Full Court of the Federal Court of Australia overturn a decision to award an employee $5.2 million

In November 2020, we published an article regarding the decision of Justice Kerr of the Federal Court of Australia in Roohizadegan v TechnologyOne Limited (No 2) [2020] FCA 1407 (see here) whereby the employer, TechnologyOne Limited (TechnologyOne), was ordered to pay former employee, Mr Benham Roohizadegan, over $5.2 million for taking adverse action against him for making complaints about bullying and harassment.

In June 2021, the Full Court of the Federal Court of Australia (Full Court) heard an appeal from TechnologyOne and on 5 August 2021, delivered its judgment in TechnologyOne Limited v Roohizadegan [2021] FCAFC 137 to overturn Justice Kerr’s decision.

Initial Decision

Mr Roohizadegan was employed by TechnologyOne as State Manager for Victoria. In 2016, Mr Roohizadegan made complaints of bullying and harassment against seven (7) other employees. TechnologyOne’s executives were aware of Mr Roohizadegan’s complaints. Around that time, complaints were made against Mr Roohizadegan for failing to work well with different managers and his team and his overall underperformance.

TechnologyOne’s CEO, Mr Adrian Di Marco, summarily terminated Mr Roohizadegan’s employment for failing to cooperate with his previous three managers, the fact that Mr Roohizadegan had complaints made against him by his team and that his team were underperforming.

Justice Kerr of the Federal Court of Australia held that TechnologyOne had taken adverse action against Mr Roohizadegan for a ‘prohibited reason’, namely, that he had made complaints of bullying and harassment, which was in breach of the general protection provisions of the Fair Work Act 2009 (Cth) (the Act). Mr Roohizadegan was awarded $5.2 million for future economic loss, damages (for breach of contract and pain and suffering) and breaches of the general protection provisions of the Act. The damages were paid by TechnologyOne and Mr Di Marco (in his personal capacity).

TechnologyOne appealed Justice Kerr’s decision.

Appeal

TechnologyOne appealed Justice Kerr’s decision on the basis that the termination of Mr Roohizadegan’s employment with TechnologyOne was not because Mr Roohizadegan filed the complaints. TechnologyOne submitted that Justice Kerr, in his judgment, had failed to:

• provide adequate reasons in support of his finding; and

• take into account all of the evidence, specifically, the nature of the complaints relied on by Mr Roohizadegan (and the circumstances which they were made) and that those complaints were irrelevant to Mr Di Marco’s decision to terminate Mr Roohizadegan’s employment.

The Full Court of the Federal Court agreed with TechnologyOne’s submissions. The Full Court held that Justice Kerr had failed to answer the essential question, being, whether TechnologyOne had established that adverse action (being the termination of Mr Roohizadegan’s employment) was not taken for a prohibited reason (being the making of a complaint), by reference to all of the evidence.

Specifically, given the fact that Mr Di Marco’s evidence was that Mr Roohizadegan’s complaints were “totally irrelevant” to his decision to terminate his employment, it was necessary for Justice Kerr to examine the nature and context of all of the evidence including the complaints. The Full Court held that Justice Kerr failed to do so.

The Full Court held that Justice Kerr had drawn an incorrect conclusion that, because Mr Di Marco was aware Mr Roohizadegan had made the complaints, that this was the substantial and operative reason for the termination of Mr Roohizadegan’s employment. The Full Court held that to reach such a conclusion, it was essential for Justice Kerr to consider the nature and circumstances of the complaints (which did not occur).

The Full Court allowed TechnologyOne’s appeal and held that a retrial was required to “… evaluate the nature of the complaints and the circumstances in which they were made”.

Take Home Messages

This case serves as a timely reminder for employers to ensure that any reasons for termination are clearly communicated to employees i.e. underperformance or conduct. In practice, employers should ensure that when putting allegations to employees, that an allegation specifically identifies what breach is alleged to have occurred.

To this end, employers must recognise the importance of handling bullying complaints separately from performance issues, so that it can be demonstrated that a fair process was undertaken.

While the damages awarded by Justice Kerr were overturned, this case highlights that large financial damages may be ordered against an organisation as well as extend to its executives (in their personal capacity) for breaches of the general protection provisions of the Act.

For more specific information on any of the material contained in this article please contact Virginia Liu on +61 8 8210 1279 or vliu@normans.com.au or Thomas Tagirara on +61 8 8217 1337 or ttagirara@normans.com.au.