The price of behaviour outside work

An agent convicted of methamphetamine crimes would certainly lose the trust of many people.

OPINION: It has been widely reported that Auckland real estate agent Samuel Clough has lost his job after pleading guilty to methamphetamine charges.

While perhaps unsurprising, it does beg the question as to what extent an employer can discipline an employee for conduct away from work.

Clough was convicted in the Auckland District Court of possession of methamphetamine, possession of methamphetamine utensils and of refusing to give a blood specimen.

When arrested, Clough claimed the methamphetamine pipe was for ‘‘aromatherapy’’ and refused to provide a blood test on the basis that his religion did not allow it.

Despite his initial attempts to thwart the police, he later pleaded guilty to the charges.

It appears Clough’s employers, LJ Hooker Ponsonby, found out about his charges only after media contacted them.

By that stage Clough had already been convicted. LJ Hooker Ponsonby franchise owner Steven Glucina has been quoted saying that the franchise has ‘‘terminated his employment contract’’, following discovery of the criminal charges.

Typically, real estate agents are contractors; however from Glucina’s comment it appears Clough was an employee.

An employer may dismiss an employee where it is fair and reasonable to do so.

But is it fair and reasonable to dismiss an employee for conduct outside of work?

This is possible only if there is an impact or potential impact on the employer’s business. This will usually be because of damage to the employer’s reputation, or impacts on the employee’s ability to perform their duties.

One of the more prominent examples is that of (now former) Forsyth Barr employee Guy Hallwright. Hallwright was a wellrespected and well-known senior investment analyst, whose role included media duties.

Things were going well for Hallwright, until he was involved in a ‘‘road rage’’ incident.

Hallwright had an altercation with another driver and struck him with his car as he departed the scene. Hallwright was convicted of causing grievous bodily harm with reckless disregard.

Forsyth Barr was understandably concerned by the damage this could do to its reputation. The media took an active interest in Hallwright’s case, and the company was almost always mentioned as his employer.

Forsyth Barr did not immediately take action, given the presumption of innocence.

However, after roughly two years, a guilty verdict was handed down. Following a disciplinary process, Forsyth Barr dismissed Hallwright. Forsyth Barr’s actions relied on Hallwright’s bringing them into disrepute and engaging in an activity that was likely to compromise his ability to carry out his duties.

Hallwright had had a number of skirmishes with the media over reporting of his case, and some of his comments led to doubts as to whether he could engage in the media duties that formed a significant part of his role. Forsyth Barr had also had a number of comments from clients and members of the public about him.

Hallwright unsuccessfully challenged his dismissal at the Employment Court.

He complained that media coverage had contributed to his dismissal and that it had been unbalanced. He said that Forsyth Barr could not claim to have lost trust and confidence in him when it had continued to employ him for two years.

The Employment Court rejected Hallwright’s claims. Judge Inglis accepted that there was evidence of damage to Forsyth Barr’s reputation.

The judge also agreed that Hallwright’s conduct had potentially compromised his ability to conduct his media duties.

We don’t know the grounds LJ Hooker have relied on in dismissing Clough. But real estate agents are given the keys to family homes and are responsible for ensuring their clients get the best return on one of their most important assets.

An agent convicted of methamphetamine crimes would certainly lose the trust of many people, and that damage may well flow on to their employer. That damage could well justify a dismissal.

Peter Cullen is a partner at Cullen – the Employment Law Firm. He can be contacted at peter@cullenlaw.co.nz.