Childcare business ordered to pay $237,000 after defaming former employee

Defamation in the workplace is more often than not associated with disgruntled employees making adverse or negative remarks about their employer (or former employer). This has become a major cause for concern for employers particularly with the advent of social media and online reviews.

However, in a recent decision awarding $237,000 in damages to a victim of defamation, the District Court of New South Wales has reminded employers that they also have an obligation not to make defamatory or disparaging remarks about former employees.

In this case, the former employee of a childcare centre alleged his former employer had sent an email containing defamatory material to the parents of the children who attended the childcare centre.

The former employee was a 20-year-old enrolled in a Diploma of Early Childhood Education and Care at TAFE. He had resigned from his employment in March 2016 due to an incompatibility with his TAFE timetable and the employer’s desired work timetable.

Following his resignation, in April 2016, the director of the childcare centre sent an email to 35 parents which read: “[Name of former employee] – is unfortunately no longer with us due to disciplinary reasons. Whilst being good with the children in general, [the employee] 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 him well in the future.”

The employee was not made aware of this email until one of the parents, who considered it to be a misrepresentation of the termination of the employee’s employment, advised him of its existence. Upon being advised of this email, the employee withdrew from his TAFE course and sought medical and psychological assistance to deal with the distress he was suffering as a result of the email.

The employee commenced defamation proceedings alleging the employer had made accusations he was:

• Dishonest;
• Not truthful about his studies;
• Fired for disciplinary reasons;
• Conducted himself in such a manner that he was terminated from his employment; and
• Not a fit person to work in childcare.

In the proceedings, the employer argued there was some truth to the accusation the employee had been dishonest about his studies as he had represented he had completed his course. The Court rejected the employer’s arguments. Instead, the Court found the employer was well aware of the state of the employee’s studies having discussed the matter with the head teacher of childhood education at TAFE. The Court considered it more likely that the employer was anxious about filling staff positions and wanted the employee to finish his course as soon as possible. When the employee advised he could not work on Wednesdays in order to finish his course as soon as possible, the employer became dissatisfied with the employee.

The Court also rejected the employer’s argument the employee had deceived the employer by failing to disclose he babysat some of the children outside of the childcare centre’s hours, noting the employer’s policy in this regard did not clearly prohibit this.

The Court rejected the employer’s defence the parents had an actual or apparent interest in the information which was justification for the email, noting it went beyond what was necessary for the parents to know. In this regard, the Court was of the view that, while the parents were entitled to know the employee no longer worked there, the remainder of the employer’s email was gratuitous and irrelevant and “impugned [the employee]’s character and reputation in an injurious way”.

In considering the damages to be awarded to the employee, the Court also had regard to:

• The need for the employee to seek medical and psychological help upon learning of the material;
• The vulnerability of the employee noting his young age;
• The fact that the employee’s character had been impugned and his reputation suffered damage both directly and by the grapevine effect, noting that a child had repeated the reputational slur that he was thought to be a liar;
• The fact TAFE staff had to become involved which placed a cloud over the employee’s presence in the early childhood education sector;
• The fact the employee felt the need to pull out of his TAFE course and delay his studies, and that it took him considerable time to find another position; and
• The group to which the material was sent was vital to the employee’s advancement in his chosen career — they were in the locality in which he lived and there was already an adverse grapevine effect.

This was all aggravated by the fact the employer knew that the material was false, had refused to apologise and maintained its position even during the proceedings.

The employee was therefore awarded $237,970.22 in damages.

Lessons for employers

When dealing with the departure of employees, it is essential employers only share information with others to the extent that it is necessary to do so, regardless of how acrimonious the departure may have been. As can be seen from this case, the potential consequences for engaging in defamatory conduct can be extremely costly.

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