Bibby Financial Services has been ordered to pay $1.4 million in compensation to its former sales director Ashley Sharma by the New South Wales Court of Appeal.
The court dismissed Bibby’s appeal against an earlier decision awarding Sharma the compensation of his $1.4 million bonus plus six months’ salary.
Sharma’s employment contract was terminated after he was accused of sexual harassment by Bibby’s NSW sales manager.
The NSW sales manager was recruited from the UK for the role but lasted less than three months and on his return to England wrote to the head of human resources at Bibby’s parent company, the Bibby Line Group, saying the reason for his departure was the alleged sexual harassment.
Bibby Line Group’s head of human resources came to Australia and started an investigation into the claim, but before Sharma was made aware of the allegations, or given an opportunity to be interviewed and respond, he was forced to either resign or have his employment terminated.
Sharma was then sent a deed of release with an offer of notice and a pro rata amount of a “special bonus” valued up to $1.4 million, which was payable shortly after the time of the purported termination of his employment.
Sharma rejected this offer and Bibby then terminated his employment for serious misconduct and did not pay Sharma notice or the special bonus.
The court held that at the time Bibby decided to terminate Sharma’s employment it did so in full knowledge of the allegations of serious misconduct yet decided not to rely on those matters or to assert Sharma engaged in serious misconduct until after he rejected Bibby’s offer.
The court also found Bibby had not proved any serious misconduct by Sharma that would warrant dismissal under the terms of his employment contract.
People & Culture Strategies represented Sharma in the case and managing principal of the law firm, Joydeep Hor, told SmartCompany Sharma had to put his “life on hold” for several years as a result of the case.
“Provisions in contracts for executives are not there for fun but are there because parties are expected to honour them,” he says.
“The company was obliged contractually to follow a process in the event there was any suggestion of the misconduct [Sharma] had engaged in.”
Hor says the outcome of the case turned on the negotiations and investigation undertaken.
“When conducting investigations into misconduct employers need to be very careful about not just the substantive decisions they make but every step in that process,” he says.
“Employers have to conduct investigations in a diligent way. There is a reason employers should consider outsourcing investigations of misconduct.”
Bibby declined to comment.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
