A recent decision of Kerr J of the Federal Court of Australia (‘FCA’) has seen an employee awarded compensation, damages and penalties totalling just over $5.2million in a landmark judgment against his former employer and its CEO.

Mr Roohizadegan took action against his former employer, TechnologyOne Ltd, and its CEO, Mr Di Marco, for unlawful dismissal and breach of contract.

Mr Roohizadegan was the State Manager for TechnologyOne Ltd, a software company from 2006 to 2016. He was a strong performer and was granted share options in TechnologyOne in addition to his contracted salary, a benefit which no other State Manager received.

During his employment, Mr Roohizadegan’s daughter became gravely ill and his mental health suffered as a result. In order to distract himself, Mr Roohizadegan spent more time at work and hid his depressive disorder from his colleagues and employer. Despite this, he continued to perform to an exemplary standard in his role.

Between 2014 and 2016, Mr Roohizadegan made several bullying complaints. He also indicated that he may bring legal action to stop the bullying behaviour.

On 18 May 2016, Mr Roohizadegan was summarily dismissed by Mr Di Marco. Mr Roohizadegan claimed that the summary dismissal was prohibited under s 340(1) of the Fair Work Act 2009 (“the FWA”) - adverse action due to exercising workplace right - and/or section 351 – discrimination. The allegations were denied by TechnologyOne Ltd, who claimed Mr Roohizadegan was dismissed for lawful and valid reasons: stagnating profits in his region, his failure to work well with different managers and that his team was “in crisis”.

During the hearing, the FCA confined the case to the claim that Mr Roohizadegan was dismissed for reasons prohibited by section 340 of the FWA, being:

• Seven instances of his exercising his workplace rights by making complaints in relation to his employment: in particular, complaints of bullying;
• His proposed exercise of his right to bring legal proceedings under a workplace law;
• His proposed exercise of a safety net contractual entitlement; and
• His having a safety net contractual entitlement.

Additionally, Mr Roohizadegan provided evidence that as a result of his dismissal he suffered a mental breakdown. The FCA examined contested expert evidence regarding whether the breakdown was caused by the dismissal, or if it was a manifestation of his earlier depressive disorder. It was not disputed that after he was dismissed Mr Roohizadegan became incapable of ever working again, and psychiatric evidence adduced during the trial established a poor outlook for Mr Roohizadegan ever working in roles for which he was qualified again.

Psychiatric evidence before the Court also established that the conduct of TechnologyOne Ltd and Mr Di Marco had aggravated Mr Roohizadegan’s pre-existing depressive disorder, and he consequently lost his ability to work.

The Court found Mr Roohizadegan to be a more credible witness than Mr Di Marco, aided significantly by Mr Roohizadegan’s evidence including notes he made at the time and clear recollection of events.

One question during the proceeding was whether the call to dismiss Mr Roohizadegan was made by the executive team of TechnologyOne Ltd or by the CEO personally.

The Court held the view that the decision was made by Mr Di Marco himself, after refusing to follow the advice of the employer’s HR Advisor to investigate Mr Roohizadegan’s bullying allegations as well as reports made by Mr Roohizadegan’s colleagues and subordinates concerning his behaviour and management style

Further, in the decision Kerr J stated:

“…I am satisfied that Mr Di Marco was fully aware of the significance of Mr Roohizadegan’s exercise of his workplace rights. I am entirely satisfied that Mr Roohizadegan’s exercise of those rights became and was a substantial and operative factor in Mr Di Marco’s reasons for taking adverse action against him.”

Mr Roohizadegan’s application was upheld under the FWA and contract.

Orders made:

• Pecuniary penalties for the adverse action: $40,000 against TechnologyOne; $7,000 against Di Marco personally, both to be paid to Mr Roohizadegan.
• Compensation of $756,410 to be paid by TechnologyOne Ltd to Mr Roohizadegan for forgone share options.
• Compensation to be paid by TechnologyOne Ltd to Mr Roohizadegan for future economic loss in the sum of $2,825,000.
• General damages to be paid by TechnologyOne Ltd to Mr Roohizadegan in the sum of $10,000.
• Damages for breach of contract to be paid by TechnologyOne Ltd to Mr Roohizadegan in the sum of $1,590,000, for commissions owed on profits made in his region.

The total funds payable to Mr Roohizadegan were $5,221,410.

Lessons for employers

• Employers must not take adverse action against e.g. terminate an employee because they have exercised a workplace right, including but not limited to the making of a complaint.
• If allegations of workplace bullying are made by an employee, employers must undertake investigations in a timely manner and particularly prior to any decision to terminate.
• Members of the executive team can be held personally liable for unlawful dismissal where they are the decision maker.
• Employers should be aware of and provide support for mental health of employees. Mental health of staff both during and after employment can be considered and contribute to compensation for future economic loss.

For assistance regarding the above issues, please do not hesitate to contact Workplace Legal on (03) 9972 4950.