When a serious employee complaint arises, many organizations instinctively turn to their legal counsel to manage the ensuing investigation, operating under the assumption that this step automatically cloaks the entire process in the protective veil of legal professional privilege. This common practice is often seen as a strategic maneuver to maintain confidentiality and control over sensitive internal matters, especially when litigation seems like a potential outcome. However, a recent landmark ruling has sent a clear message to human resources departments and corporate leaders alike: simply routing an investigation through a law firm is no guarantee of confidentiality. The true purpose and subsequent handling of the investigation are what ultimately determine whether its findings can be shielded from disclosure, a distinction that has profound implications for how companies approach disciplinary procedures and manage internal disputes. This development forces a critical re-evaluation of long-held strategies, highlighting the tension between conducting a fair, transparent process and preparing a legally defensible position.
The Anatomy of a Challenged Investigation
The critical test case emerged from a dispute between Cohealth Limited and a former employee, James Crafti, which put the boundaries of legal privilege under intense scrutiny. The situation began with a client complaint against Crafti in June 2024, prompting Cohealth to launch an internal investigation. When Crafti raised concerns about a lack of procedural fairness, the company pivoted its strategy. It engaged its law firm, Lander & Rogers, which in turn hired a barrister to conduct what was described as a “factual investigation.” The engagement letter was carefully worded to frame the barrister’s role as necessary for the law firm to provide legal advice to Cohealth. However, a crucial discrepancy arose when the company’s HR department communicated a different purpose to Crafti’s union representative, stating that an external investigator was being brought in to “finalize the investigation” and address the procedural flaws. This conflicting messaging became a central piece of evidence that would later dismantle the company’s claim to privilege, demonstrating that the stated legal purpose was not the only, or even primary, reason for the investigation.
At the heart of the Fair Work Commission’s decision was the application of the “dominant purpose test,” a legal standard used to determine if a document is protected by legal professional privilege. For the privilege to apply, the main, overriding reason for the document’s creation must be for a lawyer to provide legal advice or for use in anticipated litigation. The Commission meticulously analyzed Cohealth’s intentions and concluded that the company had dual purposes that were, at best, of equal importance. On one hand, it sought legal advice. On the other, it needed to complete a workplace disciplinary investigation that had been challenged on procedural grounds. The company’s own statements, which framed the external investigation as a step to finalize a flawed internal process, strongly suggested that the operational and disciplinary goal was just as significant as the legal one. Because the legal purpose was not clearly dominant over the disciplinary one, the Commission found that the investigation report did not meet the stringent requirements for privilege, rendering it subject to disclosure.
Unpacking the Waiver and Its Implications
Even if the investigation report had initially qualified for legal privilege, the Fair Work Commission found that Cohealth would have forfeited that protection through its subsequent actions—a concept known as waiving privilege. After the investigation concluded, the company took disciplinary action against Crafti, issuing him a written warning and placing him on a Performance Improvement Plan. In its communication to Crafti, Cohealth did more than just state the outcome; it detailed the specific findings, confirming that two allegations had been substantiated. Crucially, it also revealed the evidentiary basis for these conclusions, making direct reference to witness statements and Crafti’s own testimony gathered during the investigation. By disclosing the substance and reasoning behind the report’s findings, Cohealth effectively relinquished its right to keep the full document confidential. This act of partial disclosure was interpreted as being inconsistent with maintaining the confidentiality that privilege is designed to protect, leading the Commission to rule that the privilege had been waived in its entirety.
This ruling serves as a powerful reminder for all organizations that the functional purpose of an investigation will always be paramount in the eyes of a commission or court. The decision aligns with a growing consensus that merely using lawyers as a conduit for a standard HR process does not transform that process into a privileged legal undertaking. For HR leaders, this presents a critical strategic crossroads at the outset of any serious workplace complaint. A choice must be made: is the primary objective to conduct a fair and transparent disciplinary investigation, the results of which will be communicated to the employee to justify any subsequent action? Or is the goal to obtain confidential legal advice in anticipation of litigation? Attempting to pursue both objectives simultaneously through a single process is fraught with risk. As the Cohealth case demonstrates, this dual-purpose approach can fail to achieve either goal effectively, ultimately leading to the forced disclosure of sensitive internal documents and undermining the intended legal strategy.
A New Precedent for Procedural Fairness
Ultimately, the Fair Work Commission’s decision in the Cohealth case established a clear and instructive precedent for employers. The ruling underscored that the substance of an investigation, rather than its form, was the determining factor in whether legal professional privilege could be claimed. It was not enough to have a law firm commission the report; the dominant purpose behind its creation had to be unequivocally for legal advice. The commission found that Cohealth’s actions demonstrated a parallel, if not greater, purpose: to finalize a disciplinary matter in a procedurally fair way. The subsequent disclosure of the report’s findings and rationale to the employee further confirmed that the process was fundamentally an operational one, not a confidential legal one. This outcome highlighted a fundamental conflict between the transparency required for a fair disciplinary process and the confidentiality required for legal privilege, signaling that organizations needed to make a definitive strategic choice before an investigation even began.