Legal Update

LEGAL CONSEQUENCES OF MISHANDLING WORKPLACE INVESTIGATIONS

Authors: Greg Robertson, Hannah Blottin & Aatish Budhwani

A recent decision of the Fair Work Commission provides a reminder that deficiencies in workplace investigations can create significant legal liability for employers. In Sewell v dnata Airport Services Pty Ltd [2025] FWC 2823, the Commission held that an employee’s resignation amounted to a dismissal under s 386(1)(b) of the Fair Work Act 2009 (Cth) (“FW Act”). That sub-section defines dismissal to include circumstances where a person has resigned from his or her employment but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer (often referred to as “constructive dismissal”). In this matter, the Commission found that flaws in the investigation process led to a loss of trust in the employer and left the employee with no real or effective choice but to resign. That dismissal was found to be unfair, and the employer was ordered to pay compensation of $36,468.39.

Factual Background

The employee was engaged as a Passenger Services Delivery Agent at Perth Airport and worked under an informal flexible arrangement to accommodate her university studies. On 9 March 2025, she was subjected to inappropriate comments by a male colleague, who asked what she would wear to a social event, suggested she “wear hijab with a short mini skirt”, and commented that “it would look really good”. The employee rejected the comments, left the interaction, and shortly afterwards spoke to two colleagues who encouraged her to report the incident. She made a complaint to a Duty Manager that same evening.

The employer commenced an investigation led by operational and human resources personnel. The offending employee was suspended and interviewed, and the complainant also participated in an interview. However, the investigation concluded that the allegations could not be substantiated on the basis that the accounts of the parties did not align.

Mishandling of the Workplace Investigation

The Commission identified fundamental deficiencies in the investigation process:

1. Failure to obtain relevant evidence
   The employee had spoken to two colleagues immediately after the incident, and those colleagues encouraged her to report the conduct. Despite this, the employer did not identify or interview either individual, nor did it make enquiries as to whether the employee had interacted with others shortly after the incident. The Commission emphasised that while the relevance of those witnesses could not be assumed, the failure to obtain their evidence meant that its potential value remained unknown.
2. Flawed substantiation approach
   The investigation proceeded on the apparent basis that simply because there was a misalignment between the accounts of the complainant and the alleged offender, the allegation could not be substantiated. The Commission rejected this approach, stating that allegations are not incapable of substantiation simply because the parties’ versions differ. Rather, conflicting evidence requires proper evaluation through a reasoned fact-finding process, including an assessment of credibility and consistency.
3. Unequal treatment of the complainant
   The offending employee received a written outcome shortly after the investigation concluded. In contrast, the complainant was only informed verbally at a later date and was required to request a written outcome, which was not provided until several weeks later following a further follow-up. The Commission found that this disparity failed to recognise the seriousness of the complaint and contributed to the complainant forming the view that the employer did not value her as an employee.
4. Delayed and ambiguous outcome letter
   The written outcome letter stated that the employer was unable to make findings in relation to some allegations, which was inconsistent with earlier verbal advice that the allegations were not substantiated.
5. Unreasonable burden on the complainant
   Following the investigation, the complainant requested not to be rostered with the offending employee. The employer responded that accommodating this request would require the complainant to move to a different role or airline. The Commission found no evidence that the employer had meaningfully considered relocating the offending employee or that there were genuine obstacles to doing so. In these circumstances, placing the burden of adjustment on the complainant was considered unreasonable.

Constructive Dismissal and Unfair Dismissal

The test for “constructive” dismissal under s 386(1)(b) of the FW Act is “whether the employer engaged in the conduct with the intention of bringing the employment to an end or whether the termination of the employment was the probable result of the employer’s conduct such that the employee had no effective or real choice but to resign”.

The Commission found that the cumulative effect of the employer’s investigation failures was “sufficiently egregious” to meet this threshold. In assessing whether this dismissal was unfair under s 387 of the FW Act, the Commission concluded there was no valid reason related to capacity or conduct. While some procedural considerations were neutral, significant weight was placed on the deficiencies in the investigation process, which ultimately led to a finding that the dismissal was unfair.

In relation to remedy, reinstatement was not pursued and was therefore not ordered. The Commission awarded compensation of $36,468.39, calculated on the basis that the employee would likely have remained employed for a further six months, equating to $40,452.91 in lost earnings, less $3,984.52 earned through subsequent casual employment.

Key Takeaways for Employers

When conducting an investigation, employers should:

1. Ensure relevant evidence is obtained: Employers should identify and obtain evidence from individuals who may have relevant knowledge of the events in question, including contemporaneous witnesses.
2. Ensure assessment of evidence is reasoned: Where accounts differ, the evidence should be properly evaluated and weighed, rather than treating inconsistency alone as determinative.
3. Maintain consistent treatment across parties: Employers should ensure consistency in how complainants and those the subject of the complaint are treated throughout the process, including in communications and outcomes.
4. Provide clear and timely communication: Outcome communications should be issued without undue delay and be consistent and clear to avoid confusion and loss of confidence in the process.
5. Ensure post-complaint arrangements are balanced: Employers should avoid placing the burden of workplace adjustments solely on the complainant and should consider reasonable alternatives.
   Be aware that process failures may create dismissal liability: Serious deficiencies in investigations can result in a resignation being characterised as a constructive dismissal and expose employers to unfair dismissal claims under the FW Act.

If you require legal advice or assistance with conducting a workplace investigation, please contact our Harmers team at + 61 2 9267 4322.

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