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Workplace Investigations – The Employee and the Employer

The workplace is becoming an increasingly challenging environment for both staff and management alike, with grievances and the reporting of allegations of inappropriate behaviour on the rise. Coupled with the rise in regulatory requirements, there are expectations for greater levels of responsiveness, accountability and transparency. Increasingly, organisations are recognising the need to respond to these situations in a timely and appropriate manner.

However, a very important element in the employment relationship, is the trust an employee has in the employer that he or she will not be treated unfairly, and on the part of the employer, that the employee with not act unfairly in a manner detrimental to the employer.

Why Would I Need to Conduct a Workplace Investigation?

Often these issues can pose significant risks to an organisation. It is important, that unless workplace issues are dealt with quickly and effectively, the effect upon the organisation can be costly in terms of loss of valuable personnel, time, money and productivity, and may adversely affect an organisation’s good reputation.

Who Should Conduct the Investigation?

A common response in the past was to have the complaint or issue investigated by a Supervisor, Manager or a HR consultant, using an informal approach to resolve the situation. The experience of many is that once inquiries are commenced, and the lid is lifted from the proverbial ‘can of worms’, matters become much more complex than the initial information may have indicated.

Do They Have the Right Skills and Experience?

The organisation needs to satisfy itself that the person asked to carry out the task, has the necessary skills and knowledge to be able to conduct the investigation, in accordance with the principles of Natural Justice and Procedural Fairness.

It is essential that issues such as potential conflicts of interest are identified. A perception of bias on the part of the Investigator held by the complainant, respondent, witness or observer can undermine and taint the entire investigation and any outcomes.

Although not every workplace inquiry needs to be conducted as a full and formal investigation, where a full investigation is required, then it is paramount that the person conducting the investigation is seen to all those involved and observers as being unbiased and skilled to undertake the task. The perception that an investigation is being conducted fairly is just as important as the reality that it is being done so.

What are the Benefits of Appointing an External, Independent Investigator?

The investigation may identify systemic problems within the workplace which could lead to criticism of the organisation. In many instances, an internal Investigator may find it difficult to raise issues that they feel may not be popular with their Managers or Directors.

Adverse findings may result in ill feelings against the Investigator, which may cause further difficulties if the Investigator is required to work with those involved in the investigation during the normal course of business.

It will often be the case, that in serious matters resulting in an investigation, there are distinct advantages in an independent external Investigator being appointed. An independent Investigator will only be influenced by the evidence, they are removed from the organisational culture and politics, and the findings will be based on facts, enabling the organisation to make appropriate decisions.

Do You Have Policy Governing the Conduct of Investigations?

As an employer, you can prevent unnecessary disputes and stress in the workplace, by ensuring that your organisation has clear and transparent policies, and procedures in place governing the conduct of an investigation. The policies should apply equally to investigations conducted by another employee, or an independent Investigator.

Case Law – The Importance of Conducting a Proper Workplace Investigation

The case of Nikolich v Goldman Sachs JB Were Services Pty Ltd [2006] FCA 784, relates to company policies, and also highlights important lessons in investigating workplace grievances, and in particular, the requirement to resolve factual disputes, make clear findings and the importance of a formal framework.

The Facts:

Mr Nikolich worked as a client financial adviser for Goldman Sachs JB Were. In Canberra, advisers service a portfolio of clients, the success of which impacts on their remuneration. Mr Nikolich formed a team of advisers to improve the level of customer service.

When one of the team members left, Mr Nikolich understood that the departing employee’s clients would continue to be serviced by the remaining team members. However, Mr Nikolich’s manager, Mr Sutherland, reallocated the clients largely outside the team. Mr Nikolich lodged a formal complaint about the reallocation and alleged victimisation and intimidation by Mr Sutherland following the reallocation.

The grievance was handled by an HR manager based in Sydney. She immediately contacted Mr Nikolich and arranged a telephone conference. Mr Nikolich was unsure what outcomes he sought, although he wanted something done and did not want his position jeopardised.

The HR manager checked the reallocation with senior management, who said it was appropriate for the branch manager to allocate clients. However, Mr Sutherland handled the reallocation poorly and morale was suffering as a result. Around August 2003, the HR manager sought a response from Mr Sutherland, who denied most allegations. Mr Nikolich subsequently raised a new complaint about Mr Sutherland allegedly transferring one of Mr Nikolich’s clients to himself.

In December 2003, the HR manager provided written outcomes of the investigation. She acknowledged a lack of transparency. However, she determined that: management’s decision to reallocate the clients was “appropriate”; there was no attempt by Mr Sutherland to intimidate or cause stress to Mr Nikolich; and Mr Sutherland had stepped down from his management role.

The Result

Mr Nikolich suffered a depressive condition, which led to the termination of his employment. He brought a claim for breach of contract in the Federal Court.

The Federal Court found that the handling of Mr Nikolich’s complaint was “extremely inept” because there was no recognition of the seriousness of the complaint (an alleged abuse of power), the HR manager should have travelled to Canberra to conduct interviews (if necessary, a venue should have been hired for interviews to ensure confidentiality) and no effort was made to resolve the factual conflict between Mr Nikolich and Mr Sutherland. In particular, key witnesses were not interviewed.

The Cost

The process was found to be in breach of the company’s grievance handling procedure and the employee was awarded $515,869 in damages. The employer is currently appealing the decision.

If you are concerned about any aspect your workplace investigations, please contact one of INVision’s Directors via our website at