When organisations don't respond + what it costs
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WARNING: THIS ARTICLE CONTAINS SENSITIVE SUBJECT MATTERS SUCH AS SUICIDE.
What eighteen months of failed complaint handling has cost Australian institutions. What every leader should be reading
A worker raises a complaint. It is the moment of truth for the organisation.
The complaint is routed to a manager. The manager attempts to handle it informally (often by not writing up incident reports). HR is brought in. HR reviews. HR concludes there is “insufficient detail.” The complaint sits. The worker keeps working. The worker keeps reporting. Six months pass. A year. The complaint is reframed as a personality issue, then a performance issue, then a team dynamics issue. The investigation that was promised never happens. The records that would have been built were not built and therefore even for an external party we are starting from scratch. The outcomes across the cases studied range from resignations and reputational damage, to court orders, to in the most serious of the cases loss of life.
This is not a hypothetical. It is the pattern across the most consequential failure-to-respond cases in Australia over the last eighteen months (and longer). The cost has been measured in resignations, regulator findings, parliamentary inquiries, government contracts and, in one Victorian Coroner’s Court, with a death.
The Australian organisations involved in these cases all had policies. They all had training. Most had whistleblower programs and complaint frameworks. The failure was not absence of documentation, it was implementation.
What happened when organisations didn’t respond
- The Good Guys (Victorian Coroners Court, April 2026v= COR 2021 002298). A sales assistant at one of their stores (we will withhold names out of respect for family members) reported workplace bullying by several colleagues after a workplace injury that changed her work capacity. Her store manager attempted to handle the matter informally. HR later declined to formally investigate, citing “insufficient detail” in the complaint. The Coroner found that the HR business partner’s justification of HR’s inaction “equated to a form of filibustering” *a tactic used to delay or block progress.* Over time, the bullying allegations became intertwined with the workers performance and were treated as a team dispute, rather than as allegations of bullying. She died by suicide in May 2021. While the Coroner could not find the death *”preventable”* on the balance of probabilities, the findings noted that The Good Guys *”failed to respond appropriately”* and *”significantly let her down.”* The Coroner’s recommendation was for new policies addressing bullying complaints involving groups of workers, and clear escalation guidance for managers. The Good Guys had policies, procedures and trained managers. The failure was implementation.
- KPMG Australia (May 2024 onwards, escalating June 2026). A former audit director made a whistleblower disclosure alleging confidential client documents ( including those of Macquarie Group, Westpac and Dexus) were being misused to win new work. Three internal investigations failed to substantiate the claims. A fourth investigation, by law firm Allens, was commissioned by the KPMG board. On 29 May 2026, the KPMG Chairman publicly accepted the resignations of CEO Andrew Yates and Audit Managing Partner Julian McPherson, citing the Allens findings that prior investigations had *”fallen short of the rigour required.”* On 3 June 2026, COO Eileen Hoggett stepped down from the COO role. On 5 June 2026, ASIC Chair Sarah Court confirmed at Senate Estimates that ASIC had *”commenced a formal investigation.”* A parliamentary hearing is scheduled for 19 June 2026. Approximately $270 million in government contracts is reported to be under review. Public reporting (Human Resources Director Australia, June 2026) also indicates that KPMG IT personnel, acting under instructions from the office of the firm’s general counsel, twice accessed the whistleblower’s work laptop covertly; KPMG has publicly acknowledged that its treatment of the whistleblower fell short of the firm’s, the whistleblower’s, and the community’s expectations.
Eklom v Marshall [2026] FedCFamC2G 772 (Federal Circuit and Family Court, May 2026). A storage facility manager was subject to homophobic and sexualised remarks, and unwanted physical contact, by a contractor and a customer at the workplace. The Court awarded $116,000 in compensation and penalties, against the contractor and the customer, not an employee or supervisor. The case applies the prohibition on sexual harassment in connection with work (Fair Work Act 2009, section 527D) to conduct by third parties whose access to the workplace the employer enabled.
Loquias v The Star Entertainment Group and John Dwyer [2026] QIRC 023 (Queensland Industrial Relations Commission, 2026). QIRC 023 (Queensland Industrial Relations Commission). The Commission found the employer liable for the conduct of its manager despite the employer having policies and training in place. The Commission considered that *”targeted training (delivered properly) and regular reminders that any further breach would likely end the manager’s employment would have deterred further misconduct.”* The Commission’s finding was that policies and training existed but were not enforced in the moment that mattered — and on that basis the employer was liable.
- Magar v Khan [2025] FCA 874 (Federal Court of Australia, August 2025). A worker at a Mad Mex franchise was sexually harassed and victimised by her manager. The Federal Court awarded record-breaking damages of $160,000, finding that the manager *”created and fostered a hostile workplace environment that tolerated overt and outspoken sexist and boorish behaviour” and that normalising such behaviour *”can escalate into sexual harassment.”* The case turned on the interaction between the workplace culture and the harassment that followed.
- In August 2025, ASIC obtained its first enforcement outcomes for contraventions of the Corporations Act whistleblower protections, in proceedings against ASX-listed coal mining company TerraCom Limited. The Federal Court found TerraCom contravened section 1317AC by causing detriment to a whistleblower *”hurt, humiliation, distress and embarrassment, and damage to reputation” through the tone and content of three market announcements made by the company in response to his disclosure.
- In December 2025, ASIC published Report 827, a survey of 134 Australian companies that found 20% provided no dedicated whistleblower hotline; 25% provided no regular staff training on the whistleblower program; and 58% had not sought any feedback from employees on their speak-up culture in the previous year.
The pattern across the cases
These are not different stories. They are the same story, told different ways.
In every case, the organisation had a complaint framework. The Good Guys had a bullying policy, manager training and an HR business partner. KPMG had a whistleblower program robust enough that it sells the service to other companies. PwC had a governance board, a risk committee and an ethics code that referenced the firm’s purpose. TerraCom had a listed-company whistleblower scheme. Star Entertainment had training. The Coroner, the courts, the Senate, the Federal Court and ASIC have each separately concluded that *the existence of the framework was not the issue.*
The pattern within the failure is consistent:
- The complaint was raised, then re-categorised as a performance dispute, a team dynamics issue, a misunderstanding, a personnel matter.
- The investigation was either not commenced, or was commenced under conditions that did not equip it to find the truth.
- The investigator was either too close to the alleged conduct, or insufficiently senior to address it.
- The complaint was treated as the singular complaint, not the pattern of complaint, even where prior complaints in the same team, the same period, or against the same individuals existed.
- The internal communications, emails, market announcements, settlement deeds became evidence in the subsequent legal process.
The most consistent diagnostic: every external review coronial, parliamentary, regulatory found that the people responsible for handling the original complaint believed they were responding appropriately. The systems were used. The boxes were ticked.
Why organisations fail to respond – the science
In 1968, social psychologists John Darley and Bibb Latane ran a series of experiments that produced what is now called the diffusion of responsibility effect. Their finding was counter-intuitive: as the number of bystanders increased, the likelihood that any one of them would intervene *decreased*. The presence of others diluted individual obligation to act. The more eyes on the problem, the less the problem belonged to any of them.
The same effect maps onto the failure pattern in modern organisations. The complaint reaches a line manager. The line manager refers it to HR. HR refers it to a business partner. The business partner refers it to legal. Legal references it back to HR for triage. A committee is convened. The investigation is “commissioned” but never resourced. Three internal investigations conclude in sequence that they cannot substantiate the disclosure. None of the individuals involved in any of these steps believe they have failed the worker. The cumulative response is a failure.
Add to this the second layer of psychological safety. Amy Edmondson’s research on team psychological safety shows that when individuals fear status consequences for naming a problem, the problem stops being named. The whistleblower is treated as the difficulty, not the original misconduct. The pattern across the named cases is unmissable: the worker who raised the complaint became, in the eyes of the organisation, the source of the issue. The Good Guys “team dispute.” The KPMG covert IT access. The TerraCom market announcements naming and characterising the whistleblower. The Mad Mex hostile environment that predated the harassment claim. In each, the response strategy targeted the messenger.
A third layer compounds both: time. Each of the cases above is a slow case. The Good Guys: 2019 complaint, 2021 death, 2026 coronial finding. KPMG: 2024 disclosure, 2026 CEO resignation. PwC: 2015 conduct, 2022 surfacing, 2026 still resolving. By the time the external review concludes, the people responsible for the original failure have often moved on; the organisation has reorganised; the documentary trail has been edited or lost. *Time is part of the failure.*
What good complaint handling looks like
- Treat patterns as signals, not data points. A single complaint is information. Same team, same period, same individuals, similar themes — that is a signal, and the framework should escalate it.
- Make investigators structurally independent. If the complaint involves a manager, the manager’s manager cannot lead the investigation. Independence is structural, not personal.
- Ringfence the complaint from any performance matter. The Coroner in the Thomastown matter found that bullying allegations had become intertwined with the worker’s performance and were treated as a team dispute. Two separate, parallel processes are required where matters intersect.
- Document a dated timeline. The Victorian Coroner found in the Thomastown matter that HR’s failure to act amounted to *”a form of filibustering — a tactic used to delay or block progress.”* Written, dated progress at fixed intervals — and a recorded reason for any delay — closes that gap.
- Anticipate external review. In PwC, the Senate examined hundreds of internal emails. In KPMG, the Allens review challenged earlier internal investigations. In TerraCom*, the Federal Court found contravention in the tone and content of three public market announcements. The documents an organisation generates in response* to a complaint become the evidence.
- Make reasonable steps operate in practice. The QIRC in Loquias v The Star Entertainment Group considered that *”targeted training (delivered properly) and regular reminders that any further breach would likely end the manager’s employment would have deterred further misconduct.”* Policies and training existed in many of the failed cases. What was missing was their consistent application
The PPS Board Health Index is built for that earlier read. It surfaces the diagnostic chain at the upstream end — where psychological safety, trust, respect, and accountability indicators predict whether the regulator's letter is years or weeks away. It is not a compliance audit. It is a governance instrument.
The Diagnostic for Organisations + Boards
The boards in each of the failed cases above received reports. They received the metrics. They received the policies. The diagnostic that mattered – was the complaint that arrived this quarter handled in a way the regulator would accept? was not, on the public record, the question the board or executive leadership team asked.
The PPS Boardroom Psychological Safety Index 2025 (n=944 Australian directors and senior executives) found that 53% of boards still operate in a perceived blame culture, and only 8% of organisations could point to evidence of behavioural accountability in their own board.
The same Index found that boards with high psychological safety are three times less likely to have material psychosocial hazards in their workplaces.
The diagnostic for whether your organisation will be the next case in this article is not the existence of the complaints framework.
It is the board’s read of how that framework was used the last time a complaint was raised in anger.
What this means for entities operating in Australia
The cost of the cases above has been measured publicly: two CEOs and multiple partners across the Big Four; an entire advisory business sold for one dollar; approximately $270 million in contracts under review; $116,000 and $160,000 in Federal Court orders; further Commission orders against Star Entertainment; three Senate reports; a coronial finding on a workplace death; ASIC’s first whistleblower-protections enforcement; and a parliamentary hearing still to come.
Each case began as a complaint that an organisation declined to take seriously.
If your board is considering its own complaint architecture and whether it would survive the same scrutiny, the PPS Board Health Index includes a Complaint Response diagnostic that maps the board’s read of complaint handling against the executive’s and the frontline’s, and surfaces the same diffusion-of-responsibility patterns described above.
Read the People Plus Science Handling Complaints: A Guide for Workplaces and the *First Response* field kit at [peopleplusscience.com](https://peopleplusscience.com), or talk to us about a Board Health Index for your organisation.
Disclaimer : This article is general information only, and is not legal advice. The findings, judgments, undertakings and Senate reports referenced are matters of public record at the date of publication; aspects of the underlying conduct in some matters remain contested where the proceedings or company statements state so. Enforceable and voluntary undertakings are not admissions of liability. Individuals are identified by role unless their names appear in the formal public record of the proceeding (judgment titles, parliamentary record, or resignations announced by the entity), in accordance with People Plus Science editorial standards.
If reading this article has raised any personal concerns, support is available through Lifeline (13 11 14) and Beyond Blue (1300 22 4636).
References
Coronial and court findings
– Coroners Court of Victoria. (2026, April). Finding into death with inquest (COR 2021 002298). https://www.ohsrep.org.au/coroner_finds_the_good_guys_failed_bullied_employee_in_suicide_case_sn_805
– Eklom v Marshall* [2026] FedCFamC2G 772 (Federal Circuit and Family Court of Australia).
– Loquias v The Star Entertainment Group and John Dwye* [2026] QIRC 023 (Queensland Industrial Relations Commission).
– Magar v Khan* [2025] FCA 874 (Federal Court of Australia).
– Mejia v Capital City Cafe-Bar* [2026] FedCFamC2G 468 (Federal Circuit and Family Court of Australia).
– Australian Securities and Investments Commission v TerraCom Limited (Federal Court of Australia, August 2025) first whistleblower-protections enforcement under s 1317AC.
KPMG whistleblower matter
– KPMG Australia. (2026, 29 May). *Investigation into whistleblower allegations final public statement. https://kpmg.com/au/en/media/media-releases/2026/05/investigation-into-whistleblower-allegations-29-may-2026.html
– Human Resources Director Australia. (2026, June). “KPMG Australia CEO resigns over whistleblower investigation failures.” https://www.hcamag.com/au/specialisation/employment-law/kpmg-australia-ceo-resigns-over-whistleblower-investigation-failures/577006
– Human Resources Director Australia. (2026, June). “How to avoid becoming the next KPMG whistleblower scandal.” https://www.hcamag.com/au/specialisation/employment-law/how-to-avoid-becoming-the-next-kpmg-whistleblower-scandal/578355
PwC tax leaks matter
– Senate Finance and Public Administration References Committee. (2024, June). *Inquiry into the management and assurance of integrity by consulting services ” final report.* https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Finance_and_Public_Administration/Consultingservices
– Senate Finance and Public Administration References Committee. (2026, May). *Subsequent report ” PwC compliance with previous recommendations. (As referenced in International Tax Review: https://www.internationaltaxreview.com/article/2dcvefsmqxil86bbispvk/direct-tax/pwc-australia-hiding-from-tax-leaks-scrutiny-parliamentary-report-concludes)
– Tax Practitioners Board. (2025, September). *Deregistration of Mr Thomas Seymour. (As reported in International Tax Review: https://www.internationaltaxreview.com)
– NSW Legislative Council Public Accountability and Works Committee. (2024, May). Inquiry into NSW Government’s use and management of consulting services ” final report. https://www.parliament.nsw.gov.au/lcdocs/inquiries/2963/FINAL%20Report%20-%20Consulting%20services%20-%2022%20May%202024.pdf
Regulator publications
– Australian Securities and Investments Commission. (2025, December). *Report 827 Whistleblower programs in 134 Australian companies. https://www.asic.gov.au
– Australian Human Rights Commission. (2023). *Guidelines for complying with the positive duty under the Sex Discrimination Act 1984 (Cth).
– SafeWork NSW. *Managing Psychosocial Hazards at Work — Code of Practice.* https://www.safework.nsw.gov.au/resource-library/list-of-all-codes-of-practice/codes-of-practice/managing-psychosocial-hazards-at-work
Legislation and standards
– Corporations Act 2001 (Cth), Part 9.4AAA (whistleblower protections), section 1317AC (victimisation).
– Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019* (Cth) currently subject to public consultation, consultation closing 29 July 2026.
– Public Interest Disclosure Act 2013 (Cth).
– Sex Discrimination Act 1984 (Cth), sections 28AA, 28M, 47C.
– Fair Work Act 2009 (Cth), Part 3-5A (sexual harassment in connection with work), section 527D.
– Restricting Non-disclosure Agreements (Sexual Harassment at Work) Act 2025* (Vic).
– Anti-Discrimination Act 1991 (Qld) sexual harassment prevention plan requirement (commenced 1 March 2025).
– Australian Standard *AS ISO 10002 ” Guidelines for complaints handling in organizations*.
Research
– Darley, J. M., & Latane, B. (1968). Bystander intervention in emergencies: Diffusion of responsibility. Journal of Personality and Social Psychology, 8(4), 377“383.
– Edmondson, A. C. (1999). Psychological safety and learning behavior in work teams. *Administrative Science Quarterly*, 44(2), 350“383.
– People Plus Science. (2025). Boardroom Psychological Safety Index 2025 (n=944 Australian directors and senior executives).
– HWL Ebsworth.* (2026, May).”Investigation mistakes employers can’t afford” three lessons from the Good Guys coronial finding.”* https://hwlebsworth.com.au/investigation-mistakes-employers-cant-afford/
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