Worker loses $180,000 redundancy payout due to fraud – how an employer’s thorough workplace investigation stood up to judicial scrutiny

Worker loses $180,000 redundancy payout due to fraud – how an employer’s thorough workplace investigation stood up to judicial scrutiny

Are you confident that your workplace investigation process is fair and can be successfully defended against legal claims brought on by employees?

A flawed investigation could lead to serious consequences for the employer as evidenced by past FWC decisions where employees were either reinstated or awarded compensation in spite of the actual misconduct being justified but for the flawed process in determining the reason behind the employer’s decision to dismiss an employee.

On the upside, the more sound and procedurally fair a workplace investigation is, the better it will stand up to external testing; minimising the financial risk of a legal claim not to mention the higher likelihood of a much swifter legal proceeding, if any. A recent court ruling by FWC is a case in point of a short and sweet proceeding, spanning just over four months between October 2015 and February this year, favouring the employer’s decision to summarily dismiss a worker. 

In spite of a spotless disciplinary history in his 28 years with the employer (a national manufacturer) and his intention to continue working until it closed in 2017 for his entitlement to a redundancy payment, the former employee was unsuccessful in his attempt to claim compensation for being summarily dismissed. The long-serving employee was sacked when the employer’s investigations revealed that he had been working on his investment property “performing a range of activities wholly inconsistent with his alleged incapacity” whilst he had been claiming and obtaining workers’ compensation for a lower-back injury.

As a result of his termination, the sacked worker lost not only his entitlement to a redundancy payout of around $180,000 but also lost access to opportunities for retraining and other services associated with the employer’s impending closure of its manufacturing operations in 2017.

In 2003, the employee claimed workers’ compensation for a lower-back injury followed by a number of other claims of injury aggravation. Between 29 June and 18 July last year, he visited his doctor again on several occasions claiming further aggravation to his back injury. His doctor certified him totally unfit for work during that period with a return to modified duties thereafter. He lodged a claim for workers’ compensation for the period in question and also started receiving weekly payments.

However, covert surveillance undertaken by the employer during this time captured him engaging in significant physical activity on his investment property such as hammering, sawing, lifting and carrying equipment. These occurred over substantial periods of time which the employer considered to be contrary to his “totally unfit for work” claim. When the employer showed the surveillance to both his doctor and an independent medical specialist, they immediately signed a “cease to be incapacitated” certificate after viewing the film.

Following this, the employer suspended the employee on full pay advising him of the investigations being undertaken. During meetings, the employee and his representatives were advised of the allegations made against him and given the chance to view an abridged surveillance footage with the opportunity for him to respond to the allegations.

This led to his summary dismissal last September for dishonestly presenting with an injury and claiming workers’ compensation and for the serious, wilful misconduct of claiming to be incapacitated while simultaneously performing activities inconsistent with his alleged incapacity.

The Court did not find his dismissal unfair as the employee had “deliberately and repeatedly” misled his doctors and the employer, fraudulently claiming compensation while not heeding medical advice and risking further exacerbation to his existing injury. Rather, the Court noted how the employer had provided ample opportunities for the employee to explain his actions and had based its decision for a summary dismissal on a “credible and particularly thorough investigation”.

iHR Australia is a leading provider of workplace investigation services and workplace investigation officer training courses to organisations around Australia that are dealing with allegations of inappropriate workplace behaviour. Our expert investigators are senior professionals with qualifications and experience in legal, HR and Employee Relations highly regarded by our clients for their focused, sensitive and impartial approach. Our range of services ensures that procedural fairness and natural justice requirements are met, bringing credibility and impartiality to the issue at hand and offers a balanced, pragmatic view to determine the best way forward.

iHR Australia also offers to undertake reviews of internally conducted workplace investigations to help ensure they are sound and able to stand up to external testing.