Show me the money – employee’s failed attempt at extortion resulted in justified dismissal

In a recent decision of the Fair Work Commission (FWC) (Heydon v The Highgate Group Pty Limited [2018] FWC 956), an employee’s summary dismissal was upheld after he tried to extort money from his employer and then deliberately withheld information about work health and safety (WHS) issues, forcing his employer to shut down a site for 1.5 days.

The employee was the Operations Manager for a business that designed, constructed and serviced adventure play and training facilities.

From about March 2017, the employee claimed to hold concerns about his employer’s compliance with its WHS obligations. The employer responded to his concerns by saying that its general manager and CEO were looking into the matters and were considering how best to address them.

About two months after his initial WHS complaint, the employee wrote to the CEO stating that he had lodged a general protections application with the FWC and intended to file an application for prosecution with SafeWork. The employee went on to write that he was “prepared to engage in without prejudice discussions to negotiate a mutual separation” before lodging the SafeWork application. He said that if an agreement could be reached, he would also withdraw his general protections application.

The employee subsequently provided the general manager with his proposal for a separation amount. The items listed totalled more than $85,000. This was rejected by the employer.

The employee then lodged the SafeWork application and continued to work.

About two weeks later, the employee again raised WHS concerns in an email to the CEO. He alleged that there were deficiencies in “the documents and other arrangements” at a site he had visited, which amounted to WHS breaches. The employee suggested in the “strongest possible terms” that the site be shut down and workers be stood down on full pay.

The CEO and general manager had concerns about the lack of detail in the email, noting that the employee would be absent from the workplace for some time after the email was sent.

As a result of the email, the site in question was closed down for 1.5 days and the employer consulted WorkSafe Victoria to assist in remedying any issues. The result was that paperwork needed to be put in place and some signage was “undertaken.”

Following the reopening of the site, the employer wrote to the employee outlining concerns it had with his behaviour. Those concerns were:

  1. In his email regarding WHS issues on the client’s site, the employee had deliberately withheld critical details. This unnecessarily resulted in a closedown of the site that could have been avoided had the employee provided a full and detailed report.

  2. In his earlier correspondence, the employee had attempted to extort money from his employer by making threats regarding his intention to lodge an application for prosecution with SafeWork.

Overall the employer viewed these actions as deliberate attempts to damage the employer’s business, including by damaging its reputation, thereby eroding the trust and confidence necessary of the continuation of the employment relationship.

The employee was invited to a meeting to discuss the allegations. The result of that meeting was the summary dismissal of the employee.

The employee claimed that he was unfairly dismissed.

As the employer was a small business at the time of the dismissal, the questions for the FWC in accordance with the Small Business Dismissal Code were:

  1. Did the CEO, who effected the dismissal, believe that the employee’s conduct was sufficiently serious to warrant immediate dismissal? and

  2. Was the CEO’s belief based on reasonable grounds?

The FWC found that the CEO did believe that the employee’s conduct was sufficiently serious to warrant summary dismissal because the CEO believed that the employee was attempting to damage the employer’s business through his actions. Specifically, the employee was trying to extort a large sum of money from the employer thereby causing it harm and was trying to damage the employer’s reputation by making claims about WHS breaches and causing the employer to close down a site for 1.5 days.

The FWC also found that the CEO’s belief was based on reasonable grounds. The FWC held that the correspondence sent by the employee in which he proposed “mutual separation” could reasonably be interpreted as an attempt to pressure the employer into paying the employee a large sum of money. The FWC also considered that the employee’s email alleging WHS breaches could reasonably be interpreted as deliberately lacking in detail so as to frustrate the employer’s attempts to investigate and remedy any alleged breaches.

Ultimately, the FWC concluded that the immediate dismissal of the employee was not inconsistent with the Small Business Dismissal Code and was therefore not unfair. The application was dismissed.

The FWC also commented (at paragraph [63]) that a reasonable person could form the view that the employee was:

 …using work health and safety as a pawn in a game. The safety of a workplace can be seriously undermined when work health and safety is high jacked for an ulterior motive. I am not making a finding that this occurred but the conjunction of events could lead a person to this belief.

Lessons for employers

It is, unfortunately, all too common for disgruntled employees to threaten to complain to a regulator or commence litigation against an employer when they feel that things are not going their way. Often this is a diversionary tactic resulting from some other workplace matter such as performance management or a professional disagreement.

Employers who receive such threats should always follow the course of action set out in their policies and procedures, or as required by the law. All tribunals, courts or regulators with which an employee can lodge a complaint or application will allow an employer the right of reply.

Baseless complaints or attempts at extortion are capable of amounting to serious misconduct, as exemplified in this case. Employers should always act swiftly when an employee commits serious misconduct and should commence a disciplinary process, which may result in termination of employment.

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

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.

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