The Employment Relations Authority recently determined in the case of Hallwright v Forsyth Barr Ltd (March, 2013) that the dismissal of Guy Hallwright, a senior investment analyst at Forsyth Barr, was justified as his highly publicised criminal conviction brought Forsyth Barr into disrepute and compromised Mr Hallwright's ability to do his job.

The Hallwright decision is a welcome one for employers, as the Authority approved a number of actions taken by Forsyth Barr, including delaying the employment consequences by nearly two years pending sentencing.

Hallwright's dismissal

Mr Hallwright was convicted for causing grievous bodily harm with reckless disregard, following an incident in September 2010 in which he hit another motorist with his car. Early media reports suggested that Mr Hallwright had deliberately run over the motorist and that he had fled the scene. The extensive media coverage included numerous references to Mr Hallwright's employer Forsyth Barr.

Mr Hallwright was dismissed for serious misconduct following the criminal trial and sentencing, nearly two years after the incident. The grounds relied upon by Forsyth Barr in concluding that Mr Hallwright had committed serious misconduct were that his actions:

  • amounted to conduct bringing his employer into disrepute; and

  • breached an obligation in the parties' employment agreement not to engage in activity that was likely to compromise his ability to carry out his duties.

Mr Hallwright raised a personal grievance against Forsyth Barr, alleging that the dismissal was unjustified. He argued that:

  • the incident occurred outside of work;

  • there was no evidence that Forsyth Barr suffered loss;

  • his criminal conviction had no bearing on his ability to do his job; and

  • the media coverage and reporting of the case was biased and the real cause of any potential damage to Forsyth Barr's reputation.

The Authority's determination

In considering whether Mr Hallwright was unjustifiably dismissed, the Authority applied the usual statutory test of justification in section 103A of the Employment Relations Act 2000. That is, were Forsyth Barr's actions what a “fair and reasonable” employer could have done in all the circumstances at the time the dismissal occurred.

In considering whether the dismissal was procedurally fair, the Authority noted that a significant amount of time had passed between the incident and Mr Hallwright's dismissal, and that this time lapse led Mr Hallwright to believe his employment was safe. Whilst Forsyth Barr should have warned Mr Hallwright that he could be dismissed if convicted, the Authority found this to be a minor defect in the process. The Authority commented that it was not unusual for employers to await the outcome of a trial before addressing possible disciplinary issues. To the contrary, there may be risks for employers who attempt to address the implications of an employee's criminal charges, in a disciplinary context, before the charges have been tried.

Turning to the substantive justification for the dismissal, the Authority considered whether Forsyth Barr had reasonable grounds for concluding that serious misconduct had occurred.

The relevant question in relation to dismissals for conduct outside the workplace is whether there is a link between the employee's conduct and the employment, such that the conduct has an adverse effect on the employment. When there is such a link, an employer may consider dismissal for serious misconduct. Conduct will have an adverse effect on the employment if, for example, the employer's business may be damaged, the conduct is incompatible with the proper discharge of the employee's duties, or the conduct undermines the necessary trust and confidence between the parties.

The Authority found that the first ground of serious misconduct relied upon by Forsyth Barr, being that Mr Hallwright's actions amounted to conduct bringing his employer into disrepute, fell within the question of whether the employers business may be damaged. The Authority noted that there does not need to be any evidence of damage, as potential for damage or loss is enough.

The Authority found that Mr Hallwright's duties were carried out at a senior level, such that his own reputation, integrity and behaviour were relevant to the overall perception of the way Forsyth Barr conducted its business, and therefore he had bought his employer into disrepute. The Authority member commented that the conduct “tainted his position overall.” Mr Hallwright's argument that the cause of any damage to Forsyth Barr's reputation was the inaccurate and biased media reporting was rejected by the Authority. The Authority found that the underlying conduct was the cause of any damage to Forsyth Barr's reputation, rather than the media attention.

Turning to the second ground of serious misconduct, the Authority agreed that aspects of Mr Hallwright's duties were compromised, despite him having carried out his normal duties for a period of 20 months following the incident. Mr Hallwright was still able to carry out duties such as financial and strategic analysis, but the duties associated with publicly representing Forsyth Barr as a senior employee were found to be impaired. The Authority accepted that it was an integral component of Mr Hallwright's position that he be able to make public statements, give presentations to retail clients and provide commentary to the media.

The Authority held that the dismissal was justified, as Forsyth Barr's conclusion that Mr Hallwright's conduct did constitute serious misconduct was one which a fair and reasonable employer could have reached.

Dismissal for misconduct outside of work hours

Misconduct occurring outside of work hours may justify a dismissal where the conduct brings the employer into disrepute, or undermines the employer's confidence in the employee. Employers should remember to follow a fair process, which may include delaying the employment consequences pending the outcome of a criminal trial and sentencing.