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Office affair rumour not properly investigated

An employee has been awarded almost $41,000 for constructive dismissal.
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Office affair rumour not properly investigated

Office affair rumour not properly investigated

14 September 2020

By Mike Toten

A woman who was forced to resign after being accused of spreading rumours that her boss was having an affair with a co-worker has been awarded almost $41,000 for constructive dismissal. The Fair Work Commission (FWC) described the employer’s conduct and management of the situation as “bizarre”.

Alleged rumours

The woman was a tax team manager in a small accounting business. The employer conducted a secret ballot of other employees, asking them to “vote” on whether she had spread rumours. When three (out of about 15) said “yes”, the firm’s owner/director gave her duplicate letters of resignation and demanded that she sign them.

The FWC commented that the workplace mostly comprised young, impressionable employees, mainly women, who would be keen to impress male management. This provided the potential for a work environment notable for banter, innuendo and rumour-spreading.

The alleged rumours arose out of the following events:
  • At a two-day office Christmas party held at an Airbnb property with a swimming pool, the director was told that the employee had been spreading rumours he was having an affair with a new employee who was quickly promoted to office manager and given a laptop as a gift.
  • The employee had allegedly said that the director organised the party because the pool provided an opportunity for the new employee to strip “to make him [the director] happy”. She allegedly also said that the two were having an affair, and that the director had brainwashed another employee.

When the director became aware of the alleged rumours, he did not investigate the matter (for example to check whether his informants may have falsely implicated the employee to deflect attention from themselves), but instead called the employee in and immediately accused her of spreading them. When she strongly denied doing so, he claimed he had “witnesses”.

The employee demanded to know which employees had claimed she had spread rumours and requested that he call a meeting of all staff so she could find out who they were and confront them. The director called the meeting, mentioned the rumours, and asked for a show of hands as to whether the employee had spread them. When none were raised, he held the secret ballot vote. He then confronted the employee, expecting that she would react emotionally and resign, which was what occurred. He had prepared the resignation letters in advance.

There was other supporting evidence that he had already made up his mind that her employment would be terminated, but engineered a situation to make her “resign”.

The FWC commented that if he had instead conducted a proper investigation of the allegations and found them to be true and done by the employee for malicious reasons, he may have had a valid reason to dismiss her.

The director claimed that the employee had voluntarily resigned, and that he had attempted to talk her out of doing so. This contradicted his claims that there were some job performance issues with the employee and that her conduct in spreading rumours could amount to sexual harassment (inappropriate sexual comments about co-workers).

Forced to resign

The FWC found that the director’s conduct left the employee with no realistic option other than to resign. This amounted to constructive (and unfair) dismissal for no valid reason.

The FWC estimated that she would have remained employed for a further 26 weeks and awarded compensation of $40,940.

The bottom line: Constructive dismissal occurs when an employee “resigns” but was put in a position by the employer where he/she had no other realistic option but to do so. In other words, the employer forced the employee to resign.

When there are allegations of rumour-spreading within an organisation, the employer should conduct a thorough investigation before making any decisions. The allegations against an employee may turn out to be true, but there is also the possibility that his/her accusers have agendas of their own. The employer needs to establish what the truth is and not single out one person when there is the likelihood that others may be involved (often the case with rumour-spreading).

Read the judgment

Yang v FCS Business Service Pty Ltd [2020] FWC 4560, 1 September 2020

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