Bank manager dismissed for romantic conflict of interest

A branch manager at Westpac was dismissed after he failed to disclose a relationship with an employee that created a conflict of interest. He applied to the Fair Work Commission for relief under unfair dismissal provisions, but was unsuccessful. It must be noted that the basis  for his dismissal was not  having a relationship with an employee per se, but that he failed to disclose a relationship with an employee who was initially his direct report, and the consequences which flowed from that failure.

Mr Mihalopoulos was a long-time employee of the Bank, being promoted through the ranks until he become the bank manager of a regional branch in 2012. In February 2014, he became involved in a romantic relationship with one of the employees at his branch, Ms A. Ms A reported directly to Mr Mihalopoulos.  Both parties were married at the time the affair began. Mr Mihalopoulos and Ms A moved in together in March 2014.

This relationship was kept from Mr Mihalopoulos’s employees, and from his supervisors. When asked by his manager on a number of occasions if he was in a relationship with Ms A, Mr Mihalopoulos  denied the relationship.

Under the terms of Mr M’s contract of employment, he was required to disclose to his employer any likely conflict of interest. He also received online training on Westpac’s conflict of interest policy, which included training in what constituted an actual, potential and apparent conflict. The last situation being one where a third party might reasonably perceive that there was a conflict. Mr Mihalopoulos’s contract of employment also included provision for dismissal for dishonesty.

Mr Mihalopoulos was responsible for conducting performance appraisals on Ms A, and sought to influence salary and promotion decisions (a normal part of his role) to Ms A’s benefit.

This relationship eventually turned sour, with an Apprehended Violence Order (AVO) made against Mr Mihalopoulos. He was later charged and found guilty of breaching that order after contacting Ms A, as well as for malicious damage. For these offences, he was given a bond, with no conviction being recorded.

Following the court action, Mr Mihalopoulos’s supervisor met with him and provided him with a letter outlining the allegations against him, including that he:

  • was dishonest about the relationship with Ms A;
  • exposed the Bank to reputational damage by breaching the AVO; and
  • failed to appreciate the conflict of interest.

After following appropriate procedures, when Mr Mihalopoulos’s was eventually dismissed, Mr M applied to the Commission for reinstatement, arguing that dismissal was disproportionate to his actions.

The Commission was quite clear in finding that, contrary to his contract of employment,  Mr M was in a potential conflict of interest situation which he dishonestly failed to disclose to his employer. It said that:

to be blunt it should be obvious to any reasonably intelligent person that for a manager in an organisation such as [the Bank] to form a romantic relationship with a direct subordinate creates the potential for a conflict of interest’. It went on to find that Mr Mihalopoulos’s failure to disclose his relationship with Ms A ‘constitutes a valid reason for [his] dismissal‘,

and dismissed his application.

It should be noted that Ms A was considered on objective grounds to be one of the top performing employees in her branch, however this did not negate the perception of bias arising from the conflict of interest.

This case illustrates a number of the issues which make relationships between direct reports and co-workers an area that gives rise to sleepless nights for employers – apart from the obvious dangers of conflict of interest or perceived conflict of interest, both of which can lead to poor decisions, poor staff morale and lowered productivity while the rumours flow.  And there is always the risk of relationships going sour, and as in this case, matters escalating to court cases which result in reputational damage to the employer.

Office romances are not rare, so an employer should give some thought to how such situations should be managed. In this case, the Westpac supervisor indicated that had the relationship been disclosed, arrangements could have been made to move one of the parties to another branch. The issue becomes far more complex in smaller organisations. It is clear however, that a policy prohibiting fraternisation between co-workers certainly does not stop what appears to be nature taking its course.

Breach of a ‘golden rule’ of safety not enough to avoid unfair dismissal

A worker has been been awarded compensation after the Commission found that he was unfairly dismissed, despite finding that he broke a ‘golden rule’ of safety. Once again, the importance of following due and proper process in a dismissal has been affirmed.

The worker, Mr Auberson, was a rigger engaged on a project being run by Clough Downer Joint Venture Construction Pty Ltd (CDJVC). His duties were to work in a crew with a crane operator, a pipe fitter and another rigger.

The company had a set of ‘Safety Golden Rules’ that were displayed at various locations on site, read out and discussed each day. The relevant ‘Golden Rule’ is succinctly stated as ‘NEVER work at height without fall protection’. The Golden Rules stipulated that breaches would be investigated and may result in disciplinary action and dismissal.

On the day in question, a safety assessment was prepared requiring a harness to be worn when working at a height above 1.8 metres, and where no other fall protection (such as a handrail) existed. On commencing a job involving moving a pipe by crane, Mr Auberson checked the safety assessment and assessed that the job was ‘under the workable height’. He proceeded to stand with one foot on a pipe rack, and one foot on a beam, holding a line attached to the pipe being moved into position. He was also directing the crane driver using a hand signal or radio. He claimed that he was controlling the risk of a fall by:

  • having three points of contact; and
  • being under the workable height.

A manager then became concerned about his work, and called him off the job he was working on. There were then claims that he was standing on the pipes in contravention of accepted practice. After being called off, there was a discussion between work supervisors. He then climbed back onto the pipe rack, but denied that he was told not to do so. Mr Auberson then completed landing the pipe.

Work was stopped and a discussion about the work practice with work supervisors ensued. New safety assessments were prepared.

Four days later, Mr Auberson was stood down on full pay, and given a letter alleging safety breaches relating to the working at heights Golden Rule. A meeting was held a couple of hours later, where Mr Auberson was expected to respond to the allegations detailed in the letter. His explanations were not accepted and his employment was terminated the next day.

The Commission, when examining these events, found that Mr Auberson did breach the Golden Rule about working at height, and this was a valid reason for his dismissal. Addressing the allegation that Mr Auberson disobeyed a direction about the work practice, the Commission found that the direction alleged to have been given to him – that he not continue with the job – was not in fact given in those terms.

However, in following the process at the workplace, the Commission found that Mr Auberson was not given an opportunity to respond to the reasons for his dismissal. The letter was provided to him only 90 minutes before a meeting to discuss those allegations.  This was found to be an insufficient period for him to properly prepare his response to the allegations. While he was afforded the opportunity of a support person, he had no opportunity to meet with that person prior to the meeting. His dismissal was found to be unjust and unreasonable.

This case illustrates what should now be a familiar adage in workplace relations. A dismissal for the right reasons, but in the wrong way, will lead to a finding of unfair dismissal. Not even a breach of a ‘Golden Rule’ is exempt from this.

Mr Auberson was then awarded compensation, calculated at 12 weeks’ pay, minus  40% for his own contribution towards the situation that lead to his dismissal. The total was $8,831.78.

 

The right to have legal representation at the Fair Work Commission depends on the facts

Recent decisions by the Commission serve to remind employers that there is no automatic right for them to be represented by lawyers in matters before the Fair Work Commission. The objective is for employees and employers to have roughly equal footing to achieve a fair outcome. This would not be served where an employer may have access to significantly greater legal firepower, but it does take into account that employees represented by large unions are likely to have access to very experienced advocates.

Under section 596 of the Fair Work Act 2009 (Cth) (the Act) an employer can only be represented in the Commission by a lawyer with permission.

That permission may only be granted if:

(a) it would enable the matter to be dealt with more efficiently, taking into account the complexity of the matter; or

(b) it would be unfair not to allow the employer to be represented because they are unable to represent themselves effectively; or

(c) it would be unfair not to allow the employer to be represented taking into account fairness between the employer and other persons in the same matter.

The Act provides examples of circumstances in which the Commission might grant permission, including where a person is from a non-English background or has difficulty reading or writing, or where a small business is a party to a matter and has no specialist human resources staff while the other party is represented by an industrial association or another person with experience in workplace relations advocacy.

Clearly, this right is not intended to benefit large, ASX-listed employers with large and experienced human resources teams – unless the matter is ‘complex’.

This was the situation that Asciano Services Pty Ltd found itself in recently when it sought permission to be represented by lawyers in unfair dismissal proceedings.

Asciano’s application had been challenged by its former employee’s representative, the Rail, Tram, and Bus Industry Union.

The Union submitted that Asciano should not have legal representation because:

  • it could represent itself using its own qualified personnel;
  • the matter was not complex;
  • Asciano is a large organisation with significant resources and a sophisticated human resources department; and
  • the basis of section 596 of the Act was ‘to put everyone on an equal footing.’

Ultimately, these factors persuaded the Commission that Asciano should be refused permission to have legal representation.

What does this mean for employers? The Commission’s decision provides some useful indicators of when an application for legal representation may or may not be granted.

Factors in favour of allowing representation

  • a complex matter of law to be determined;
  • no internal legal team;
  • no internal human resources team;
  • no specialist personnel;
  • the non-availability of internal legal, human resources or other specialist personnel (if any) to attend a hearing; and
  • unfairness.

Factors against allowing representation

  • internal legal team;
  • internal human resources team; and
  • other specialist personnel.

The Commission will be looking  at the facts of each case in making a determination. In another recent decision involving Greyhound Australia Pty Ltd (Greyhound), the Commission allowed Greyhound to have legal representation because even though it had human resources staff, their lack of advocacy experience compared to the union representing the other party would have meant that ‘an inequality or disparity would exist.’