How to prevent the airing of your company’s dirty laundry

company's dirty laundry
Kieran Pender

By and

written on August 8, 2017

Nasty employment disputes can generate bad publicity. How can HR help protect the organisation?

Newspaper readers love scandal, and employment disputes can be particularly scandalous. As the widely-publicised litigation between Channel Seven and Amber Harrison demonstrates, the airing of workplace grievances in open court can be damaging to all.

Unfortunately for media-shy employers, the principle of open justice – that litigation must be open to the public – is an essential feature of the Australian judicial system.

Gagging orders

There are exceptions to the open justice principle. Most courts and tribunals have power to issue suppression, anonymity and pseudonym orders. For example, the Fair Work Commission can ‘de-identify’ (or hide the identity of) parties, order closed hearings, restrict attendance and prohibit the publication of evidence. These orders can be granted where the Commission is “satisfied that it is desirable to do so because of the confidential nature of any evidence” or “for any other reason”. The Federal Court and state courts have similar powers.

Yet despite the scope of its powers, the Commission (and various courts) have been particularly hesitant to abrogate the open justice principle in the employment setting.

The 2014 case of Corfield is illustrative. After an employee had sought an anti-bullying order, the employer applied to the Commission to conceal the identity of the parties. The employer submitted that “the publication of the name of the applicant and respondents in what is essentially a private and confidential matter will not be conducive to good governance of the respondent employer”. Given the employment relationship was ongoing, the respondent argued that a de-identification order was appropriate.

Commissioner Michelle Bissett didn’t agree. The submissions of the employer were insufficient to overcome the “presumption… that a hearing will be conducted in public”.  She concluded: “Mere embarrassment, distress or damage by publicity is not a sufficient basis to grant such an application.” While this is not an insurmountable hurdle, it does require the employer to demonstrate compelling grounds.

Behind closed doors

There are other ways to minimise the likelihood of an employment dispute descending into trial by media. If an employee is exiting in a situation which may turn acrimonious, ask them to execute a Deed of Release in return for a small ex-gratia payment in addition to their termination entitlements. Not only does this prevent the employee from commencing litigation (at least in theory – some disgruntled ex-employees have been known to try suing regardless), but the Deed can also include a confidentiality provision. This restrains either party from disclosing the terms of the Deed or related circumstances, and a breach entitles the affected party to sue for damages.

Such Deeds can include non-disparagement obligations. These often require that “the parties must not disparage each other”, with disparage defined as “any negative statement, whether written or oral, about either party”. Non-disparagement provisions are common in settlement agreements between commercial disputants, but can also be used in the employment context.

Such clauses are no panacea. Particularly aggrieved employees may not agree to a Deed of Release, preferring to chance their arm before the Fair Work Commission or a court. And if the employee breached the confidentiality or non-disparagement provisions, (public) litigation would be required to seek damages – defeating the very point of the clause. However, in our experience once a Deed is signed and the employee has left the organisation, such steps rarely become necessary.

The judicial luminary Michael Kirby once wrote: “An unfortunate incident of the open administration of justice, is that embarrassing, damaging and even dangerous facts occasionally come to light.”

This sentiment may be cold comfort for human resource professionals trying to protect their organisation’s reputation. It only underscores, though, the importance of effectively managing the termination process to ensure that an employer’s dirty laundry is not aired on the front page.

This article originally featured in the July 2017 edition of HRM magazine.

Don’t miss out on more great content like this.

Comment

To comment on this article please provide your name and email address. Your email address will not be available publicly.

*