A well-known Australian retailer has sacked an employee after finding out he sexually harassed a colleague in a former organisation over ten years ago. So how should HR professionals handle historic wrongdoing cases?

They say the past always comes back to haunt you, but what if you’ve already paid the price for your actions? Should you continue to be punished for your prior mistakes?

A large Australian retailer was recently faced with these questions when it found out that a 53-year-old pricing coordinator it had recently hired and promoted was previously found to have sexually harassed a co-worker when he worked as an accountant with a different organisation in 2009.

In October 2021, a month after the retailer had promoted the coordinator, he claimed it made the decision to summarily dismiss him when it became aware of the Federal Court’s 2013 finding against him.

The coordinator says the response was “outright vengeful”, according to Workplace Express [gated], and is now suing the company, claiming he has been discriminated against. 

The coordinator has asked to be reinstated or for $167,000 to cover two years’ lost wages (he says it could take a man of his age that long to find employment now that he has been banned from being readmitted as an accountant) as well as general damages.

HRM has reached out to the employer for comment and is yet to hear back, but according to reports from the AFR, a spokesperson confirmed that the coordinator was let go during his probation period and that it will be defending the claims made against it, if its submission to have the lawsuit thrown out on 29 March isn’t successful.

So how should employers respond when they learn of an employee’s toxic past? And at what point is someone legally entitled to a second chance? HRM put these questions to Michael Byrnes, Partner at Swaab law firm.

Facts of the initial case

In order to make a call about whether or not the employer’s response was reasonable and proportionate to the behaviour, we first need to briefly unpack the details of the initial court case.

In 2013, the coordinator – then a contracted accountant with a recreational organisation – was ordered to pay $476,163 in damages, lost wages (past and future) and medical expenses for the verbal and physical harassment of a supervisor he worked with in May 2009. At the time, this was one of Australia’s largest sexual harassment payouts. However, he was not criminally charged.

According to the court’s notes, the coordinator made “vulgar and explicit” comments towards the supervisor at a work social event and then “engaged in unwelcome sexual intercourse” with her while she was “heavily intoxicated”.

The coordinator claimed he and the supervisor had been engaging in consensual sexual behaviour.

In an exchange between the supervisor and coordinator, the supervisor denied the behaviour was consensual (see section 212 of the court documents) and Justice Mordy Bromberg noted that the supervisor was left with post-traumatic stress from the events as well as psychiatric illnesses, which could impact her ability to work in the future. 

The court documents noted: 

“Prior to the harassment, [the supervisor] was a confident, highly functioning individual who was outgoing and socially active. Her reaction to the sexual harassment has resulted in dramatic changes to both her personality and her lifestyle.

In the period between the harassment and the trial, [the supervisor] spent most of her time at home alone. She was frequently teary. She had difficulty sleeping and experienced recurring nightmares which caused her to grind her teeth and required her to wear a protective mouthguard to bed. She was often crippled with fear and suffered from agoraphobia. She was scared to take public transport and her fear of [the coordinator] led her to install security cameras in her former home.”

The supervisor resigned from her role five months after the harassment took place.

Initially, the coordinator argued that he and the supervisor weren’t technically co-workers, as he was a contractor, and that the physical harassment hadn’t occurred in the workplace as it took place in a corridor between the office and its lifts.

Bromberg rejected this claim, stating: the “objective of eliminating sexual harassment in the workplace would be significantly undermined if associated common areas such as entrances, lifts, corridors, kitchens and toilets were construed as falling beyond the geographical scope.”

And while the fact that the two were not offical colleagues protected the coordinator from elements of the Sex Discrimination Act, Bromberg found he had still breached s28B(6) of the Act, which prohibits sexual harassment from “workplace participants” – a section that was added to protect employees from the behaviour of onsite visitors.

 “There’s no obligation on an employee to positively disclose that they’ve had an adverse finding of this kind against them. So it’s incumbent on employers… to ask the right questions.” – Michael Byrnes, Partner, Swaab.

In assessing the claims of sexual harassment, Bromberg had to weigh up conflicting accounts from the supervisor and the coordinator.

Ultimately, Bromberg looked at the previous character of the individuals, claiming the supervisor was someone who had proven to be “a hardworking individual” who was “an honest person [and] respectful of the truth”. However, he determined that the coordinator was “an arrogant individual with little or no regard for the truth”.

Ultimately, the court sided with the supervisor.

Do employees have to disclose their past?

There’s no denying that claims made in this case are serious, but, from a legal perspective, is the coordinator entitled to a second chance after paying for his behaviour, both financially and from a reputational standpoint?

The coordinator claimed there’s no evidence he has been or would be a serial offender, and that he should be afforded the legal right to employment.

“A tribunal likely won’t just assume that an employee is going to engage in similar conduct again… the conclusion might be reached that they’ve ‘done the crime, done the time,'” says Byrnes.

There are rare exceptions to this, he adds, when dealing with criminal conviction matters.

“There are circumstances where some people are absolutely prohibited from performing certain jobs, for instance working with children or vulnerable people.”

Another example would be if someone’s credibility and honesty has been put into question by engaging in theft or fraud. In that case, an employer might have good reason not to entrust them with managing large sums of money, if that was an inherent requirement of the role.

“It is legitimate and appropriate for an employer to take account of a previous adverse finding of this kind when making a recruitment decision,” says Byrnes.

“But there’s no obligation on an employee to positively disclose [i.e. volunteer this information] that they’ve had an adverse finding of this kind against them. So it’s incumbent on employers who want to know whether there have been any adverse findings of this kind, whether they be criminal or civil, to ask the right questions.”

If an employee is asked, ‘Have you ever had any civil cases brought against you related to employment matters?’ and they had but said ‘no’, that could be a different story.

“An employee would need to answer such a question honestly. And then the failure to answer the question honestly could become the basis of termination of employment.”

The strength of the ground for dismissal would be determined by the gravity of the deception, he says. White lies about trivial matters are highly unlikely to come back to bite (after all, who hasn’t stretched the truth in a job interview before?). But significant lies that put the company or its people at risk could form the basis of a termination.

What is the coordinator actually claiming?

While the basis of the coordinator’s lawsuit is that he believes his dismissal was without merit, he is also claiming that the retailer took adverse action against him due to his ‘social origins’. 

Under the Fair Work Act s351(1), employees are protected from discrimination due to their social origins, which usually includes their ‘class, caste or social-occupational category’ but could also cover the way in which someone is regarded within a group of people.

While it’s unclear how this applies to the current circumstances (it will become clearer if the case is heard in the following months), Byrnes says this claim is “very rarely used”.

“It’s not yet apparent if he will be able to rely on this ground for a claim,” he says. “Because you need to be able to show that [the behaviour] is unlawful under either the Federal legislation – and social origins isn’t unlawful under the applicable Federal laws – or the state legislation in which the conduct occurred.”

(You can read more about social origin protections here). 

The retailer has rejected the discrimination allegation, as well as the allegation that it had breached the employment contract “without merit or reasonable basis”.

Ensure you follow the right processes

Another accusation the coordinator made against the retailer was that it failed to discuss the matter with him when it became aware of his past before summarily dismissing him, according to Workplace Express.

Whether or not this is true, Byrnes says it’s important for employers to consider procedural fairness when investigating matters of this nature.

“It’s a two-step approach,” he says. “First, it would be prudent to present your preliminary findings to the employee about the adverse finding or event and give them the opportunity to explain it and provide some context.

“Secondly, having heard that, if you’ve formed the view that their employment should be terminated, give the employee an opportunity to make a submission as to why their employment shouldn’t be terminated, if they wish to, and then consider that submission.”

This is an imperative step if employees have access to the unfair dismissal jurisdiction – i.e. if their employment is covered by a modern award or enterprise agreement, or they fall under the high-income threshold, and have served the minimum employment period (6 months for most employees, 12 months for those employed by a small business)), as it demonstrates that you’ve followed a procedurally fair process. This can work in an employer’s favour in the event of a claim.

How can employers protect themselves?

It’s best to conduct a risk assessment prior to making decisions about terminating employees for past behaviour, says Byrnes.

This could include whether the behaviour would prohibit them from performing their job and whether their employment poses any risks to the health and safety of the rest of your workforce.

A simple way to protect your company from both making a bad hire and ending up in front of the court could be to ask more questions of candidates at the start of the employment journey.

While questions about someone’s criminal history are commonplace in the hiring process, it’s less common to ask of someone’s civil law history. Byrnes suggests expanding the question to include civil matters related to issues of bullying, sexual harassment or other forms of serious misconduct.

However, when doing this you need to be careful about asking questions about spent criminal convictions, which usually cover convictions made over ten years ago (less for juvenile offenses).

Spent conviction schemes are in place prevent discrimination on the basis of previous less serious convictions and they vary state by state. You can view the various state rules here.

It’s best to make a call about whether or not you’ll factor civil matters into your recruitment processes early in the piece, says Byrnes.

“If the question hasn’t been asked and is subsequently raised after the person has been employed, it’s much harder for an employer to terminate them.”

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