ANZ culture shock: What to do when employees run wild

Stephen Booth, Lisa Qiu

In recent news, two former ANZ traders have sued the ANZ bank in separate proceedings before the Federal Court of Australia, for losses allegedly sustained by them as a result of their employment having been terminated by the bank. In late January, one of the traders, Mr O’Connor, dropped his claim against the bank, saying that he was not prepared to put his family through a difficult fight, and the associated financial and emotional costs.

Mr Alexiou, who is continuing his claim, was stood down by the bank in September 2015, following findings by the bank of inappropriate conduct including lewd and explicit communications about sex and drugs, over the internal chat terminal used by employees.  

Mr O’Connor sued the bank for damages allegedly suffered by him as a result of the termination of his employment in October 2015, which also, according to the bank, arose from inappropriate and sexually explicit communications, as well as for allegedly spending $37,000 on the company credit card for non-work related expenses.

Both Mr Alexiou and Mr O’Connor sued ANZ for damages, more than $30 million between them, for deferred shares and bonuses, and future income which they say they have lost as a result of their dismissals.

Both traders alleged as part of their claims that their dismissals were unlawful, unfair or in breach of their contracts, because the conduct for which they were allegedly being dismissed was conduct of a type which was in fact encouraged or condoned, directly or indirectly, by ANZ.  

The crux of Mr Alexiou’s ongoing argument is that the trading floor culture of sex, drugs and alcohol is at odds with what the bank dictates in its policy documents as acceptable and expected conduct, but was nevertheless tolerated, and that it was therefore unreasonable for the bank to dismiss him for engaging in conduct that was in line with the real culture of at least part of the bank.

This case raises an interesting issue: what happens when an employer condones and tolerates inappropriate behaviour? Can the employer still discipline an employee engaging in that conduct, on the basis that it is inconsistent with company policies and expectations?

 While each situation will turn on its own facts, what is clear is that it becomes more difficult for an employer to argue that certain behaviour is inconsistent with company policies and expectations when, in fact, the behaviour complained of is a regular occurrence in the company, and is often ignored or dealt with inconsistently.

In one case, employees had a beer at lunch and were dismissed for it. It was held that they were unfairly dismissed, despite there being a clear written policy of zero tolerance for drinking alcohol at work, because the company’s approach to disciplining employees who did have a drink at work was inconsistent. It was unfair to allow some employees to have a drink over lunch, while dismissing others for the same behaviour.  

In another case, employees have been held to have been unfairly dismissed for swearing in the workplace, because the workplace tolerated a culture of swearing (though tolerating generalised swearing may not condone swearing abusively at a particular person, if that distinction is reasonable in the context).  

These cases turn on what would be "harsh, unjust or unreasonable", the criterion for general unfairness for unfair dismissal in the Fair Work Commission (FWC). Mr Alexiou and Mr O’Connor were paid too much to make a claim in the FWC, so they sued in a common law court. The relevance of condoning behaviour there will probably not be fairness as such, but the validity of the application of (allegedly disregarded) policies as grounds for their termination, and the requirements for termination to be found in their contracts. In particular, did their conduct amount to "serious misconduct" if, as alleged, such conduct was common and condoned? 

Colourful allegations of this sort also serve a tactical purpose in attracting media attention, which might be used as a pressure point to assist in settlement negotiations.

The publicity thus far has already prompted comments by ANZ Chief Executive Shayne Elliot that the bank is determined to stamp out such conduct, and to tackle Alexiou’s claim in court. It remains to be seen whether the proceedings will continue to a hearing, or settle confidentially. No-one wants to air their dirty laundry in public, but the public perception of a settlement on undisclosed terms could be difficult for ANZ. We’ll await the outcome with interest. 

Stephen Booth, Principal
Phone: +61 2 9895 9222

Lisa Qiu, Lawyer
Phone: +61 2 9895 9207