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Employer appeals $5.2 million general protections ruling

23 March 2021

#Workplace Relations for Employees

Published by:

James Stedman

Employer appeals $5.2 million general protections ruling

In 2020, the Federal Court of Australia awarded more than $5.2 million in compensation and penalties to the senior manager of a software company who was terminated because he had made bullying complaints during his employment.

The landmark case is now scheduled for appeal and cross-appeal to be heard by the Full Court from 9-11 June 2021.

The case

In Roohizadegan v TechnologyOne Limited (No 2) [2020] FCA 1407, Mr Roohizadegan (Applicant) was a longstanding employee of TechnologyOne. In early 2016, he reported concerns to the company on at least seven occasions that his colleagues were undermining or bullying him.

The Applicant’s employment was terminated in May 2016. He alleged that his employment was terminated because he had made complaints about his employment. In contrast, TechnologyOne variously asserted that it ended the employment because the Applicant was unable to work with his managers, he was not producing growth for the company, and the Applicant’s colleagues had expressed concerns about his management style.

Mr Roohizadegan had contractual entitlements to a base salary, bonuses and shares based on a percentage of the company’s profits. The summary termination of the employment therefore had significant financial implications for both parties.

Key considerations at first instance

The Federal Court, at first instance, accepted that by raising his concerns about bullying, Mr Roohizadegan made complaints about his employment and this was sufficient to attract protection in the Fair Work Act 2009 (Cth) (FW Act) in relation to exercising a workplace right.

Justice Kerr then held that the employer’s explanation for the termination was not credible and that it had failed to discharge the statutory presumption that the adverse action was because Mr Roohizadegan had exercised a workplace right (section 361 of the FW Act).

While the court did not express a conclusive view about the decision-maker’s exact motivations, Justice Kerr was satisfied that the CEO was the relevant decision-maker and he was aware of the seven complaints that the Applicant made before deciding to “pull the trigger”. His Honour placed significance on the CEO’s credibility as a witness and considered that his account of his state of mind at the time of termination could not be relied upon.

As the Court was not satisfied that the employer’s reason for terminating Mr Roohizadegan’s was for a reason other than because he had exercised a workplace right, it was liable to pay him compensation. The Court held, on the basis of medical evidence, that the termination also caused an aggravation of the Applicant’s mental health condition which meant he had been incapacitated for employment since the termination.

Of particular interest, while assessing the economic loss, Justice Kerr rejected the argument that if Mr Roohizadegan’s employment was not terminated when it was, it would have ended a short time later. His Honour relevantly said at [1037]:

“...It cannot sensibly be suggested that a person who has been bullied out of their job is to be denied compensation for its loss because the counter-factual is that but for their dismissal, they would have returned to a hostile workplace in which they would have been harassed again until they left.”

Mr Roohizadegan was awarded $2.825 million in compensation for economic loss, $1.59 million in compensation on account of a breach of contract, $756,410 in compensation for the foregone share options and an additional $10,000 for general damages. Penalties of $40,000 and $7,000 were imposed on the company and its CEO respectively.

Lessons to be learned

The case is a reminder that the employer has the burden of demonstrating the reasons for termination where a ‘general protection’ applies. The statutory presumption may not be displaced if the employer is unable to evidence a credible alternative reason for the termination.

It also demonstrates that a strained employment relationship will not necessarily reduce the quantum of an employee’s economic loss payment if the employer has contributed to the hostility in the workplace. The outcome of the appeal and cross-appeal may have significant implications for executives and senior managers with bonus or share entitlements.

Authors: Evan Willis & James Stedman

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

James Stedman

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