“Toxic” husband and wife bully-fest ends in court: the importance of establishing a healthy workplace culture

A court has upheld a management consultancy’s sacking of a senior employee for her role in bullying her colleagues and creating a “toxic” work environment. It also found that they did not take unlawful adverse action because she lodged a workers compensation claim, although they did not give her adequate notice of dismissal.

The Federal Circuit Court accepted evidence from the chair and a director of the company that they decided to dismiss the senior consultant for misconduct before she lodged a workers compensation claim.

The decision to remove the consultant was made after receiving a report from an investigator containing what the chair described as “an overwhelming amount of damning evidence” against the senior consultant and her husband, the organisation’s managing director, who was also summarily dismissed.

On the basis of that evidence, the chair came to the view that the consultant and her husband had created a “toxic work environment” in which they had “simply picked off employees and got rid of those they disliked, using [the company’s] funds to pay them off”.

The chair told the director that he was appalled at the extent of the pair’s bullying behaviour and the company had no choice but to dismiss both of them for gross misconduct.

The judge said the “expressed reasons” given by company’s chair and director for dismissing the senior consultant “were their actual reasons and were based solely on their belief that the [senior consultant] had engaged in bullying and harassment of other employees and ex-employees and that any return by her to work was untenable because of the effect it would have on other staff and the business”.

She said the evidence indicated that the senior consultant’s workers compensation claim played no part in the decision to dismiss her.

The employee claimed that her dismissal amounted to adverse action in contravention of the general protection provisions of the FWA, in particular ss.340 and 351 of the Act. She alleged that her employment was terminated for the reason or reasons that included the reason that she had a workplace right consisting of a right to make a claim under the Workers Compensation Act 1987 (NSW); that she exercised her workplace right, including by lodging a claim for workers’ compensation payments with HSA’s insurer; and/or that she had a mental disability for the purposes of s.351 of the FWA.

The court ruled that the company breached the senior consultant’s employment contract by failing to give her notice, and contravened notice requirements under s44 of the Fair Work Act. It also found the chair and director were involved in the statutory notice breach.

The court will hold a further hearing to consider ordering penalties for the notice breaches. iHR believes this case underlines the need for managers to recognise their responsibility as custodians of an organisation’s workplace culture.