08 Aug Expensive schnitzels prove costly for employee
A recent case in the Federal Circuit Court highlights the importance for employers of having appropriate written employment contracts with their employees and having robust procedures in place with respect to their supply arrangements.
In the case of Amponsem v Laundy (Exhibition) Pty Ltd  FCCA 2206, a chef was employed by the Laundy Hotels Group under a written employment contract which required the chef to, amongst other things, “faithfully and diligently serve the company” and comply with its “behaviour standards manual”.
One day the chef was asked by his manager to find a new supplier of schnitzels as the manager was unhappy with the existing supplier’s product. The chef sourced a new supplier through a business called K&S Goods. Under the arrangement, K&S Goods would buy schnitzels from a company called South Coast Chicken Fillets and Smallgoods (SCCF), who would then sell them to the employer for $2.80 or $2.90.
The chef told his manager that SCCF would only supply schnitzels to the Hotel Group through K&S Goods. This was untrue. The chef also neglected to tell his manager that K&S Goods was his wife’s business, and that K&S Goods was buying their schnitzels from SCCF for $1.80 or $1.90, a full $1 less than the price it was selling them to his employer. In addition, the employer had been invoiced for over 7,000 schnitzels that it never received.
Not surprisingly, the Federal Circuit Court found that the chef had breached his duty of fidelity to his employer under his employment contract and under the company’s behaviour standards manual. The Court awarded the employer damages in the amount of approximately $72,000.
Lessons For Employers
This case highlights the importance for employers of having appropriately worded employment contracts which clearly set out the employee’s duty to, amongst other things, act in the best interests of their employer and ensure there is no conflict between the interests of the employer and the employee’s own personal interests. The case is also a reminder to employers of the need to have robust procedures in place with respect to their supplier arrangements.