The infamous Cartier watches controversy of Australia Post on rewards policy

Towards the end of 2018, Australia Post secured a banking deal with Commonwealth Bank, Westpac and the NAB that allowed post offices to render bank services in Australia’s regional areas. Australian post celebrated this great moment of achievement by gifting their four employees with luxury Cartier watches worth $20,000 in total. 

By the end of 2020, this case of a generous reward policy became the headline in major news channels and took quite an uneventful turn. People were appalled over the amount of spending under Australia Post’s reward policy which the CEO Christine Holgate probably had made in good faith error of judgement by spending nearly $20,000 on watches for executives. This expensive reward sparked controversy for the Morrison government as the Australian government is a shareholder of Australia Post that involves the taxpayers’ money. Australia Post is the government business enterprise that provides postal services in Australia. It was quite apparent that the Government had to take a firm stand over the growing turbulence amongst the citizens and media. Prime Minister Scott Morrison ordered an independent review of the matter and a series of investigations was initiated in the last two years.

Australia Post on 29th October, 2020 made an announcement that Christine Holgate had agreed to stand aside during the four-week investigation. However, the CEO’s lawyer Bryan Belling brought the fact about lack of proper communication and notification by the employer to Holgate.

According to Holgate, she received a letter from the chairman of Australia Post that instructed her to stand down for which she had never agreed in any written form. Sooner, the Australia Post made a public announcement that she agreed to step aside and  Holgate was under complete dismay that the board had failed to formally notify her that she had been stood down. However, Holgate finally departed from her post on 2nd November 2020. 

Subsequently, Holgate in her statement had clarified that Australian Post is a commercial organisation and the rewards approval had come from their chairman in good faith. She also denied the involvement of taxpayers’ funds in it and the rewards were in accordance with the growth of the business from a commercial standpoint. She wrote in a 154 page Senate inquiry submission containing emails and photos. Holgate repeatedly spoke about the chair who she feels unlawfully stood her down and failed to defend her despite knowing the facts of the case.

The aftermath

However, the widespread criticism all over the media critically pointed towards the need to make immediate changes in the reckless rewards policy and executive bonus structure of Australia Post. Greg Rayner, the national secretary of Communications Union was seen to be quite vocal about the issue that gifts for highly paid executives needs to be governed, and suggested that the government should not just ask the CEO to step down but there is also a need to undertake complete reshuffling of the team to avoid such controversies in future.

The senate inquiry report over Australia Post finally came out on 26th May 2021. The committee recommended that Australia Post chairman Lucio Di Bartolomeo should resign and the Government must apologise to Holgate for denying her the legal principles of procedural fairness and natural justice in her departure saga from Australia Post.

Referring to the rules of procedural fairness that require a hearing appropriate to the circumstances, lack of bias, evidence to support a decision, and inquiry into matters in dispute; it was clearly indicated that these procedural principles were not followed appropriately while handling the case. Also, whenever it is proposed to make an adverse comment about a person, procedural fairness should be provided to that person before the report is presented to the final decision maker and must be done as a matter of best practice.

Australia Post has overhauled its rewards policy and use of credit cards after the infamous Cartier watches controversy; however many eminent industry specialists believe that this case also indicates a wider pattern of behaviour towards women in workplaces, including the parliament.

Holgate is said to have developed suicidal thoughts because of this ordeal and she had to deal with immense mental turmoil during the past two years. This month she has joined Toll Global Express as their Chief Executive Officer and finally earlier this month Holgate has also reached a $1 million settlement with Australia Post. The settlement consists of a $1m payment to be taxed as an employment termination payment to Holgate and $100,000 of legal costs.

Over the last two years, there seems to be a growing cynicism regarding the fairness of employee pay and rewards structure in many organisations.

State legislatures, institutional investors and even shareholders have become active allies while increasing the responsibility on boards to ensure the sanctity of the matter. This trend is likely to increase in future and companies will need to refrain from any oversight in matters pertaining to its criticality. If not managed more ethically with fair practices and procedural fairness, these can become a larger part of a much bigger problem ending in legal consequences affecting the overall brand of the organisation.