Hallwright/Forsyth Barr decision – employees beware
Senior employees be warned – a tarnished personal reputation can cost you your job.
Investment analyst Guy Hallwright’s failed bid to return to Forsyth Barr confirms senior employees will be held to a high standard of behaviour, not only on the job, but outside of work as well, employment lawyers say.
And while some employment lawyers agree with the ERA's decision this week, at least one thinks Hallwright is in with a chance of he appeals to the Employment Court.
Minter Ellison Rudd Watts partner Jennifer Mills says Hallwright’s personal reputation – post conviction of causing grievous bodily harm with reckless disregard – was relevant to how Forsyth Barr was perceived by its clients.
“Mr Hallwright being discredited personally tainted his position, such that it compromised his ability to carry out his duties,” Ms Mills says.
Hallwright found out this week he would not get his job back as a senior analyst at Forsyth Barr, where he often provided media commentary on listed companies.
Employment Relations Authority member Rosemary Monaghan decided Forsyth Barr was justified in dismissing Hallwright from the firm last year, post conviction, after the 2010 incident that left a man with two broken legs after Hallwright hit him with his car.
Forsyth Barr managing director Neil Paviour-Smith successfully argued the conviction had a reputational effect on the firm.
Hallwright, who argued he was still fit to do his job, is yet to decide if he will appeal against the ERA’s decision.
Bosses will be pleased
Ms Mills says the Hallwright decision affirms the law that when an employee is dismissed for bringing their employer into disrepute, it is not necessary for the employer to show actual proof of the damage to its reputation.
“It is enough for the employer to establish the potential impact on its business."
During the hearing late last year, Mr Paviour-Smith acknowledged to the ERA it could not prove it had lost clients at Forsyth Barr after Hallwright's trial and conviction, but Ms Monaghan accepted the firm’s evidence of almost constant linking in the media of Hallwright and Forsyth Barr as his employer.
Although Hallwright was technically capable of carrying out financial analysis or transactions with institutional clients, his media profile and participation in public presentations and report-writing on behalf of the firm had been compromised, Mr Paviour-Smith said.
Simpson Grierson partner John Rooney says it would have been almost impossible for Forsyth Barr to prove actual damage in this situation.
“You can’t prove a negative,” he says. “It’s just about impossible to expressly link Hallwright’s actions to actual financial damage.”
“This determination shows you don’t have to prove actual damage, you just need to show there is the potential for it. And that is obviously a much lower threshold than proving actual damage.”
Why didn’t Forsyth Barr just ban Hallwright from the public side of the job?
Mr Rooney says Forsyth Barr should not have been required to take Hallwright back on a lesser job and stripped of his public duties.
“He was employed to do the whole role – contact with clients and media included. They shouldn't be put in a position where they say there are parts of his role that he can no longer do.”
Even though the public aspects of Hallwright’s job made his case stand apart from other dismissal cases before the ERA, Mr Rooney did not think that alone made the difference in Ms Monaghan’s decision to uphold the dismissal.
“Even if he hadn’t had a public profile in the role the employer could still look to dismiss, I think.
“For employers, the decision highlights that in a situation where you have somebody who causes your name to be splashed across the media in connection with something very negative, you have the ability to take action.”
A tick for following good process
Forsyth Barr’s win was a reminder to employers to follow good process in disciplinary matters.
The firm’s "innocent ‘til proven guilty" approach in choosing to let Hallwright keep working at the firm – for almost 20 months until the outcome of the trial was known – had stood it in good stead with the ERA.
“They were prepared to do that, and the authority looked on that favourably as far as to whether they had followed fair process. It sends a message they gave him fair consideration,” Mr Rooney says.
“If Forsyth Barr had terminated Hallwright’s position earlier it could have counted against them in terms of fair process.”
Many firms would have suspended Hallwright on full pay until the outcome of the trial was known.
And Forsyth Barr’s decision to let him keep working was often the more difficult choice to make because it could be a long time to wait for an outcome.
“Although you can understand the desire to act quickly, and it can be a cost not to, nine times out of 10 you’ll come out better off with patience and acting carefully, rather than quickly.”
What are Hallwright’s chances at an appeal?
Although the ERA threw out Hallwright’s argument for reinstatement, there is a chance the Employment Court could take a different view.
If he appeals, the Employment Court would rehear the entire case without reviewing, or taking into account, the authority’s decision.
Mr Rooney says it is not unusual to see Employment Court judges give a determination that is completely different to the ERA.
“The arguments often get presented differently in the court as the losing party has worked out a different way to present their arguments to court.”
However, Mr Rooney says Hallwright will have to think long and hard about whether an appeal is worth it.
It would be an expensive process – Employment Court hearings usually take twice as long as those before the ERA – so his legal bill would be at least double.
And while ERA members do not always refer to case law in its determinations, Ms Monaghan had made reference to several leading cases to support her decision.
Ms Mills agreed the law on which which the ERA had relied on in upholding Hallwright’s dismissal appears sound.
Garry Pollak, from Garry Pollak & Co, disagrees.
"I think it's likely the court will overturn it.
"The employer [Forsyth Barr] did not establish it had been brought into disrepute and it has a significant onus of proof in this regard," Mr Pollak says.
"Can an employer simply dismiss an employee if convicted in the District Court over a matter that has nothing to do with employment? Perhaps if loss is actually established or trust irrevocably broken... but this employee's driving has no link to employment."