Monday, 26 October 2020

Senior employee wins $5.2 million payout in general protections claim after being dismissed for making bullying complaints

Please note this case has been appealed to the Full Federal Court and the decision has been quashed and a retrial ordered. Please see our updated article here.

The Federal Court has recently delivered a landmark judgment in a general protections claim, ordering a software company, TechnologyOne Limited, to pay more than $5.2 million in compensation, damages, and penalties to its former State Manager, Mr Benham Roohizadegan.

Mr Roohizadegan commenced employment with TechnologyOne as a State Manager in 2006 and was summarily dismissed in May 2016. At the time of his dismissal, Mr Roohizadegan was receiving a total remuneration package of approximately $845,128.00 (mainly attributable to incentive payments). Mr Roohizadegan alleged that the reason he was dismissed was because he had made seven bullying complaints throughout his employment.

TechnologyOne submitted that Mr Roohizadegan was dismissed because the profits in his region were stagnant, his team was “in crisis” and he failed to work well with different managers over a two-year period. Mr Roohizadegan denied these claims and produced evidence to support that his performance had been satisfactory, including a number of awards he received during his employment.

Mr Roohizadegan’s bullying complaints

Between 2014 and 2016, Mr Roohizadegan came into conflict with several other employees. In April 2016, he raised complaints about three senior employees, and complained that another two employees were marginalising him. He raised his complaints with HR and informed them that he was considering taking legal action.

TechnologyOne’s Executive team met twice to discuss Mr Roohizadegan’s complaints, as well as other complaints that had been made about Mr Roohizadegan by his sales team.

HR advised the Executive team not to take action against Mr Roohizadegan on the basis of mere allegations, and that TechnologyOne should conduct an investigation. The CEO, as the head of the Executive team, rejected this advice and proceeded to summarily dismiss Mr Roohizadegan in May 2016 without properly addressing his complaints.

Federal Court findings

Mr Roohizadegan filed a general protections compliant under the Fair Work Act 2009 (the Act)  claiming that he was dismissed for prohibited reasons including seven instances of exercising his workplace rights by making complaints, in particular, to having been bullied.

As a result of his dismissal, Mr Roohizadegan contended that he suffered a profound mental breakdown and depressive disorders. It was not in dispute that after he was dismissed Mr Roohizadegan became incapable of ever working again.

Ultimately, the Court found that TechnologyOne had taken adverse action against Mr Roohizadegan for the prohibited reason that he made complaints or enquiries in relation to his employment (ie the bullying complaints).

The Court also found that the sole decision maker responsible for terminating Mr Roohizadegan was TechnologyOne’s CEO, and that the CEO was fully aware of the bullying allegations when terminating Mr Roohizadegan’s employment. The Court decided that the CEO chose the interests of Mr Roohizadegan’s alleged bullies over the interests of Mr Roohizadegan and terminated his employment unlawfully.

The Court hypothesised that if the CEO had taken the advice of HR and undertaken an investigation, this would likely have led to consideration of the conduct senior staff members, including HR, and any formal investigation would risk uncovering issues which the CEO would prefer not to explore.

Mr Roohizadegan’s was awarded $2,825,000 for his future economic loss, representing over four years of future losses (less incentive payments he would not have received, and the Court applied a 15% discount to factors which may have affected his earning capacity), $756,410 to compensate for share options, $1,590,000 in damages for breach of contract and $10,000 in general damages for pain and suffering. The Court also fined the CEO personally the sum of $7,000 and $40,000 for TechnologyOne for their breaches of the Act and both fines were paid directly to Mr Roohizadegan.

The Court took the view in awarding the significantly high amounts that it was important to deter employers, and specifically CEOs, from dismissing employees for exercising their workplace rights. The Court stated: “In the end, in Mr Roohizadegan’s instance, his [the CEO’s] choice was to stand with the bullies rather than the bullied. 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”.

Lessons for employers

This case highlights the importance of properly addressing bullying complaints and undertaking workplace investigations where appropriate, particularly prior to making a decision to terminate employment and where bullying allegations have been raised by that employee. The manner in which such complaints should be addressed will of course depend on the individual circumstances.  The case also demonstrates how liability in general protections complaints can extend to an Executive team personally, and most notably, CEOs when they are the decision-maker.

However, whilst this case should alert employers to the risks of adverse action taken for prohibited reasons, large awards like the one in this case are rare. This case can be distinguished on its facts due to the employee’s undisclosed depressive disorder making him incapable of work again, the rejection of HR advice by the CEO, and the seniority and earning capacity of the employee.

Case: Roohizadegan v TechnologyOne Limited (No 2) [2020] FCA 1407


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.