No harassment, no unfair dismissal – ruling clears Energy Australia

On March 25th, an application against Energy Australia made by a former director of corporate affairs was dismissed at the Federal Court by Justice Julie Ann Dodds-Streeton. Former Energy Australia employee Kate Shea claimed that she had been made redundant in 2012 as retribution for sexual harassment complaints made previously and this was found not to have been the case.

Justice Dodds-Streeton stated that Energy Australia had sound business reasons for making the redundancy and Ms Shea’s claims had no reasonable basis and were made for personal gain rather than in good faith.

The allegations

The claims that were previously made against Energy Australia included allegations that managing director Richard McIndoe was previously involved in sexual harassment against a female employee at a party in 2006. Ms Shea also claimed that she had been the victim of sexual harassment in 2010 by then chief financial officer Kevin Holmes and that Energy Australia had a corporate culture in which sexual harassment was condoned.

An investigation was undertaken relating to Ms Shea’s complaints in 2011 and the results found that although Mr Holmes had made contact with her he had not sexually harassed her. After the investigation, Ms Shea sent a letter to Mr McIndoe accusing him, along with the CFO and the company’s HR director of concealing evidence and working to cover up a culture of sexual harassment within the organisation.

The letter is said to have contained a number of demands including one for a financial settlement, and threats that if the demands weren’t met in a specific time frame the letter would be sent to Energy Australia’s parent company in Hong Kong, CLP Holdings Limited. Ms Shea received a sum of $133,000 and returned to work in October 2011. She and her personal assistant were made redundant four months later after a company restructure.

The outcome

Justice Dodds-Streeton noted that Section 341 of the Fair Work Act 2009 has not yet been thoroughly tested from a judicial standpoint, and that there are still a number of significant aspects which are left unaddressed. Although there is no requirement for complaints made against a company to be justified or for an accusation to be true or proven, there is still a requirement for claims to be reasonable and genuinely held by the complainant. According to Justice Dodds-Streeton, the claims made by Ms Shea weren’t made in good faith but purely from the motivation of financial gain. The judge stated that she wasn’t convinced that Ms Shea had any real belief that her former colleagues’ conduct amounted to sexual harassment and this was apparent in her conduct as a witness.

The judge also determined that complaints made against an organisation need to be underpinned by a right or an entitlement. In Ms Shea’s case, there wasn’t enough of a connection between the alleged misconduct of Mr McIndoe against another female employee and the employment of Ms Shea.

Ms Shea had been seeking reinstatement and lost earnings which would have amounted to around $6M. The judge ruled out reinstatement, due to the fact that the trust required for an employee/employer relationship was gone. Energy Australia and the employees involved were cleared of any allegations of harassment and misconduct and the redundancy was found to have been made for sound business rather than personal reasons.