Xero case tests employers’ handling of senior-leader complaints

Xero issued an unreserved apology in late October to Ally Naylor and other former employees after Maria Dew KC conducted an independent review of its handling of a 2017 whistleblower complaint involving founder Rod Drury.

For employers, the case reaches directly into legal advice, investigator independence, complainant support and fair treatment of the person accused. Each choice becomes more delicate when the allegation involves a founder, executive or director. The company also links parts of its response to Australia’s Positive Duty laws, but gives no implementation date or statutory provision.

Xero is an accounting software company. The dispute now tests its escalation path as well as the contact alleged in 2017. Former employee Ally Naylor alleged, in a Stuff investigation, multiple instances of unwanted sexual contact by Drury at his apartment while he was chief executive nearly a decade ago. Drury told Stuff the relationship was “consensual and mutual.” Naylor rejects that account.

The apology concerned Xero’s handling of the complaint, not a stated finding on the disputed contact. The legal lesson centers on process rather than an assumed outcome.

What should employers do first?

Jim Roberts, a partner at Hesketh Henry, put the first instruction plainly. “Generally speaking, the key is not to ignore the complaints! Just as important, do not jump to any conclusions!” he said.

Roberts said employers should investigate as soon as possible, depending on the nature of the allegations. He also recommended legal advice from the outset. The complaint type, surrounding circumstances and identity of affected parties may determine the investigation’s design, which is why Roberts recommended counsel before the employer embarks on the process. Speed and impartiality must work together, not as substitutes.

When is an outside investigator warranted?

Roberts said an external and independent investigator may be needed, especially when the board or senior leadership is involved. He advised employers to treat everyone involved with dignity until they can safely reach a conclusion. Employers should also provide appropriate support during that period.

Roberts particularly emphasized support when the injured party and alleged offender are current employees of the employer or when the alleged offender is a director. That makes independence most consequential when a complaint reaches senior power. His wording also matters: an outside investigator is a case-specific recommendation, not a stated requirement for every workplace complaint.

What has Xero committed to change?

Xero will appoint independent investigators for serious complaints involving senior executives or directors. Whistleblowers will also be able to report concerns to a third-party organization. The company will give clearer guidance on its whistleblowing and serious complaint-handling process. It will provide more wellbeing support to all whistleblowers and communicate outcomes more clearly.

Xero will also contribute to the cost of independent legal advice for employees raising sexual harassment complaints involving senior executives or directors. Together, these measures address access to reporting, investigation and advice at the point where hierarchy may complicate all three.

On risk management, Xero will refresh its integrated Positive Duty response plan and risk framework. It will develop integrated monitoring and reporting of incidents, plus more targeted employee surveys and exit interviews. The board will receive expanded specialist training on sexual harassment risks, complainant disclosure and trauma-informed approaches.

Those commitments extend earlier changes made since the 2017 complaint. Xero updated its Code of Conduct and people practices, added policies on workplace relationships, and implemented Australia’s Positive Duty laws across its global operations.

Will the new controls work in practice?

The first test is whether employees can use the third-party reporting route without involving the leadership line connected to the complaint. Another test is whether independent investigators, legal advice and support arrive early enough to shape a fair process.

Xero’s targeted surveys, exit interviews and expanded board training may then show whether reporting, disclosure and trauma handling have changed in practice. Those measures should reveal whether Xero’s response becomes routine practice across serious complaints, reporting and board oversight, rather than a one-case answer to the allegation involving its founder.