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All in the Family - When family ties are a ground for dismissal
It is generally accepted that most successful personal relationships are built upon mutual trust and confidence. Each partner to a relationship should feel that the other will be supportive and sensitive to matters which are both individually and mutually important.
The same concept is, of course, true of a successful employment relationship. A good relationship between employer and employee is also built on trust and confidence. In the same way, a natural consequence is an expectation that each party will be sensitive to matters which are of both individual and mutual importance.
Difficult, and potentially most unfortunate, consequences can result where there is a conflict between the duties owed as a consequence of the fundamental duties owed in each of these two different types of relationship. Those difficulties were recently illustrated in the decision of the Employment Court in Power Beat International Limited v Andersen. In that case, a husband and wife had both been employed by the same employer - a company involved in the electronics industry.
The husband, a research and development officer, was dismissed by the company. This event was, understandably, the cause of considerable distress and upset to the wife, who remained employed by the business. The matter did, however, become more complicated by the events which transpired.
The husband claimed that he had been unjustifiably dismissed by the company. Further, he raised issues concerning the way in which certain products (which he had helped to develop) had been registered in the New Zealand Patents Journal. While the wife (an administration co-ordinator with access to company records) was not directly involved as a party to this dispute, she informed the company that her first loyalty would be to her husband. The company recognised this loyalty as appropriate.
At the same time, however, the company expressed grave reservations about the wife's continued ability to be loyal to the company. It was particularly concerned that the wife would, in the course of her employment, potentially have access to company files containing sensitive information about patents and commercial matters.
As a result of its concerns, the company made a decision to dismiss the wife from its employment. It did so by informing her that her position had become redundant.
The Court found that the wife's redundancy was not genuine - and that if it had not been for her relationship with Mr Anderson, no decision concerning redundancy would have been made.
On the other hand, however, the Court confirmed that the decision to dismiss the wife was substantively justified. Drawing upon precedent decisions, it found that the company reasonably concluded that there was a risk that the wife would disseminate sensitive commercial information to a person pursuing an action against it.
In the event, the Court concluded that, while the decision to dismiss the wife had been substantively justified, the manner in which it had been carried out (by way of a non-genuine redundancy) justified an award to the wife of $7,500 to compensate her for her distress and humiliation.
This decision serves to emphasise difficulties which can arise where co-employees have personal, as well as working, relationships. Where one partner to a personal relationship is dismissed, the other partner is also at the risk of dismissal if a reasonable conclusion can be drawn that their continued employment presents the danger of breach of the duty of trust and confidence owed as an employee.
Experience suggests that personal relationships in workplaces are relatively common - happily, however, cases of this type are not. To some extent, that may reflect the limited circumstances in which a breach of duty can arise. For example, the decision reached in the case above would not have been justified if the wife had worked on a production line (as opposed to having direct access to company records).
The decision does, however, send a warning to employees that a breakdown in an employment relationship for one partner can have serious consequences for the employment relationship of the other.
