Good HR gone bad – who is responsible when HR are in hot water?

Recent incidents have proven that the human resources function isn’t immune to consequences.

When those responsible for managing misconduct are themselves accused of breaching policy, who is truly to blame: the individual, or the system?

As recently reported, the Australian Securities and Investments Commission (ASIC) brought civil penalty proceedings against the former chief executive and managing director of Super Retail Group, Anthony Hegarty, after alleging that he failed to manage a conflict arising from an alleged relationship with the company’s former chief human resources officer.

In addition, Bupa’s chief HR and people officer, Rebecca Donaldson, recently resigned from her role after publicly claiming she didn’t pay for items in a supermarket self-checkout – and who can forget the high-profile exposure of a relationship between Astronomer chief executive Andy Byron and the start-up’s chief people officer, Kristin Cabot, at a Coldplay concert?

Reflecting on these recent and public cases of HR managers getting in trouble, HR Leader spoke to employment lawyers to explore the implications for operation, process, and accountability.

When it comes to the immediate aftermath of an incident involving HR, Patrick Will of Liquid Employment Lawyers said that immediate containment is critical.

In this way, “a business must instantly ring-fence that individual’s access to prevent the tampering or deletion of evidence because they hold the keys to highly sensitive personnel files, investigation records and internal communications as a result of their function”.

Further, businesses will need to assess whether the incident triggers mandatory reporting to state regulators, listed entities, or even to the Australian Stock Exchange, should the incident impact the company’s share price.

Will added that accountability lies with the chief executive and the board, given that they set the culture and are responsible for oversight.

Michael Byrnes of Swaab Employment Lawyers added that human resource practitioners should be held to the highest standard, given that they enforce the standards of conduct – while also avoiding framing them as infallible.

“Organisations should have little hesitation in holding senior human resources practitioners to account when they fail to meet the required standards of conduct. They should, upon determining the facts (by formal investigation if necessary), take timely and decisive action,” he said.

When matters are seemingly less serious on the surface – such as the light-hearted suggestion of thievery – compared to other forms of misconduct, especially within an organisation, Will said that comments should be considered within the employer’s duty to provide a safe workplace.

He explained that the threshold of “too far” has shifted from protecting the brand to protecting employees from harm, but that it is reached when conduct creates an irreconcilable conflict with professional duties or an organisation’s reputation.

Will said the overarching question for organisations is whether the conduct has a sufficient connection to the employment or an individual’s capacity to do their job.

Further, Byrnes said that organisational action can be meritorious when a joke is “grossly offensive, seriously undermines credibility or standing, or reflects a lack of judgement”, adding that just because conduct is intended to be humour does not mean it is not damaging.

He added: “While employers should not be the morality police, they are entitled to be concerned about conduct that renders ongoing employment in senior HR roles effectively untenable. The next between the conduct (even out of hours or private conduct) and employment provides the employer with the imperative to take action.”

In the same way, Byrnes said that relationship disclosures should be enforced strongly for high-level employees where the possibility for conflict of interest is higher, reinforcing the importance of handling such matters sensitively and confidentially and in line with applicable policies.

Will said that the post-Respect@Work reform landscape means power imbalances are a critical factor for employment lawyers to consider, with the capacity for subtle coercion or victimisation when HR are involved in a relationship immense “because HR ultimately controls grievance and performance processes, making these high-level relationships exceptionally high risk”.

He asserted that policies fail when they rely exclusively on self-reporting, and that employers should expand processes to require peer reporting.

“These policies work when they are used as a conflict-of-interest tool rather than a morality tool. Australian law doesn’t prohibit consensual workplace relationships. What matters, however, is that someone with no stake in the outcome knows about it and manages the conflict,” he said.

Reflecting on the debate between individual responsibility and organisational policy deficiencies, Will said that the dual-hat expectation nature of the Australian HR set-up is conflicting and can even enable misconduct to continue.

“HR is culturally expected to be the advocate for employee wellbeing, but legally, their primary duty is to manage risk and enforce compliance for the employer. This dichotomy implodes when an HR leader commits misconduct. The function designed to protect the business is suddenly the threat, revealing a structural lack of true independence,” he said.

“Businesses need a mechanism that quickly and accurately assesses whether a complaint meets the threshold for a protected whistleblower disclosure, a psychosocial issue, or a low-level grievance.”

Byrnes added that, if a matter ends up in the public domain, a response of “no comment” will rarely be enough, but that employers should be aware of legal obligations when making media statements to avoid creating an impression that an investigation is concluded when it is not.

Broadly speaking, he urged employers to reinforce formal reporting mechanisms, potentially include a board member or general counsel in these processes when the issues relate to the chief executive or managing director, and overall build a culture where employees feel free to speak up without fear of retaliation or recrimination.

Will also encouraged the development of reporting pipelines that actively feed into continuous risk assessment, and one that is proactively used to prevent issues. In the same way, he reinforced the importance of protecting confidentiality, giving disclosers feedback and updates, and treating retaliation as a disciplinary matter”.

“Silence following a disclosure is a sure way to teach staff not to speak up,” he said.

“In the past, high-profile executive misconduct was often handled with a confidential settlement and a quiet resignation. Due to evolving legislation limiting the use of non-disclosure agreements in sexual harassment cases, alongside stronger whistleblower frameworks, the legal toolkit for sweeping things under the rug is shrinking.”

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