In a recent case, three employees were dismissed after complaints were raised that two of them had allegedly exercised their senior position to benefit the employment of family members and that one had engaged in fraud about his qualifications to become employed.

Background

The three applicants included a senior manager, Ms K, who had been employed for 32 years, her de facto partner Mr B and her nephew Mr K. The Respondent claimed that Ms K’s misconduct lay in that she allowed Mr B to employ Mr K “when he was not competent or experienced or qualified” and that she failed to declare her family relationship with Mr K particularly during his hiring process.  It was further alleged that Ms K also influenced the hiring of Mr B’s daughter and Mr K’s former partner. Following a protracted investigation, the three employees were accused of fraudulent, dishonest, and corrupt behaviour and dismissed.

The Fair Work Commission (the ‘FWC’) found in favour of each of the employees considering their dismissals harsh, unjust and unreasonable and ordered reinstatement and a restoration of lost pay. Ultimately, the FWC did not find that the family members were employed based on their relationships.

What were the central issues at play?

As the applications were heard together several general issues were discussed by the FWC. The concerns surrounding the procedural fairness of the external investigation and the employer’s handling of the show cause process were particularly noted.

The FWC recognised that the employer’s external investigation failed to adequately take a range of factors into consideration because it did not interview the employees who were accused of the misconduct.

Of much concern, none of the applicants were interviewed throughout the investigation. Since the external investigators did not interview Mr K, the investigation findings were mistaken about the specific teaching arrangements of Mr K’s employment and so failed to see that he was appropriately qualified and not employed because of nepotism. The FWC identified how this practically affected Ms K’s case, by noting that it meant Ms K wasn’t made aware of emails sent years prior indicative of her involvement in Mr K’s employment. She was not able to respond to them and was not even aware about them until they were shown to her at the hearing in cross examination.

The external investigation process was further criticised by the FWC for taking 18 months to deliver a report on matters that were “not complex”. This compounded the unfairness suffered by the employees who were suspended with pay for over a year. The FWC also criticised the employer’s decision to suspend the employees where a risk assessment had not been conducted and, contrary to the employer’s policy, no explanation was provided to the applicants as to why suspension was necessary during the investigation.

While a lengthy investigation may suggest thoroughness, the FWC concluded that it should not have taken 18 months for the investigator to gather that material and prepare the report. Similarly, the FWC criticised the employer for taking nine months to conclude the show cause process after it received the investigation report.

The FWC also criticised the extensive redaction of information in materials provided to the employees for their response, which meant they were not able to fully respond to the materials which the investigator relied upon to substantiate the allegations against them, finding that the failure to provide full and unredacted copies of the materials unfair.

Lastly, the FWC criticised the decision maker for not critically forming his own view about the external investigation report that was produced for the employer.

Other issues

The Commission also considered the question of whether Mr K (who was employed as a casual on a regular and systematic basis) had a reasonable expectation of ongoing work on a regular and systematic basis where the employer had a policy of only engaging casual teachers one semester at a time.  The FWC found that, while the employer asserted that their policy meant he was only hired for ‘one semester’, it had failed to communicate that to Mr K and so it was ‘reasonable’ for him to expect continuous employment (which had gone on for around 4 years). The reasonableness behind Mr K’s expectation was further informed by the well-known staff shortages in the subjects that he taught as highlighted in an earlier audit and the urgency behind his initial employment during COVID.

What are the lessons for employers?

There are a number of lessons employers can take away from this case:

1. Choosing an experienced external workplace investigator is important.
2. Engagement of external investigators does not mean that an employer can rely on the investigation report provided without reviewing the report and critically analysing it.
3. Consider carefully whether materials (including redacted information) should be provided to an employee in an investigation for their response to ensure the investigation is procedurally fair.
4. Conduct investigations and show cause processes as expeditiously as possible.
5. Ensure current policies are complied with (unless there is a sound and defensible reason not to).
6. Communicate clear expectations to casual employees if they should not have any expectation of ongoing regular and systematic work in the future.