Nick Smith resigned as a result of letters written in his
capacity as ACC Minister. Bronwyn Pullar, friend and former
National Party official, approached Mr Smith in 2010 for help with
her ACC claim. As a loyal friend, he accepted. So what's the
problem and why did he have to go?
Its obvious says Labour's ACC Spokesman, Andrew Little,
"He was trying to use his Ministerial influence to get a
decision in favour of someone who was a friend of his –
you just don't do that as a Minister and he knows
Writing a letter on Ministerial letter head in support of a
friend's ACC claim when you just so happen to be ACC Minister
screams "conflict of interest". Mr Smith's personal
interest in the matter as a friend clearly came into conflict with
his professional obligations as Minister of ACC.
Mr Smith is not an "employee", but conflict of
interest situations like the one he found himself in can and do
arise in the course of everyday employment relationships. This
problem is not unique to elected members of parliament who are
governed by their own set of rules.
There would no less of a problem with Mr Smith's conduct,
for example, if Mr Smith was CEO or a manager of ACC and was found
to have written letters in support of a friend's claim on ACC
letterhead. For employees, conflict of interest situations can
constitute serious misconduct and be grounds for dismissal.
This is because employees owe a duty of good faith and fidelity
to their employer. They must at all times act in the best interests
of their employer and avoid any activities that may bring their
employer into disrepute or damage the relationship of trust and
confidence between them. This means that employees should avoid any
potential or perceived conflicts of interest and must inform their
employer where any actual or perceived conflicts of interest could
In the case of state sector employees, the State Services
Commission Standards of Integrity and Conduct includes the
obligations to be "trustworthy" and ensure "actions
are not affected by personal interests or relationships".
So what is a conflict of interest? You may have a sense that you
understand what this term means, but it is somewhat difficult to
succinctly define. It is often defined in an individual's
employment agreement or in company Codes of Conduct.
A conflict of interest generally occurs when an employee's
personal interest in a matter may influence or compromise, or
appear to influence or compromise, their duties as an employee.
This can happen in the following scenarios:
When an employee accepts secondary employment in a role that
conflicts or interferes with their primary role. A solicitor for
the Department of Conservation, for example, was dismissed for
acting for private clients in litigation against the
Attorney-General. The litigation attracted media attention and the
Department risked adverse publicity as a result;
When an employee uses their position for personal benefit. You
may recall Mary-Anne Thompson, former Head of the Immigration
Service, who resigned in 2008 after a spate of allegations
including that she was helping her relatives gain permanent
residency in NZ;
When an employee has an interest in a company that competes
with or purchases or sells goods and services to their employer.
The Employment Court upheld a decision by Air NZ to dismiss one of
their employees who was found to be a director and shareholder of a
company supplying food to Air NZ; and
When an employee of a business/organisation enters into a
personal relationship with an employee of a competing
business/organisation. When Madeline Setchell applied for, and was
appointed to, the position of Communications Manager with the
Ministry of the Environment in 2007, she disclosed her personal
relationship with Kevin Taylor, Chief Press Secretary for National
Party leader John Key as a potential conflict of interest.
The bottom line is that employees' loyalties must lie first
and foremost with their employer. If an employee's personal
interest in a matter or activity could be seen to compromise their
duties as an employee, this may give rise to a conflict of
interest. If in any doubt an employee should proactively raise any
potential issues and seek guidance, plowing ahead regardless may
well give grounds for dismissal.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
This WHS decision clarified the interpretation of s 19 of the Work Health and Safety Act 2011 (NSW).
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