Second job maybe grounds for fair dismissal

There are circumstances in which an employer may legitimately regard the holding of a second job by an employee as misconduct which may constitutes a valid reason for dismissal; however there are reasonably strict conditions for that to be the case, as the following portion of a Fair Work Commission unfair dismissal decision makes clear.

“S. 387 (a) – Valid reason for the dismissal related to capacity or conduct

In this instance, the applicant was dismissed because the employer considered that his activities, whereby he conducted a secondary business that provided contract paraplanning services, fundamentally breached the contract of employment. The applicant asserted that his secondary business as a contract paraplanner did not represent valid reason for dismissal because inter alia, it did not negatively impact the business interests of the employer.

The applicant’s contract of employment document did not specifically refer to the issue of secondary employment. Clause 5 of the contract of employment document included various clauses which require the applicant to inter alia, not engage in any business or activities which may conflict with or be harmful to the employer’s business interests. Clause 15 of the contract of employment document refers to the employer’s policies and procedures which are contained in the Luka Group Team Member’s Handbook Version 1 document (the Handbook) which at clause 6.4, refers to “Other Employment”.

The terms contained in the contract of employment and the Handbook reflect the well understood notion that an employee is obliged to devote their time and energies in the interests of the employer, and that any engagement in secondary employment would not be inimical to the employer’s interests. Contract of employment and policy and procedure documents often stipulate that engagement in any secondary employment is only permitted with the expressed approval of the employer.

In this instance, the relevant terms of clause 6.4 of the Handbook are expressed in other than obligatory terms wherein it is stated:

“All full time members of our Group are expected to devote their full energies to the work of the Group and are discouraged from accepting employment or compensation from outside sources without the prior written approval of their Partner.” [emphasis added]

Despite the non-obligatory nature of the wording in the Handbook, the evidence has revealed that the applicant understood that his secondary employment as a contract paraplanner which had been undertaken without written approval of the employer, was something that, if discovered by the employer, may bring his employment to an end. The applicant’s understanding of the risk that he was taking by engaging in secondary employment as a contract paraplanner without obtaining clear approval from the employer, was reflected in an email exchange that he had with another employee on 22 October 2019.

The subject of the 22 October email exchange was “Side hustle”, and the following extract from an email that the applicant sent to his colleague at 2:29 pm discloses that the applicant recognised that if the employer discovered his “side hustle” his employment would be jeopardised, and his colleague might be the beneficiary by moving into his office:

“When I interviewed for here I was pretty heavily running an ebay store and let them know and the response was “as long as it does not interfere with your work we don’t mind”, and heaps of people here have side stuff.

I did mention before in my wage review when I became an adviser how much I get when I contract to try and push my wage up, so they were aware I did or was contracting at that point and nothing was said lol.

Just figure it is easier not to mention it, also have not had any reason to.

Lol and if they told me I had to pick, you might end up with your own office haha – because im only working for the money…”  1 [emphasis added]

The evidence has confirmed that the employer was unaware that the applicant was conducting a secondary business as a contract paraplanner. The applicant had attempted to suggest that he had informed the employer about his work as a contract paraplanner during the negotiations for his remuneration increase. However, the evidence disclosed that the applicant referred to the rates paid to contract paraplanners as a means to obtain leverage to secure a greater increase in his remuneration. The applicant disingenuously sought to portray this pay negotiation and the earlier mention of his eBay business, as evidence of knowledge that the employer had gained of his secondary employment as a paraplanner. The applicant attempted to confound the clear knowledge that the employer had regarding his eBay business with the reference in pay negotiations to rates paid to contract paraplanners, so as to diffuse and deflect from the undeniable potential for the conflict of interest that the employer would realise when his secondary employment as a contract paraplanner was discovered.

Although the applicant asserted that his secondary employment as a contract paraplanner did not conflict with the business interests of the employer, on various occasions during the Hearing, the applicant confirmed that the nature and extent of his activities as a contract paraplanner could not be justified as some innocent, harmless, and/or partially disclosed secondary employment. For example, during the cross-examination of Mr McKenna by the applicant the following exchange occurred:

“There wasn’t much protection going on there? — No, because you were doing the wrong thing.

Accused, with no evidence provided in your – – – ? — No, you were doing the wrong thing and you actually admitted that you were doing it.

I never said I wasn’t. …”  2[emphasis added]

Further, despite the applicant’s assertions that his undisclosed secondary employment as a contract paraplanner did not represent a valid reason for his dismissal, during the course of his cross-examination of Mr McKenna, he also made the following statement: “my entire case is lack of procedural fairness.” 3

A careful and thorough examination of all the evidence has established that the undisclosed secondary employment undertaken by the applicant as a contract paraplanner was, once clarified in its nature and extent, misconduct that the employer could properly consider to have represented a fundamental breach of the contract of employment. It was largely irrelevant that the applicant may have performed contract paraplanning work via engagement through an intermediary, and apparently for clients that were not located in the vicinity of Dubbo. Once the employer had confirmed that the applicant had undertaken 10 to 20 hours per week in undisclosed secondary employment involving financial services in the same or similar operations to those undertaken by the employer, it was entitled to treat the activities of the applicant as misconduct that was inconsistent with any continuation of the employment relationship.

In summary therefore, the conduct of the applicant whereby he engaged in undisclosed secondary employment performing work as a contract paraplanner, constituted misconduct and provided valid reason for the dismissal of the applicant.

  1. 387 (b) – Notification of reason for dismissal

The employer provided initial verbal notification of the reasons for the applicant’s dismissal during the termination of employment meeting that occurred on 30 October 2019. Subsequently, the employer provided a termination letter dated 8 November 2019, which provided more detailed notification of the reason for the applicant’s dismissal including reference that was made to various clauses in the applicant’s contract of employment document.

Consequently, the applicant was notified of the reason for his dismissal both verbally and subsequently in writing. Although the employer was understandably alarmed during the meeting held on 30 October 2019, when the applicant confirmed that he had performed between 10 to 20 hours per week in his contract paraplanning business, such alarm should not have been immediately translated into verbal notification of dismissal. The employer has subsequently acknowledged that Mr McKenna acted too hastily, and he should have adjourned the meeting before providing any notification of dismissal.”

Harris v Luka Financial Pty Limited (2020) FWC 5402 delivered 16 October 2020 per Cambridge C