External workplace investigation reports do not automatically attract privilege

Employers often seek to protect the contents of an investigation by engaging external legal advisors and claiming legal professional privilege. However, the privilege is not automatic and can be lost. This was highlighted in a recent case where the Fair Work Commission (FWC) ordered the production of an employer’s external workplace investigation report, rejecting the employer’s claim of legal professional privilege. In Crafti v Cohealth Limited [2025] FWC 3285, the FWC found that seeking legal advice was not the dominant purpose for commissioning the investigation and even so, the employer’s conduct waived possible privilege.

We unpack the decision below and examine the practical steps for a legal professional privilege claim.

Background

cohealth Limited (Employer or cohealth) commenced an internal investigation into a verbal complaint received from a client in relation to one of its employees, Mr James Crafti (Employee).

The Employee alleged that cohealth was conducting its internal investigation in a manner that was procedurally unfair and inconsistent with the dispute settling procedures in the enterprise agreement because the allegations put to him were vague and the Employer had not taken a statement from the complainant. The Employee refused to participate in the internal investigation whilst these issues were ongoing.

cohealth then contacted lawyers to seek advice on how to proceed. The lawyers engaged an external investigator to investigate under a letter of engagement that set out the terms of reference for the investigation as being “to enable [the legal representatives] to provide legal advice to cohealth”.

Following completion of the external investigation, the Employer sent a letter to the Employee’s union representative setting out the outcome of the investigation (outcome letter). The outcome letter communicated which of the allegations had been substantiated by the external investigator, the evidentiary basis for the findings, and notified the Employee that he would be issued with a written warning and placed on a performance improvement plan (PIP).

The Employee appealed the findings of the external investigation under the Employer’s Workplace Grievance and Misconduct Procedure (Policy). As part of the appeal process, the Employee asserted that under the enterprise agreement he was entitled to receive a copy of the external investigation report because the report was “relevant material” that formed the basis of the Employer’s concerns about his unsatisfactory work performance and behaviour. cohealth rejected the request and later dismissed the Employee for refusing to participate in the PIP and failing to improve his performance.

The Employee made two separate applications to the FWC: a dispute notification application in relation to the dispute procedures under the enterprise agreement and an unfair dismissal application.

As part of the proceedings, the Employee applied to the FWC for an order for production of documents, including the external investigation report and associated materials. The Employer objected claiming that the external investigation report and associated materials were protected by legal professional privilege.

When will legal professional privilege apply?

A confidential written or oral communication will attract legal professional privilege if it is brought into existence for the ‘dominant purpose’ of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. See our previous article Spilling the beans: Waiver of privilege for your investigation reports.

The ‘dominant purpose’ is a question of fact that is determined objectively at the time the communication was made. While evidence of the subjective intention of the author or person requesting the creation of the communication is significant, it is not conclusive evidence as to the dominant purpose of the communication. Where multiple purposes are identified, it is necessary for the person making a privilege claim to establish that the legal advice purpose or litigation purpose was the “ruling, prevailing, paramount or most influential purpose” of the communication.

Why was cohealth unable to claim legal professional privilege?

To satisfy the FWC that the investigation report was protected by legal professional privilege, the Employer needed to prove that:

• the dominant purpose for commencing the external investigation was to obtain legal advice
• it had not waived legal advice privilege over the investigation report through its subsequent conduct.

Dominant purpose

The FWC found that the investigation report had been commissioned for multiple purposes. One purpose was to obtain legal advice about the complaint against the Employee (legal advice purpose). The other was to determine whether the Employee had breached cohealth’s code of conduct and if disciplinary action should be taken (employment disciplinary purpose).

The FWC found that the employment disciplinary purpose was the ‘dominant purpose’ for commencing the investigation. While the Employer led evidence that the formal letter of engagement to the external investigator indicated that the external investigation was to provide legal advice, there was otherwise a critical absence of direct evidence from the Employer’s decision maker as to the dominant purpose.

Instead, the Employee led clear evidence that cohealth had commenced the internal investigation under its policy and it had deemed it appropriate to engage an external independent investigator to continue and finalise the investigation on its behalf.

 Key evidence of the dominant purpose being the Employment Disciplinary Purpose included:

• cohealth’s obligation to investigate: cohealth determined that it had an obligation under its policy to investigate whether the actions of the Employee breached cohealth’s code of conduct and warranted disciplinary action
• misconduct procedure: cohealth’s policy provided a procedure for addressing allegations of misconduct, which included conducting an external workplace investigation
• robustness of the internal investigation: Emails between cohealth and the Employee’s union representative disclosed that cohealth’s purpose in appointing an external investigator was to conduct a more robust investigation, due to the Employee’s concerns about the procedural fairness of the internal investigation and cohealth’s perception as to the gravity of the allegations against the Employee
• continued investigation: The emails also disclosed cohealth’s intention to ‘continue the investigation’ and to have the external investigator ‘finalise the investigation’ on cohealth’s behalf. The FWC considered that this language indicated a continuation of the pre-existing employment disciplinary purpose
• notice of allegations: cohealth sent a letter to the Employee attaching the policy and code of conduct and notifying him of the allegations against him and that an external investigator had been appointed to conduct an independent workplace investigation. The FWC found that attaching these policies supported the continued operation of the employment disciplinary purpose.

Waiver of privilege

Privilege can be lost through a party’s actions. Despite finding that privilege did not attach to the external investigation report, the FWC also made findings that cohealth’s actions would have ‘waived’ the privilege because its conduct was inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. The waiver of privilege arose because:

• the outcome letter provided disclosed the evidentiary basis for the external investigator’s findings, rather than merely stating which allegations were substantiated or partially substantiated
• the disclosure in the outcome letter was not for the purpose of providing the Employee with an opportunity to respond to the findings because cohealth had already decided that it would issue the Employee with a warning and place him on a PIP
• the disclosure in the outcome letter went beyond what was necessary to explain the basis for the warning letter and PIP.

Practical implications for employers

This decision is a reminder for employers to take careful consideration when seeking to commission an investigation under legal professional privilege. Practical takeaways from the decision include:

• quarantine any internal investigation: prior to commissioning an external workplace investigation, take steps to ‘quarantine’ any internal investigation and avoid referencing the internal investigation or attaching internal policies in further communications with the Employee
• dominant purpose: be clear on what the dominant purpose of the investigation is and who within the organisation is making the decision to commission the investigation. If privilege is disputed, evidence from the legal representative or the formal letter of engagement to the external investigator may not suffice in convincing a Court or Commission of the dominant purpose
• communications with employees: avoid referencing the evidentiary basis for the investigator’s findings and only disclose an investigator’s findings to the extent necessary to enable an Employee to respond to the findings.

If you have any questions about how this decision may impact your organisation, please get in touch with our team below.

Disclaimer
The information in this article 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.

Published by:

Megan Cant

Annelise Harper, Jacqueline Brown

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