Workplace Compliance
The Pyramid of Corruption: Why Small Ethical Breaches Become Major Scandals
The Pyramid of Corruption: Why Small Ethical Breaches Become Major Scandals
What Councils and SMEs Need to Know in 2026
When considering corruption, most individuals typically envision large-scale fraud, bribery, criminal prosecutions, or prominent media scandals.
The reality is vastly different.
Significant corruption cases seldom originate with a suitcase of cash or a multi-million-dollar fraud. They often begin with minor ethical compromises that go unchallenged. A favour granted to a colleague. A conflict of interest that has not been disclosed. A gift accepted without hesitation. A procurement shortcut that may seem initially inconsequential.
These seemingly minor breaches are the foundation of what is commonly called the Pyramid of Corruption.
For councils, government agencies, and small to medium-sized enterprises (SMEs), a thorough understanding of this idea is essential. Organizations that disregard low-level misconduct often establish conditions conducive to serious fraud, corruption, governance failures, and reputational damage.
Understanding the Pyramid of Corruption
The Pyramid of Corruption shows how misconduct intensifies in the absence of timely organizational intervention.
At the foundation of the pyramid lie minor ethical breaches. As these behaviours become normalised, more serious misconduct usually arises. Over time, corruption becomes ingrained in the organization’s culture.
By the time organizations recognise the issue, the financial, legal, and reputational consequences may be large.
The principle is clear: preventing corruption begins well before the involvement of fraud investigators.
The Foundation: Small Ethical Breaches
Most corruption scandals originate from conduct that employees and managers often regard as inconsequential.
Typical examples include:
- Undisclosed conflicts of interest.
- Acceptance of gifts and benefits.
- Favouritism in recruitment decisions.
- Misuse of vehicles, equipment, or resources.
- Manipulation of leave records or timesheets.
- Circumventing procurement procedures.
- Failure to declare secondary employment.
Individually, these actions may seem insignificant. Together, they foster a culture in which employees perceive rules as flexible and accountability as unlikely.
Once that mindset is established, the organization becomes susceptible to more serious misconduct.
A recurring observation by anti-corruption agencies throughout Australia is that misconduct often arises not from the absence of policies, but from their disregard or inconsistent enforcement. The NSW ICAC has consistently identified procurement environments in which gifts, benefits, and supplier relationships have influenced decision-making, despite formal policies and controls.
The Middle Layer: Fraud and Abuse of Authority
As ethical standards decline, the potential for fraud and abuse correspondingly rises.
This stage typically involves:
- Procurement related fraud.
- Tender process manipulation.
- Incorrect invoicing.
- Improper use of organizational funds.
- Unauthorized expenditure.
- Improper exercise of delegated authority.
- Giving preferential treatment to suppliers or contractors.
For councils, procurement continues to represent one area with the highest risk of corruption.
The NSW Independent Commission Against Corruption has extensively investigated council procurement processes, identifying instances where employees manipulated purchasing decisions, showed preferential treatment to suppliers, or accepted benefits for awarding contracts.
SMEs face similar risks. Many business owners place considerable trust in long-tenured employees while exercising limited financial oversight. Regrettably, trust without verification may give rise to opportunities for misconduct.
The Queensland Crime and Corruption Commission’s 2025 analysis of local government corruption risks identified procurement activities, rising infrastructure spending, and evolving operating environments as critical areas requiring enhanced governance oversight.
The Top of the Pyramid: Systemic Corruption
At the highest level, corruption is integrated into the organizational culture.
Employees no longer perceive misconduct as an isolated occurrence. So it is regarded as “how things are done around here..”
Warning signs include:
- Widespread conflicts of interest.
- Collusion between employees and suppliers.
- Manipulated procurement outcomes.
- Suppression of complaints.
- Retaliation against whistleblowers.
- Lack of executive action despite acknowledged concerns.
- Systematic concealment of improper conduct.
When corruption reaches this stage, organizations often encounter regulatory investigations, media scrutiny, and substantial reputational harm.
Restoring public trust may require several years.
A Recent Example: Governance Failures Under Investigation
Recent developments illustrate how governance issues may intensify in the absence of adequate oversight.
In June 2026, the NSW Independent Commission Against Corruption ICAC) started public hearings relating to the University of Wollongong, addressing allegations related to recruitment practices, conflicts of interest, and contract awards. The inquiry is examining whether senior officials manipulated recruitment processes and whether contracts were awarded without governance and due process.
The inquiry is assessing whether senior officials influenced recruitment processes improperly and whether contracts were awarded absent governance and due process. Instead, they focus on governance controls, conflicts of interest, decision-making processes, and accountability.
This reflects an increasing trend throughout Australia. Integrity agencies are placing increasing emphasis on governance deficiencies that create opportunities for misconduct before financial losses.
The key takeaway for councils and SMEs is clear: inadequate governance often serves as the conduit through which corruption risks arise.
The Hidden Enablers of Corruption
Corruption seldom thrives in isolation.
Organizational deficiencies often contribute to the escalation of misconduct.
Poor Leadership
Employees observe leaders’ actions significantly more attentively than their words.
If leaders disregard misconduct, neglect to address complaints, or enforce standards inconsistently, employees promptly perceive that integrity is discretionary.
Policies That Exist Only on Paper
Many organizations have excellent policies.
Far fewer have effective implementation.
A code of conduct that remains unread on an intranet will not effectively prevent corruption.
Employees require practical guidance, consistent reinforcement, and transparent accountability.
Inadequate Training
Many employees receive minimal training on:
- Potential Conflicts of Interest.
- Procurement Integrity.
- Fraud awareness.
- Gifts and benefits.
- Reporting Responsibilities.
Without education, employees rarely identify risks before issues arise.
Fear of Speaking Up
A key indicator of corruption is an organizational environment in which employees feel apprehensive about reporting concerns.
Recent governance reforms throughout Australia have further enhanced protections for whistleblowers, recognising that reporting remains one of the most effective means of early misconduct detection. In June 2026, the Alice Springs Town Council implemented an enhanced whistleblower policy aimed at safeguarding individuals who report misconduct and protecting them from retaliation.
How Councils and SMEs Can Break the Pyramid
The most effective corruption prevention strategies prioritise addressing misconduct at the foundational level to prevent its escalation.
Build an Ethical Culture
Integrity must be integrated into daily decision-making processes.
Employees should recognise that ethical conduct is a compliance obligation and a fundamental organizational value.
Strengthen Procurement Controls
Procurement continues to be among the highest risk functions within both councils and SMEs.
Regular reviews ought to assess:
- Tendering procedures.
- Delegations.
- Vendor Partnerships.
- Contract variations.
- Conflict of Interest Disclosures.
Establish Effective Reporting Channels
Employees must know:
- Procedures for Reporting Concerns.
- Intended Recipients of Reports.
- What protections exist.
- Next steps following the submission of a report.
Confidence in reporting systems substantially enhances the accuracy of early detection.
Conduct Regular Audits
Routine audits should concentrate on:
- Financial control measures.
- Procurement Operations.
- Delegated authority.
- Recruitment Procedures.
- Conflict management frameworks.
Audits often detect emerging risks before their escalation into significant issues.
Investigate Concerns Promptly
Minor misconduct issues should never be disregarded simply because they seem insignificant.
Timely intervention often mitigates the need for more extensive and costly investigations.
Final Thoughts
The Pyramid of Corruption serves as a compelling reminder that significant integrity failures seldom occur abruptly.
Most corruption scandals originate from minor ethical compromises that are overlooked, justified, or normalised.
For councils and SMEs, the challenge extends beyond merely identifying major instances of corruption. The challenge lies in identifying and addressing the behaviours at the base of the pyramid before they escalate into more serious issues.
Effective governance, competent leadership, robust reporting systems, and proactive investigations continue to be the most effective tools for preventing corruption.
Organizations that take early action safeguard not only their financial assets but also their reputation, organizational culture, and public trust.
In 2026 and the future, integrity will be recognised as more than merely a compliance issue. It is a strategic business priority.
Contact ACCA ([email protected]) for help in this area.
Is Legal Professional Privilege Still Relevant for Workplace Investigations in 2026? Updated article
Is Legal Professional Privilege Still Relevant for Workplace Investigations in 2026?
Updated for 2026: New Case Law and Practical Lessons
This article has been updated to include recent Federal Court commentary, Fair Work Commission decisions and practical guidance for councils, government agencies and SMEs conducting workplace investigations where legal professional privilege may be in issue. Original article can be read here
Many councils, government agencies, and employers still believe that hiring lawyers to carry out a workplace investigation automatically protects the process with legal professional privilege.
That idea is still risky.
Australian courts and tribunals keep confirming that simply having a law firm involved does not create privilege. The crucial question is whether the investigation is mainly to get legal advice or to get ready for a lawsuit.
By 2026, this problem has become more important because investigations now more often include:
- psychological and social risks
- accusations of bullying and harassment
- complaints about unwanted sexual behaviour
- reporting of wrongdoing by an insider
- code of Conduct breaches
- conflicts of interest
- fraud and corruption allegations
- unfair dismissal proceedings; and
- workers’ compensation and workplace conflicts
Employers who do not understand privilege may accidentally reveal sensitive information during lawsuits, Commission hearings, court reviews, and investigations.
The Key Legal Principle
The High Court’s decision in Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 is still the fundamental rule. Privilege applies only when the main reason for the communication or document is to get or give legal advice, or to use it in current or expected legal cases.
Who the investigator is does not matter.
If the primary goal of the investigation is to find out if rules were broken, if bad behaviour happened, or if someone should be disciplined, then privilege might not protect the information.
The Fair Work Commission Warning Employers Still Ignore
One of the most important workplace investigation decisions is Gaynor King [2018] FWC 6006.
The City of Darwin hired Minter Ellison to look into bullying claims. The Council later said the report was confidential because lawyers carried out the investigation.
Commissioner Wilson did not accept that argument.
The Commission looked into the real reason for the investigation and found that the main goal was to see if workplace behaviour rules and Council policies were broken, not to get legal advice.
The Commission also looked at how the employer acted: employees were told about the investigation, the accusations, and the results. Sharing this information weakened the claim of privilege.
That decision is still very important in 2026 because many organisations still organise investigations in ways that do not protect privilege.
Why Some Investigation Reports Remain Protected
Privilege applies when the investigation is done mainly to get legal advice.
In the cases Bowker, Coombe and Zwarts v DP World Melbourne Ltd [2015] FWC 7312 and Kirkman v DP World Melbourne Ltd [2016] FWC 605, the Fair Work Commission agreed that certain information was protected because the investigators were hired specifically to help lawyers give legal advice.
The Commission examined:
- the exact words used in the retainer
- the role of the lawyers
- the reason for the investigation
- how documents were managed
- whether findings were broadly disclosed; and
- whether the employer kept things confidential as they should
Privilege is determined by how things are organised, their goals, and how people behave—not by job titles or guesses.
Recent Federal Court Commentary (2023–2026)
The Federal Court’s decision in Diawara v National Australia Bank Limited [2023] FCA 1048 provides one of the most important recent clarifications. (Australasian Lawyer)
The case was about a claim of privilege over a cultural review report created during a discrimination dispute. The Court confirmed that:
- the dominant purpose test remains the central inquiry
- the focus is on why the person made or obtained the document
- the party claiming privilege must prove the necessary facts; and
- privilege can apply even if the document is used for secondary or additional purposes
The Court looked at the agreement between Herbert Smith Freehills and Wise Workplace Solutions and agreed that the main reason for the report was to help the lawyers legally advise NAB.
This decision confirms that privilege can be kept, but only when the evidence clearly shows that the main reason was legal advice.
Recent Oversight Commentary
A 2022 external review by the South Australian Ombudsman highlighted the importance of the dominant purpose test when evaluating claims of privilege over investigation materials. The Ombudsman said that if investigations mainly focus on gathering facts about employee complaints or policy violations, claims of privilege might fail unless the evidence clearly shows the investigation was for obtaining legal advice.
The Ombudsman also emphasised that labelling a document “privileged and confidential” does not make it privileged. Courts and oversight agencies will focus on the true nature of the work and the actual reason for the investigation.
Why This Matters for Local Government
The problem is especially serious for councils.
Local government investigations often include:
- councillor behaviour
- allegations against a senior executive
- code of Conduct matters
- complaints about bullying
- procurement concerns
- allegations of corruption
- protected disclosures; and
- conflicts of interest
Many councils believe that hiring outside lawyers guarantees privacy.
That assumption becomes a problem when things get to:
- The Fair Work Commission
- NCAT
- ICAC
- The NSW Ombudsman
- Legal process
- Public interest disclosure investigations; or
- Judicial review.
If privilege doesn’t apply, sensitive information might be exposed, including:
- draft findings;
- internal communications;
- witness credibility assessments;
- legal assumptions;
- procedural weaknesses; and
- governance failures.
The Practical Lessons for Employers in 2026
Organisations should not automatically assume they have special rights just because lawyers are investigating.
The safer approach is to separate:
- factual investigations
- disciplinary decision-making
- witness evidence collection; and
- legal advice.
Employers should get advice early on how to organise the investigation before choosing investigators.
- Retainer documents are important.
- How the investigation is carried out is important.
- How findings are shared is important.
- How reports are shared is important.
- How the organisation uses the report later may decide if the privilege continues.
Often, the best protection isn’t a privilege.
The best way to protect yourself is by carrying out investigations that are:
- procedurally fair
- impartial
- based on evidence
- properly documented; and
- capable of withstanding external scrutiny
The main lesson from the Commission, the Federal Court, and oversight authorities is still the same.
In 2026, organisations that still do not understand legal professional privilege may find out too late that their supposedly confidential investigation materials can be revealed during lawsuits or regulatory checks.
Are your policies putting you at risk?
Your Policies Might Be Putting You at Risk
Many organisations highlight their policy library as evidence of effective governance oversight. After reviewing thousands of investigations, audits, and compliance failures, one fact remains unequivocally clear:
An ignored policy can create greater risk than having no policy at all.
Across Australia, organisations are increasingly facing this challenge through employee complaints, regulatory scrutiny, Ombudsman inquiries, integrity investigations, and costly litigation. The pattern remains consistent: the policy is established, yet the practice is not implemented.
The discrepancy between documented policies and actual practices now constitutes one of the most significant governance risks confronting employers.
This is precisely where ACCA provides help.
The Hidden Risk Inside Your Policy Library
Most organisations cannot answer three basic questions:
- When were your policies last reviewed?
- Do your staff members understand these?
- Could you provide evidence that they are being followed?
If the response to these questions is unclear, your organisation may be at risk.
Outdated Policies Create Legal and Regulatory Exposure
Legislation changes. Case law evolves. Regulators raise expectations.
However, many organisations continue to rely on policies that were written five, seven, or even ten years ago. A bullying policy developed before implementing psychosocial risk obligations, or a sexual harassment policy established before positive duty reforms, is outdated and is a potential liability.
Untrained staff Cannot comply with rules they do not understand
In investigations, employees regularly state:
- “I think I saw it when I started.”
- “I know we have one, but I’ve never read it.”
- “I didn’t know that was required.”
Courts and regulators routinely assess whether employees received training, whether policies were readily accessible, and whether expectations were consistently reinforced. A policy that lacks clarity and understanding is indefensible.
Managers who ignore policies create evidence against the Organisation
This is the most severe failure.
When managers circumvent procurement regulations, disregard grievance procedures, neglect to get conflict of interest declarations, or delay investigations, they generate a paper trail that compromises the organisation’s defence.
Courts evaluate actions rather than assurances.
A carefully drafted policy that is not followed may strengthen a claim against your organisation.
Why Councils and Public Entities Face Even Greater Scrutiny?
Local government and public sector bodies uphold comprehensive policy frameworks, including codes of conduct, procurement protocols, conflicts of interest management, fraud control, public interest disclosures, delegations, and governance structures.
However, volume does not equate to compliance.
Integrity agencies, auditors, and investigators consistently identify discrepancies between documented requirements and actual practices. These gaps result in reputational harm, determinations of maladministration, and, in certain instances, an elevated corruption risk.
This is the point at which independent oversight becomes essential.
How ACCA Protects Your Organisation
ACCA specialises in identifying the specific risks outlined above before their development into legal, financial, or reputational issues.
We offer independent, expert compliance support through:
Policy Health Checks
Thoroughly evaluate your current policies to confirm they accurately reflect:
- current legislation
- recent case law
- regulator expectations
- contemporary workplace risks
We identify gaps, inconsistencies, and outdated content and deliver clear, actionable recommendations.
Compliance Audits
We assess the extent to which your policies are being implemented. This encompasses:
- reviewing real‑world practices
- interviewing staff
- assessing training and awareness
- examining documentation and decision-making
- identifying where managers are bypassing requirements
This is the evidence that regulators seek — and the evidence that most organisations do not possess.
Practical, Targeted Training
We provide training that staff effectively comprehend and retain. No jargon. No generic slides. Clear, practical guidance specifically tailored to your risk profile.
Implementation Support
Policies only work when embedded. We help you:
- communicate expectations
- reinforce standards
- establish monitoring processes
- hold managers accountable
This transforms policies from static documents into dynamic controls.
If you have not tested your policies, you do not know your Risk
Most organisations can tell you how many policies they have. Few individuals can determine whether those policies are effective.
If your policies have not undergone independent review within the past two years, staff have not received training, or compliance has never been tested, it is important to act now.
When a regulator, investigator, or tribunal reviews your organisation, they will not be impressed by the volume of your policy library.
They will try to determine whether your staff adhere to it.
Strengthen your governance before someone else tests it
ACCA helps organisations to bridge the gap between policy and practice, thus safeguarding against preventable legal, financial, and reputational risks.
If you want to assess the effectiveness of your policies or require an independent compliance review, ACCA is available to help.
Contact ACCA today to schedule a confidential consultation regarding your policy framework and compliance risks.
Governance Matters — Especially When Nobody Is Watching
Governance Matters — Especially When Nobody Is Watching
Governance Looks Strong on Paper — But Is It?
Today, most organizations publicly champion governance, compliance, and accountability.
They publish policies, codes of conduct, procurement procedures, fraud control frameworks, workplace behaviour standards, and risk management plans. Boards and executive teams routinely tackle integrity, transparency, and compliance obligations.
Despite these efforts, governance failures persist across Australia.
By 2026, policies are rarely the problem. The problem is whether those policies are truly understood, consistently applied, properly enforced, and backed by leadership behaviour.
Many organizations seem compliant outwardly, while serious problems silently brew beneath.
This remains a top governance risk for councils, government agencies, and SMEs.
Why Governance Failures Still Occur in 2026
Modern organizations navigate ever-tougher environments.
Councils and government departments confront:
- rising community expectations
- tighter financial pressures
- increasing regulatory obligations
- workforce shortages
- cyber security threats
- procurement scrutiny
- heightened public accountability
SMEs face these common challenges:
- rising operating costs
- staffing pressures
- economic uncertainty
- increasing compliance obligations
- intense commercial competition
Under pressure, organizations can slowly normalize poor practices.
Shortcuts may replace proper processes. Oversight can weaken. Employees may avoid reporting concerns out of fear of conflict, reputational damage, or career repercussions.
Importantly, governance failures seldom start with major misconduct.
They often start with small rationalizations:
- “we need to get this project finished.”
- “everyone does it this way.”
- “it’s only temporary.”
- “the organization cannot afford delays.”
Repeated compromises eventually erode accountability, transparency, and organizational integrity.
Performance Pressure and Ethical Risk
A top governance risk in 2026 is performance pressure.
Many organizations intensely focus on:
- financial performance
- project delivery
- operational targets
- KPIs
- political expectations
- public image
While performance matters, problems arise when organizations prioritize outcomes over ethical decisions and proper oversight.
This can foster environments where employees feel pressured to:
- manipulate reporting
- ignore compliance failures
- bypass procurement controls
- avoid documenting concerns
- conceal mistakes
- protect reputations instead of addressing problems
In many investigations, warning signs appeared well before formal action.
The failure was not because of lack of information. The failure was the unwillingness to confront the problem early.
Why Councils and SMEs Remain Vulnerable
Local Government Risks
The failure was the unwillingness to confront the problem early.
- public funds
- procurement processes
- development approvals
- community services
- infrastructure projects
- regulatory functions
Even the perception of favoritism, poor transparency, weak procurement controls, or inconsistent decisions can erode community confidence.
Public trust is hard to earn and easy to lose.
Poor governance also exposes councils to:
- reputational damage
- regulatory scrutiny
- legal disputes
- workplace conflict
- adverse media attention
- loss of community confidence
SME Risks
SMEs face distinct yet equally serious governance challenges.
Smaller organizations often depend on trusted staff, informal systems, and minimal oversight.
Without strong internal controls, businesses risk becoming vulnerable to:
- procurement manipulation
- payroll irregularities
- fraud
- conflicts of interest
- financial misconduct
- cyber-related scams
- poor record keeping
In many SMEs, governance weaknesses are not deliberate. They develop gradually because operational pressures take priority over oversight.
Warning Signs Leaders Often Ignore
They develop gradually as operational pressures overshadow oversight.
Common indicators include:
- resistance to scrutiny
- poor record keeping
- inconsistent decision-making
- weak procurement controls
- lack of policy enforcement
- repeated complaints about transparency
- employees afraid to report concerns
- senior staff avoiding accountability
- excessive reliance on one employee controlling key functions
- unexplained financial anomalies
- informal approval processes
- poor complaint handling
Organizations must take these indicators seriously.
Unaddressed small issues can escalate into major organizational, financial, and reputational risks.
Governance Is More Than Compliance
Strong governance isn’t about the number of policies an organization has.
It is measured by:
- leadership behaviour
- accountability
- transparency
- ethical decision-making
- effective oversight
- consistent policy enforcement
- willingness to address misconduct
- organizational culture
Policies alone don’t build integrity. Leadership behaviour does.
Leadership behaviour delivers.
When leaders dodge tough talks, skip consistent standards, or put reputation over accountability, organizational culture can quickly decay.
Building a Culture of Accountability
Organizations that manage governance risks effectively share key characteristics.
They:
- encourage reporting of concerns
- respond to complaints consistently
- maintain strong procurement and financial controls
- review policies regularly
- provide ongoing staff training
- support independent oversight
- act early when warning signs emerge
- prioritize transparency and accountability
Strong organizations know governance is not a onetime exercise.
Governance demands constant focus, regular review, and strong leadership commitment.
Final Thoughts
Governance failures continue to harm councils, government agencies, and SMEs across Australia.
The lesson is obvious.
A policy on a shelf offers little protection without a culture of integrity, accountability, transparency, and ethical leadership.
Real governance is not about appearances.
It is about what leaders, managers, and employees do when no one’s watching.
Contact [email protected] for help in these areas.
Lack of Sleep, Poor Decisions and Rising Workplace Risk: Why Councils and SMEs Should Pay Attention
Lack of Sleep, Poor Decisions and Rising Workplace Risk
Introduction: The Hidden Cost of Workplace Fatigue
Across Australia, many workplaces still treat exhaustion as a sign of commitment. Employees who work late into the night, managers surviving on minimal sleep, and executives constantly “pushing through” are often praised for their dedication.
However, growing research suggests this culture may be creating a serious governance and compliance risk for Local Government, government agencies, and SMEs.
How Lack of Sleep Impacts Decision-Making
Lack of sleep does far more than reduce productivity. Research now links fatigue to poor judgment, inflexible thinking, impaired decision-making, and unethical behaviour.
Tired employees are more likely to cut corners, ignore procedures, make reactive decisions, and fail to properly consider the consequences of their actions. Fatigue also reduces emotional control and increases “tunnel vision” thinking, where individuals focus only on immediate outcomes rather than long-term risks.
Fatigue and Unethical Behaviour in the Workplace
Importantly, one of the first abilities people lose when tired is the capacity to reflect on the ethical consequences of their actions. This means exhausted employees are more likely to rationalise shortcuts or justify conduct they would normally recognise as inappropriate.
What begins as “just getting the job done” can quickly evolve into procedural breaches, poor workplace behaviour, or misconduct.
Governance Risks for Local Government and Public Sector Organisations
For councils and government organisations, this creates significant risk.
Fatigued staff may:
- Overlook procurement requirements
- Mishandle complaints
- Fail to maintain proper records
- Make poor decisions under pressure
- Ignore compliance obligations
In environments where accountability, transparency, and procedural fairness are critical, even small lapses can lead to allegations of misconduct, governance failures, reputational damage, or legal scrutiny.
Many investigations into workplace misconduct, fraud, corruption, and compliance breaches reveal a common factor — employees operating under excessive workload pressure and chronic fatigue.
Why SMEs Are Particularly Vulnerable
For SMEs, the danger can be even greater.
Small businesses often operate with limited staff, high workloads, and minimal internal oversight. Owners and employees frequently manage multiple responsibilities while working extended hours. Over time, fatigue can weaken internal controls and create conditions where errors, poor judgment, or even fraudulent conduct become more likely.
Common Workplace Failures Linked to Exhaustion
An exhausted finance employee may fail to identify suspicious transactions. A fatigued manager may ignore bullying or harassment complaints. An overworked staff member may manipulate records simply to keep up with unrealistic expectations.
These issues are rarely isolated incidents. They are often symptoms of a workplace culture where fatigue has become normalised.
Workplace Fatigue as a Risk Management Issue
The issue is not simply employee wellbeing — it is organisational risk management.
Businesses and councils that reward constant overwork may unintentionally be increasing their exposure to fraud, misconduct, poor workplace culture, and legal liability.
Forward-thinking organisations are now recognising fatigue as both a workplace safety issue and a governance issue. Managing workloads, encouraging healthy work practices, and reducing burnout are no longer optional wellbeing initiatives — they are essential risk mitigation strategies.
Creating a Sustainable Workplace Culture
Leaders should ask themselves an important question:
Are we rewarding productivity — or simply rewarding exhaustion?
Organisations that prioritise sustainable workloads, ethical leadership, and employee wellbeing are far more likely to maintain strong governance, effective decision-making, and healthy workplace cultures.
Conclusion: An Exhausted Workplace Is Not a High-Performing Workplace
The message for leaders is simple: an exhausted workplace is not a high-performing workplace.
It is a workplace operating with reduced judgment, weakened ethical safeguards, and increased exposure to serious organisational risk.
For Local Government, government agencies, and SMEs, managing fatigue is no longer just a wellbeing initiative — it is a critical governance and compliance priority.
Workplace behaviour and culture
Bullying, Harassment, and Misconduct
Workplace behaviour and culture go far beyond being merely human resources concerns.
These concerns centre on governance, compliance, and risk management.
These issues directly affect governance, compliance, and risk management.
- Formal complaints
- Workplace investigations
- Sick leave and workers’ compensation claims
- Staff resignations
- Unfair dismissal claims
- Legal action
- Reputational damage
- Loss of productivity
- Audit and governance issues
So workplace behaviour is a critical organizational risk—not just a personality issue.
What Exactly Defines Workplace Behaviour?
Workplace behaviour includes:
- Bullying
- Harassment
- Sexual harassment
- Discrimination
- Aggressive management styles
- Conflicts between staff
- Inappropriate language
- Misuse of authority
- Misconduct
- Breaches of the Code of Conduct
- Victimisation
- Unprofessional behaviour
These behaviours erode workplace culture and pose serious risks to the organization.
Why Workplace Culture Matters
Workplace culture is often described as:
“The way we do things around here.”
If the culture allows:
- Bullying
- Harassment
- Aggressive behaviour
- Poor management behaviour
- Ignoring complaints
- Favouritism
- Conflicts of interest
- Lack of accountability
Policies cannot resolve the issue because staff prioritise organizational culture over formal rules.
Toxic workplace culture often leads to:
- High staff turnover
- Increased sick leave
- Low morale
- Complaints
- Investigations
- Loss of staff
- Difficulty recruiting staff
- Reputational damage
Workplace culture is a governance matter, forged by the tone set from the top.
Bullying in the Workplace
Workplace bullying involves repeated unreasonable behaviour that threatens health and safety.
Examples include:
- Yelling at staff
- Constant criticism
- Excluding staff
- Setting unrealistic deadlines
- Withholding information
- Public humiliation
- Threatening job loss
- Excessive monitoring
- Misuse of performance management
- Spreading rumours
Bullying often escalates into both a WHS and HR issue.
Harassment and Sexual Harassment
Harassment encompasses any behaviour that:
- Offends
- Humiliates
- Intimidates
Sexual harassment includes:
- Unwelcome comments
- Jokes
- Messages
- Emails
- Physical contact
- Requests for dates
- Inappropriate comments
- Displaying inappropriate material
Organizations now bear a proactive responsibility to prevent sexual harassment, not just respond to complaints.
Misconduct
Misconduct may include:
- Breaches of the Code of Conduct
- Inappropriate behaviour
- Misuse of resources
- Conflicts of interest
- Fraud or theft
- Breaches of policy
- Failure to follow lawful and reasonable directions
Misconduct often sparks formal investigations.
Why These Issues Become Major Problems
Workplace behaviour issues can quickly escalate into major problems when:
- Complaints are ignored
- Managers do not act
- Managers are the problem
- There is no reporting system
- Policies exist but are not followed
- Investigations are not handled properly
- There is no training
- Leadership tolerates poor behaviour
- There are no consequences
Many major workplace investigations stem from a minor issue that was first overlooked.
What Organizations Should Have in Place
To proactively manage workplace behaviour risks, Councils, and organizations should implement:
- Code of Conduct
- Workplace Behaviour Policy
- Bullying and Harassment Policy
- Complaint Handling Procedure
- Investigation Procedure
- Training for managers
- Training for staff
- External investigator available
- Confidential reporting process
- Proper documentation
- Leadership training
- Clear consequences for misconduct
This forms a key part of a strong compliance and governance framework.
The Role of Managers and Leaders
Managers and leaders shape workplace culture in important and impactful ways.
Staff closely watch how managers act and what they allow.
When managers:
- Ignore bad behaviour
- Do not act on complaints
- Play favourites
- Bully staff
- Do not follow policy
- Do not document issues
As a result, the workplace culture will deteriorate.
Culture Flows Powerfully from the Top Down.
Final Thought
Many organizations see workplace behaviour issues as solely the responsibility of Human Resources.
They are not.
These issues touch on governance, risk management, legal matters, and reputation.
If workplace behaviour is not managed effectively, it will inevitably become:
- A complaint
- An investigation
- A legal issue
- A reputational issue
A powerful way to manage workplace behaviour is to:
- Set clear standards
- Train staff and managers
- Act on issues early
- Investigate properly
- Ensure leadership sets the right example
Remember
Workplace culture springs from influences that go far beyond formal policies.
It is shaped by the behaviour you allow.
Contact [email protected] if you need help in this area.
$90,000 Sexual Harassment Case: A Warning for Councils and Small Businesses
$90,000 Sexual Harassment Case: A Warning for Councils and Small Businesses
$90,000 Sexual Harassment Decision – What Council CEOs and SME Managers Must Learn From This Case
A recent Federal Circuit and Family Court decision has sent a very clear message to employers across Australia: failing to properly manage workplace sexual harassment and basic employment obligations can be extremely costly — both financially and reputationally.
In Mejia v Capital City Café-Bar [2026], the Court ordered a café director to pay approximately $90,000 in compensation and penalties following a sexual harassment incident involving a young employee. This case is significant because it is one of the first published decisions under the new sexual harassment jurisdiction introduced under the Fair Work Act reforms in March 2023.
For Council CEOs, senior managers, and SME owners, this case provides several critical lessons.
What Happened in This Case?
The employee, a 23-year-old migrant worker, alleged that the café director hugged her, kissed her without consent, and attempted to offer her money while pinning her against a sink.
The incident occurred shortly after the employee had raised concerns about her pay and the fact that she had not been receiving pay slips. The employee did not return to work after the incident and later commenced legal proceedings.
The Court accepted that the incident caused distress, humiliation, and ongoing emotional impact, and compensation was awarded accordingly.
However, the sexual harassment itself was only part of the problem.
The Employer’s Bigger Problem – Multiple Fair Work Breaches
What significantly increased the penalties was the employer’s broader failure to comply with basic employment laws. The Court found the director had failed to:
- Provide a Fair Work Information Statement
- Provide a Casual Employment Information Statement
- Provide pay slips
- Pay correct wages including overtime and casual loading
- Maintain proper employment records
- Make the Award and National Employment Standards available
- Provided false pay slips to the Fair Work Ombudsman
The Judge described this as a “comprehensive, if not complete, disregard for the obligations of a national system employer.”
This is a critical point for employers: sexual harassment cases often expose broader compliance failures.
Important Legal Development – New Sexual Harassment Jurisdiction
This case was brought under section 527D of the Fair Work Act, introduced under the Secure Jobs, Better Pay reforms.
This means employees now have another legal pathway to pursue sexual harassment claims — in addition to the Human Rights Commission and anti-discrimination processes.
In practical terms, this increases the legal risk for employers.
Key Takeaways for Council CEOs and SME Managers
A Single Incident Can Result in Large Compensation
The Court made it clear that sexual harassment does not need to be repeated behaviour to result in significant damages.
Many managers still believe that a “one-off incident” is less serious.
This case confirms that is not how courts see it.
Power Imbalance Matters
The Court placed significant weight on:
- The employee being young
- Being a migrant
- Having limited financial resources
- The offender being the business owner and in a position of authority
This highlights a major risk area for:
- Small businesses
- Councils
- Family-run businesses
- Workplaces where owners/directors deal directly with staff
Power imbalance increases damages.
Poor HR Practices Will Make Everything Worse
The penalties were not just for harassment — they were for systemic non-compliance.
This is where many councils and SMEs are exposed:
- No proper policies
- No training
- Poor documentation
- Incorrect pay slips
- No investigation procedures
- No HR systems
- No external investigator
When something goes wrong, these failures compound liability.
Text Messages and Apologies Can Become Evidence
The director sent messages apologising and asking the employee to keep the incident secret.
This significantly damaged his case.
Managers and business owners often try to “fix things informally” after an incident.
This can make the legal situation worse.
This Case Sends a Message About Personal Liability
Importantly, the director personally was ordered to pay penalties.
This is critical for:
- Council senior managers
- Directors
- Business owners
- CEOs
- General Managers
You can be personally liable, not just the organisation.
What Organisations Should Do Now
This case clearly shows what organisations should have in place:
- A clear sexual harassment policy
- Complaint reporting procedures
- Investigation procedures
- Manager training
- Proper wage and payroll compliance
- Proper employment records
- Access to an external investigator
- Post-investigation follow-up processes
Organisations that do not have these systems are exposed to significant risk.
Final Thoughts
This decision is a warning to employers across Australia. The combination of sexual harassment and basic employment law breaches resulted in a $90,000 outcome for a single incident involving one employee in a small business.
For councils and SMEs, the message is very clear:
If you do not have proper workplace policies, complaint procedures, and investigation processes in place before something happens, it is already too late.
Prevention, proper procedures, and independent investigations are no longer optional — they are a critical part of risk management and governance.
If you have none of these, then contact ACCA ([email protected]). I can help protect you, your business, and your employees by ensuring you have the proper policies and ensuring matters are handled properly, fairly, and legally.