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News 30 June 2020

Fair Work Commission finds conflict of interest validates summary dismissal

The Fair Work Commission (“the Commission”) has found an employee of a governing sporting organisation (“the organisation”) was fairly dismissed when he chose to concurrently pursue a coaching career. The Commission agreed there was a significant conflict of interest and performing the new role was not in the “legitimate interests of his employer.”

The facts

The employee, a former international professional footballer with a desire to become a professional coach, was employed as a technical advisor to a regional football governing body. The employee’s role involved overseeing coaches and the performance of teams governed by the organisation, as well as talent management and development across the region. Shortly after accepting the position, the employee notified the organisation he had been offered a coaching position with a team competing in the league overseen by the organisation. The organisation was concerned the coaching role presented a conflict of interest. In reaching this conclusion, it considered the oversight and leadership the employee’s role demanded in relation to player development, and the perceived conflict which would exist as well as the time commitment and scheduling conflicts which would occur when performing both roles. The organisation met with the employee to discuss the matter and entered into written communications. Overall, the organisation considered the impact on the organisation and its stakeholders was too great and explained they “simply [could not] allow [him] to take [the] role as head coach.”

The employee did not accept the position of the organisation and a further meeting was held in order to discuss the issue. However, the organisation maintained the coaching role would undermine its integrity. Being mindful of the employee’s desires to become a coach, it offered to explore opportunities within the organisation in the new year.

The employee confirmed he had accepted the coaching position without notifying the organisation. The organisation stood the employee down pending the outcome of a show cause meeting. During the meeting the employee again contended he saw “no significant issue or conflict” performing both positions. The following day the organisation informed the employee he was summarily dismissed. The organisation offered the employee a deed of release which was declined. The employee lodged an unfair dismissal claim soon after the dismissal took effect.

Decision

The Commission, when reviewing whether the organisation had a valid reason to dismiss the employee, considered the employee’s duties, his hours of work and the employment and contractual relationship. The Commission was satisfied a conflict did exist. The Commission considered the employee “downplayed the amount of time he would have been required to spend in his role”. The Commission also considered accepting the role “would, not might as a matter of speculation, totally undermine the governing body’s independence, integrity and standing within the clubs competing.”

The Commission also considered the conflict and incompatibility of holding both positions was in breach of the employee’s contract of employment and/or the implied duty of loyalty and fidelity. Overall, the Commission was satisfied there was a valid reason for dismissal.

In considering the process adopted by the organisation leading up to the employee’s dismissal, the Commission was satisfied it was a fair process, noting the employee had an opportunity to respond both verbally and in writing. The Commission did consider the employee’s employment history, the organisation’s refusal to offer to trial the employee in both roles, and the impact of the termination on the employee and his young family. Ultimately, the Commission was satisfied the dismissal was not harsh, unjust or unreasonable, commenting “sometimes personal ambition clouds reasonable judgement.”

Lessons for business

This case highlights the importance of objectively considering a situation where a conflict of interest may exist. In this case, the organisation took careful steps to discuss the conflicting position with the employee and explained the ways in which it was incompatible with his contract of employment. When the employee refused to relinquish the role and indeed accepted the conflicting contract, the organisation followed a process allowing the employee the opportunity to respond to the possibility of termination.

How we can assist

Under current employment legislation, costly consequences await organisations found to be recruiting, managing or terminating staff incorrectly. Attend our Managing Termination, Redundancy and Unfair Dismissals course to increase your knowledge of counselling and discipline processes, and how to best manage an unfair dismissal claim.

Written by Eliza Johnstone, Graduate Workplace Relations Advisor.

[2020] FWC 2819

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