Justified dismissal in conflict of interest case

It can be hard to determine whether an employee’s private activities give rise to a conflict of interest with their employment duties.  However, the Employment Relations Authority has recently considered a case in which the conflict of interest was relatively easy to identify.

In Williams v Fletcher Construction Company Ltd[1] the employee (Mr Williams) was initially a Contract Supervisor and then a Works Manager for Fletcher EQR, a business unit of Fletcher Construction.  Fletcher EQR assessed work required to earthquake-damaged properties and then an accredited contractor would submit a quote.  Mr Williams was responsible for allocating work to accredited contractors and for overseeing their work.

In 2014 the EQC carried out an audit of claims completed by Fletcher EQR.  In that review, the director of an accredited contracting company stated (in a recorded interview) that Mr Williams had prepared ‘five or six’ quotes for the company and had charged $30 per quote.  This information was provided to Fletcher EQR, which commenced a disciplinary process against Mr Williams.  Mr Williams conceded that he had helped to prepare the quotes and said that the contracting company had given him $150 cash. However, he did not accept that this was a conflict of interest, but said it was “just a mate helping a mate”. 

The Authority held that a fair and reasonable employer could conclude that it was serious misconduct for an employee to accept payment for work done at home which was connected with his work duties.  It was also fair and reasonable for that employer to no longer have trust and confidence in him.  The Authority noted:

  • Mr Williams was in a position to decide who should be allocated work, as long as the quotes were accepted by the quantity surveying team. Accepting payment from a contracting company in those circumstances did create a conflict of interest situation.
  • The employment agreement stated that the employee must not receive any payment, fee, gratuity, commission or other benefit, except with the company’s consent. Mr Williams said that he was not aware of this provision. The Authority held that he could be expected to know that accepting money in those circumstances was improper, even if he had not reviewed that clause.
  • It was fair and reasonable for the employer to take account of the fact that it had a high public profile. It could and should have been able to expect to have a high level of trust and confidence in contract supervisors and their dealings with contractors.
  • The fact that the conduct was historical (from 2011) did not cause the dismissal to be unfair, as the employer had not known about it earlier and had investigated it promptly.
  • The employer was able to refer to Mr Williams’ employment record, which contained a warning from 2013, even though that warning concerned an unrelated matter and was issued after the 2011 conduct. The Authority noted that if his record had been unblemished, that would have been a factor in his favour that the employer would need to take into account. There was therefore no unfairness in having regard to the warning.
  • The employer took account of mitigating factors, including an admission of the conduct and his service with the company. This was reflected in the decision to pay Mr Williams’ one month’s notice.

[1] [2015] NZERA Christchurch 58

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2 Comments

  1. It is interesting that the Authority, as reported, appears to have focussed on the Fletcher’s employee being PAID.

    I suspect that even being involved ( for no reward ) in helping a friend preparing specific quotes is probably a breach of his duty of confidentiality and loyalty to his employer such that a conflict of interest would arise. Providing general guidelines might not be.

    A mate is a mate until backed into a corner, when he may turn into a nightmare.

    Reply

  2. An interesting discussion is worth comment. I do believe that you need to publish more on this subject matter, it may not
    be a taboo matter but usually people don’t speak about these topics.
    To the next! All the best!!

    Reply

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