The James Packer and David Gyngell beachside brawl obviously would have troubled Mr Gyngell’s employer. However, the Sydney Morning Herald, on 13 May 2014, indicated “Nine Entertainment’s board discussed the issue this week and there was unanimous support for the Chief Executive.”

We can assume the Nine Entertainment Board’s public position didn’t fully express the directors’ concerns. They were faced with a question that many companies face. Should we moderate our standards for the CEO or other star performers? What may be the employment law ramifications of providing leniency to your CEO for their damaging public behaviour?

Other companies have seen fighting (even out of hours) as inexcusable behaviour. In the often cited case regarding out of hours activities affecting on-going employment, in 1998 Telstra determined a technician who attacked a co-worker out of hours should be dismissed. (Rose v Telstra [1998] AIRC 1592) (it’s worth noting, Telstra’s decision was not upheld by the Australian Industrial Relations Commission, the predecessor to the Fair Work Commission.)

Most cases involving employment related fighting that come before the Fair Work Commission and Courts, involve fighting at the workplace or at least between co- workers. However, that is not necessary for an employer to consider it behaviour justifying disciplinary action.

The Fair Work Commission and its predecessors have been clear that out of hours conduct by employees can be taken into account by their employer in certain circumstances. Those circumstances being:

  • where the conduct is likely to cause damage to the relationship between the employer and the employee
  • if there is damage to the employer’s interests
  • where it is incompatible with the employee’s duties as an employee (Rose v Telstra).

You could see Mr Gyngell’s behaviour falling on the wrong side of all of the listed criteria.

The Commission and other tribunals have also been clear that in considering an organisation’s treatment of one employee, how others have been treated will be taken into account. You can set high standards for your organisation, although you need to apply them consistently to have a good chance that an employment tribunal will support those professed high standards.

Numerous organisations have been admonished by tribunals for inconsistency of treatment in their disciplining of employees. Australia Post ended up on the wrong side of a Commission decision in a case involving widespread pornography related misconduct. The seemingly disparate treatment of lower level employees vs the treatment of managers, was amongst the reasons Australia Post’s dismissals of lower level employees for breach of their policies was found to be unfair (B, C & D v Australia Post [2013] FWCFB 6191 at 109).

In a decision handed down by the NSW Industrial Relations Commission on 17 April of this year, involving quite outrageous conduct at a Christmas party, the more lenient treatment of a more senior manager involved in the same incident was highly relevant to the severity of the sanction imposed on a more junior employee involved in the same offensive behaviour (PSA & POAAU v Dept of A-G & Justice [2014] NSW IR Comm 1009).

Decisions involving the weighing up of outrageous behaviour by a key employee against other factors going to the short term and longer term success of the organisation are rarely easy. Commercial factors appropriately need to be taken into account. However, part of the commercial considerations needs to be the cost of diminishing your organisation’s ability to set and maintain standards into the future.

Faced with making a decision similar to that made by the Nine Entertainment Board and theoretically also facing Mr Packer’s companies’ boards, matters that are worth considering, include:

  • how have similar transgressions been treated in the past for employees at other levels?
  • if the conduct is without precedent, have there been events of like gravity?
  • assuming you are going to depart from past practice, can you impose a sanction that is still substantial? (e.g. loss of a large bonus, plus imposition of re-training etc.)
  • how can you communicate the company’s actions to its stakeholders that lessen the negative effect of the leniency?