In brief 

A recent decision of the Fair Work Commission issues some timely reminders to employers when investigating misconduct and implementing subsequent disciplinary outcomes. Flawed investigations (or failing to investigate at all) will likely prejudice an employer’s ability to successfully defend an unfair dismissal claim. 

The case 

In the case of Panchal v Bulla Mushrooms (Aust Pty Ltd) [2024] FWC 2784 (Bulla Mushrooms) Ms Panchal, a harvest team leader was dismissed from her employment with Bulla Mushrooms on 7 June 2024. She was dismissed after her employer had concluded she had engaged in bullying and discrimination of multiple employees over the past two years.

The employee was first notified of the allegations on 24 May 2024 when she was stood down. A week later, she received correspondence from the Chief Executive Officer (CEO) which set out the eight allegations and invited her response to the allegations in writing.

In summary, the allegations included that Ms Panchal had:

• intentionally reduced an employee’s hours of work after they raised a question about working conditions at Bulla Mushrooms;
• engaged in bullying and racial discrimination by not including an employee’s picked mushrooms in the performance program, resulting in the employee not getting her bonus; and
• raised her voice, withheld information about breaks, excluded employees from information about work and assigned employees roles which they were not comfortable performing.

(the Allegations)

The employee provided a written response to the Allegations on 6 June 2024. She overwhelmingly denied the allegations and provided an explanation to each of them. Some of her responses included:

• an employee’s reduced working hours were due to her absence on sick leave and a decrease in production during the relevant period;
• she would raise her voice to ensure employees could hear her instructions in the noisy harvesting area;
• all “picks” were recorded and bonuses were paid properly;
• all employees were responsible for cleaning the kitchen room and amenities; and
• she undertook an employee’s induction and onboarding (contrary to what was alleged).

Ms Panchal received a response the following day which said that Bulla Mushrooms had considered the response and concluded on the balance of probabilities that the Allegations were substantiated. The letter stated Bulla Mushrooms intended to terminate the employee’s employment and invited a response by 4:00pm the following day. The employee requested an extension of time but received a letter on 4:30pm the next day confirming her employment was terminated with immediate effect.

During the hearing, the CEO also presented evidence of 26 complaints from MatchWorks (a company that placed workers at Bulla Mushrooms) which referred to “sub-human’ treatment of its workers by Ms Panchal and comprised of allegations of yelling, racism and exclusion.

Bulla Mushrooms contended it had “compelling evidence” that Ms Panchal had engaged in bullying and discriminatory behaviour, rendering the ongoing employment relationship unsustainable. It claimed it had a valid reason to dismiss Ms Panchal and made reference to its duty of care to its own workers to provide a safe workplace. 

Was the dismissal unfair?

In assessing whether the dismissal was harsh, unjust or unreasonable, Deputy President Colman issued some timely reminders which are oftentimes overseen or neglected by employers. These included:

• the fact that there are multiple allegations against a person does not lower the applicable standard of proof. Each allegation must be investigated and a conclusion must be reached on the balance of probabilities about whether each allegation is true;
• not only must an employer show a valid reason for dismissal, but the employer must also show on the balance of probabilities that the conduct occurred;
• employers need to be careful putting scanty, conclusory and hearsay allegations to employees as these are difficult to respond to and validate;
• an employee’s responses to allegations should be carefully considered prior to any disciplinary decision being made; and
• mere assertions should not be put to an employee without supporting particulars.

Deputy President Colman ultimately found all allegations levelled against Ms Panchal were unsubstantiated.

The dismissal was found to be unjust and unreasonable and therefore unfair.

Compensation

The employer was ordered to pay six weeks’ gross pay to Ms Panchal, equating to AU$7,269.24 plus superannuation. Due to the scathing findings of Deputy President Colman, this award would have been much higher, except a “very substantial reduction” was made to the employee’s compensation due to her failure to mitigate her loss by searching for other jobs.

Takeaways

When considering allegations of misconduct and the associated disciplinary steps, employers need to keep the following matters front of mind:

• if a complaint is made against an employee, it should be acted on as soon as practicable. In addition to legal exposure, sitting on allegations for long periods of time can have a significant impact on availability of witnesses and reliability of evidence. It may also be argued that an employer has “condoned” the conduct by not acting on it at the time;
• a proper investigation should be conducted to determine if allegations of misconduct against an employee are substantiated. Where appropriate, these should be conducted externally. This is particularly important considering an employer is required to prove to the Fair Work Commission that the misconduct occurred;
• when allegations are put to an employee, this must be done in a clear manner which enables the employee to provide a response. It is useful to focus on the “who, what, when, where” as opposed to including assertions and conclusions about an employee’s conduct. Despite best intentions, this is an area where employers often fall into error;
• an employee’s response to any allegations must be properly considered. If an employer rejects an employee’s response, it should have cogent reasons for doing so. In the present case, Deputy President Colman held the employee’s responses were “compelling but Bulla chose to reject them”; and
• simply because it is alleged a worker may pose a health and safety risk does not mean the worker’s right to procedural fairness should be disregarded or trumped. Lawfully standing the worker down and investigating the matter in a timely manner are appropriate steps to mitigate potential health and safety risks.

Balancing and implementing the above matters is not always straightforward, particularly where serious, historical allegations are brought to an employer’s attention. It is prudent that employers have proper internal processes to respond to allegations of misconduct and to avoid the errors made in this case. In complex cases, employers should seek advice to minimise exposure to post-employment claims and remedies. Furthermore, the importance of these steps cannot be understated due to the significant changes under the Sex Discrimination Act 1984 (Cth) and to an employer’s obligations to identify and manage psychosocial hazards.