Conducting investigations

Are you in or out?

September 22, 2016

One of the first decisions to be made by an employer when confronted with a situation warranting investigation is whether the matter can be adequately investigated internally or whether investigation by an independent third party is warranted. This decision is an important one – choosing the wrong option can potentially lead to other claims including workers compensation, general protections or a “stop bullying” application under the Fair Work Act 2009 (Cth) (the Act).

To help employers make this decision, the Fair Work Commission (FWC) in Xiaoli Cao v Metro Assist Inc; Rita Wilkinson [2016] FWC 5592 (Cao Case) has provided some guidance for employers.

In the Cao Case, Ms Cao complained to the CEO in October 2014 that she had been bullied at work by her manager, who had allegedly engaged in unreasonable behaviour towards her. The Employer decided to conduct an internal investigation into Ms Cao’s complaints.

Ms Cao was advised in November 2014 her complaints were unfounded. The CEO recommended that the best way to move forward was to introduce an external mediator to assist in addressing and resolving matters. This resulted in an agreement between the manager and Ms Cao.

In December 2015, Ms Cao lodged a second complaint against the manager. In January 2016, Ms Cao was advised the result of the internal investigation was that her complaints were unfounded.

Ms Cao was dissatisfied with the outcome of the employer’s investigations and lodged an application for a “stop bullying” order.

Deputy President Sams concluded that based on the evidence, the claims made by Ms Cao were unsupported and the allegations did not amount to the definition of bullying conduct found in the FW Act.

As to the internal investigations, DP Sams agreed while that the internal investigations were conducted in a “fair, reasonable and transparent” manner and that engaging an external investigator would not have changed the outcome, DP Sams recommended that “where an employee vigorously asserts that an internal investigation into bullying allegations will lack transparency or independence, it may be prudent for the employer to engage an independent third party to conduct the investigation.”

What does this mean for employers?

It is important when making the initial decisions about investigating allegations to ensure that the complaint is dealt with in an objective, timely and thorough manner. This may mean considering an independent (third party) investigation in situations where:

employees are questioning the transparency or independence of an internal investigation;

there are power imbalances;

there are conflicts of interest;

an internal investigation cannot be conducted in a fair, impartial and transparent manner;

it may be more cost effective to outsource the investigation so management can continue doing other work; and

an employee is unlikely to accept the outcome of an internal investigation.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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