Employer successfully appeals workplace defamation claim. Can an employer now say anything they want about an employee?

The news headlines often report on defamation claims filed by high profile celebrities and politicians.

However, a recent New South Wales decision concerning a child care worker and his ex-employer, a small private sector child care centre shows any Australian workplace is potentially at risk of a defamation claim.

This article explains how the defence of qualified privilege works – the defence most likely to be relevant to the employment relationship.

What is defamation?

Defamation law protects the reputation of every individual. In 2005, the States and Territories agreed to have uniform laws passed. In Victoria, this led to the enactment of the Defamation Act 2005 (Act).

The Act abolished the distinction between libel (defamation in written form) and slander (defamation in temporary or verbal form), and introduced a 12 month limitation period. It reinforced long held legal principles for example the estate of a deceased person cannot file a defamation claim.

The Act also introduced a number of defences, such as justification, contextual truth, absolute privilege, reporting Court proceedings, honest opinion, innocent dissemination, triviality and qualified privilege.

For an employer, the defence of qualified privilege allows an employer to express adverse opinions about an employee’s performance or conduct provided that the communication is to those who need to know, for example, another manager or supervisor, a board, an HR manager, or an external lawyer providing advice.

To rely on the defence of qualified privilege in making a potentially defamatory communication, the Act has a three step test:

1. the recipient of the communication has an interest in receiving the communication;
2. the communication is communicated to the recipient; and
3. the publication is reasonable based on a range of factors.

If an employer communicates its concerns more broadly than is reasonable, an employer risks losing its defence of qualified privilege. The Act says the defence of qualified privilege is negated, if the maker of the defamatory communication is “.. actuated by malice”.

How an employer’s email to 35 parents led to an order to pay $237,970!

A 20 year old childcare worker was employed for approximately 9 months. After the worker ceased working, the business owner sent an email to 35 parents, stating:

“Matt is unfortunately no longer with us due to disciplinary reasons. Whilst being good with the children in general, Matt was not truthful with us regarding his studies and some other issues and I felt it was better for him to move on and possibly gain a bit more life experience. We wish well with his future.”

The worker found out by chance about the existence of the email from a parent, after he had left his employment. He sued both his employer and the sole director personally for defamation.

After an 11 day trial, the trial judge ordered compensation of $237,970.22.

The trial judge held that the employer had acted maliciously by sending the email to 35 parents, who had no need to know information in the email about why the worker was dismissed.¹

The employer appeals

The employer appealed² successfully on two grounds.

First the trial judge had misunderstood the nature of the qualified privilege defence and the meaning of malice as used specifically in the context of defamation.

Second, had defamation claim been established, then the damages awarded were excessive, and should have been $40,000.

The test for qualified privilege required the trial judge to identify the privileged occasion. The appeal judges found the employer needed suitably qualified staff, and parents had a “vital interest” to know that staff members were qualified, including knowing their names, qualifications, and suitability for the role.

The child care centre had established a “sufficient connection” that a parent may be concerned by the reasons for the recent and sudden recent departure of a child care worker, and that parents may speculate or complain in the absence of any communication. Unless the child care worker could prove otherwise, the law would presume that the employer had acted honestly.

Importantly, the appeal bench confirmed that to be “actuated by malice” does not mean ill will, prejudice, bias, recklessness, lack of belief in truth, nor lack of procedural fairness in the employment dismissal process.

The trial judge had made an error by giving malice its everyday meaning, not its legal meaning. Malice for defamation purposes means where the extent of the publication goes beyond what is necessary for a recipient to know.

Lessons for employers

The decision should not be seen as a licence for employers to say anything it wants about an employee.

An employer must always consider on a case by case basis who must know information adverse to an employee’s reputation. This consideration must take place before any internal communication is sent. An employer must take particular care where the information is to be communicated externally.

An employer communication based on the same facts as this child care worker’s case might have had an entirely different outcome, say in a manufacturing industry context. A manufacturing employer has no need to inform its customers about why an employee is dismissed. A customer has no interest in knowing about the identity and integrity of the employee. Such information is irrelevant to the manufacture and sale of a product.

For more information:

If you need assistance in drafting an internal or external communication about a controversial employment, industrial or HR matter, please call us to discuss.

 

^{1. Bowden v KSMC Holdings Pty Ltd t//a Hubba Bubba Childcare [2019] NSWDC 98}

^{2. KSMC Holdings Pty Ltd t/as Hubba Bubba Childcare v Bowden [2020] NSWSC 28 – 3 March 2020}