Friday, 29 November 2019

How not to conduct an internal investigation: when can your company’s internal investigation process actually increase your liability?

In a recent matter before the South Australian Employment Tribunal, an employer’s “very flawed” investigative process into an employee’s sexual harassment allegations was a significant factor in the employer being held vicariously liable for the unlawful acts of one of its employees.

The applicant employee was ultimately awarded $30,000 in general damages, largely as a result of the defective investigation process and the employer’s management being ill-equipped to conduct a thorough investigation.

This decision emphasises the importance of conducting independent, timely and procedurally fair investigations.

Under both State-based and Federal anti-discrimination legislation, employers can be held liable for one employee’s sexual harassment of another, where the employer cannot demonstrate that it exercised reasonable precautions to prevent the sexual harassment occurring.

In this case, the applicant employee, a casual supermarket assistant who worked in the supermarket’s café and juice bar, alleged she had been sexually harassed by her co-worker, the Head Chef.

While the employee raised the matter separately with two members of management on the day the incident occurred, the management staff did not take her complaints seriously. No statement was taken from her, nor was her evidence recorded. Furthermore, while the Tribunal found that the two managers reviewed the CCTV footage from the incident, they did not spend much time doing so, nor did they examine it thoroughly. Critically, the CCTV footage was not shown to the employee, nor was she provided with a copy of the footage, and the recording was automatically destroyed two weeks later.

It was not until over five weeks after the incident, when the employee escalated her complaint to other management staff, complaining that her allegations had not been taken seriously, that a duty manager formally recorded the employee’s complaints and recommended the matter be escalated for formal investigation.

However, this formal investigation also contained substantial flaws that ultimately led to the supermarket being held vicariously liable for the Head Chef’s misconduct. The Tribunal further stated that “prompt investigation … and taking appropriate action” in respect of implementing any workplace sexual harassment policy was relevant when assessing the supermarket’s vicarious liability for the Head Chef’s actions.

The Tribunal highlighted the most serious errors in the employer’s investigation, including that it failed to:

  • record a proper statement from the employee in a timely manner and in a private place rather than on the shop floor;
  • put the precise allegations to the Head Chef and obtain a statement from him in a timely manner;
  • speak to any other potential witnesses in a timely manner;
  • carefully and thoroughly review the CCTV footage, and give the opportunity to the employee to do the same;
  • preserve the CCTV footage; and
  • report the outcome of the investigation to the parties involved in a clear and timely manner.

The Tribunal emphasised that the case “only highlights the need to ensure that employers conduct independent investigations and maintain proper records when complaints are made.”

Recommendations

If your business is unable to undertake an effective internal investigation in response to a workplace complaint, engaging an external investigator to assist your business when an employee raises serious allegations ensures that the investigation will be performed in a timely, unbiased and professional manner. Any investigation conducted by an external lawyer also means that the report can be protected by legal professional privilege.

Case study: Evans v Ikkos Holdings Pty Ltd and Ythos Holdings Pty Ltd and Ikia Holdings Pty Ltd T/As Pasadena Foodland and Crugnale [2019] SAET 222

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.

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