Employees have a duty to faithfully serve their employer and be loyal. Running a competing business while still employed (and after the relationship comes to an end in certain circumstances) will clearly be a breach of that duty. However, in the absence of a specific clause in an employment contract stating otherwise, employees are not prevented from pursuing other opportunities or having a second concurrent job. In the 2013 case of Change Group International PLC V City Exchange Mart Pty Ltd it was held that “The authorities recognise that the pursuit of a commercial opportunity whilst in employment is not always incompatible with a duty to faithfully serve the employer”. Therefore, what the second job is, and whether it competes or detracts from the primary job, are questions of degree.
In a recent case, the Fair Work Commission (FWC) ruled that an employee who was granted annual leave for a certain purpose, but subsequently undertook paid employment with another employer during that time, was unfairly dismissed.
Case study: Jim Bril v Rex Australia Limited t/a K & K Glass
Mr Bril was a truck driver with K & K Glass. During the course of his role, he often made deliveries of glass to a client, Tamar. On 26 May 2014, Mr Bril asked Mr McParland (General Manager of K& K Glass) if he could take a period of leave between 2 – 10 June 2014. Whilst generally two weeks’ notice was required before taking leave, Mr Bril told Mr McParland that he needed to take that time off because he needed to get his car registered. For this reason, the late leave request was granted.
On 1 June 2014, the Director of Tamar (Mr Rupchev) asked Mr Bril to help out Tamar to “freelance as a driver” for the period 2 – 5 June 2014. Mr Bril accepted the role, as he needed the money. It was also submitted that Mr Bril also wanted K & K Glass to find out about it so as to convince the company to give him a pay rise.
On 2 June 2014, Mr McParland went to Tamar’s workshop and saw Mr Bril working there. Mr McParland was surprised to see Mr Bril, and they had a conversation.
Mr Bril claimed that when he returned to K & K Glass on 11 June 2014, he was told by Mr McParland that Mr Bril had engaged in a conflict of interest and that he had two choices – resign or get the sack. K & K Glass submitted that it was Mr Bril who came to the meeting and decided to resign.
Mr Bril was represented by the union, whilst K & K Glass was unassisted.
The Commissioner preferred the evidence of Mr Bril, as the evidence of Mr Trimarchi (K & K Glass’ Dispatch Manager) conflicted with the evidence of Mr McParland – “It should be obvious by this point that Mr Trimarchi’s oral evidence was marred by significant inconsistencies with his statement of evidence, internal inconsistencies and inconsistencies with the evidence of Mr McParland. He gave every indication both in the content of his evidence and the manner in which he gave it of being an untruthful witness”.
The FWC ultimately held that Mr Bril was forced to ‘resign’ by his employer and was therefore a person protected from the unfair dismissal jurisdiction.
With regards as to whether there was a valid reason for Mr Bril’s dismissal, the FWC held that there was no conflict of interest –
“Undertaking secondary employment which does not encroach on the primary employer’s field of business does not contravene the implied contractual term of fidelity and good faith. Nor does the implied term impose any duty upon the employee to disclose secondary employment of this nature”.
Therefore, it was held that “Mr Bril, in applying to access his statutory accrued annual leave entitlements, was under no requirement to disclose the reason, or the true reason, why he was taking annual leave or the activities he intended to undertake while on annual leave”.
Mr Bril was awarded 3 months’ pay – this amount would have been higher but for the fact that Mr Bril obtained alternate employment relatively soon after being dismissed.
Lessons for Employers
In the absence of a clause in an employment contract expressly stating that an employee either needs to seek consent or is not permitted to work for another employer during his/her employment, it appears as though employees are free to do as they please in their down time.
However, the higher up an employee is within the business, the more difficult it will be for that employee to argue that he/she has not breached the duty of fidelity.
When faced with an employee who has secondary employment, employers should consider:
- Is the second employer a competitor?
- Is the employee still performing their job to a high standard?
- What is written in the contract?
And most importantly – get your facts straight before heading into an unfair dismissal hearing to avoid being labelled an “untruthful witness”.
If you require your contracts to be reviewed or are faced with a wayward employee, contact HR Legal.
This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.