Federal court awards largest ever adverse action payout

In brief 3 min read

A senior employee was awarded $5.2m after he was dismissed, with the Federal Court deciding his employer took adverse action against him and hence breached his employment contract.¹

How does this affect you?

If facing an adverse action claim, it's important to remember that:

• an employer must be able to prove that adverse action was not taken because of a prohibited reason; and
• the potential damages awarded to the employee are uncapped.

It's crucial for employers to properly consider workplace complaints and investigate if necessary, and to document decisions and steps taken.

Background

Mr Roohizadegan was summarily dismissed from his senior position at TechnologyOne (TechOne), after he lodged seven separate complaints of bullying. He took action against both TechOne and its CEO, arguing that he had been dismissed because of those complaints.

TechOne defended its actions, saying Mr Roohizadegan's dismissal had nothing to do with his complaints. Instead, the CEO had decided to dismiss him solely because of his continued poor performance, poor leadership and an inability work well with three senior managers over two years.

Mr Roohizadegan also said TechOne had breached his employment contract by consistently underpaying his incentive entitlements.

The decision

By making his complaints, Mr Roohizadegan had exercised workplace rights. The Federal Court decided that TechOne failed to prove the complaints were not a reason for his employment ending – an essential part of defending an adverse action claim.

The CEO was the sole decision maker in ending Mr Roohizadegan's employment. In the end, the court decided that the CEO was aware of Mr Roohizadegan's complaints and they were a factor in his reasons to dismiss Mr Roohizadegan. As a result, it had taken unlawful adverse action. The court rejected TechOne's evidence that Mr Roohizadegan was a poor performer, poor leader and problematic employee, as TechOne had not investigated these claims despite being repeatedly advised to do so by HR.

During his employment Mr Roohizadegan's daughter became seriously unwell, and his guilt about prioritising work had a significant impact on his family and personal life. No one at TechOne was aware of the effects on Mr Roohizadegan's mental health, since it did not have a material impact on his work. Ultimately, Mr Roohizadegan's dismissal resulted in him suffering a mental breakdown. The court decided that TechOne's conduct had aggravated Mr Roohizadegan's existing condition, which meant he lost his capacity to work and to ever work again in a similarly qualified role.

Mr Roohizadegan was also successful in his claim for breach of contract.

TechOne was ordered to pay a total of $5,221,410. The penalties were ordered to be paid to Mr Roohizadegan and included, amongst other things, damages for hurt and humiliation. TechOne's CEO was personally ordered to pay a penalty of $7,000.

TechOne is resisting the decision, so watch this space.