Here's an essay I wrote for Employment Law at the University of New South Wales. You may find it useful. The question I sought to answer was: Under what circumstances may an employee be sacked for out of hours conduct? Would you recommend changes to the current rules?
Author's Note: You probably know this already, but: this essay does not constitute legal advice. It is a student research paper on the law as it stood in Australia in 2008. It is not to be relied upon, please seek independent legal advice if you're in a situation where this may be applicable. If you have any questions, feel free to contact me. If you do choose to use the material in this paper, feel free to do so - I only ask that you credit me accordingly (also let me know, as I'd love to see how you develop this work further).
Summary/Implications
Of concern to employees and employers is when an employee may be sacked for conduct which occurs outside of the workplace. As the lines between the spheres of one's private and professional life blurs, it becomes more important to know what rights each party has in defining it such as to bring about the most efficient and workable relationship. Employees may be sacked for out of hours conduct provided that the alleged conduct is a breach of an express or implied term of the employment contract; and that it has a sufficient connection with the workplace or employment. What will constitute a sufficient connection is a question of fact and will vary according to the circumstances. An employer is not precluded from dismissing an employee merely on the spatial fact that the conduct occurred outside of the ostensible workplace; nor is an employer permitted to dismiss an employee for conduct which has an insufficient connection with the employment.
1. INTRODUCTION
The circumstances where an employee may be sacked for out of work conduct are diverse and not limited to the application of any strict rule. Justice Staindl in Hussein v Westpac Banking Corporation[1] (“Hussein”) recognised that “there is surprisingly little case law on when a dismissal is justified in such circumstances”.[2] The ambit of this area of law traverses various issues including the balancing of competing interests between the employee to maintain a private life on one hand, and an employer to maintain a viable workplace on the other.[3] Due to the range of possible circumstances that can occur outside the workplace, it is an area which is both vast, and vastly underdeveloped at common law.
It is not uncommon for a person’s work to become ‘their only social life, and their only opportunity to meet companions and potential sexual partners’.[4] The development of a work culture that is increasingly integrated with personal time, through the breakdown of strict working hours,[5] leads to an increase in actions that are coincident to both the private sphere of an individuals’ life and their work. Thus, there is an understanding that the actions of individuals may extend well beyond the ostensible subject of employment, and that it is difficult to determine when an employees’ action is undertaken in the capacity of a private individual. The recent decision of Telstra v Carlie Streeter[6] raises these issues, and although it has spurred much attention in the media,[7] has made little substantive development of this area of law.[8]
This essay will aim to examine the authority concerning termination of an employee for out of hours conduct in order to provide a coherent model reflecting the current state of the law regarding such circumstances. It will go further to propose alternative models of reform, and assess the appropriateness of such models. It will do so by firstly, examining existing authority and rationalizing the various tests and circumstances to propose a model that reflects the law appropriately; secondly, it will assess the appropriateness of alternative models; finally, it will make a recommendation on any necessary reform regarding the termination of employees for out of hours conduct.
2. THE CURRENT STATE OF THE LAW
2.1 Examining the Authorities
As it is often a question of fact, it is prudent to have regard to the circumstances in which the various legal principles are applied. The circumstances in which the courts have considered whether an employee may be terminated for conduct arising out of work may fall generally into two categories: where the alleged conduct out of hours involves sexual harassment; and where there is general misconduct.
2.1.1 Sexual Harassment
McManus v Scott-Charlton[9] (“McManus”) recognises that “circumstances may exist which would justify an employer direction proscribing the private sexual harassment of an employee by a co-employee”.[10] His Honour further recognised that “caution that should be exercised”[11] in allowing employers to supervise the private activities of employees. Such direction is lawful according to Finn J if: firstly, the harassment “can reasonably be said to be a consequence of the relationship of the parties as co-employees”; and secondly “the harassment has had and continues to have substantial and adverse effect on the workplace relations, workplace performance and/or the ‘efficient equitable and proper conduct’ of the employer’s business”.[12] Once it is established that there is a lawful direction, and that it is reasonable, a failure to obey such a duty will constitute a breach which warrants termination.[13] Though it is tempting to claim that this is an exhaustive test,[14] Coward v Gunns Veneer Pty Ltd[15] (“Coward”) reminds us that McManus is limited to its particular circumstances.[16]
In Appellant v Respondent,[17] their Honours affirmed the test of ‘exceptional circumstances’ adopted by Drake DP at first instance.[18] Her Honour considered that “it is only in exceptional circumstances that an employer has a right to extend any supervision over the private activities of employees”.[19] Thus, accommodation provided for by the employer for flight attendants is considered a “clear break from their employment obligations”.[20] The case concerned the issue of whether a workplace policy regarding harassment could extend to conduct in a hotel room provided for by the company.
It is difficult to reconcile this case with the finding in McManus that sexual harassment between co-employees concerned the workplace generally. Furthermore, in Carlie Streeter v Telstra Corporation[21] Hamberger SDP found at first instance that a hotel room after a Christmas function, paid for by the employees, was still within the nexus of employment.[22] One possible explanation is that it was decided on its facts, and that regardless of the ruling regarding the sexual harassment policy, the evidence regarding the sexual harassment was not accepted by their Honours in Appellant v Respondent.[23]
A more general test is given by Smith v The Christchurch Press Company Limited[24] (“Smith”) which considers firstly, that there must be a “clear relationship between the conduct and the employment”. Secondly, that “it is not so much a question of where the conduct occurs but rather its impact or potential impact on the employer’s business, whether that is because the business may be damaged in some way”;[25] for instance, if it “undermines the trust and confidence necessary between employer and employee”.[26]
2.1.2 General Misconduct
There exists the possibility that misconduct not related to any positive direction of an employer, outside of work, will concern the employment relationship. Wall v Westcott[27] suggests that “a worker who deliberately so conducts himself that it is unlikely that the employer would, or could, continue the employment” may be dismissed regardless that the conduct occurred outside of work.[28] On the other hand, in relation to conviction of a criminal offence, Hussein v Westpac Banking Corporation[29](“Hussein”) suggests that “an appropriate test is whether or not the conduct has a relevant connection to the employment”.[30] Whether something has a ‘relevant connection’ will be a question of fact. In cases where there has been an incident of assault outside the workplace between co-workers, it may be sufficient to establish that it is “unsafe for the Company to continue to employ” the employee.[31]
2.2 Rationalising the Authorities: A Model of the Current Law
Although the abovementioned case law is examined categorically, a categorical approach to the circumstances is narrow and not exhaustive. There must be an underlying principle which properly ascertains such circumstances. This model proposes that it is primarily a question of breach. This necessarily imports a prima facie relationship with the employment. Once there is an identifiable breach in such circumstances the courts will subsequently determine the connection that conduct has with the employment in order to justify bringing it within the purview of the employment. This further requirement is imported to varying degrees in the circumstances and is based on the need to protect an individuals’ right to privacy. It recognises that there exists numerous conduct which may come within the purview of employment, but not all conduct will give an employer the right to interfere. As Finn J states, such a nexus is necessary for “employment does not entail the total subordination of an employee’s autonomy to the commands of the employer”[32]
2.2.1 Breach of Contract
In its most basic interpretation, the employment relationship is a contractual one. It follows logically that the ability to determine the contract must be on the basis of some breach which goes to the heart of the contract rendering it nugatory.[33] It then becomes a question of whether conduct beyond the ‘workplace’ constitutes such a breach. If it does, by ordinary principles of contract, termination may be justified.
Interestingly, Hussein cites HEF of Australia v Western Hospital [34](“HEF”), which considered that “the relevance of a conviction or an employee’s alleged misbehavior to the employee’s work should be considered in terms of whether or not the employee has breached an express or implied term of his or her contract of employment”. His Honour Lawrence DP stated that the question must necessarily be considered in terms of a breach of an express or implied term. [35] The proposition by Gault J in Smith that “it is not so much a question of where the conduct occurs but rather its impact or potential impact on the employer’s business”[36] may be interpreted as a statement that the primary concern is whether the alleged conduct impacts on certain duties and obligations that are terms implied into the employment contract.
The primary concern of contractual breach is consistent with the authorities. In McManus it was the implied duty to obey reasonable directions;[37] Appellant v Respondent concerned an express term of the contract regarding sexual harassment; Carlie Streeter v Telstra Corporation[38] concerned the duty of mutual trust and confidence (though not authoritatively implied in Australian law); the cases of misconduct involve a breach of either a broader duty to co-operate,[39] mutual trust and confidence,[40] or an employer’s duty to other employees to provide a safe workplace.[41]
A substantial proportion of cases where an employee may be dismissed for out of work conduct may be captured by the above basic contractual principles. However, where the contract may serve to unduly infringe on ones private life, there must be more than a mere impact on the employment relationship.[42] The conduct must be connected or related to the employment to the extent that it justifies the infringement on the individuals’ ‘private’ life.
2.2.2 Connection with Employment
Not all prima facie breaches of an implied or express term of a contract will bring the conduct sufficiently within the purview of the employment. Out of hours conduct is elusive, since the degree of connection with the employment is often unclear and will vary in different circumstances.
McManus suggests there is a connection if the harassment arises out of the employment relationship and if it has some adverse effect on the workplace. Coward suggests that in some circumstances, it is commonsense what conduct will disrupt the workplace.[43] However, a commonsense approach is broad and does not serve to protect the rights of employees’ emphasized in Appellant v Respondent and McManus. It places no positive onus on the employer to establish a relevant connection and is limited to very clear facts. In Hussein, the principle regarding criminal offences was considered to be one of ‘relevant connection with the employment’. Clearly any criminal offence will be liable to affect the trust between two parties, but to dismiss employees for offences completely unrelated to the subject of employment such as traffic offences for bank employees would be unjustifiably restrictive. The question of ‘relevant connection’ necessarily concerns the occurrence of some conduct beyond an employers’ direction as it would be redundant to consider if there was a ‘relevant connection’ between conduct that disobeys a reasonable direction given by an employer. Interestingly, the test in McManus has been used in circumstances of assault outside of work.[44] Yet this was done in a limited manner as Ross VP made the finding based on the broader test that there was a lack of requisite connection.[45]
It is apparent that how the connection is drawn varies according to the circumstances. Broadly speaking, it appears that where the alleged conduct involves a reasonable direction which extends beyond the workplace, the test in McManus is appropriate. Where there is some misconduct outside of work, the question is whether that misconduct has a relevant connection with the employment. Furthermore, it is a question of degree and fact. Where the conduct outside of work is so clearly detrimental to the employment relationship that it cannot be reasonably expected that the relationship continue, an application of commonsense would suggest it justifies termination.[46]
2.3 PART CONCLUSION
Employees may be sacked for out of hours conduct provided that the alleged conduct is a breach of an express or implied term of the employment contract; and that it has a sufficient connection with the workplace or employment. What will constitute a sufficient connection is a question of fact and will vary according to the circumstances. An employer is not precluded from dismissing an employee merely on the spatial fact that the conduct occurred outside of the ostensible workplace; nor is an employer permitted to dismiss an employee for conduct which has an insufficient connection with the employment.
3. ALTERNATIVE MODELS AND THE NEED FOR REFORM
As clearly demonstrated above, the present model concerning termination for out of work conduct is a contractual one with elements of unitarianism and protectionism. It is unitary to the extent that it seeks to regulate conduct which may have a detrimental effect on the performance of work[47] and the enterprise in general. This is supported by Crieghton & Stewart[48] to the extent that the area of law is considered, in part, “ultimately based on judicial perceptions as to the legitimacy of managerial authority over conduct which threatens order in the workplace”.[49] The desirability to regulate out of work conduct through the extension of the contract essentially gives primacy to the protection of the enterprise.[50] On the other hand, it recognises the need to protect the vulnerability of employees from directions or consequences that result from an intrusion into private affairs.[51] It does so by requiring the second element of sufficient connection with employment. Thus, the question is whether it is desirable to move away from the unitary and contractarian/common law model of dealing with termination in these circumstances and whether the emphasis should be more on the individual employee rights or on the enterprise.
3.1 Issues with the Current Model
The issues with the current model are synonymous to issues regarding unitarianism and common law and contractual theory. Firstly, there has been some academic discourse regarding the traditional emphasis of the contract theory of employment on the loyalty and obedience of an employee while lacking in employer duties.[52] To have a contractual model in determining when an employee may be dismissed in the circumstances concerned will consequently have an inherent focus on the desires of the employer. Secondly, on a more practical level, the authority governing these circumstances is vast and ungoverned by any principle. Consequently, workers’ are exposed to judicial assumptions, and both employers and employees are uncertain as to their respective rights.[53] The third issue is that though there is in some circumstances a narrow interpretation of when an employer can interfere with private affairs, the courts and commission have wide discretion as to the matters. This is not necessarily a disadvantage as there is integrity in judicial discretion. However, the absence of any strict or explicit protections for employees places these rights at risks. The nature of the common law of employment is that it is “constantly subject to change… and occasionally indicate revised judicial perceptions of the employment relationship”.[54] The present model affords no guarantee of an employee’s interest of maintaining an autonomous private life where in the context of globalization and technological advances, there is an increased integration between the workplace and private affairs.[55]
Thus, the underdeveloped nature of this area of law presents inherent problems to both employers and employees. There must be some reform in order to overcome the abovementioned issues.
3.2 Alternative Models
The first possible alternative is a strong-form model, which proposes the abandonment of the entire contractual and common law analysis.[56] The perceived shortcomings of the common law outlined above may justify a shift away from common law principles into alternative means for governing employment. Creighton & Stewart analyses the possibility of such a shift, and identifies that its practical application would involve the use of tribunals or commission; and investing increased powers to such tribunals.[57] This is irrelevant to the extent that tribunals are still affected by the interpretation of obligations by the courts. Furthermore, most of the authority governing these circumstances stem from the commission which is already less restricted in making its findings. Conferring more powers upon the commission has no perceived value in resolving certainty or protecting individual rights.
A semi-strong reform model involves the legislative codification of the law, or at least, a safety net for the protection of rights. Legislative codification is a possible model for reform, having legislation regarding the extent to which an employee may be dismissed for out of work conduct will provide both certainty and protections. However, though there are several issues involving such an approach, one major issue is that legislative codification is less flexible than the common law. Given the dynamic nature of the employment relationship, it is not entirely suitable to opt for this model.
A weak reform would be the possible development of further common law principles which state more explicitly and determinatively the principles governing these circumstances. It may be desirable to the extent that expressing the law will help provide certainty and some form of common law protection which is flexible. It is a form which is least intrusive and places value in the integrity of the courts. However, with such weak reform, the employment contract will still be subject to the abovementioned underlying judicial values which may stand to foster an injustice on the individual. Furthermore it is problematic to express a strict rule given that certain circumstances will demand a different standard of connection between the conduct which occurs out of work and the employment. A breach of reasonable direction, a breach of trust and a breach of policy each requires a varying standard of connection on the facts. Some may be so obvious that it should go without saying,[58] and others so intrusive that it must be properly justified.[59]
3.3 Appropriateness and Conclusion
The ability to objectively state which model is a more appropriate one is difficult due to the range of issues which the question of termination for out of work conduct traverses. No model is without some negative consequence or questionable substantive value. Inasmuch as the employment relationship is a contractual one, it is also, beyond the contract, a relational one. The problems associated with the circumstances may be resolved outside the legal reform and by proper management of the employment relationship. That is, it may be more appropriate to consider means by which employers and employees can clarify verbally or in writing what each party considers to be appropriate conduct out of work. This may well resolve any questions regarding certainty. Courts will always consider the importance of an individuals’ private life. However, it may be further entrenched by means of increased consultation between the parties to protect ones rights and determine boundaries.[60] Thus, the most suitable model would appear to be a hybrid one which, through soft legal reform (either by encouragement or workplace codes), encourages the interaction and agreement between an employer and employee.
4. CONCLUSION
In conclusion, in determining what circumstances an employee may be dismissed for conduct occurring out of hours, it is necessary to first examine the contract and any express or implied term which the conduct stands to breach. Secondly, it is necessary to establish some sort of connection between that conduct and the employment. The degree of connection will vary according to the circumstances and will often be a question of fact.
Employment law is a dynamic creature, subject to changing social values, globalization and advances in technology and communication.[61] To the extent that an understanding of labour shifts with such changes, so too does the nexus between people’s private and professional life. This perpetual change makes it inherently hard to codify the rules of the employment relationship. Thus, the model which best approaches issues concerning employment is one that invariably seeks to ensure that no rights, regardless of how large or small, are left behind: that all persons are afforded a just solution according to the values of their time. Furthermore, in pursuit of such ends, the most suitable model may not be one of legal reform. In a narrow sense, employment is a contract, but it is also a relationship. A relationship that when managed well will transcend any injustices which arise from entering the sphere of legal adjudication.
BIBLIOGRAPHY
Texts
Creighton, B. ‘Labour Law: an introduction’ The Federation Press,
Stewart, A. 2000, third edition.
Owens, R. ‘The Law of Work’, Oxford University Press, 2007.
Riley, J.
Riley, J.
Articles
Ierodiaconou, M. ‘An employer can discipline an employee for after-hours conduct that is directly linked to employment and which has a serious a significant effect on the workplace or damages the employers’ interests’ 2004, Volume 78 Issue 4, Law Institute Journal p. 42 – 45.
Spry, M. ‘After Hours Conduct, Dismissals and the Workplace Relations Act 1996 (Cth)’ 1999, Volume 19 Issue 4, Queensland Lawyer p. 121-123.
Cases
1. Appellant v Respondent (1999) 89 IR 407
2. Australian Telecommunications Commission v Hart (1982) 43 ALR 165.
3. Australian Tramway Employees’ Association v Brisbane Tramways Co Ltd (1912) 6 CAR 35 at 42.
4. Carlie Streeter v Telstra [2007] AIRC 679
5. Coward v Gunns Veneer Pty Ltd (1997) BC9706392
6. HEF of Australia v Western Hospital (1991) 4 VIR 310
7. Hussein v Westpac Banking Corporation (1995) 59 IR 103
8. Leslie v Graham (2002), Unreported Federal Court of Australia, as per Branson J.
9. McManus v Scott-Charlton (1996) 140 ALR 625
10. R v Darling Island Stevedore & Lighterage Co Ltd; Ex parte Halliday and Sullivan (1938) 60 CLR 601 at 621.
11. Re Transfield Pty Ltd [1974] AR (NSW) 597
12. Rose v Telstra (1998) 45 AILR 3-966.
13. Smith v The Christchurch Press Company Limited [2001] NZLR 407.
14. Telstra v Carlie Streeter [2008] AIRCFB 15
15. Wall & Anor v Westcott (1982) 1 IR 252
[3] Ierodiaconou, M. ‘An employer can discipline an employee for after-hours conduct that is directly linked to employment and which has a serious and significant effect on the workplace or damages the employer’s interests’ 2004, Volume 78 Issue 4, Law Institute Journal p. 42
[7] Extract from The Australian, ‘More staff fired over sex romp’ 14 August 2007 (see course material).
[8] Note: In Telstra v Carlie Streeter [2008] AIRCFB 15, the commission decided on the issue breach of mutual trust and confidence and duty to answer reasonable questions.
[15] Coward v Gunns Veneer Pty Ltd (1997) BC9706392, unreported judgment of the Federal Court of Australia.
[24] [2001] NZLR 407 confirmed by Leslie v Graham (2002) Unreported, Federal Court of Australia, as per Branson J.
[25] Smith v The Christchurch Press Company Limited [2001] NZLR 407 as cited in Ierodiaconou, M. as at Note 3 at p. 44.
[32] McManus v Scott-Charlton (1996) 140 ALR 625, as at 629 citing Australian Tramway Employees’ Association v Brisbane Tramways Co Ltd (1912) 6 CAR 35 at 42.
[37] R v Darling Island Stevedore & Lighterage Co Ltd; Ex parte Halliday and Sullivan (1938) 60 CLR 601 at 621.
[42] McManus v Scott-Charlton (1996) 140 ALR 625.; See also Appellant v Respondent (1999) 89 IR 407.
[43] Coward v Gunns Veneer Pty Ltd (1997) BC9706392 as cited in Spry, M. ‘After Hours Conduct, Dismissals and the Workplace Relations Act 1996 (Cth)’ (1999) Volume 19 Issue 4 Queensland Lawyer p. 121.
[45] Ibid. as cited in Spry, M. ‘After Hours Conduct, Dismissals and the Workplace Relations Act 1996 (Cth)’ (1999) Volume 19 Issue 4 Queensland Lawyer p. 121.
[46] See Coward v Gunns Veneer Pty Ltd (1997) BC9706392, unreported judgment of the Federal Court of Australia.; and Wall & Anor v Westcott (1982) 1 IR 252
[53] Contrast McManus v Scott-Charlton (1996) 140 ALR 625; Appellant v Respondent (1999) 89 IR 407; and Telstra v Carlie Streeter [2008] AIRCFB 15.
[54] Creighton, B. & Stewart, A. ‘Labour Law: an introduction’, The Federation Press, 2000, at p. 10 citing Byrne v Australian Airlines Limited
[56] Creighton, B. & Stewart, A. ‘Labour Law: an introduction’, The Federation Press, 2000, p. 11 citing Rideot 1996.
