BEWARE – THE RAMIFICATIONS OF AN OFFICE AFFAIR CAN JUSTIFY DISMISSAL

In the recent case of M v Westpac Banking Corporation [2015] the Fair Work Commission has indicated to employers and employees alike that dismissal can be justified due to the various ramifications which may arise as a result of an office affair. In this case, the Commission ultimately rejected the applicant’s unfair dismissal application against Westpac on the primary basis that his behaviour in an office affair resulted in a conflict of interest with his employer.
 
The applicant was employed at Westpac for approximately 16 years and in 2012 was promoted to Bank Manager. While he held this position, he became involved in a romantic relationship with one of his subordinates (Ms A), who reported directly to him.
 
The primary reasons which were submitted by Westpac for the applicant’s dismissal included; the conflict of interest which arose as a result of the relationship, the applicant’s dishonesty about the relationship, his criminal conduct and the inappropriate disclosure to other staff members of details relating to the relationship. Deputy President Hamberger considered each of these reasons and ultimately agreed that these primary reasons, which were submitted by Westpac for the applicant’s dismissal, did in fact justify dismissal under the circumstances.
 
CONFLICT OF INTEREST
The applicant’s obligation to disclose any potential conflicts to his employer was outlined in his employment contract and Westpac’s conflict of interest policy. It was the Commission’s view that employers are entitled to reasonably expect employees will disclose to them any potential conflicts of interest, so to allow the employer the opportunity to manage them appropriately within the workplace.
 
The conflict of interest which the relationship created was seen as the primary reason for dismissal. This was particularly seen to be the case as the applicant held a senior position, Ms A reported directly to him, he conducted Ms A’s performance appraisals and during the course of the relationship Ms A was given a promotion of which the applicant was said to have positively advocated for Ms A.
 
DISHONESTY
The applicant, on two separate occasions, lied to his manager regarding his relationship with Ms A when directly asked. Irrespective of this, the applicant had a duty and obligation to make his manager aware of the relationship even before he was directly asked. The Commission held that the lack of disclosure on behalf of the applicant combined with his overt lying was a valid reason for the applicant’s dismissal.
 
CRIMINAL CONDUCT
Ms A took out an AVO against the applicant after the relationship had ended. This was breached twice by the applicant. Westpac submitted that the applicant’s criminal conduct could have damaged the banks reputation within the community. This was however rejected by the Commission.
 
INAPPROPRIATE DISCLOSURE
Westpac additionally submitted that the applicant inappropriately disclosed to staff members his romantic relationship with Ms A. That this did occur was not disputed by the applicant however, it was done so in the context of the applicant apologising for his recent behaviour. Deputy President Hamberger commented that although it may have been better for the applicant to not discuss the matter with the other staff members, he found it difficult to condemn the applicant for apologizing for his behaviour.
 
The Commission concluded that the applicant’s relationship with Ms A had the potential to create a conflict of interest and this, combined with the applicants repeated failure to disclose the relationship to his manger when asked, amounted to a valid reason for his dismissal. It was held that this behaviour ‘fundamentally undermined the trust and confidence which is at the heart of the employer-employee relationship’.
 
RECOMMENDATIONS
Although office affairs are not uncommon and employers cannot prevent their employees from forming romantic relationships, the parties involved do have an obligation and responsibility to take reasonable measures to ensure that their work and work environment is not adversely affected by such relationships.
This case also demonstrates how important it is for employers to ensure they have up to date and appropriate workplace policies in place, in particular conflict of interest policies.
 
If you believe your workplace policies may need reviewing or updating please do not hesitate to contact Michael Bishop on 9614 7707 to discuss further.

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