Federal Court Stresses the Significance of Investigating Allegations in Case Resulting in Landmark $5 Million Payout

In a recent general protections case, the Federal Court underscored the significance (and cost) of a failure to act appropriately in response to claims of bullying and harassment made by employees. Mr Benham Roohzadegan, a Regional General Manager of Technologyone Limited (“The Company”) sought compensation and penalties for the termination of his employment which amounted to adverse action for exercising his workplace rights to make complaints of bullying and harassment.

The Court found that not only did the Company fail to investigate Mr Roohzadegan’s complaints, but that allegations made against Mr Roohzadegan that were used as the basis for his termination were not investigated either. In his decision, Justice Kerr drew particular attention to the significance of workplace safety and the role in which executive directors play in maintaining a healthy and supportive environment.

The Relevant Facts

Due to personal circumstances, Mr Roohzadegan suffered from intense distress which deeply affected his mental state and wellbeing, however, the Company was unaware of his condition. The Court heard of the various and excessive workplace conflicts between Mr Roohazadegan and colleagues which exacerbated his personal stress, causing him to feel he was being abused, bullied, and threatened.

Mr Roohzadegan joined Mr Di Marco, the Executive and Chief Executive Officer of the Company as a party to the proceedings due to his role in the adverse action. Mr Di Marco was criticised for his poor decision making in dismissing Mr Roohzadegan’s complaints, failing to attempt to resolve the issues, not giving Mr Roohzadegan a chance to respond to complaints made against him regarding his performance and behaviour, and for not investigating the same. Instead, Mr Di Marco’s ‘choice was to stand with the bullies rather than the bullied’ and responded by terminating Mr Roohzadegan’s employment.

The Federal Court Decision

Justice Kerr held that pursuant to the Fair Work Act 2009, Mr Roohzadegan’s workplace rights had been interfered with by the Company and Mr Di Marco insofar as they dismissed serious complaints of bullying and harassment. The Court also became aware of Mr Di Marco’s disregard of professional human resources advice which outlined that the dismissal of Mr Roohzadegan would be deemed unfair under s 385 of the Fair Work Act 2009 if it were to be merely based on allegations made by employees related to the claims of harassment. Justice Kerr rejected Mr Di Marco’s claim that the termination was due to “lawful and valid reasons” unrelated to Mr Roohzadegan’s allegations of bullying.

It was recognised that the conduct of the employees in question and the Company’s inaction resulted in:

the significant aggravation [of the applicant’s] pre-existing depressive disorder, with the consequence that [he has] lost [his] capacity to work and has a poor prognosis of ever regaining any capacity for remunerative employment in a position for which [he] would be otherwise qualified.

The Federal Court recognised the extent to which an employee can be impacted by the inaction and potentially inflammatory response to bullying by their employer in ordering the maximum compensation as well as exemplary damages available. The orders were made against not only the Company but against Mr Di Marco. Justice Kerr ordered the respondents to pay in excess of $5 million, consisting of penalties, compensation analogous to general damages, compensation for future economic loss, compensation in respect to forgone share options and damages for breach of contract.

What This Means for Employers

The case reinforces the responsibility held by senior managers in upholding their duties to actively maintain a safe workplace. The Federal Court particularly emphasised the consequences of poor management and the importance of taking employee complaints seriously through appropriate action and investigation. It is clear that employer conduct that is perceived to be complicit with bullying behaviour, will be heavily reprimanded and penalised.

Ultimately, a lack of investigation of both the complaints made against Mr Roohzadegan as well as the bullying complaints he made against other staff led to Mr Roohzadegan’s success in the proceedings. This serves as a reminder that terminating an employee for exercising their workplace rights is a serious contravention of the Fair Work Act 2009 (Cth) and can not only be costly to the Company but also senior managers involved in the relevant decision making processes.

If you have any further questions regarding unfair dismissal, bullying investigations or responding to issues involving mental health in the workplace please do not hesitate to contact Nick Stevens or Jane Murray.

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