Clocking on, clocking off: What does it mean to serve your employer faithfully?

The concept of the employee’s duty of fidelity to their employer is an implied obligation central to all employment contracts. The implied obligation is that the employee has a duty to serve their employer faithfully. Employees must also avoid situations where their interests and those of their employer conflict. 

There are two parts to the duty of fidelity. The first is that of the employee serving the employer faithfully, they are to act in the employer’s best interests. The second is the requirement that the employee avoid situations that could cause a conflict of interest with the interests of their employer. 

What does it mean to serve your employer faithfully? 

To serve your employer faithfully, an employee must consider how to serve the employer’s best interests even when off the clock. In the 2021 case of Omar Chebbo v Major Crane Logistics Pty Ltd a Victorian Crane Operator was dismissed due to his attendance of an unlawful protest at the Construction, Forestry, Maritime, Mining and Energy Union office in Melbourne, breaching Victorian Covid restrictions. 

Mr Chebbo had been sent home from work earlier that day because of a state government directive. He returned home and then travelled to Melbourne to check in on the protest and show support for his fellow construction workers. 

Mr Chebbo alleged that he had been unfairly dismissed despite not having done anything that would reflect poorly on his employer. He was contacted by the managing director and was dismissed without notice for alleged serious misconduct. He was dismissed because his attendance of the illegal protest amounted to serious misconduct and had brought the company into disrepute. 

He brought an unfair dismissal claim to the Fair Work Commission (FWC) seeking reinstatement or substantial compensation. The FWC determined that he had failed his duty of fidelity to his employer. His attendance at the protest was a reputational risk to his employer as he was breaching a public health order. The FWC said that the dismissal itself was fair and lawful, but dismissal without notice was too harsh. Mr Chebbo was entitled to the 4 weeks’ pay he would have received had he been given notice. 

What is a conflict of interest? 

The second part of an employee’s duty of fidelity is to avoid conflicts between their interests and their employer’s interests. They must not let their own interest influence their conduct. There are three variants of conflicts of interest: 

• A real conflict of interest is where a direct conflict exists between current official duties and existing private interests that improperly influences the employee in the performance their duties. The case of Leo Bertos v Northern NSW Football Limited [2020] is a prime example. Bertos was the Technical Director for Northern NSW Football. He was dismissed when he accepted the Head Coach position with Weston FC, Northern NSW Football’s biggest competitor. He brought an unfair dismissal claim to the FWC, but this was dismissed due to the clear conflict of interest. 

• An apparent conflict of interest is where it appears or could be perceived that the employee’s private interests are improperly influencing their performance of their official duties regardless of whether this is the case or not. For example, if a member of an employee’s family worked for their employer’s biggest competitor, that would be an apparent breach of interest, even if this had no effect on their performance. 

• You even need to avoid a potential conflict of interest is where the employee’s private interests do not currently conflict with their official duties but has the potential to.  

Avoiding conflicts of interest 

To minimise conflicts of interest, employees should regularly check if your private, financial, or other interests’ conflict with their employers. They should also consider your close family member’s interests. An employee should take reasonable steps to prevent their interests from influencing their decisions, actions, or advice during their employment. 

Should there be a conflict of interest or a reasonable ground for a conflict of interest, an employee should report to their employer immediately. 

Managing Conflicts of Interest 

Sometimes it may be impossible to avoid a conflict of interest. While the specific means of managing it will be dependent on those circumstances, there are some general actions that can be used to manage conflicts of interest: 

• Change an employee’s duties so they aren’t in the position for a conflict of interest to arise. 

• Implement safeguards like an information barrier to limit the employee’s access to information that could give rise to a conflict of interest. 

• Ask the employee to dispose of their conflicting financial interests. 

The employee’s duty of fidelity is a great deal more complex than it would appear on the surface. An employee must be aware of the employer’s best interests outside of work and must keep abreast of potential conflicts of interests to fulfil their duty of fidelity to their employer. 

Voice Lawyers would be delighted to assist your business to navigate the complexities arising from any employment law issues you may be having or just to answer your employment law queries. 

This article is general in nature and is not legal advice. If you need help with an employment law matter, Voice Lawyers is here for you.  

Speak to us at Voice Lawyers for advice and representation in your Employment Law matter. Please contact us on 02 9261 1954, email us at voice@voicelawyers.com or use the link on our website to book a consultation.