Conflicts of Interest
Side-hustles, office romances, and social media posts – all of these activities may or may not constitute conflicts of interest depending on the specific circumstances, details, and workplace policies involved in a particular scenario. As a result, conflicts of interest can create a need for the involvement of a workplace investigator, mediator, or arbitrator.
Consideration of both specific case-law precedents and the broader legal framework related to conflicts of interest are good starting points for employers and workers regardless of whether they are anticipating a workplace investigation, mediation or arbitration, or are simply seeking to gain insight into what is – and/or could be – a conflict of interest.
Legal Overview: Concepts Applied by Workplace Investigators, Arbitrators & Mediators
A. The Employee Duty of Loyalty, Faithfulness/Good Faith and Fidelity
In the area of employment/labour law, conflicts of interest are typically dealt with as they relate to the duty of good faith and fidelity owed by employees to employers. As stated by the Supreme Court of British Columbia in Rupert v. School Dist. No. 61, 2001 BCSC 700 (CanLII) (“Rupert”), “(t)he duty of fidelity and good faith, also referred to by the courts as the duty of loyalty or duty of faithfulness, is a fundamental term implied into every contract of employment”. In other words, regardless of whether there is a written contract or not, and regardless of whether employee loyalty is a specific term of that contract, all employees owe a duty of faithfulness to their employer.
The court in Rupert goes on to describe that the duty is considered to have been breached not only when an activity causes actual harm to an employer, but also where the duty could cause harm. Conflicts of interest that are breaches of the duty of good faith and fidelity can justify termination without notice or severance pay.
Examples of breaches of this duty, as reviewed by the court in Rupert, include situations where an employee operated their own business on employer property or earned secret profits by competing with their employer after hours.
Note that the general law regarding termination is different for unionized versus non-unionized employees. For unionized workers, arbitrators apply the test set out in William Scott & Co. v. C.F.A.W., Local P-162, 1976 CarswellBC 518,  1 Can. L.R.B.R. in order to determine whether dismissal is justified or whether a different outcome should occur (including reinstatement of the worker to their job with or without a lesser sanction, or other compensation). For non-unionized employees, the Supreme Court decision in McKinley v. BC Tel,  2 SCR 161, 2001 SCC 38 (CanLII) sets out the guiding principles in determining whether employee conduct/misconduct justifies dismissal.
***For a detailed review of the respective test and principles, please refer to the Discipline and Termination section under the Areas of Focus tab of this website.***
B. Moonlighting, Side-Hustling, and Second Jobs
In today’s “gig economy” (involving short-term contracts for temporary/freelance positions typically for app-based operators, such as ride-sharing jobs and food delivery services) employees might work for a regular employer but have a host of other work-based sources of income.
As mentioned, participating in a business in direct competition with a current employer constitutes a conflict of interest. In their text on employment law, Neuman and Sack summarize the following list applied by courts to ascertain “whether outside work constitutes a conflict of interest:
- Was the outside work minor?
- What was the nature of the employee’s position?
- Did the employer specifically prohibit outside work?
- Was there dishonesty on the part of the employee?
- Were the employer’s resources used to do or obtain outside work?
- Did the employee pursue outside work or have it offered to him or her?”
(Peter Neumann and Jeffrey Sack, eText on Wrongful Dismissal and Employment Law, Lancaster House, 2012 CanLIIDocs 1, (“Neumann & Sack”).
Another aspect that could be added to this list is whether the outside work operates during simultaneous hours. As stated by the Court in Wells v. Newfoundland and Labrador Nurses Union (1986), 57 Nfld. & P.E.I.R. 67 (Nfld. S.C., T.D.) (“Wells”); an employee “who commits [themselves] to work for someone during normal business office hours … cannot commit [themselves] to work for someone else during those same office hours.”
C. Personal Behaviour, Interests and Opinions
Beyond situations involving outside work, conflicts of interest can also occur outside of situations involving activities that are “incompatible” with a worker’s employment, or prejudicial to the employer.
Neumann & Sack provide that ” a conflict of interest may arise whenever an employee has a personal interest sufficiently connected with [their] professional duties that there is a reasonable apprehension that the personal interest may influence the actual exercise of the professional responsibilities”.
However, per the court in Wells; “An employer espousing a cause may very well view with a jaundiced eye an employee who espouses an opposing cause but, unless it conflicts with the employee’s function, there may be little to be done about it.”
In other words, conflicts of interest can arise from personal behaviours, interest and opinions but are only deemed to be conflicts when they interfere with – or appear to interfere with – that job’s functions/responsibilities. As such, the following cases demonstrate that both office romances and use of social media could potentially be – but are not necessarily – conflicts of interest.
D. Tales from the Courts (and Arbitration and Mediation Hearings)
The arbitration matter of Re: Toronto (City) and IAFF, Local 3888 (Bowman), 2014 CarswellOnt 19312,  O.L.A.A. No. 507 garnered a great deal of press attention as it involved a firefighter who posted misogynist and racist tweets on his twitter account. The employer terminated the firefighter’s employment, and the firefighter’s union grieved the dismissal. Ultimately, the arbitrator dismissed the grievance stating that the firefighter’s “conduct has impaired his ability to fulfill the complete range of responsibilities of a firefighter […] [a] reasonable and fair minded member of the public, if apprised of the facts, would, in my view, consider that the grievor’s continued employment would so damage the reputation of the Employer as to render employment untenable”.
A contrasting result occurred in Gélinas c. Centre d’Analyse des Opérations, 2004 CarswellNat 6261, 2004 FC 1755, which involved a supervisory employee who had an affair with a subordinate. The relationship was reported to the employer some months after it began but, before it was reported, the subordinate was promoted by that supervisor. The supervisor was fired and commenced proceedings for wrongful termination. In finding in favor of the dismissed supervisor, the court looked to “the situation of the employer during this one or two month period, to determine whether it suffered any damage. The evidence does not demonstrate this. The (employer) has not proven that the relationship in itself affected its operations in any way or that it sullied its reputation, or that it was inconsistent with the [supervisor’s] duties as a manager or created a conflict of interest”.
Conflicts of interest arise in an employment context when they breach the duty of good faith and fidelity that is inherent in all employment relationships. A conflict involves a situation where the employee’s behaviour or interests (work-related or otherwise) interfere with their job responsibilities or function.
For example, it might be alright for a waiter to work afterhours as a driver for a ride-sharing service but for a taxi-driver to do so might be a conflict of interest. Similarly, it might be acceptable for a barista to complain about property taxes on social media but likely not alright for a City Hall employee.
Professional legal assistance – in the form of workplace investigation services, arbitration, or mediation – is crucial given the nuances involved in determining whether a conflict of interest exists, and if so, rises to the level of a breach of the duty of good faith and fidelity. In that regard, please contact Neil Hain for assistance dealing with workplace conflicts of interest.
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Neil Hain has prepared this document for information only; it is not intended to be legal advice. You should consult Neil Hain about your unique circumstances before acting on this information.
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