The Federal Court of Australia awards former State Manager of an ASX-listed software company $5.2 million in a general protections claim

In the recent case of Roohizadegan v TechnologyOne Limited (No 2) [2020] FCA 1407, Justice Kerr of the Federal Court of Australia (Federal Court) found that an ASX-listed software company and its CEO had taken adverse action against an employee who exercised a workplace right in making a bullying complaint and found that it was in contravention of the general protection provisions of the Fair Work Act 2009 (Cth) (the Act).

The Federal Court’s decision to award in excess of $5.2 million to the employee has sent a strong message to employers that failure to investigate employee complaints, and taking adverse action employees for making such complaints, will not be received favourably by the judicial system.

Facts

The Applicant, Mr Benham Roohizadegan, commenced employment with the Respondent, TechnologyOne Limited (TechnologyOne) in 2006 in the position of State Manager for Victoria. From 2006 to 2016, TechnologyOne’s size and revenue grew exponentially. As TechnologyOne’s revenue increased, so did Mr Roohizadegan’s income, from $208,932 in the 2006/07 financial year to $845,128 in the 2015/16 financial year.

During his employment, Mr Roohizadegan received a number of awards and benefits for his services and outstanding performance. In particular, Mr Roohizadegan was granted share options in 2013, 2014 and 2015 and received TechnologyOne’s prestigious Chairman Award in 2010, 2012, 2013 and 2014.

From late 2010, Mr Roohizadegan experienced problems with his family and personal life, onset by his daughter being diagnosed with a serious disease. The effects of Mr Roohizadegan’s personal issues caused him to increase his hours of work. Notwithstanding, in 2016, Mr Roohizadegan raised complaints of bullying and harassment against seven (7) other employees. Ultimately, TechnologyOne’s executives discussed Mr Roohizadegan’s complaints but opted to take immediate action against Mr Roohizadegan for the complaints against him and purported underperformance. TechnologyOne’s CEO, Mr Adrian Di Marco, received HR advice to not take immediate action against Mr Roohizadegan and to conduct an investigation prior to making any determination.

Notwithstanding this advice, Mr Di Marco proceeded to summarily terminate Mr Roohizadegan’s employment. The reason given for Mr Roohizadegan’s termination was that he was unable to cooperate with his previous three managers, Mr Roohizadegan had complaints made against him by his team and that his team were underperforming.

Mr Roohizadegan filed a general protections claim against TechnologyOne and Mr Di Marco claimed he was dismissed for prohibited reasons including exercising a workplace right to make complaints in relation to his employment (i.e. complaints of bullying by other staff). Mr Roohizadegan submitted that as a result of his dismissal, he suffered a mental injury and was permanently incapable of ever working again.

Decision

Justice Kerr confirmed that, under the general protections jurisdiction, TechnologyOne would only be liable if they dismissed Mr Roohizadegan because of his exercise of a workplace right as the reason (or part thereof) for them taking adverse action to terminate his employment. TechnologyOne had the reverse burden of proving, on the balance of probabilities, that Mr Roohizadegan was not dismissed for the reason that he had exercised a workplace right.

The Federal Court found that TechnologyOne’s ‘Open Door Policy’ and ‘Workplace Bullying Policy’ permitted all managers to hear employee complaints and that this also applied to Mr Roohizadegan’s employment. As such, the Justice Kerr held that Mr Roohizadegan had a basis to file a complaint about bullying and harassment in the workplace.

It was found that Mr Di Marco was the sole decision-maker for the termination of Mr Roohizadegan’s employment. Justice Kerr criticised Mr Di Marco’s repeated decision to reject “professional HR advice that it would be unfair to dismiss Mr Roohizadegan on the basis of mere allegations”. Further, Justice Kerr provided a scathing assessment of Mr Di Marco, stating he was a “highly unimpressive witness” whose evidence was “tortured and evasive” and that his “choice was to stand with the bullies rather than the bullied”.

Justice Kerr was not persuaded by TechnologyOne’s defence that it lawfully terminated Mr Roohizadegan’s employment and did not take adverse action against him, and found that the Mr Roohizadegan’s complaints about being bullied by other staff was a substantial and operative reason for Mr Di Marco’s decision to terminate his employment.

In finding that TechnologyOne had breached the general protections provisions of the Act, the Federal Court awarded Mr Roohizadegan a sum totalling $5,228,410, comprising of:

• $2,825,000.00 for future economic loss;
• $756,410.00 compensation for foregone share options;
• $1,590,000.00 damages for breach of contract; and
• $10,000 in general damages for pain and suffering.

Further, the Federal Court ordered that Mr Roohizadegan be paid $7,000.00 personally from Mr Di Marco and $40,000.00 from TechnologyOne for their breaches of the general protection provisions of the Act.

In awarding such a significant penalty, Justice Kerr stated that it was important that other employers, including CEOs, are deterred from unlawfully terminating employees if they exercise their workplace rights. Justice Kerr stated that “to achieve effective deterrence, CEOs in like positions need to know that such temptations as he faced are to be resisted; and that there will not be an insubstantial price for failing to do so”.

We are yet to hear whether the decision will be appealed by TechnologyOne.

Take Home Messages

This case serves as a timely reminder for employers that employee complaints should be properly investigated and not pushed to the side or dismissed. Quite often, employee complaints are met with counter claims of bullying and harassment. It is important that both are investigated and considered on their merits.

Employers who are found to be biased on one version over the other without properly investigating will be exposed to the risk of facing an adverse action claim. As such, employers should ensure that when investigating employee complaints, respective HR advice is taken into consideration and that a procedurally fair process is followed.

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.