It’s not uncommon for issues to arise in the workplace that require investigation. Workplace investigations are a valuable tool that can be utilised by employers to understand and address matters such as performance, absenteeism, conduct, workplace culture or safety. In some circumstances, conducting an investigation is not only best practice, but a legal obligation.

If you are currently facing an issue in your workplace that may require investigation, it would be prudent to obtain legal advice now, to ensure your business meets its legal obligations throughout the investigation process.

What is a Workplace Investigation?

A workplace investigation is fundamentally about uncovering the truth through a fair and impartial process. It involves carefully examining actions, omissions, and events to make objective, fact-based findings that support informed and appropriate outcomes.

When serious complaints or allegations arise in the workplace, it may be tempting to resolve them quietly or through informal discussions. However, in many cases, this approach is neither appropriate nor legally sound. A formal, evidence-based investigation often offers greater protection for the business and all individuals involved.

Choosing not to investigate can carry significant legal and cultural risks. Take, for example, a complaint of sexual harassment that is ignored. If the matter escalates to litigation, one of the key issues in relation to liability will be the employer’s failure to take reasonable steps to prevent the harassment. In some cases, the decision not to investigate may even be viewed as discrimination and a breach of the employer’s positive duty to prevent sexual harassment and sex-based discrimination.

There are cultural consequences too. If a complaint goes unaddressed, the person who raised it may feel unsupported or silenced. If the concerns are valid, a lack of response can also embolden the wrongdoer, leading to further misconduct.

Not all workplace matters require investigation. In fact, conducting an investigation in circumstances where it is not warranted will create significant difficulties for the employer, and may irreparably harm the workplace culture. However, the failure to conduct a proper investigation when the circumstances require one, can likewise be extremely damaging, and may result in liability for the employer.

For these reasons, it’s crucial that employers take care when deciding whether to investigate. Exercising sound judgment at this early stage can help ensure not only legal compliance, but also a healthier and more respectful workplace culture.

What process should a business follow when conducting a Workplace Investigation?

No two investigation processes will ever be the same, however, we have prepared a checklist below for our clients to consider before initiating a workplace investigation.

1. Decide whether to Investigate

The first step in the investigation process is to make a decision as to whether an investigation is necessary. This involves evaluating the seriousness of the complaint, whether the alleged conduct breaches workplace policies or legal obligations, and the potential risks to individuals and the business if the matter is left unexamined. In some cases, such as allegations of discrimination or sexual harassment, there may be a legal duty to investigate. It’s also important to avoid delaying this decision. In some cases procrastination can lead to missed evidence, escalation of the issue or claims that the business failed to take appropriate action.

The decision to investigate should take into account the following considerations:

• How serious is the matter or conduct in question? The more serious the matter, the more likely a formal investigation is warranted;
• Can the issue be properly resolved without investigation, such that each party feels the issue has been dealt with appropriately?;
• How many people have been impacted (or may be impacted by the conduct/ issue under consideration?; and
• Will the failure to investigate the matter create legal liability?

2. Prepare for the Investigation

Once the decision to investigate is made, thorough planning is essential. This includes appointing an impartial investigator who is free from bias or conflict of interest. One of the central hallmarks of a proper investigation is independence. If an independent investigation can be performed in-house by the employer, then there is no reason to outsource the investigation. However, if this is not possible, the matter is very serious or the issue concerns an employee at a very senior level in the organisation, it is best that the investigation be conducted by an external third party. This is usually under the auspices of legal advice, so that legal professional privilege will attach to the investigation findings and outcomes.

It is crucial to define the scope of the investigation (what will be examined and what falls outside the investigation), identify relevant documents and potential witnesses, and establish a timeline. The investigator should understand relevant workplace policies, legal obligations and procedural fairness requirements.

The failure to properly identify with precision the allegations that are to be investigated will affect the entire investigation and may mean that the findings are questionable and cannot be relied upon. To often, we see investigations fail, and create significant legal issues, cultural fallout and ongoing disruption in the business, because the investigation was not properly considered and the allegations and scope of the investigation were not properly defined and made clear.

Thought needs to be given to how the workplace will be managed while the investigation is being conducted. This includes whether one or more of the participants will be suspended from work, whether one or more employees need to be separated at work, or moved to different divisions or reporting lines. These decisions may have ongoing ramifications and need to be assessed against the gravity of the allegations, the employer’s duty to provide a safe place and system of work and the impact these changes may have on the parties involved and the business more generally.

3. Notify all of the Participants

Transparency is critical. All parties involved in the investigation including the complainant, the respondent and any witnesses should be informed about the investigation, and their role in it. They should be told what the investigation will cover, what to expect, and their rights and obligations during the process (e.g. confidentiality, support persons and protection from victimisation). Witnesses do not need to be provided all relevant information regarding the investigation and in fact often this is not advisable.

Both the complainant and the respondent should be clearly informed of the allegations, and the complainant should have an opportunity to review the allegations that will be investigated before the investigation is commenced, so as to ensure the investigation covers all matters the complainant wishes to raise as long as the matters are appropriate for investigation. The respondent must be given a reasonable opportunity to respond. Notifying participants in a clear, respectful, and consistent way helps set the tone for a fair process.

4. Confidentiality

The investigation should be a confidential process, and each participant must be informed that they are to maintain the confidentiality of the process and the matters raised in the investigation. It is not uncommon for complainants to feel entirely undermined, or that the investigation is a sham, if the process is not kept confidential. Likewise, the complainant should be reminded that although they may have initiated the process, they are required to ensure they do not disclose any matters that are part of the investigation.

5. Conduct the Investigation

This stage involves gathering and assessing the relevant evidence. The investigator will typically conduct interviews with all relevant parties, review documentation, and evaluate the credibility and consistency of the information obtained. The investigation should be conducted objectively, with a focus on establishing facts rather than assumptions. As such, the questions regarding the allegations posed by the investigator should be impartial and not contain hidden or overt assumptions about the matter. Procedural fairness must be maintained throughout, meaning all parties are given a fair chance to be heard and the decision-maker remains impartial.

If the investigator records their interviews, each participant should be afforded the opportunity to review the statements provided to correct any errors. It may be the case that participants do not want to sign off on statements prepared by the investigator following interviews. If this is the case, the investigator is still able to rely on the responses provided by the participants in any interviews.

Interviews cannot be recorded unless all the parties to the interview consent to the recording.

6. Formalise the Report and Notify the Parties

After evidence has been collected, the investigator should prepare a written report outlining the findings of fact. This may include an assessment of whether the allegations are substantiated, unsubstantiated or unable to be determined. The report should clearly explain the reasoning behind each conclusion, relying on the evidence collected. Once finalised, the investigation report should be provided to the relevant decision-makers (e.g. HR or management) to consider the findings and determine appropriate next steps or disciplinary action, if warranted. It is very important that the decision makers are not involved in the investigation, nor the creation of the findings report.

At the conclusion of the investigation, all the parties should be notified that the investigation has been concluded. The complainant should be notified of the outcome of the investigation but is not entitled to know what (if any) disciplinary action was taken in relation to the respondent. The respondent is not entitled to a copy of the investigation report but is entitled to know the outcome of the investigation and its consequences for them.

Timeliness

It is very important that workplace investigations, especially those that have been commenced because of a complaint by an employee against another employee, be conducted timeously. Investigations that drag-on, do not keep the relevant parties informed and are not conducted quickly and efficiently can often do more harm than good. In fact, many claims arise as a result of botched or excessively delayed investigations.

If the investigation is taking longer than expected, it is very important to ensure all the participants are kept informed of the process and the reasons for delay. This is especially the case when one of the participants may be suspended from work for the duration of the investigation.

Case Studies

In some cases, the failure to conduct a thorough, procedurally fair workplace investigation can render a dismissal harsh, unjust, or unreasonable. Thus, exposing employers to significant legal and financial consequences.

In Kildey and Ors v Technical and Further Education Commission [2024] FWC 383 three TAFE NSW employees were dismissed following an investigation into alleged conflicts of interest. The investigation, conducted by an external investigator, took more than 18 months to complete and was plagued by delays, shifting scope and inconsistent communication with complainants. The Deputy President raised a number of flaws in the investigation including  a deviation from TAFE policies. Ultimately, the FWC found the dismissals were harsh, unjust and unreasonable, ordering reinstatement with lost pay, and emphasising that investigations must be prompt, procedurally fair and consistent with internal policies.

Similarly, in Calovski v Opal Packaging Australia Pty Ltd [2024] FWC 1717, a forklift operator was summarily dismissed following an incident at work. The employer concluded that the incident was due to the employee’s failure to operate the forklift safely but failed to properly investigate his account of the accident. The FWC found that the dismissal was harsh and unreasonable, ordering reinstatement and back pay, noting that an employee’s explanation for the accident was not investigated and had it been, it would have been found not to have been his fault. The Commission stated that the employee’s version must be fully and fairly considered before disciplinary action is taken.

In Panchal v Bulla Mushrooms (Aust) Pty Ltd [2024] FWC 2784, the employer terminated Ms Panchal’s employment for alleged bullying, discrimination and misconduct over a two-year period. Bulla Mushrooms provided Ms Panchal with a list of allegations on 31 May 2024, to which she responded denying all allegations on 6 June 2024 at 11.40 am. On the same day (6 June) Bulla Mushrooms informed Ms Panchal that all allegations were substantiated on “the balance of probabilities” and terminated the employment. The FWC found all allegations were unsubstantiated, reiterating that each allegation must be individually investigated and proven on the balance of probabilities. The Commission stressed that mere assertions, without supporting evidence, should not be put to an employee and relied upon and that their response must be properly considered prior to dismissal.

Finally, in Elisha v Vision Australia Ltd [2024] HCA 500, the FWC examined whether an employer’s handling of allegations and investigative process amounted to a procedurally fair approach. The High Court awarded approximately $1.4 million in damages, for a psychiatric injury suffered by the employee as a result of an extremely deficient investigation and subsequent termination of employment. The Court found the employer breached a contractually binding disciplinary process and denied the employee a chance to properly respond to serious allegations before it terminated the employment. In a landmark ruling, the Court held that psychiatric injury is a potentially recoverable head of damage for breach of contract where disciplinary processes are improperly executed. The decision underscores the need for employers to conduct a robust and appropriate investigation into wrongdoing, especially where the consequences may lead to termination of the employment, including following their own processes before making decisions.

These cases demonstrate that employers must ensure workplace investigations are not only thorough and supported by evidence, but also procedurally fair, timely, and compliant with both internal policies and legal obligations. Where allegations are complex, or where impartiality may be compromised, engaging an independent investigator can provide both fairness to employees and protection to the organisation. Once sound investigative policies are in place, employers should ensure they are clearly communicated to staff and consistently followed when the need for an investigation arises.

We recommend that employers should have comprehensive and flexible policies, which deal with different workplace issues that may require an investigation, and set out a procedurally fair process for the conduct of a workplace investigation.

Where it would be inappropriate to conduct an investigation internally, employers should consider the benefits of engaging an expert.

If you wish to discuss any aspect of this client alert, require specialist advice, or assistance conducting investigations, please do not hesitate to contact us.