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Unfair dismissal after bullying complaints: $5 million in damages

A ruling to deter others who might be tempted to contravene the FWA.
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Unfair dismissal after bullying complaints: $5 million in damages

Unfair dismissal after bullying complaints: $5 million in damages

12 October 2020

By Gaby Grammeno

An employer who denied a senior manager’s claims of bullying then unfairly sacked him has been ordered by the Federal Court to pay over $5 million in damages, fines and compensation. In deciding on the penalty, the Judge took the view that it was important to deter others who might be tempted to contravene the Fair Work Act by dismissing someone for exercising their workplace rights.

The bullying claims

The manager was employed by a publicly listed software company. His job was initially State Manager for Victoria, with a gross income, including bonuses, that grew from over $200,000 in 2006 to more than $800,000 a decade later as Regional General Manager.

His role was to build the business, manage and develop the market for the company’s products and manage the region’s sales staff. For the greater part of his period of employment, he was known to be very hardworking, committed and loyal, and regarded as an outstanding performer.

Outside of work, from late 2010 he was dealing with grief and intense personal stress due to his daughter’s grave illness requiring full time hospitalisation, and feelings of guilt that he had been too intent on his work to give proper priority to his daughter’s health. Nevertheless, he maintained his capacity to work under increasingly stressful circumstances, but concealed his distress from his colleagues.

Despite his strong work performance, however, various workplace matters brought him into conflict with other staff, and he subsequently came to feel he was being threatened, bullied, abused, and having his role undermined by other staff.

The accumulation of incidents, including a number of complaints and allegations made by sales staff, eventually led his CEO to terminate his employment in May 2016.

The psychological impact of his termination was profound, with depression and mental breakdown ultimately resulting in his being unfit to seek or obtain other employment.

The former manager sued the company, seeking compensation and penalties arising out of what he alleged was his summary dismissal for prohibited reasons. He also sought damages for breach of contract by his employer in respect of its alleged non-payment of part of the incentives due to him as a percentage of the company’s profit before tax performance.

The case was heard in the Federal Court of Australia.

In Court

The manager claimed his summary dismissal was for reasons prohibited under the Fair Work Act 2009, namely his having exercised his workplace right to complain of bullying, among other things. The Court heard that the workplace culture was one of fear, intimidation, bullying and passive aggressive behaviour.

The senior manager’s legal team submitted that there had been no urgency for the termination, no attempt was made to raise or resolve issues with him before he was dismissed, he was never given a chance to respond to the alleged complaints about his performance and behaviour, and there was no investigation into allegations against him.

Moreover, he had suffered major loss and damage, the mental injury caused by the conduct was likely to result in his never working again, and the company and its CEO had not exhibited any contrition.

His employer denied the allegations, claiming that the manager had been dismissed solely for the lawful and valid reasons that there had been complaints about him from sales staff, licence fees in his region were not growing, his team was ‘in crisis’ and he had been ‘unable to work well’ with three different managers within a two-year period.

The Judge noted that it was possible to have some sympathy for the CEO, as he appeared to have been effectively manoeuvred into a position where he had no good choices. However, he twice rejected professional HR advice that it would be unfair to dismiss the manager on the basis of mere allegations. In the end, ‘his choice was to stand with the bullies rather than the bullied’.

The Court found that the company and its CEO had taken adverse action against the former manager, in breach of its obligations under the Fair Work Act.

The Judge said that but for its being the company’s first offence, its actions would have justified imposing a penalty close to the highest end of the scale, to deter others from taking similar actions.

The company was ordered to pay the former manager $1,590,000 in damages for breach of contract, $2,825,000 for future economic loss, $756,410 in compensation for forgone share options and $10,000 in general damages. In addition, fines of $40,000 for the company and $7,000 for the CEO were imposed for contravention of the Fair Work Act. In total, the wrongful dismissal cost the company $5,228,410.

The bottom line: Chief Executive officers need to know that they must resist any temptation to dismiss someone for exercising their legitimate workplace rights, even if they believe they can argue that there were other reasons for the dismissal.

Read the judgment

Roohizadegan v TechnologyOne Limited (No 2) [2020] 1407 (2 October 2020)

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