MDC Legal lawyer Gemma Little discusses whether an employee can be dismissed for making a vexatious or baseless complaint in the workplace. The employer will likely need to divert considerable resources away from the business to respond to, investigate and manage the complaint, and it is likely to be a stressful and destabilising matter, Gemma writes.
What can an employer do if an employee makes vexatious or baseless complaints in the pursuit of some ulterior purpose? These complaints might be made within the business or organisation, for example to a supervisor, HR or the Board, or externally, for example by way of a bullying application to the Fair Work Commission.
In either case, the employer will likely be required to divert considerable resources away from the business or organisation to respond to, investigate and manage the complaint, and it is likely to be a stressful and destabilising matter for the business and those affected.
Moreover, care is required to avoid the risk inherent in responding adversely to such complaints. Taking disciplinary action against the employee because they have made a complaint risks a claim that the employer has breached the employee’s general protections. The Fair Work Act 2009 (Cth) (FW Act) prohibits an employer from taking adverse action against an employee because, amongst other things, they make a complaint or enquiry in relation to their employment: section 340.
However, from an employer’s perspective, the vexatious nature of the complaint must be dealt with to avoid anarchic or capricious workplace practices.
This article will consider how courts have approached the issue and discuss how an employer may effectively manage vexatious complaints to mitigate the risk of legal claims.
The case law: Shea
The difficulties associated with managing vexatious complaints were considered by the Federal Court in Shea v TRUenergy Services Pty Ltd (No 6)  FCA 271.
Ms Shea alleged that her employer made her position redundant because she made various complaints, including that she had been sexually harassed by the Chief Financial Officer on a work trip, that the Chief Executive Officer had engaged in sexual misconduct towards other employees, and that the investigation of her complaints was deficient.
TRUenergy argued that a number of Ms Shea’s complaints were not valid complaints made in good faith, but rather “grave accusations of serious misconduct by other employees whichwere largely based only on rumour or gossip.”
Ms Shea, on the other hand, argued that her complaints were genuinely made in good faith but that, in any case, the general protections provisions of the FW Act did not require complaints to express a bona fide grievance, be capable of proof or substantiation, or be made in good faith.
In this context, Judge Dodds-Streeton found that, to be an exercise of a workplace right within the meaning of the FW Act, a complaint:
- need not be factually correct, substantiated, proved or ultimately established; but
- must be genuinely held or considered valid by the complainant; and
- must be made in good faith and for a proper purpose.
A “proper purpose” when making a complaint was considered to be “giving notification of the grievance, accusation or finding of fault so that it may be, at least, received and, where appropriate, investigated or redressed.”
While the object of the general protection provisions is to protect employees from retribution because they have made a complaint in relation to their employment, Dodds-Streeton J stated that it does not follow that the making of false, baseless, unreasonable or contrived accusations invokes the statutory protection. In Dodds-Streeton J’s view, a complaint made for some ulterior purpose or collateral advantage would not invoke the statutory protection.
Further, Dodds-Streeton J noted that, to protect its employees, an employer must discipline or restrain an employee who is making baseless and damaging accusations of misconduct against other employees in an abusive or threatening manner. The statutory protection should not operate to secure immunity from the consequences of misconduct.
Dodds-Streeton J ultimately found there was no reasonable basis for a number of Ms Shea’s complaints, and that she did not genuinely hold those grievances or communicate them in good faith or for a proper purpose. Therefore, these complaints were not an exercise of a workplace right within the meaning of the FW Act. In any case, Dodds-Streeton J found that the complaints did not form part of the reasoning in the decision to make Ms Shea’s position redundant. As such, Ms Shea’s general protections claim failed.
Ms Shea appealed the decision to the Full Court of the Federal Court: Shea v EnergyAustralia Services Pty Ltd FCAFC 167.
The appeal was dismissed. However, in its judgement, the Full Court cautioned that:
- “considerable care” needs to be exercised before constraining the meaning of the exercise of a workplace right to make a complaint; and
- “to too readily imply” the need for the complaint to be genuine or bona fide may discourage those who may have mixed motivates for making a complaint.
However, because the Full Court found that Ms Shea’s complaints were not part of the reasoning in making her position redundant, it was not necessary to decide whether Dodds-Streeton J was correct in finding that a complaint must be genuine to be the exercise of a workplace right within the meaning of the FW Act.
Post-Shea – the drawing of fine lines
Following the Shea cases, the issue remains unresolved. In light of the Full Court’s caution, courts have been unwilling to find that a complaint must be genuine to be considered the exercise of a workplace right. However, as the following cases demonstrate, it appears that courts are prepared to make fine and, at times, tenuous distinctions between the vexatious complaint and the consequences flowing from it, such as a loss of trust and confidence, resulting in the general protections claims flowing from such complaints failing. The following three cases are illustrative of this.
Wilson v Victorian Aboriginal Health Service Cooperative Limited  FCCA 3237
Mr Wilson brought a general protections claim alleging that his employer terminated his employment because he made complaints. These complaints included that clients of the employer’s service were bullying, harassing and racially discriminating against him when they talked, laughed and looked at him when he walked through the waiting area, and that the Chief Executive Officer bullied, victimised and racially discriminated against him by not appropriately dealing with his complaints.
An independent investigation into Mr Wilson’s complaints found that they had no basis in fact, that at least one complaint was “nothing more than fabrication” (and which Mr Wilson admitted he knew was false), and that the complaints were “completely vexatious and trivial”, motivated by a desire to damage the reputations and careers of those he complained against.
The employer defended the claim on the basis that it terminated Mr Wilson’s employment because of gross misconduct, consisting of making false claims against senior members of the management team.
Judge Riley considered the Shea cases and concluded that, in light of the Full Court’s caution, he ought not to apply Dodds-Streeton J’s findings. Rather, Riley J considered that the “better approach” was to proceed on the basis that Mr Wilson’s complaints were exercises of workplace rights within the meaning of the FW Act.
However, Riley J found that the employer dismissed Mr Wilson, not because he made complaints, but because the complaints he made “were worded in such a way that they destroyed any possibility of a viable working relationship with senior management”; and that the employment relationship had broken down irretrievably.
Mr Wilson’s general protections claim was dismissed.
Mikulic v Ecolab Pty Ltd  FCCA 146
Ms Mikulic alleged that Ecolab dismissed her because she made complaints about her supervisor engaging in bullying behaviour towards her. An investigation into Ms Mikulic’s complaints found them to be unsubstantiated.
Ecolab submitted that Ms Mikulic’s complaints were not made in good faith but were a tactical response to management of her performance. Evidence in support of this submission included an email from Ms Mikulic to a friend which stated:
They are trying to get rid of me but I am giving them a hard time. YOU KNOW HOW DIFFICULT I CAN BE ESPECIALLY WHEN I THINK THAT I AM RIGHT.
Judge Cameron stated that it was not necessary to determine whether Ms Mikulic believed in her complaints or not. Cameron J accepted, without deciding, that the complaints Ms Mikulic made were an exercise of a workplace right within the meaning of the FW Act; while noting that “the meaning of ‘complaint’ is not finally settled”.
Ultimately, Cameron J held that Ms Mikulic’s complaints evidenced two fundamental problems:
- an inability to work harmoniously with her supervisor and thus to function effectively as a member of the team; and
- a propensity to make allegations against her supervisor that were not, upon inquiry, made out.
In relation to the latter issue, Cameron J considered that it was not unreasonable for Ecolab to conclude, as it did, that Ms Mikulic was not being truthful and accurate in her complaints. As such, Cameron J accepted that Ecolab had lost trust and confidence in Ms Mikulic.
Cameron J held that these were the reasons motivating Ecolab’s decision to dismiss Ms Mikulic, rather than because she made complaints.
Ms Mikulic’s general protections claim was dismissed.
Morley v Monza Imports Australia Pty Ltd  FCCA 622
Ms Morley claimed that Monza dismissed her because she made complaints, including about inappropriate behaviour by an employee (Mr P) towards her (in 2012) and other employees (in 2015) at work Christmas parties.
Ms Morley’s complaints about the inappropriate behaviour were investigated and found to be unsubstantiated. During the course of the investigation, it came to light that Ms Morley harassed, intimidated and pressured employees to corroborate her complaints and to raise other complaints. These employees said that they felt Ms Morley dramatised Mr P’s behaviour and that they did not consider that the matter required investigation.
In this context, Judge Reithmuller reiterated that the mere fact that a complaint is not substantiated does not make it a complaint that was not genuinely held or otherwise made in good faith. However, Reithmuller J went on to state that it is easy to imagine some complaints being so frivolous or vexatious, or simply made for ulterior motives, that the conduct of the employee could not be intended to be protected by the FW Act.
Monza argued that it dismissed Ms Morley, not because she made complaints, but because of her unwillingness to accept the outcome of the company’s investigation, and the pressure she put on other employees to continue to agitate the complaints.
Ultimately, Reithmuller J held that “the making of complaints per se” was not a reason for Ms Morley’s dismissal, but rather her dismissal was by reason of her harassment and intimidation of staff associated with her complaint and her inability to reasonably engage with the company on the outcome of the investigation.
Ms Morley’s general protections claims was dismissed.
Takeaways for employers
Where does this leave an employer who is managing an employee who makes damaging, baseless or vexatious complaints for some collateral advantage?
Whether a complaint must be genuinely held or made for a proper purpose for the purposes of a general protections claim is unresolved and, in the absence of affirmative authority, courts are unwilling to restrict the operation of the general protections provisions in the FW Act in this way.
However, not all is lost. There is an obvious need to balance the legitimate interests of both employees and employers in a manner consistent with the objects of the FW Act and the general protections provisions. The courts do recognise the irrationality of an employer being unable to take disciplinary action, up to and including termination, against an employee who makes vexatious complaints.
Courts appear willing to draw a distinction between the complaints and matters closely connected to or resulting from the complaints, for example by having regard to the complaints as a basis for determining that the employee is unable to work with supervisors, management or within a team; or to conclude that the employer has lost trust and confidence in the employee; or that there has been an irretrievable breakdown in the employment relationship.
Taking disciplinary action against employees who make vexatious complaints is not without risk; however, with careful management and a strategic approach focussed on assessment of the employee’s ability to work within the company/ organisation or with key employees, rather than on the employee’s complaints, the risk can be mitigated.
MDC Legal regularly assists employers to successfully navigate these and many other challenging situations. If you would like advice or assistance, please contact our office on (08) 9288 4000.
Gemma Little (BA/LLB Hons, University of Western Australia) is a Lawyer at MDC Legal. Gemma completed a Bachelor of Laws with Honours and a Bachelor of Arts majoring in Psychology at the University of Western Australia in 2015. Gemma has worked in employment law since 2013, first as a paralegal and then as a lawyer. She has a broad range of experience in providing advice and assistance to both employees and employers. Gemma’s experience includes assisting in statutory and contractual-based claims; drafting employment contracts and workplace policies; and providing legal and strategic advice on employee and employer rights and obligations, transfer of businesses, workplace investigations, disciplinary action, restructuring and redundancy and post-employment restraints. Contact Gemma at [email protected]