Pezzimenti v Rotary (part 2)

The decision on penalties and costs in the case of Pezzimenti v Rotary international puts an exclamation mark on the importance of addressing bullying allegations and having a fair performance management process.

The facts in the case mirror circumstances that commonly arise in workplaces – a manager says a subordinate is underperforming and the subordinate says they are being bullied by their manager.

In a decision delivered last year in the Federal Circuit Court, Judge Driver found that the employer had taken prohibited adverse action against an employee who made a bullying complaint. The employee was awarded compensation of over $200,000. Our comments on that decision are here.

On 24 January 2020, the Court delivered its decision on penalties and costs. It ordered Rotary to pay penalties of $50,000 (against a maximum of $54,000) to Mr Pezzimenti together with Mr Pezzimenti’s costs on an indemnity basis.

Judge Driver gave four reasons for ordering penalties the very high end of the range:

• The contravention was deliberate – in particular, he found that the employer had deliberately moved the goal posts during the performance management process and that the employee was “set up to fail”
  
• The contravention was by a very senior officer of the employer
  
• The contravention was “objectively serious” in that it involved dismissing an employee who had made a complaint
  
• There was no evidence of a compliance system or culture of compliance.
  

Employers should take careful note of this decision. The lessons for employers are to:

• Address every bullying allegation. In our experience, there is a tendency for some employers to ignore, or not take seriously, bullying allegations made during a performance management process. This litigation demonstrates why that is not appropriate
  
• Consider how to manage conflict. Employers should be clear about who will conduct the performance management process, who will investigate the bullying allegation and how the overlap between those two issues will be managed
  
• Document the reasons for decisions. Employers have the onus of showing that an employee has not been the subject of adverse action if they make a bullying allegation. In order to discharge that onus, it will help the employer to have clearly documented reasons setting out why action taken against the employee was fair
  
• Have systems and processes for dealing with performance issues and employee complaints.