Botched investigation breaches employment contract
The Full Court of the Federal Court in Romero v Farstad Shipping (Indian Pacific) Pty Ltd [2014] FCAC 177 recently ruled that a shipping company breached an officer’s contract of employment and failed to follow its discrimination policy when it conducted a flawed investigation into allegations of bullying against the officer’s captain.
The officer sent an email to HR complaining about the captain’s “targeted bullying” of her. The email was treated as a “formal complaint” and investigated by internal HR along with issues raised by the captain about the officer’s poor work performance. The investigation found that there was a “clash of personalities” between the two and the bullying complaint was not substantiated.
Despite agreeing that there was no bullying or sexual harassment, the Court found that Farstad’s handling of the matter breached the officer’s employment contract.
The Court said Farstad’s discrimination policy formed part of the officer’s employment contract:
The officer’s letter of offer stated that the company’s policies were to be “observed at all times”
The wording of the policy made it clear that the company expected “mutual obligations” about the way the officer would conduct herself and how complaints would be handled by the company.
The policy was accompanied by an education campaign at the time of the offer of employment and there was regular reinforcement of the policy.
The policy was provided at the same time as the contract of employment.
The existence of legislation governing matters contained in the policy reinforced the contractually binding nature of the policy.
The Court found that the employer breached its policy by firstly dealing with the employee’s initial grievance as a “formal complaint” without considering the policy’s informal options. Secondly, the employer’s investigation was not conducted in accordance with requirements of the policy:
The captain was interviewed before detailed allegations were taken from the officer;
A number of potential witnesses were not interviewed;
The investigation was not properly documented – the officer’s own notes of her interview were much more exhaustive than the company’s notes.
The Court was critical of Farstad’s interview of the officer describing it as an “ambush”.
The Court also said that while it was appropriate for Farstad to pursue the captain’s competency concerns about the officer, the issue should not have been blurred with the bullying complaint when there were procedures designed by the company’s enterprise agreement which were to be followed for performance matters.
Lessons to learn
Employers should review written employment contracts and policies to ensure that policies which are not intended to be contractually binding are clearly drafted.
Workplace investigations are carefully scrutinised by courts and commissions.Internal HR teams need to be supported with appropriate workplace investigation training to enable them to carry out investigations which will stand up to that scrutiny and can be relied on.
Workplace investigations can overwhelm internal teams who may have the expertise, but simply insufficient time and capacity to conduct a thorough investigation and document it accurately.The benefit of outsourcing the investigation should be considered against the risk of rushing it.
