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Here's why businesses shouldn't rush to conclusions in employment investigations

A recent employment case in Australia demonstrates the importance of taking care with employment investigations and not rushing to conclusions.

workplace investigationGregory Sherry sued Toyota Australia in the District Court in New South Wales following his dismissal. Sherry had been sacked for what Toyota decided was improper use of his company credit card. After a six-day hearing, the court disagreed. One expects the hearing would have been much quicker (and cheaper) in our Employment Relations Authority.

Sherry had been told that he would be entitled to a redundancy payment of around A$380,000 (NZ$544,000) gross if he worked until a particular date. Sherry had worked for Toyota for about 20 years at the time, having risen through the ranks. He decided to work until that date. Unfortunately, he was sacked three days beforehand for serious misconduct. Toyota said he would get none of the redundancy compensation promised because he was dismissed before he was made redundant.

Sherry was required to go to Port Melbourne from Sydney for meetings with his successor and others in the period leading up to his redundancy. He took his family with him and paid for their travel with his personal credit card. They stayed with him in the hotel he had booked at the company’s expense and did not require extra bedding.

The company alleged many things. One was that Sherry booked a larger room than he ought to have booked, so that he could squeeze his family in. The Australian Open was on in Melbourne at the time and hotel accommodation was both hard to get and more expensive. The court rejected the company’s argument. Indeed, the court ultimately rejected the company’s allegation that Sherry was guilty of serious misconduct at all.

Sherry had acted ineptly but not dishonestly or unethically. This was not sufficiently serious to justify his dismissal.

It appears that Sherry and his family went to the Common Man restaurant for a meal prior to catching the flight back to Sydney at the conclusion of the business trip to Melbourne. Sherry separated family expenses by paying for their costs on his personal credit card.

He charged the company for his own meal and a beer – the princely sum of A$32.50. Sherry gave two slices of leftover pizza from his own meal to his son. The company relied on this as one of its grounds for dismissal. It alleged that he had spent company money to buy food for his son when he ought not to have done so.

The company seemed to make a big deal of this, but the Judge found that none of the evidence relating to the meal established serious misconduct. Sherry’s dismissal was unjustified.

Sherry wanted as one of his remedies the full redundancy compensation payment. He won that argument, but the final amount awarded to him was adjusted for an ex-gratia payment made by the company and some fine-tuning on expenses.

One of the court’s concerns was that Toyota had not approached the investigation with an open mind and that it had rushed the investigation. There was evidence that Toyota had already made its mind up before it heard from him in an investigation meeting called without forewarning.

I have no doubt that the case would have been decided the same way in New Zealand.

In 2019 our Employment Court heard a claim by a Department of Conservation ranger.

DOC policy requires employees to advise their supervisor immediately if their driving licence is suspended. The ranger advised his manager when his application for a limited licence was declined, some six weeks after he had been suspended from driving. He had driven a DOC vehicle in the meantime.

The worker was challenging some of the demerit points that had been used against him and raised that with DOC during the disciplinary process. The court held that the process was defective and that DOC did not approach the investigation with a sufficiently open mind.

The chief judge also held that the worker deliberately failed to promptly disclose that his licence was suspended, and that he drove the work vehicle during the suspension. The chief judge said that a fair and reasonable employer could have upheld serious misconduct and dismissed.

This contribution by the worker saw his compensation reduced, but nonetheless he won his case due the to the deficiencies in DOC’s process. The worker got reasonably significant remedies but failed to get reinstatement, which is what he was really after.

Two interesting cases where each worker got a significant sum of money for an unjustified dismissal. Neither retained employment.

In the Toyota case there was a genuine redundancy with the transfer of work to the head office at Port Melbourne. In the DOC case the relationship was too badly damaged to reinstate the worker.

In both cases the employer could have avoided significant expense by slowing down and giving their long-standing employees a fair hearing.