The significance of fair and timely investigation into whistleblower allegations

Reinstatement and compensation ordered 8 min read

A Deputy President of the Fair Work Commission in Sydney ordered reinstatement and compensation for three TAFE employees who were dismissed following a public interest disclosure that led to a workplace investigation involving conflict of interest allegations.

The outcome from the recent Kildey and Ors v Technical and Further Education Commission [2024] FWC 383 highlights the importance of reviewing an external investigation report critically.

This Insight examines the risks of not investigating whistleblower allegations in a timely and procedurally fair manner and the importance of scrutinising investigation findings prior to taking disciplinary action.

Key takeaways

• When investigating actual or perceived conflicts of interest, a broad enquiry that includes consideration of the circumstances leading up to, and following, the conflict will lead to more defensible findings.
• Organisations should critically review an investigation report and its findings and form their own views before taking further disciplinary action, such as terminating employment.
• It is prudent to factor procedural concerns (such as a lengthy investigation period) into any decisions concerning disciplinary action.
• Organisations should carefully balance their obligations under whistleblower legislation with the principles of procedural fairness.

Who in your organisation needs to know about this?

People who oversee, manage or conduct workplace investigations.

Background to the case

Mr Kildey was the nephew of Ms Kerr. Mr Browne was the de facto partner of Ms Kerr. All three (the Applicants) were employed by TAFE until they were dismissed based on the findings of a workplace investigation into alleged conflicts of interest. The Applicants lodged unfair dismissal proceedings seeking reinstatement.

The underlying workplace investigation commenced with a complaint in February 2021, alleging in relevant part that Mr Browne was involved in improperly recruiting and managing Mr Kildey's employment. Preliminary enquiries yielded further concerns that Ms Kerr was involved in improperly assisting to hire Mr Kildey's former partner and Mr Browne's daughter at TAFE. TAFE determined that the complaint was protected under the Public Interest Disclosures Act (NSW) and, in April 2021, engaged an external investigator to conduct an investigation.

In September 2021, TAFE informed the Applicants of the investigation, provided them with the allegations and suspended their employment. The Applicants provided initial responses in October 2021, and the investigator then conducted witness interviews between October 2021 and August 2022. The Applicants were not interviewed as part of the investigation or provided with updates on its progress.

In an investigation report provided to TAFE in September 2022, the investigator relevantly found that each Applicant failed to complete a conflict of interest form declaring their personal relationships vis-à-vis internal recruiting, management and hiring practices at TAFE. The investigator found this to be inconsistent with the TAFE Code of Conduct, which included recruitment of a family member as a type of conflict, as well as the Independent Commission Against Corruption Act 1988 (NSW), which prohibits fraudulently obtaining or retaining employment or appointment as a public official.

In October 2022, TAFE invited the Applicants to participate in a show cause process. The Applicants then requested the investigation report, copies of witness statements and other materials that supported the findings. TAFE provided some of these materials in redacted form to protect the identities of the complainant and witnesses. The Applicants were terminated in June 2023 following this process.

On review, the Deputy President largely disagreed with the investigation findings and also found broader procedural shortcomings. The Deputy President found that dismissal was harsh, unjust and unreasonable, and ordered reinstatement with lost pay as an appropriate remedy for the Applicants.

Conflicts of interest analysis

The Deputy President made the following findings with regard to the alleged conflicts of interest.

• Mr Kildey was not required to declare a conflict of interest because he was not a TAFE employee at the time of recruitment, and he did not make any decisions that could be described as a conflict.
• It would have been preferable for Mr Browne, who had recruited Mr Kildey and was the de facto partner of Mr Kildey's aunt, to declare a conflict, but a failure to do so was not improper given the broader circumstances. The Deputy President noted that:
  • Mr Kildey was qualified to meet a business need and was hired for only one semester;
  • Mr Browne's supervisor was aware of the family relationship;
  • Mr Kildey did not report to Mr Browne; and
  • Mr Browne was not responsible for Mr Kildey's subsequent retention at TAFE.
• Ms Kerr was involved in the recruitment and extension of Mr Kildey's former partner and Mr Browne's daughter as education administration support contractors, and she engaged in misconduct by not declaring personal conflicts of interest. The Deputy President noted, however, that their engagement was required for urgent remediation works, the recruitment occurred during a challenging time of COVID lockdowns, both individuals were qualified for the roles and there were no other candidates. The Deputy President also took into account evidence that Ms Kerr was under significant workload pressures at the relevant time. For these reasons, the Deputy President found that Ms Kerr's conduct was in error, but was not dishonest or corrupt.

The decision underscores that analysing conflicts of interest extends beyond an enquiry into whether there is a declaration in the relevant register. Instead, it is a holistic inquiry where several factors may be relevant, such as:

• the broader circumstances around why the conduct at issue occurred;
• who within the organisation was aware of outside interests and when; and
• other checks and balances that were in place.

The decision also illustrates how characterising a conflict too broadly can create unintended consequences—identifying what specific decisions or actions gave rise to a conflict can better help investigation findings withstand scrutiny.

Organisations must scrutinise investigation findings before taking further action

The Deputy Commissioner found that when the investigation report was provided to TAFE, it took an uncritical view of the investigation findings and effected the dismissal of the Applicants. However, under cross-examination, the decision-maker who effected the dismissal expressed doubt about those findings and said he was no longer confident his decisions to dismiss were sound.

The Deputy Commissioner observed that the decision-maker could have critically reviewed the investigation report and its findings and formed his own view in relation to appropriate action at the time.

The decision illustrates the need for organisations to be comfortable with, and accept, investigation findings prior to taking further action.

Investigation process

The Deputy President highlighted a number of procedural flaws in the investigation, including deviations from established TAFE Guidelines in the following ways:

• suspending the Applicants without conducting a required risk assessment first;
• failing to provide the Applicants with periodic investigation updates, which were required every 12 weeks; and
• taking 18 months to complete the investigation, where internal policies allowed 18 weeks for such investigations.

The decision illustrates the risks of not following company processes and policies in respect of an investigation and not actively updating participants to an investigation.

Finally, while investigations can take some time and a number of obstacles can arise (such as witness availability or locating relevant documents), the Deputy President was, understandably, very critical of the 18-month time span of the investigation. Those who conduct and manage investigations need to ensure they occur at pace. Where there are issues concerning long periods of delay, it is prudent to factor this into any decisions concerning disciplinary action following such a process.

Whistleblower legislation considerations

TAFE's position was that the complaint was protected under the Public Interest Disclosures Act (NSW). However, despite this, the Deputy President observed that redacting investigation materials before providing them to the Applicants was unfair, and that disclosing the complainant's identity may have assisted in responding to the allegations.

Unlike the corporate whistleblower regime, the public interest disclosure regime in NSW does not provide for a criminal offence for disclosing the identity of, or information likely to identify, a whistleblower. Instead, the NSW legislation requires that identifying information 'tending to identify a person' is not to be disclosed by a public official or agency, unless a number of exceptions apply. These exceptions include where the person consents in writing, if it is 'necessary' that the identifying information is disclosed to a person 'whose interests are affected' by the disclosure, or if the disclosure is necessary to 'deal with the disclosure effectively'.

Regulated entities under the Corporations Act therefore have a stricter obligation, with more serious consequences, if they disclose the identity of a whistleblower to a respondent in an investigation without first obtaining consent. We therefore do not interpret this decision to mean that whistleblower-identifying information must be provided to respondents where corporate whistleblower laws are engaged.

What's next?

Organisations should:

• evaluate whether their investigations policies and processes are compliant with whistleblower requirements;
• consider whether investigations they conduct or commission are, in practice, rising to the expectations and standards set out in their internal policies and processes (and, if not, consider implementing training and/or communicating expectations with their investigators and investigation providers); and
• ensure that disciplinary decision makers are comfortable with investigation findings before implementing disciplinary decisions.