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Federal Court orders $5.2 million bullying payout

14 October 2020

The Federal Court has heard that publically listed company TechnologyOne Ltd took adverse action for raising a bullying complaint. Read this review of the case from our expert team in Australia.

 

The Federal Court has heard that publically listed company TechnologyOne Ltd (one of Australia’s biggest software companies) and its CEO Adrian Di Marco, took adverse action against former Victorian Regional Manager Benham Roohizadegan, for raising a bullying complaint. In doing so, Justice Kerr found that Mr Di Marco chose to "stand with the bullies rather than the bullied". 

Below, we discuss the findings in Roohizadegan v TechnologyOne Limited (No 2) [2020] 1407 (2 October 2020) and the important lessons for employers arising out of this decision. 

Facts

On 3 July 2006, Mr Roohizadegan commenced employment with TechnologyOne Ltd (TechnologyOne) in the position of Victorian State Manager. From the time Mr Roohizadegan was employed at TechnologyOne, the company experienced exponential growth in Victoria. The company's growth was reflected in Mr Roohizadegan’s gross annual income, which increased from $208,932 in the 2006/07 financial year to $845,128 in the 2015/16 financial year. In 2015, Mr Roohizadegan was promoted to Regional General Manager. 

However, there was an apparent toxic corporate culture at TechnologyOne which manifested in complaints being made by and against Mr Roohizadegan. Mr Roohizadegan pled that he made seven complaints to his employer in relation to his employment, and that these were individually or severally the reason for his dismissal or were included as a reason for that action. 

On 3 February 2016, Mr Roohizadegan purportedly made the first of his complaints to Mr Di Marco. He complained that a subordinate was undermining him in his role in managing the Victorian region, following a dispute as to who to hire in a role which resulted in the subordinate threatening that "one of them would have to go". Subsequently, Mr Roohizadegan alleged staff in his team began "marginalising him" and that his team were making decisions behind his back. 

On 24 April 2016, a TechnologyOne HR Business Partner sent an email to the HR Director informing her about complaints made against Mr Roohizadegan by the sales staff of TechnologyOne with whom she had met in Melbourne during a recent trip. This email also explained that Mr Roohizadegan had told her he was considering making a bullying claim and taking legal action against a colleague. When this email was forwarded to Mr Di Marco, he described it as the worst he had seen in 35 years in the business. TechnologyOne argued that Mr Di Marco upon receipt of this email decided to terminate Mr Roohizadegan's employment. However, they would not terminate him immediately in order for him to complete the project he was working on at the time. 

On 25 April 2016, Mr Roohizadegan sent an email to Mr Di Marco which contained, amongst other things, complaints of bullying against some of his colleagues as he was being excluded from key client meetings. TechnologyOne's HR Business Partner had cursory discussions with the individuals that Mr Roohizadegan had alleged were bullying him. These individuals were also named in Mr Roohizadegan's email. However, TechnologyOne never formally investigated Mr Roohizadegan's complaints. The HR Director warned Mr Di Marco against terminating Mr Roohizadegan's employment without an investigation into the bullying complaints he had raised.  

On 18 May 2016, Mr Roohizadegan attended a meeting at TechnologyOne's offices. At this time he was on a period of stress leave as a result of the conduct he had complained about, and subsequent complaints which had been made against him. At this meeting, Mr Roohizadegan's employment was summarily terminated by Mr Di Marco. Consequently, Mr Roohizadegan brought a claim against TechnologyOne alleging adverse action as a result of his bullying complaints, and a claim for breach of contract in relation to non-payment of incentives since 2009.   

Findings 

Justice Kerr found that both TechnologyOne and Mr Di Marco (in his individual capacity) had breached the Fair Work Act 2009 (Cth) (Fair Work Act) and took adverse action against Mr Roohizadegan by terminating his employment after he exercised a workplace right. Specifically, the workplace right exercised by Mr Roohizadegan was that he made complaints regarding bullying by his colleagues.  

Justice Kerr found that Mr Di Marco chose to "stand with the bullies rather than the bullied" by choosing to terminate Mr Roohizadegan rather than those who bullied him. 

Orders

Justice Kerr fined Mr Di Marco $7,000 and TechnologyOne $40,000 for their respective breaches of the Fair Work Act. 

Justice Kerr also ordered that TechnologyOne pay Mr Roohizadegan:

  • $2,825,000 in respect of his future economic loss;
  • $756,410 in forgone share options;
  • $1,590,000 in damages for breach of contract; and
  • $10,000 in general damages.
This is one of the biggest payouts to a former employee we have seen in quite some time. 

TechnologyOne has already indicated that it intends to appeal Justice Kerr's decision. 

 

Lessons for employers

This case highlighted the importance of ensuring that company policies and procedures are followed in circumstances where an employee makes a complaint of bullying, or any other complaint in relation to their employment. Where necessary, employers should also consider undertaking formal investigations into workplace complaints and grievances and where appropriate, engaging an external investigator under privilege to undertake workplace investigations. 

Employers ought to be aware of the reverse onus of proof which exists under section 361 of the Fair Work Act. If it is alleged that an employer took an action for a particular reason or with a particular intent, it is presumed that the action was taken for the alleged reason or intent, unless the employer is able to prove otherwise. This is often a difficult hurdle for employers to overcome. 

It is also equally as important that employers stay in touch with their employees, in order to have an ongoing understanding of the culture of the business. This is particularly important in the current COVID-19 circumstances where many employees may be working remotely and/or in modified roles. 

If you require further information or have any queries in relation to this legal update, please contact Matthew Smith, George Haros or Christina Tsakiris.

We would like to acknowledge the contribution of Grant Klemm to this article.

Further Reading

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