Len Brown would go if he was CEO, say lawyers

JOSH MARTIN
Last updated 15:55 25/10/2013
len brown
LAWRENCE SMITH/ Fairfax NZ
LEN BROWN: Nothing illegal here.

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Employment relations experts have weighed in on the Len Brown case, with some saying if he was employed as a chief executive on one of New Zealand's major listed companies he would be fired.

Susan Hornsby-Geluk, partner at Dundas Street Employment Law said there would be a "strong likelihood" that Brown would be asked to stand down by the board of directors if the same behaviour occurred in a private company, more so if he led a public department.

"One of the critical issues would be if the other party was a subordinate, then it would be wholly incompatible with the objectives of the chief executive of a company," Hornsby-Geluk said.

"Another issue would be employee [chief executive] judgment. Whether the employer was concerned by the judgment applied by him," she said.

Unlike Brown, who is accountable to Auckland voters, chief executives have accountability to a board of directors.

Peter Cullen, the principal of Cullen Employment Law, said although an affair was "dangerous", it might not result in instant dismissal because a board would take a holistic view of the employee's work.

"I don't think it's fatal or necessarily a moral issue, a board will look past that."

Another employment expert who would not be named, said if the affair was outside of the workplace with a non-employee, the likelihood of Brown being fired simply for his infidelity would not fly.

"If the CEO is having an affair, that's nobody's business but their family. If it's in the Ngati Whatua room of the Town Hall with a staff member, that's another matter," he said.

However, employers such as Forsyth Barr and the New Zealand Navy have recently been found to have acted legally in dismissing employees, of lower status than Brown, for incidents such as road rage and an intra-office affair.

Employers and Manufacturers Association employment relations adviser David Lowe said any workplace affairs would need to be assessed by a company's directors as objectively as possible.

"You have got to make sure that you are not espousing your own morals, it's about looking at whether it creates a problem for business.

Lowe said it often came down to two things: breaking company policies around time-wasting, relationships and conflicts of interest, or bringing the company into disrepute.

"Should you have been spending your day doing your job, or doing something else?" Lowe said.

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"Disrepute depends on the circumstances and the link back to the business. That's absolutely subjective.

"If it gets into the media, that's a whole other issue because the likelihood of bringing the company into disrepute grows," Lowe said.

Hornsby-Geluk agrees that if Brown was working for a major listed company and had received such public interest and media attention into his indiscretions "it would have to be said that there has been damage to the employer".

However, directors would also consider whether the affair would affect his ability to do his job.

Brown has maintained there is no impact throughout the scandal.

"I think that is possibly true," Hornsby-Geluk said, "that would only arise if feedback from stakeholders said they had lost confidence in his ability to do his job," Hornsby-Geluk said that if the Brown-Chuang scandal was based at a private company, the fallout would probably be minimised though a golden handshake and a "quick exit" by Brown.

"It's in nobody's interests to air anyone's dirty laundry," she said.

Cullen said Brown, unlike private sector employees, could probably survive.

"For Len, the grim reaper isn't a board of directors, it's the ballot box."

- Fairfax Media

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