“Bizarre Spectacle” Leads to $40K Unfair Dismissal Payout

An accounting firm has been ordered to pay a former employee $40,940 after the Fair Work Commission (FWC) found she was forced to resign when her employer accused her of spreading salacious rumours.

What happened

The applicant in the matter, Ms Yang, was employed for just under three years as an accountant and later, as a manager accountant responsible for the supervision of others.  Her employment ended on 9 December 2019 when she signed duplicate resignation letters, prepared by the employer.

A strange sequence of events preceded the signing of the resignation letters. The director of the accounting firm, Mr Shen, was told at a staff Christmas party on 5 December that the applicant was spreading rumours that Mr Shen was having an affair with one of his employees (Ms Yan) and that he had brainwashed another employee.

Mr Shen set about investigating the allegations.  On 9 December, Mr Shen discussed the rumours with various employees.  One employee told Mr Shen she had not heard the rumours, but said that the applicant had expressed some concerns that Ms Yan appeared to dislike her.  Later that day, Mr Shen called the applicant into a meeting with another employee, Ms Peng, and challenged the applicant about spreading the rumours.  The applicant denied she had done so but Mr Shen told her that he had witnesses to confirm that she had spread them.  The applicant became upset and asked Mr Shen to name the persons who had said she had spread the rumours.  Mr Shen declined to do so.  The applicant requested that all of the staff be summonsed to a meeting so that she could confront her accusers and ask them to reveal their identity.  Mr Shen agreed, and called all of 15 staff into a meeting room.

Once all the staff were assembled, Mr Shen told them that he had heard about the rumours and then proceeded to repeat them.  He said he had been told that the applicant had spread the rumours.  Mr Shen told those gathered that the applicant had denied spreading the rumours. In what the FWC described as a “rather bizarre spectacle,” Mr Shen asked that those who had heard the rumours being spread by the applicant to raise their hands.  No hands were raised.  It was then suggested that a secret vote take place and pieces of paper were given to all staff on which they would write “yes”  or “ no” to two questions as to whether they had heard the rumours from the applicant.  The ballot outcome was that two people had written “yes” to both questions and one person had written “yes” and “no”.  All other ballots indicated “no” to both questions.

The meeting participants then disbursed, leaving the applicant with Mr Shen.  There were differening accounts given in the FWC about what transpired next but the events concluded with the applicant signing two copies of a typed resignation letter which the employer had prepared.  The applicant subsequently gathered her personal belongings and left the workplace.

FWC findings

Before the FWC, the employer argued the applicant had resigned from her employment and had not been forced to do so.  The applicant argued she had resigned because of conduct engaged in by her employer.

Commissioner Cambridge of the FWC observed that there were a number of “very unusual, perhaps even bizarre aspects of the employment circumstances” that meant the workplace environment appeared to provide significant potential for innuendo driven banter and rumour mongering.  It was understandable, the Commissioner said, that Mr Shen would take some action in response to learning of the rumours.  But, instead of investigating the rumours in a “careful and considered manner,”  Mr Shen called the applicant into a meeting and accused her of making them up.  Although the applicant was the one who suggested a meeting of all staff to test the accusations against her, the Commissioner found this course of action was so inappropriate and unpredictable that it should have been rejected by Mr Shen.

The Commissioner concluded that the conduct of the employer in unjustly deciding that the applicant was responsible for creating and disseminating the rumours, and then engaging in a process which involved a “humiliating” vote of all staff, was conduct that was intended to produce, or was likely to result, in the resignation of the applicant.  The applicant had no realistic option in the circumstances but to resign.  The applicant had therefore been dismissed by the employer.

Turning to the question of whether the dismissal was unfair, the Commissioner found that there may have been a valid reason to dismiss the applicant had there been a “careful, fair and just investigation” into the rumours that ultimately confirmed the applicant as the culprit.  But the Commissioner found Mr Shen adopted a “hasty and ill-considered conclusion” which failed to consider that others may have been involved.

The applicant had not been provided with the opportunity to respond to the reasons for dismissal, with the Commissioner finding that Mr Shen’s approach to the matter led to the predicable outcome of the applicant responding emotionally to the accusations, leading to her resignation.  The Commissioner found that Mr Shen was prepared for that outcome, such that he had the resignation letters ready.

The applicant was awarded six months’ pay, less three weeks’ notice that was paid to her.   

Jenny Yang v FCS Business Service Pty Ltd [2020] FWC 4560