Public and private sector employers now find themselves walking a tightrope where a misstep in either direction can lead to litigation and liability.
In late September, the Queensland Industrial Relations Commission delivered judgment in East Coast Pipeline Pty Ltd v Workers’ Compensation Regulator. The case involved a workplace investigation into complaints of sexual harassment and bullying. The accused employee allegedly told a colleague that “flavoured condoms were on sale, and that maybe that would give her something to do in the lunch break”, suggested that his colleague was a lesbian because she received flowers from a female friend, made lewd comments about her skirt, and demeaned and swore at other colleagues.
Upon hearing these allegations, the employer initiated a formal investigation into the employee’s behaviour. The employer requested the complainants make their complaints formal, conducted interviews, kept meticulous records, required all participants to sign and endorse interview minutes, suspended the accused employee and sent home the complainants.
To most, the approach adopted by the employer in this case is uncontroversial. Bullying and sexual harassment are serious matters. Employers can be vicariously liable for the sexual harassment of an employee, and the potential for substantial awards of compensation has increased dramatically following the landmark 2014 case of Oracle v Richardson. Being complacent to sexual harassment in the workplace is now a potentially expensive exercise, and for some the decisive action of East Coast Pipelines may resemble best practice.
However, in the present case, the employee under investigation subsequently lodged a workers’ compensation application, claiming that the unreasonable actions of his employer were major contributing factors to a psychological injury he suffered. Despite his employer mounting a vigorous defence, the claim was accepted by WorkCover and then upheld by the Industrial Relations Commission. Both found that East Coast Pipelines had contributed to the employee’s mental health injury by proceeding straight to a formal investigation, and that the employer’s approach did not constitute reasonable management action.
A number of factors were relevant to these findings. The employee had no prior record of workplace misconduct; in fact he was a model employee with an unblemished past. Senior staff conducting the investigation had expressed surprise about the allegations and considered the alleged behaviour to be highly out of character. According to Commissioner Gary Black, the investigation undertaken was “unnecessarily forensic or elaborate”, especially in light of the small size of the employer.
Moreover, the employer failed to take into account the employee’s existing mental health problems — of which they were aware — such that the investigation amplified the stress and anxiety suffered. The employer had also encouraged the complainants to formalise their complaints, despite them initially only seeking to make informal complaints. This again was unnecessary in Commissioner Black’s opinion, particularly as the employer knew that a formal complaint would have the effect of damaging the employee’s already vulnerable mental state. In totality, the employer’s approach did not therefore represent reasonable management action and the workers’ compensation claim was upheld.
The East Coast Pipelines case leaves employers in a difficult position. On one hand, they presently face increased vicarious liability for sexual harassment occurring in the workplace and are rightfully taking all forms of harassment seriously. On the other, this recent development indicates that adopting an over-zealous approach to investigating alleged misconduct can itself create liability when the investigation causes injury to the investigated employee. Employers seemingly find themselves between a rock and a hard place.
What is an employer to do? As this case demonstrates, it can be exceedingly difficult to balance the interest of complainants, respondents and other employees when allegations of misconduct arise. In the public sector setting, the Procedures for Determining Breaches of the APS Code of Conduct and for Determining Sanction provide a clear pathway for dealing with formal code of conduct complaints. However, when allegations are raised informally, East Coast Pipelines indicates that a disproportionate response may be frowned upon. To ensure that management actions are not unreasonably taken, managers should be sensitive to the mental state of the accused person, the veracity and complexity of the complaints, whether there is a prolonged history of unsatisfactory behaviour, whether a formal investigation is necessary to clarify the allegations and whether the incident is a one-off that may only warrant an informal counselling.
While it is important to have workplace procedures in place, East Coast Pipelines is a reminder that managers should handle each situation individually and not immediately proceed to elaborate formal investigations. The words of another Shakespearean character are relevant here. As Friar Lawrence proffered in Romeo and Juliet, “Go wisely and slowly. Those who rush, stumble and fall.”
John Wilson is managing legal director at Bradley Allen Love. He acknowledges the assistance of his colleagues Rebecca Richardson and Kieran Pender in the preparation of this article.