Case Summary: Code of Conduct Financial Record Keeping for a Social Club

Disclaimer: The following summary illustrates how the Merit Protection Commissioner has reviewed a particular case and should not be relied on as legal advice.

Case Summary: Code of conduct—financial record keeping for a social club Key words: employment relationship-procedural fairness-upheld Application The agency found the applicant had breached the APS Code of Conduct as it determined that there was a failure to keep proper financial records with respect to the workplace social club. This action was found to breach subsection 13(11) of the Public Service Act 1999 and the applicant was informed that a sanction of a reprimand had been imposed. The applicant sought a review by the Merit Protection Commissioner under Public Service regulation 5.24 (2) of both the finding of a breach and the sanction imposed. The social club was informal in nature and aimed to raise money to offset the cost of the annual Christmas function. The applicant said that this was not a formal role and only involved depositing money and writing cheques when required. The applicant had taken on the role as the incumbent treasurer was having difficulty balancing the finances. A number of social club members approached management with their concerns in relation to the social club finances. As a result of these approaches, the applicant was informed by the agency of a potential breach of the Code of Conduct and was suspended from duty with pay, while an investigation was conducted. After the investigation, the applicant was notified by the decision maker that the allegation had been proven as the applicant had not behaved ‘honestly’ in the course of APS employment. The other allegation was not proven. The applicant questioned the agency’s ability to undertake a formal inquiry into this matter, and made claims as to procedural flaws in the investigative process, in particular a lack of procedural fairness including an apprehension of bias. The issue of apprehension of bias, while addressed in the report, is not covered in this summary. Review The applicant raised a concern about procedural fairness (see accompanying general information). These were around the issues of whether or not there was an employment relationship with regard to social club activities and the application of the ‘hearing rule’.

Social club activities and an employment relationship In the applicant’s view, as the social club had no formal procedures or guidelines, it was not activity undertaken in the course of APS employment and therefore the APS Code of Conduct did not apply. It was argued that whilst some activities investigated took place on work premises and within working hours, they did not occur ‘in the course of APS employment’. Generally, the Code requires a relationship between the conduct complained of and employment. Different sections of the code require different levels of connectedness between the standard of conduct and APS employment. The facts and circumstances of each matter will determine whether the required relationship exists. The conduct that was the subject of this review arose out of the applicant’s involvement with a workplace social club and the role of depositing money and writing cheques. As such, a sufficient relationship existed to warrant an investigation under the agency’s procedures for dealing with suspected breaches of the Code of Conduct. Application of the ‘Hearing rule’ The applicant also argued that the finding of a breach was based on one finding of fact— evidence that there were electronic financial records—and the claim of not being given an opportunity to comment on this evidence before a decision was made that a breach had occurred. The investigators stated the basis for the proven allegation was the applicant’s response to a question about financial records. To quote the report: I base this [the finding of breach] on the fact that, in [one person’s] statement, [the applicant] was asked … if there were any electronic financial records for the Social Club, [the applicant] said there were not any electronic financial records for the Social Club…[and] there are. The agency’s procedures stated that: The principles of procedural fairness (natural justice) will be observed at all stages of the disciplinary process… this includes..the hearing rule which requires a decision maker to give an opportunity to be heard to a person whose interests may be adversely affected by a decision. The Merit Protection Commissioner considered that if a decision is made without the decision maker giving the affected employee an opportunity to respond to evidence used to make a relevant finding, the hearing rule has not been properly applied. The agency’s procedures also stated: The delegate will first provide the employee with a copy of the discipline report and give the employee 7 days, or a longer period as may be agreed, to provide comments in relation to the findings and the action/sanction imposed. After considering the employee’s comments the delegate will advise the employee in writing of his her decision, what action/sanction (if any) is to be imposed, and the employee’s review rights. Inherent in this statement is that all relevant material should be provided with, or set out in, the report, suggesting that there may well be, at that stage, material unfamiliar to the employee concerned. The letter sent to the applicant attaching the report stated, however, that the delegate had found the relevant allegation proven, and asked for comment ‘before I make a final decision in relation to sanctions’. The agency’s comments on the process were as follows: I accept that the ambiguity of this letter would seem to suggest that only comment regarding sanctions would be considered (and in this regard a revised template Disclaimer: The following summary illustrates how the Merit Protection Commissioner has reviewed a particular case and should not be relied on as legal advice.

has been developed and promulgated for use.) In any event, [the applicant] provided a response to both the breach and the sanction…Clearly, had [the applicant] presented information that changed the delegate’s opinion regarding whether there had been a breach of the Code of Conduct, it was open to the delegate to amend that decision. Evidently, the delegate was still of the view that the determined breach of the Code of Conduct was correct. In relation to the sanction, on consideration of [the applicant’s] comments, a lesser sanction than originally proposed was imposed. The applicant strongly refuted whether any comment could have in any way changed the delegate’s decision, as the letters had been drawn up and on the desk ready to hand over. The fact that the delegate did not change the decision that a breach had occurred did not mean the applicant’s comments had been disregarded. Evidence that the applicant’s comments were considered is in the modification to the sanction. A reassignment of duties and a reprimand had originally been proposed, and the agency delegate decided to impose a reprimand only. Having regard to the totality of the matters, the Merit Protection Commissioner was satisfied that the applicant was provided with the details of the case and with opportunities to respond to that information before decisions were made.

‘Honesty’ with regard to the financial records With regard to the actual allegation, the Merit Protection Commissioner considered that the primary issue was, as indicated by the inquiry officer, the records or lack thereof. To the extent that the applicant did not provide records when asked, this may support a conclusion that the records did not exist, or were not up to date. The record of interview between the inquiry officer and another employee stated that the other employee had asked the applicant: …for copies of any financial records and was told by [the applicant] no records existed for this year, or last year, since [the applicant] had taken control of finances. … the applicant [stated] there never were any electronic records, yet this was not true, as the deleted files were later recovered by IT. The conversation referred to above formed the basis for the conclusion that there had been a breach of the Code of Conduct. Both the inquiry officer and the delegate confirmed in separate conversations that the primary piece of evidence taken into consideration was the applicant’s response to the question by the other employee. The applicant’s response with respect to this conversation was: I was never asked specifically if there were any electronic records, nor did I say ‘no records existed for this year or last year…’…The person] didn’t ask me for any ‘electronic records’ but I do recall [being asked] for ‘any other records’ to which I responded ‘no’ because I had already handed [over] everything I had…. An earlier meeting had occurred at which the issue of the missing money was raised. The applicant stated in response to the inquiry report that ‘10 minutes after the meeting I handed over everything I had’. With respect to the records themselves, the applicant said that there were problems on occasion accessing the financial programme, but that the programme had been used. Upon returning from leave, an access error message came up when trying to use the programme, and the agency IT support area said the data was lost. The applicant ‘honestly believed’ the data had gone. The inquiry officer stated that social club material, including the financial programme data, had ‘been deleted’ but that IT staff had been able to recover certain information. The inquiry officer said with respect to the financial records that these ‘reconciled very closely with what was in the bank account…’, the difference being minor and that it looked like the applicant had attempted to keep accurate records. In addition, the programme folder was generally accessible to a number of employees. The Merit Protection Commissioner considered that it was more probable than not that the applicant would not have stated there were never any records when so many people knew that there were. The explanation for the comment that there were not any records is plausible given the belief that they had been lost, and is consistent with the fact that they were missing. A finding that an APS employee has not been honest is a serious one, and requires, even on the balance of probabilities, a sufficient weight of evidence. On the basis of the above the Merit Protection Commissioner was satisfied that the applicant was honest in the response, and as such, the primary basis for the finding, as articulated by the inquiry officer, could not be sustained. The evidence paints a picture of a fairly informal arrangement with respect to the management of the social club. There did not appear to be a charter or any guidelines as to roles and responsibilities, and various members took responsibility for certain fundraising activities. There is evidence of ‘IOUs’ being used to put money in a box to pay for chocolates, and an honour system with respect to raffles and other events. Envelopes of money appear to have been held in drawers, and there was a tin which appears to have been used to essentially provide petty cash. Some individuals appear to have kept the records for their particular events. The inquiry officer was not able to determine why the money was missing, be it ‘theft or inappropriate practices’. The inquiry officer noted that ‘due to poor practices of the social club’, it had been difficult to trace expenditure and profit. Those practices appear to encompass more than the activities of the applicant. Outcome On the basis of the above, the Merit Protection Commissioner recommended that the agency set aside the decision that the applicant breached subsection 13(11) of the Act. As the recommendation was that no breach has been found, the issue of a sanction did not arise. The Merit Protection Commissioner considered that some issues raised in the course of this review highlighted the need for the agency’s procedures for determining whether a Disclaimer: The following summary illustrates how the Merit Protection Commissioner has reviewed a particular case and should not be relied on as legal advice. breach of the Code of Conduct had occurred to be amended. As noted earlier, upon being made aware of the ambiguity of its approach, the agency revised its template to clarify the delegate’s responsibility to seek comment from the employee on both the proposed finding of a breach of the Code and the sanction prior to either decision being made. Lessons learnt: Conduct that is apparently unrelated to the performance of duties may be subject to the Code if it can be demonstrated that there is a real connection between the behaviour and its effect on the workplace. It is also important that, consistent with agency procedures and policies, the decision maker provides an opportunity to be heard to a person whose interests may be adversely affected by a decision.

Office of the Merit Protection Commissioner December 2009