Conflict of interest in the workplace and its consequences
The employment relationship is a fiduciary one where the core obligation is one of loyalty and integrity — the key characteristics an employee should possess, no matter what form of employment he is engaged in (see, Kvaerner Petrominco Engineering Sdn Bhd v Virginia Jaqueline Chan [2007...
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| Format: | Article |
| Language: | English |
| Published: |
Malaysian Institute of Management (MIM)
2017
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| Online Access: | http://irep.iium.edu.my/63445/ http://irep.iium.edu.my/63445/ http://irep.iium.edu.my/63445/1/63445_Conflict%20of%20Interest%20In%20the%20Workplace.pdf |
| Summary: | The employment relationship is a fiduciary one where
the core obligation is one of loyalty and integrity —
the key characteristics an employee should possess,
no matter what form of employment he is engaged
in (see,
Kvaerner Petrominco Engineering Sdn Bhd v
Virginia Jaqueline Chan
[2007] 1 ILR 494). It includes,
the employee’s obligation to act in good faith; not to
make profit out of his trust; not to place himself in a
position where his duty and his interests may conflict;
not to act for his own benefit or the benefit of a third
party without the informed consent of his employer;
and not to misuse the employer’s confidential
information for his own benefit.
Further, it is an implied term that the employee
will serve the employer in good faith. In turn,
the employer places confidence and trust in the
employee and this includes trusting the company’s
property in their care. The employee should not
betray the trust and confidence reposed on him
by the company. An employee who defrauds
the company by falsifying and manipulating the
company’s documents and divulging the company’s
business information to a third party without prior
approval or authorisation from the company, amongst
others, would be committing acts of a grievous
nature (see,
Normalina Mansor v MSU Holdings
Sdn Bhd
[2017] 3 ILR 183 and
Ho Khoy Li v KS Lau &
Co
[2016] 2 ILR 586). The integrity of the employee
in the aforesaid circumstances would be seriously
jeopardised as he would have breached the very
foundation of his contract of employment. It would
be difficult for any employer to repose trust and
confidence in the said employee thereafter.
An essential component of the employee’s duty
of fidelity is the obligation to serve in the best interest
of the employer. An employee should not place
himself in a position where his interests conflict with
his duties. As aptly noted by the Industrial Court in
Esso Production Malaysia Incorporated v Md Yusof
Nordin
[1997] 2 ILR 711, ‘the employee is required at
all times, to act in a faithful manner and not to place
himself in a position where his interests conflict with
his duties.’ It would be a clear violation of the duty
of fidelity when an employee acts in conflict with the
best interest of the employer for example, conducting
private business during working hours, stealing the
employer’s customers, or supplying the company’s
business information to the company’s competitor. In
Pantas Cerah Sdn Bhd v Lau Boon Seng
[1999] 3 ILR
216, the Industrial Court stated
inter alia, that:
... it is implied that the employee will faithfully
with loyalty and honesty further the interest of
the employer. There is a fiduciary relationship
between the employer and the employee. An
employee, under the payroll of the employer
should not do any act which causes detriment to
the interest of the employer
It is noteworthy that an employee who has
committed wrongdoings inconsistent with the
employer-employee relationship would be deemed
to have betrayed the trust and confidence reposed
on him. In such circumstances, it would be unsafe
to continue his employment and this would justify
immediate dismissal. Having said the above, the
consequences ensuing from workplace conflict of
interest is discussed in this article with reference to
the awards by the Industrial Court. |
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