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FWC rules that employees should kiss and tell

Posted on June 25, 2015

In Mihalopoulos v Westpac Banking Corporation [2015] FWC 2087, the Fair Work Commission (FWC) heard an unfair dismissal application by an employee whose employment was terminated partly due to his failure to disclose his relationship with a subordinate employee.

Mr Mihalopoulos commenced in employment with Westpac in 1998 as a teller and worked his way up to the position of Bank Manager of Westpac’s Wollongong branch by September 2012. In February 2014, Mr Mihalopoulos began a romantic relationship with another employee, “Ms A”, who worked at the same branch and directly reported to him.

Westpac led evidence showing that between February 2014 – August 2014, Mr Mihalopoulos was asked on a number of occasions whether he and Ms A were in a relationship, which he denied. Westpac also showed that during this period, Mr Mihalopoulos was instrumental in securing bonuses and other career opportunities for Ms A.

On 25 August 2014, Mr Mihalopoulos eventually admitted to his Regional General Manager that he had been involved in a relationship with Ms A for six months. The trigger for Mr Mihalopoulos breaking his silence was an argument between he and Ms A days earlier which led to the Police being called and an Apprehended Violence Order (AVO) being taken out against Mr Mihalopoulos by Ms A. On 1 September 2014, Mr Mihalopoulos breached the AVO.

A meeting was organised with Mr Mihalopoulos on 9 September 2014 during which Westpac provided him with a letter of serious misconduct allegations, as follows:

  • That he was dishonest about his relationship with Ms A when questioned about it and did not disclose that there might be a real or perceived conflict of interest.
  • That he breached the AVO and in doing so exposed Westpac to reputational damage.
  • That he inappropriately disclosed details of his relationship with subordinates.

Mr Mihalopoulos responses were not deemed by Westpac to be adequate, and the company concluded that he had not appreciated the seriousness or extent of the failure of his leadership and consequently terminated his employment on 22 September 2014, effective immediately.

After hearing Mr Mihalopoulos’ subsequent claim, the FWC considered that Westpac had a valid reason for terminating Mr Mihalopoulos’ employment. Specifically, Senior Deputy President Hamberger noted that while employers cannot stop their employees from forming romantic relationships, “such relationships have the potential to create conflicts of interest. This is most obviously the case where a manager forms a romantic relationship with a subordinate… It is virtually impossible in such circumstances to avoid - at the very least - the perception that the manager will favour the subordinate”.

Indeed, Mr Mihalopoulos’ manager gave evidence that had he known about the relationship, measures could have been put in place to avoid such a conflict. Accordingly, Mr Mihalopoulos’ claim was dismissed on the basis that the dismissal was not harsh, unjust or unreasonable in the circumstances, rather that Mr Mihalopoulos’ behaviour “fundamentally undermined the trust and confidence which is at the heart of the employer-employee relationship”.

This decision should encourage employers to consider whether their employment contracts and policies include adequate disclosure obligations upon their employees. Similarly, in the event that an employee discloses such a conflict, employers must adopt reasonable and practical measures to minimise the conflict.

Please contact a member of Lynch Meyer’s Workplace Relations team if you require advice about an employee issue.

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