In brief

When employees engage in out-of-hours misconduct, it can negatively affect the reputation of the employer. When this occurs, employers often want to (and sometimes need to for damage control reasons) take disciplinary action against the employee/s concerned. If you want to know when it is possible to dismiss an employee for engaging in out-of-hours misconduct, read on.

What you need to know

  • There must be a connection between the employment relationship and the out-of-hours misconduct.
  • The out-of-hours misconduct must regarded as being likely to cause serious damage the employment relationship and/ or damage the employer’s interests and/or be incompatible with the employee’s duty as an employee.
  • The out-of-hours misconduct must be of such gravity as to indicate a repudiation of the employment contract by the employee.

General

The advent of technology and the ability to be ‘on line’ almost anywhere at any time has negated the traditional view of work (i.e. sitting at a desk from 9.00am to 5.00pm). This creates interesting discussions in terms of workplace flexibility but it also creates a unique set of issues for employers who are increasingly finding themselves unable to monitor and/or regulate the conduct of employees outside of, but otherwise connected to, the workplace.

When misconduct does occur outside of the workplace, it is generally outside of the control of the employer which means that confidentiality can be compromised. As such, it is all too easy for salient incidents to go ‘viral’ which can cause irreparable harm to the employer’s reputation. In such instances, the knee- jerk reaction of employers is to terminate the employment of the employee/s concerned but this is not always possible.

Recent Example

Michael Page Recruitment recently found itself at the end of a media maelstrom when a group of 22 employees acted out during a weekend at Mount Buller’s Reindeer Ski Club. During the trip, which was not company-funded or sanctioned, the employees allegedly had a rambunctious couple of nights during which they became extremely loud and intoxicated, wreaked havoc on the premises (and subsequently refused to clean it up)  and physically threatened the managers of Ski Club. The conduct was reported to have been so bad that the police were required to attend the premises

In a Facebook post that subsequently went ‘viral’, one of the managers of the Ski Club condemned the behaviour of the Michael Page employees. This Facebook post was picked up by media outlets leaving Michael Page scrambling into damage control. In a statement that it released on the Monday morning, Michael Page apologised for the conduct of its employees and stated that an internal investigation was underway and that all individuals allegedly involved would be interviewed and appropriate disciplinary action would be taken.

The accepted authority in these sorts of matters is Rose v Telstra Corporation Limited (1998) AIRC 1592 (Rose v Telstra). In accordance with this decision, an employee’s employment may be terminated because of out-of-hours conduct provided that:

  • The conduct is likely to cause serious damage to the relationship between the employer and the employee; or
  • The conduct damages the employer’s interests; or
  • The conduct is incompatible with the employee’s duty as an employee.

Essentially, the conduct must be of such gravity as to indicate a rejection or repudiation of the employment contract by the employee.

Given the principles of Rose v Telstra, whilst we may never know what disciplinary action was taken by Michael Page against the employees, it is fair to surmise that several dismissals could have been implemented given the reputational damage caused to the Michael Page brand.

Applicant v Employer [2015] FWC 506

The 2015 decision of Applicant v Employer [2015] FWC 506 provides guidance on the issue of out- of-hours misconduct and whether it constitutes a valid reason for the termination of an employee’s employment.

In this decision, the employee made an unfair dismissal claim following the termination of his employment for his conduct in allegedly groping a waitress at a hotel after work hours. The incident occurred on the second night of the employee’s stay at the hotel. He was staying at the hotel in order to attend training sessions arranged by the employer and was scheduled to work the following day.

On the night of the incident, the employee was sitting with a group of other employees in the dining area of the hotel having drinks. Whilst there is some dispute regarding the actual incident, the Fair Work Commission ultimately accepted the waitress’s evidence which was that the employee had groped her bottom whilst he was walking away from the bar and towards the table that his work colleagues were sitting at. The waitress complained about the employee’s conduct to his boss who was also present at the hotel and, after an investigation into the matter, the employee was consequently dismissed from his employment.

In his unfair dismissal claim, the employee argued that (among other things) the alleged incident did not constitute a valid reason for the termination because the conduct occurred out of working hours. The employer on the other hand argued that there was a clear connection between the employee’s misconduct and his employment relationship given the fact that:

  • The employer had a long standing arrangement with the hotel such that it booked at least 40 rooms in every five-week period for its employees and received a corporate rate;
  • The relationship with the hotel was an important one;
  • The employee participated in training at the hotel on the day of the incident and he was paid for that day;
  • The employer paid for the employee’s food and accommodation while at the hotel; and
  • The employee was to be working the following day and was, at the time of the incident, drinking with his work colleagues who were also working the following day.

The Fair Work Commission ultimately found that the employer had a valid reason to terminate the Applicant’s employment as the only reason the employee was at the hotel at the time of the incident was because of the employment relationship he had with the employer. The Fair Work Commission also took into account the fact that employee had previously been given a warning for his misconduct in damaging a hotel room. This was not a matter where the conduct went ‘viral’; however, the Fair Work Commission considered that the fact that employee’s actions had the potential to damage the employer’s reputation more broadly entitled the employer to treat the conduct seriously.

Conclusion

As is clear from these cases, employers can dismiss employees for engaging in out-of-hours misconduct subject to the principles of Rose v Telstra being satisfied. It is also clear that it is imperative for employers to treat out-of-hours misconduct seriously in order to mitigate potential reputational damage, should the misconduct be broadcast more widely.

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