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How a Mismanaged Dismissal Cost a Business Owner $125,000

In a case that underscores the importance of appropriate workplace conduct, a managing director has been ordered to pay a hefty fine of $125,000 for mismanaging a dismissal and making threatening remarks. The situation stemmed from a dispute involving unpaid employee entitlements and ended in serious allegations and threats.

The project manager employed by Gatwood Management Pty Ltd was abruptly dismissed following a disagreement regarding overtime charges at the HMAS Watson naval base in Sydney. The managing director terminated the project manager’s employment in a highly inappropriate manner and demanded the immediate return of company property. The incident came to light when the project manager alerted his colleagues via a company WhatsApp group.

In an attempt to portray the termination as a voluntary resignation, the managing director sent an email accusing the project manager of being a “Company Thief”. This email served to escalate the situation, with threats promising severe consequences for any future similar actions by other employees.

Soon after, the managing director allegedly made a threatening call to the project manager, demanding the removal of the WhatsApp message. The threats escalated further, eventually involving the project manager’s family. Accusations of cocaine usage at work were made against the project manager, which he fervently denied.

Despite the project manager’s efforts to clarify the situation through the company’s HR department, the HR manager acknowledged his resignation. This decision, however, did not end the case. The court later found that the project manager was suffering from work-related PTSD and was undergoing psychological treatment due to the incident.

In a significant blow to the managing director, the court ordered him to pay $25,000 for non-economic losses, attributing this to the managing director’s unreasonable conduct and vile accusations. Judge Humphreys termed the managing director’s actions as “reprehensible in the extreme”, causing considerable distress to the project manager.

Compensation for economic loss was also awarded, with a payout of over $57,000 calculated as four months of the project manager’s salary. This decision was based on the understanding that the project manager still had many potential earning years ahead.

Penalties were enforced on top of compensation. The court stated the managing director’s actions were deliberate and found no signs of remorse. The managing director’s disregard for court orders further exacerbated the situation. A penalty of $42,624 was imposed to discourage such conduct in the future.

This ruling offers a stark reminder that employers should manage workplace disputes professionally and respectfully. Damaging accusations and threats not only harm the individuals involved but can also have serious legal and financial repercussions for businesses. It is a reminder that maintaining respect and fairness in the workplace is not only ethical but also legally essential.

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