Australia: Israel Folau vs Rugby Australia: Izzy or Izzy not in breach of contract?

Last Updated: 22 June 2019
Article by Dominic Russell

Israel Folau .published some controversial comments on his Instagram account recently. These comments were first seen by thousands of followers, and were then shared by the media to an audience of millions.

In making the comments, Folau expressed views which many found at odds with Australian standards for respectful discourse, and which created a lot of kick back against Folau and Rugby Australia as well.

Unfortunately, this incident wasn't a first for Israel Folau - in fact, he had previously expressed similar views, and received strong feedback, amounting to a warning, about it.

As with any organisation, Rugby Australia has its own reputation to protect, so when one of their most prominent ambassadors damns both the organisation and almost everyone that it represents (let's face it, how many people do you know who, according to Folau, aren't on a one-way trip to hell?), it is unrealistic to expect them to let it go unanswered.

Rugby Australia's answer was to convene a panel, which included two of Australia's pre-eminent employment law silks, to decide whether Folau was guilty of breaching its Code of Conduct ('the Code'). This panel subsequently determined that Folau was indeed guilty as charged.

But is a breach of the Code a breach of contract?

This is where it becomes a little tricky. Policies are not always contractually binding.

A contract is an exchange of promises, requiring certainty and understanding between the contracting parties, and in the ordinary course, can only be terminated according to its terms. Workplace policies, however, are not contracts. Policies can be amended by the employer at any time without consultation, and unfortunately, are often anything but certain.

Policies, such as behavioural codes are rarely drafted using the type of language found in contracts, and they often contain guidelines (sometimes referred to as 'aspirational' terms by those within the legal profession). Aspirational terms are vague terms of indefinite imprecision, couched in lofty phrases that present an organisation as a model of corporate and ethical responsibility, and which are intended to ensure that individuals bound to adhere to them understand that they are part of something serious, and much greater than themselves.

Aspirational terms read more like mission statements which when considered objectively, could mean just about anything.

One good example of an aspirational term in the Code is "[b]e a good sport, displaying modesty in victory and graciousness in defeat". When does this rule apply - could this 'obligation' apply equally to Folau's code of conduct hearing as it does a rugby match?

The terms of Folau's contract were, for the most part, set out in his contract. I haven't had the benefit of perusing Folau's contract, so I can only speculate, but like most employment contracts, I would expect to see a clause stating that Folau agreed to comply with Rugby Australia's policies (including the Code), but also that Rugby Australia's policies do not form part of his contract.

The reason for this is that contracts are a two-way street whereas policies, particularly behavioural codes, are rules that an employer doesn't necessarily want to be contractually bound to follow. A good example of this was the case of Goldman Sachs JBWere Services Pty Limited v Nikolich [2007] FCAFC 120 where the employer inadvertently found itself in breach of contract because it failed to "take every practicable step to provide and maintain a safe and healthy work environment for all people".

JBWere could have avoided this outcome by making a couple of small changes to its employment contracts.

How can a breach of the Code be a breach of contract?

One way would be if Folau had received a written direction from Rugby Australia not to do something specific that would be in breach of the Code. Any subsequent similar breach of the Code would represent a failure to carry out directions, that if reasonably given, could be a breach of contract.

Whilst Folau was given a dressing down over his anti-gay comments in April 2018, recent articles suggest that he never received a written warning, nor agreed to a contract variation that would have prevented him from publishing his comments in April 2019.

What other avenues are there for Rugby Australia?

If policy terms are expressed clearly enough and create an obvious obligation on one party to do something, a court might consider them as being incorporated into a contract. In this case, any failure by Folau to comply with what is deemed to be a binding term of a Rugby Australia policy could potentially amount to a breach of contract.

What does the Code say about posting to social media?

As far as public comments are concerned, according to the Code, players are expected to avoid making comments that might be "detrimental to the best interests, image and welfare of the game", not "act in a way that may adversely affect or reflect on, or bring you...or Rugby into disrepute or discredit" or "use Social Media as a means to breach any of the expectations and requirements of you as a player".

While these rules are not clearly aspirational terms, they still leave a lot of room for interpretation, including whether they create an obligation to do anything in particular. For example, what are the 'interests' of Rugby? From who's perspective is reputation and credit valued? Do the Code's "expectations and requirements" of players continue to operate outside of Rugby?

The recent case in the Federal Court regarding the suspension of Jack De Belin under the NRL's 'no fault stand down' policy sheds some light on what the 'interests' of a sporting governing body are.
In De Belin's case, Justice Perry accepted the 'no fault stand down' policy was reasonably necessary to protect the legitimate interests of the NRL. The evidence presented by the NRL to support this claim was compelling. De Belin's criminal charges relating to sexual violence had directly impacted existing and prospective sponsorship deals, as well as merchandise sales - with both being measurable even before the season got underway.

Evidence from community sourced feedback also showed a high likelihood that De Belin's continued involvement in the NRL could alienate segments of the community and cause a reduction in the participation of women.

Whether he's innocent or guilty, the NRL has a major sport to govern and De Belin was charged with a serious offence. After considering the evidence, the NRL acted in accordance with a clear policy which was accepted by the court as reasonable. The result is that De Belin is suspended indefinitely, on full pay, pending the determination of his criminal case.

Next, through the application of the De Belin test of 'interests' held by a sporting governing body, we might look to ask whether Folau's preaching on Instagram would negatively impact crowd numbers, merchandise sales or sponsorships.

Indeed it may have, although I haven't found anything published that would suggest this to be the case.

Rugby Australia also acted quickly in suspending, and subsequently terminating Folau's contract.

Rugby's prompt action probably looked good from a community standpoint, although it also means that any evidence of financial loss flowing from Folau's Instagram post is likely to be more speculative than concrete. In fact, given his high profile and standing in the game (as a player, not a preacher), it's even possible that for Rugby Australia and the Waratahs, the financial cost of Folau's absence from the game outweighs the potential loss of his continued presence.

What other interests could Folau damage via Instagram?

The short answer is 'his own'. Following his online revelations, Folau has been sacked, has copped a lot of negative press and, understandably, has had sponsors withdraw their support. It's hard to imagine any organisation actively looking for brand ambassadors like Folau.

Nevertheless, Rugby Australia also have an interest in Folau, and Folau published comments via social media that could likely "adversely affect or reflect on, or bring [Folau]...or Rugby into disrepute or discredit". The Code is quite clear on this. Folau's comments rattled a few cages, including those of some of the most prominent names in Rugby - and it is safe to say that any reasonable person could have anticipated this. For this reason alone, I would accept that Folau probably breached the Code.

How serious were Israel Folau's actions?

Whether or not Folau's comments were a "high level breach" of the Code of sufficient seriousness to warrant termination of his contract is a question that should be considered in light of other cases of Code breaches. In March 2013, Kurtley Beale punched two of his own team mates while drunk in a taxi and was fined $40,000 and suspended from a tour of South Africa, following the finding that he had committed high-level breaches of the Code. Notwithstanding this, Kurtley Beale was selected to play for Australia in May that same year.

Earlier this year, Rugby Australia suspended Reuben Leilua for four years following a positive test for performance enhancing drugs. In another case from 2017, Newcastle Rugby player Mark Meafua was suspended for 10 years (and later charged with assault) for punching a referee after receiving a red card.

Folau had his contract terminated after publishing a quote from the bible captioned with a statement that both offended people and affirmed his belief in what many would consider to be a fairly extreme attitude.

But was it a breach of the Code? Probably. Did it undermine public confidence in the integrity of Rugby? I doubt it. Was it a breach of contract? Possibly. Was termination necessary? Probably not.

Takeaway lessons for employers

Managing employee behaviour in the workplace is a challenge faced by all businesses, no matter their size. Businesses are, after all, commercial enterprises with commercial goals, that happen to be staffed by people who will hold disparate views from each other on many things.

If there is anything to learn from the Folau scandal, it is that:

  1. Satisfying the public demand for action on a contentious issue may still leave organisations exposed to claims made against them by employees, particularly if all the organisation has to hang their hat on is a 'code of conduct' filled with aspirational terms; and that
  2. The call for blood is usually louder than the call for reason. If you must act, act promptly - although not before obtaining independent legal advice.

Coleman Greig will continue to watch the Israel Folau v Rugby Australia saga closely and will provide updates as the matter progresses.

If you have a query relating to any of the information in this piece, or you would like to speak with a lawyer in Coleman Greig's Employment Law team with regard to the implementation and enforcement of company policies in the workplace, or if you wish to receive advice on taking disciplinary action against employees for misconduct either in or outside the office.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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