Conflict of Interest Leads to Fair Dismissal

Background to Complaint

In this complaint for unfair dismissal to the EAT, the employer was engaged in the production of roof trusses for timber frame houses. The company learned in mid 2005 that one of its employees was setting up his own business for the manufacture of roof trusses for brick built houses. The employer was primarily involved in roof trusses for timber built houses and trusses for brick built houses accounted for only a small portion of business. The employee had started employment with the company in 1995 and later became a team leader.   On hearing of the employee’s plan to set up a new business, the company had a number of informal meetings with him about his status with the company. The employee was hesitant to discuss his new enterprise but did not deny involvement.   Senior managers at the company met with the employee on 16th January 2006 and advised him that his proposed enterprise placed him in a conflict of interest situation in relation to the company. Also as a team leader he had access to confidential information that compromised the welfare of the company.   By summer 2006 the employee had acquired equipment and property to establish the business and was advertising in the local media.   Another formal meeting took place on 18th July 2006 to address the situation. It was hoped an exit plan could be agreed with the employee. The employee stated that he had no intention of leaving his employment.   The company terminated his employment on 19th July 2006. The employee was advised that he could appeal this decision to dismiss him.  

EAT Findings

The Tribunal found that;   • The employee consistently refused to give an explanation to the his employer on the nature and substance of his emerging roof trusses business • The employer was understandably concerned at the possible impact such an enterprise would have on its own operations • That concern was increased due to the employee’s position with the company and his access to sensitive confidential information • A more open approach was needed by the employee in addressing his employers concerns • There was a possible conflict of interest between the work undertaken by the company and the enterprise established by the employee • Due to the lack of openness and engagement on this topic the company could not be expected to retain the employee • Consequently the company was justified in their decision to dismiss the employee   Thus, the employee’s claim under the Unfair Dismissals Acts 1997-2001 failed.   Source: McCullagh v IJM Timber Engineering Ltd, UD908/2006, MN462/2007, Employment Appeals Tribunal     [metaslider id=2600]