our top tips

HG Employment Law Alert: 20 March 2015
Last Updated: 27 March 2015
Article by Andrew Tobin and Adele Garnett

Investigating misconduct complaints in the workplace remains a difficult task for employers. However, there have recently been a number of cases in the Fair Work Commission (FWC) which give guidance to employers of the pitfalls to avoid – before, during and after investigations.

In this Alert, Partner Andrew Tobin and Solicitor Adele Garnett, summarise some key points from recent cases.

Before commencing an investigation

What do the policies say?

Before doing anything, it is important that the organisation's policies are reviewed to ensure that they are followed. For example, check whether there are specific procedures to be followed in policies on workplace investigations, grievance management, discrimination and harassment.

This ensures that the employees, management and the investigator are all on the same page and know what to expect out of any investigation. It can also help to ensure "fairness" for employees protected from unfair dismissal and, in proceedings for "stop-bullying" orders in the Fair Work Commission, is one of the issues the Commission will take into account in considering the terms of any order it proposes to make.

The issue can take on even greater significance where, for whatever reason, the employer is contractually bound to follow its policies as incorporated into the relevant employment contract or contracts. If a policy is part of an employee's contract and is not followed, that could result in the employer becoming liable in a common law claim for damages for breach of contract (see Romero v Farstad Shipping (Indian Pacific) Pty Ltd [2014] FCAFC 177).

Generally, incorporation of policies into employment contracts is not ideal and, where that occurs, it is usually inadvertent as the result of drafting error.

As side notes:

  • If you don't have policies applicable to misconduct and misconduct investigations, now is as good time as any to develop them;
  • If you do have applicable policies but haven't looked at them for a long time, now is as good a time as any to have a look at them to see if they are still appropriate;
  • Either way, if you have any doubts, get some advice how to implement policies in such a way that does not result in your organisation taking on additional and unnecessary contractual obligations.

To suspend or not to suspend – that is the question!

If there are reasonable grounds to suspend, the employer should do so as soon as is reasonably practicable. Reasonable grounds would include:

  • Where the employer has significant concerns about an employee's alleged behaviour, such that it could possibly lead to a dismissal;
  • Where the employer is concerned that the employee would represent a danger to themselves or others if left in the workplace; and
  • Where there is a concern that the employee will tamper with or remove evidence relevant to the investigation if left in the workplace.

Employers need to be consistent in their messages – a suspension indicates that an employer has concerns that an employee's alleged conduct, if proven, may result in a loss of trust and confidence such that a dismissal is necessary.

In Camilleri v IBM Australia Limited [2014] FWC 5894 (IBM case), Mr Camilleri was found to have made inaccurate expense claims for a period of three years. IBM suspended Mr Camilleri approximately 9 months after the investigation began – and over a month after the investigation report had been received and considered by management. Despite the fact that Mr Camilleri was found to have engaged in serious misconduct, Senior Deputy President O'Callaghan stated, " is difficult to reconcile the IBM position that it had lost trust and confidence in Mr Camilleri as an employee and proposed to dismiss him, with its requirement for him to work until 21 January 2014." Due to a number of procedural concerns with the dismissal, Mr Camilleri was reinstated.

If there are two employees involved in the alleged incident it may be necessary to suspend both employees during the investigation to ensure there is no question of bias.

In Francis v Patrick Stevedores Holdings Pty Ltd [2014] FWC 7775 (Patrick Stevedores case) there were allegations of assaults and conflicting stories of provocation between two employees, however, the employer only suspended one of the employees. The employer was criticised for its approach, and overall, the investigation was found to be biased and one-sided.

Do we need a formal investigation?

This depends on the complexity of the situation. In Bluescope Steel (AIS) Pty Ltd v Agas [2014] FWCFB 5993 (Bluescope Steel case), the incident in question involved a straightforward safety breach. In those circumstances, an informal investigation by management – where they mainly relied upon an incident report – was sufficient.

However, if a number of employees are involved, there is more than one incident, or a number of conflicting stories a formal investigation is essential to ensure reliable findings.

Another consideration is the seriousness of the allegations. If the potential consequences are significant for the employee, for example dismissal, a higher degree of satisfaction is required to substantiate the allegations – that is, the strength of the evidence necessary to establish a fact on the balance of probabilities will vary according to the nature of the allegations.

In Farmer v KDR Victoria Pty Ltd T/A Yarra Trams [2014] FWC 6539 (Yarra Trams case), Commissioner Wilson was particularly concerned with the strength of the evidence against the employee. In this case the employee was accused of using a mobile phone whilst driving a tram. Due to the potentially serious consequences for the employee, the Commissioner stated that an objective and arm's length investigation, which included close questioning of the witnesses, should have been conducted.

Who should investigate?

Human Resources? A senior manager? An external investigator? Any of these people might be the right person for the job, depending on the situation. Recent cases indicate two questions to ask in deciding who to choose.

  1. Who has the right level of experience?
  2. The person appointed to undertake the investigation must have the appropriate skills and experience to do so.

    In the Patrick Stevedores case, the HR Manager was given the task of investigating the incidents. Unfortunately, she did not have the experience or expertise to properly conduct a serious misconduct investigation. Her task was made particularly difficult by the "code of silence" amongst staff. It was found that the HR Manager's, "inexperience and lack of forensic skills as to the assessment of witness evidence, was a major contributory factor to the weaknesses exposed in the respondent's evidentiary case." Had the investigation been conducted properly in that case, it is likely that the employee would not have been dismissed.

  1. Internal or external investigator?
  2. There are benefits to both, and it will depend on the allegations and the circumstances as to which is the better choice.

    If there are allegations against senior managers, or an internal investigation may reasonably be seen as biased, an external investigator is essential. An external investigator may also be the best choice if there is no one appropriately skilled to do the job (see above), or there is a lack of internal resources.

    Alternatively, if there is a need to understand the workings of the business or of a particular occupation (for example, investigating a medical incident within a hospital), an appropriately skilled staff member may be better placed to investigate.

    While they may cost more initially, external investigators have potential to save employers money and stress in the long term. However, care should also be taken in deciding on an appropriately experienced external investigator. Ideally, you should not engage an investigator who will be involved in deciding what consequences will flow from the investigation- e.g. a disciplinary procedure. The investigating officer and the disciplining officer should be independent.

    If an external investigator is appointed, it is important that "independent" investigations are not overly influenced by the employer. In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Pty Ltd (No 3) [2013] FCA 525 the employer framed the questions for the investigation, required the HR Manager to sit in on the interview with the employee accused of misconduct, and generally appeared to "supervise" the investigation. It was subsequently found not to be an independent and impartial investigation.

    However, reviewing a draft investigation report and requesting clarifications or additional information (or even checking grammar/wording) can result in a better quality investigation report – but employers need to walk the fine line between this and directing the investigation, or influencing findings.

Does the employee need to know the allegations against them before the interview?

Not necessarily. For example, if there is a need to put the allegations to the employee without having any evidence disturbed, or to ascertain their initial reaction, then it may be necessary not to provide details of the allegations prior to interview. In the IBM case, the employee was not provided with the allegations by the Internal Audit Investigators before the investigation, and in the circumstances, Senior Deputy President O'Callaghan said that this was understandable.

However, in most cases, it will be expedient to allow the employee time to prepare and gather supporting evidence before an interview, and they should be provided with the allegations prior to their interview. In the interests of a ensuring a thorough investigation, it may be necessary to allow the employee to present evidence to support their case (or conduct a further interview) if the employee is not provided with the allegations before the initial interview.

During the investigation

Who should be interviewed?

Anyone who has information that is relevant or material to the matter being investigated should be interviewed.

Usually, the employee in question should be interviewed, but not always. Whether to conduct an interview with the employee is a matter for the investigator – for example, in the Bluescope Steel case, the allegations were relatively uncomplicated, and it was found that there was no strict requirement to interview the employee. The employee was well aware of the basis of the allegations against him (having completed an incident report), and had ample opportunity to present his case.

If the employee subject to the misconduct allegations mentions someone as a witness to a particular incident, or asks for a particular person to be interviewed, interviewing that person should be seriously considered. In Cannan and Fuller v Nyrstar Hobart Pty Ltd [2014] FWC 5072 (Nystar Hobart case), Deputy President Wells criticised the investigator for not questioning a witness about a particular incident where they were identified as a witness by Mr Cannan.

Should I offer the employee a support person?

One of the considerations for the FWC in deciding whether a dismissal was "harsh, unjust or unreasonable" is whether there was an unreasonable refusal by the employer to allow the employee to have a support person present to assist at any discussions relating to dismissal (section 387(d) Fair Work Act 2009). While this does not impose a positive obligation on the employer to offer a support person, it is generally seen as best practice to do so.

There is a risk that if an employee is not offered a support person, and they are instructed to maintain strict confidentiality, it may be that that they are inadvertently being denied a support person. In the IBM case, Senior Deputy President O'Callaghan criticised IBM for instructing the employee not to discuss the matter with anyone prior to the investigation interview, as this meant that the employee was not aware of his right to a support person (although the employee brought a support person regardless).

However, if the discussion does not "relate to dismissal", there is no obligation to allow for a support person. In the Bluescope Steel case, it was found that the preparation of a contemporaneous incident report would not ordinarily be considered to be involving discussions "relating to dismissal".

Overall, it is best practice to offer an employee a support person wherever practicable. Employers should, however, consider stipulating (unless extenuating circumstances exist) that the support person be from outside of the workplace, and should always ensure that the support person is aware of their confidentiality obligations (see Construction, Forestry, Mining and Energy Union v MSS Strategic Medical and Rescue (MSS) [2014] FWC 4336 where it was found to be reasonable to give a warning to an internal support person for breaching confidentiality during a disciplinary process).

What if the employee witnesses won't cooperate?

The investigation in the Patrick Stevedores case was severely hampered by uncooperative employees – the "wharfies" who witnessed the incidents had a "code of silence" which was unofficially endorsed by the union.

In response to that evidence, Deputy President Sams stated that employees have a duty to be "open, frank and honest" with their employer about serious issues in the workplace. Therefore, uncooperative employees may be opening themselves up to disciplinary action – and there have been cases in the past where a dismissal has been upheld where employees were uncooperative and dishonest in investigations (see for example, Telstra v Streeter [2008] AIRCFB 15).

In the first instance, an uncooperative employee should be warned that such behaviour can result in disciplinary action (up to and including dismissal), and they should be reminded of their obligations. If the behaviour continues, there may be justification for commencing a separate disciplinary procedure against the uncooperative employee.

What if additional allegations are raised during the investigation?

If they are related to the initial allegations, they must be included in the investigation – particularly if they are raised by the alleged perpetrator. In the Patrick Stevedores case, during the investigation interview, the employee raised that she had been punched and harassed by the complainant; however, the investigators did not pursue the allegations. This was found to be grossly unfair, and showed that the investigation was biased and incomplete.

After the investigation

What if the decision-maker disagrees with the investigation findings/report, or the report is flawed?

It is entirely open to the decision-maker to disagree, on a reasonable basis, with the investigation findings.

For example, in the Nyrstar Hobart case, the investigator found that an allegation was unsubstantiated on the (incorrect) assumption that bullying required intent. The decision-maker in that case disregarded that finding, and, relying upon the witness statements, found the allegation substantiated.

While this may have been an appropriate course of action, unfortunately, Nyrstar Hobart did not inform the employee in question that the allegation was substantiated, and did not provide copies of the relevant witness statements for the employee to respond to. Because of this, Deputy President Wells found the termination process procedurally unfair.

A second independent opinion or legal advice is invaluable in such situations. In the Patrick Stevedores case mentioned above, Deputy President Sams was critical of the employer for not seeking advice where the investigator/HR Manager was inexperienced, and even suggested that if the employer had sought advice, the matter would not have ended up in unfair dismissal proceedings.

The decision-maker has a responsibility to independently assess the investigator's findings and recommendations before making a decision. In the Patrick Stevedores case, of serious concern to Deputy President Sams was the fact that the decision-maker only relied upon a brief email from the HR Manager/investigator in deciding to dismiss the employee. This resulted in the decision-maker being unaware of serious flaws, bias, and conflicting evidence in the investigation – and significant criticism by Deputy President Sams of senior management.

However, it is worth noting that in Dent v Halliburton Australia Pty Ltd [2014] FWC 5692, the Commissioner accepted the employer's submission that, "an investigation does not need to be without flaw. It does not need to be forensic in detail." An investigation does not need to be perfect for an employer to be able to rely up it to dismiss an errant employee – if appropriate processes are followed.

Do I need to give the employee the investigation report in the show cause process?

In unfair dismissal proceedings, the criteria for considering whether a dismissal was harsh, unjust or unreasonable includes whether the employee was given an opportunity to respond to any allegations against him/her (section 387 (c) Fair Work Act 2009). To ensure employees can adequately respond, employees need to be given whatever information the employer is relying upon in making the decision.

There are two recent case examples where an employer has been criticised for not providing employees with sufficient information to be able to respond to the allegations levied against them – the Yarra Trams case, where the employee was only provided with the investigation report at the disciplinary meeting; and in the Nystar Hobart case, where the employee was not provided the witness statements, even though the employer specifically relied upon them instead of the investigation report. Both processes were found to be procedurally unfair, and the unfair dismissal applications were upheld.

It is therefore essential that the employee is provided with all the information/evidence that is being relied upon by the employer. However, to ensure the safety of witnesses, it may be necessary to also warn the employee that any attempt to contact witnesses without management approval may result in further disciplinary action. Furthermore, parts of the investigation report or witness statements which contain irrelevant information not relied upon may be able to be removed or redacted.

© HopgoodGanim Lawyers

Award-winning law firm HopgoodGanim offers commercially-focused advice, coupled with reliable and responsive service, to clients throughout Australia and across international borders.

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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Andrew Tobin
Adele Garnett
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