No competition: Conflicts of interest in the employment relationship

Many standard employment contracts contain a clause that addresses an employee’s obligations in relation to secondary employment and conflicts of interest. The obligation is generally that an employee will not act in a manner that conflicts with the interests of their employer or their duties as an employee. This contractual obligation is reflective of the common law duty that an employee must not engage in conduct that is incompatible with their duties to their employer.

The Fair Work Commission (FWC) was recently required to examine this duty in the course of an unfair dismissal claim lodged by a former professional footballer who accepted a head coaching role whilst also employed by the club’s governing body.

In Bertos v Northern NSW Football Limited [2020] FWC 2819, the FWC heard that the employee had been employed by Northern NSW Football Limited as a Technical Advisor for about two years. Northern NSW Football Limited is the governing body for football in northern NSW.

In December 2019, the employee accepted an offer to act as the Technical Director for 3-4 months. In that role, the employee was required to:
  • provide advice and recommendations that shaped strategy, policy and regulations in relation to the premier competitions over which the employer governed, including the National Premier League (NPL);
  • assess and monitor the youth development programs of clubs which was important in determining their eligibility to compete in the NPL; 
  • have direct involvement in Talent Support Programs through which the best players are provided to premier clubs; and
  • assess the performance of premier clubs’ squads at the Premier Club Skill Acquisition Program to determine placement during the season.

Around the same time that the employee accepted this role, in an effort to further his development as a professional football coach, the employee also accepted a position as Head Coach of one of the clubs competing in the NPL.

When the employer became aware of this secondary employment, it immediately raised concerns with the employee, advising him that the perceived and actual conflict created by his employment in both positions was too great, and that it would not allow him to continue in both roles.

Specifically, the employer was concerned that the impartiality required in its governance of its competitions and the clubs within those competitions would definitely be jeopardised if he held the position of Head Coach of one of those clubs. It was also concerned that both roles required a significant amount of work to be performed on afternoons and weekends. The employer therefore strongly advised the employee to relinquish his role as Head Coach.

The employee disagreed with these concerns and reassured the employer that his priority would be his role as Technical Director, and that the club would accommodate him as needed.

The employer maintained its concerns and commenced a disciplinary process in which the employee was directed to show cause as to why his employment should not be terminated. At the conclusion of the process, the employee was summarily dismissed on the basis that his conduct in accepting the Head Coach role, failing to disclose the role and subsequently refusing to relinquish it despite the employer’s advice, was inconsistent with his employment obligations.
The FWC ultimately agreed with the employer.

The FWC found that the employee had downplayed the time required to perform his role as Head Coach, and there would inevitably be conflicts between the hours required by both roles.

The FWC also accepted that it was in the employer’s interests to have an effective working relationship with the clubs in its competitions, and that the employer needed to be, and needed to be seen to be, both independent and an organisation with integrity. The FWC accepted that the employee’s secondary employment would, and “not might as a matter of speculation”, totally undermine the governing body’s independence, integrity and standing.

The FWC concluded that the employee’s conduct in placing himself in a position of conflict and opposition between his duties and obligations owed to the employer and the duties and obligations he assumed as Head Coach (and his refusal to relinquish that role), in breach of his contractual and common law obligations, was a valid reason for his dismissal.

It also found summary dismissal to be a proportionate response to the employee’s conduct which was, according to the FWC, repugnant to his employment relationship with the employer.

In dismissing the application, the FWC commented that this was a case in which the employee’s personal ambition had clouded reasonable judgment:

“[The employee]’s ambition to coach football at the highest level has resulted in him being unable to appreciate that taking on the role of Head Coach … was not in [the employer]’s best interests and would have conflicted with his duties and obligations to [the employer]. Faced with a choice between relinquishing his role as Head Coach … and maintaining his role as acting Technical Director of [the employer], [the employee] preferred his own interest in pursuing his ambition to be a football coach at the highest level.”  (at [75])

Lessons for employers

This decision highlights the importance of ensuring that employment contracts, particularly those of senior employees within an organisation, contain sufficient safeguards to protect the employer’s interests and prevent conflicts of interest.

With this decision, the FWC has shown support for the position that an employer is entitled to protect its interests when it has genuine concerns that an employee’s conduct is incompatible, or in conflict, with those interests. 

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 |

>Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog.

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