Court decision

The Israel Folau saga: A simple case of failure to comply with an employment contract or is there more?

Andrew Tobin, Richard Gardiner, Jon Erbacher, and Robert Dickfos / 20 May 2019

Key issues:

  • Israel Folau has been found guilty of a high level breach of the player Code of Conduct in response to his Instagram post stating that “Hell awaits” homosexuals and other so-called “sinners”.  
  • The Code of Conduct Tribunal constituted by Rugby Australia has determined that Folau’s contract with Rugby Australia be terminated.
  • Folau has the right to appeal the Tribunal’s decision by way of rehearing with a new three person appeal tribunal formed pursuant to the Code. Rather than appealing, it now seems likely that Folau will challenge Rugby Australia’s termination of his contract in the courts, on the basis that his right to freedom of religion has been infringed. 

Israel Folau has been found guilty of a high level breach of the player Code of Conduct (Code) in response to his Instagram post stating that “Hell awaits” homosexuals and other so-called “sinners”.  The Code of Conduct Tribunal constituted by Rugby Australia (Tribunal) has determined that the appropriate sanction was to terminate Folau’s contract with Rugby Australia.

Background

On 10 April 2019, Israel Folau posted to his Instagram and Twitter accounts (words to the effect) that “Hell awaits” homosexuals, amongst others.  Folau did so, despite having previously been warned by Rugby Australia (RA) in 2018 following a similar social media statement in which he claimed that homosexuals were destined for Hell unless they repent. Following that earlier instance, it is alleged that Folau gave RA assurances he would not post similar comments on social media in the future. This took place in the midst of negotiating a four year contract extension with RA. 

Following the Instagram and Twitter posts, RA issued Folau with a breach notice on 15 April 2019 stating that his conduct constituted a high level breach of the Code which warranted the termination of his $4 million employment contract. Folau challenged the right of RA to terminate his employment contract, leading to the hearing before the Tribunal. 

The divisive action by RA in issuing the termination notice to Folau has been widely criticised, with media outlets claiming that it infringed on Folau’s right to express his religious beliefs. More generally, it has brought about further discussion and controversy surrounding the use of social media by public figures. RA was of the view that Folau’s matter is best characterised as an employment law dispute with a contracted employee which has nothing to do with freedom to express religious beliefs.

Breach by Folau 

In January 2018, the Rugby Union Players Association and the Rugby Bodies (Rugby Australia and the State Unions) agreed to a new Collective Bargaining Agreement (CBA) governing the terms and conditions of the employment of professional Rugby players. Folau’s employment contract was signed in October 2018 in the context of this CBA. From media reports, it is understood that RA sought specific clauses relating to Folau’s use of social media to be inserted into his player’s contract, but was unsuccessful on the basis that this was an impermissible variation of the CBA in circumstances where such a clause would not benefit the player.

In the absence of specific social media restrictions in Folau’s contract, RA was required to establish that Folau had breached the Code and therefore failed to follow the lawful and reasonable instructions of his employer (i.e. as set out in the Code but as also explained to him in RA’s prior warning in 2018).  The requirement to observe an employer’s lawful and reasonable instructions will be implied into any employment contract, even if the requirement is not expressly stated. Further, it is assumed that Folau’s contract did, in fact, contain express agreement on his part to observe his employer’s policies, including the Code. 

The relevant provisions of the Code that Folau breached are as follows:

1.3: Treat everyone equally, fairly and with dignity regardless of gender or gender identity, sexual orientation, ethnicity, cultural or religious background, age or disability. Any form of bullying, harassment or discrimination has no place in Rugby.

1.7: Use Social Media appropriately. By all means share your positive experiences of Rugby but do not use Social Media as a means to breach any of the expectations and requirements of you as a player contained in this Code or in any Union, club or competition rules and regulations. 

1.8: Do not otherwise act in a way that may adversely affect or reflect on, or bring you, your team, club, Rugby Body or Rugby into disrepute or discredit. If you commit a criminal offence, this is likely to adversely reflect on you and your team, club, Rugby Body and Rugby. 

While not being privy to the terms of Folau’s employment contract, it is possible that the Code was expressly incorporated as a term of the contract (which will depend on the language of the contract, if any, relating to the Code). This would be unusual from an employer’s perspective, but if the Code was validly incorporated into his contract then a breach of the Code itself amounts to a breach of the contract. It is more likely that RA’s position is that the Code was a valid workplace policy; Folau was on notice that he was to comply with the policy; and by breaching the policy he has failed to follow RA’s reasonable and lawful instructions warranting the termination of his contract. 

Arguments before the Tribunal

RA alleged that Folau had breached the Code, causing reputational harm to RA in circumstances where he was previously warned and disciplined for conduct of a similar nature. As a result, RA sought termination of Folau’s employment contract on the basis that he breached that contract (and his duty as an employee) by failing and/or refusing to obey the lawful and reasonable instructions of his employer to not post comments of an offensive nature. It is anticipated that RA argued that, given the repeated nature of the misconduct, termination of Folau’s contract was justified.

Based on media reports, Folau’s arguments before the Tribunal were that: 

  1. the words in his Instagram and Twitter posts were a reflection of his religious views;
  2. the words were not his direct words, as he was quoting scripture; and
  3. the degree of seriousness of his conduct should be mitigated in light of his commitment to his religion. 

After three days before the Tribunal, the Tribunal found that Folau had committed a high-level breach of the Code on 7 May 2019.

Sanction

The Tribunal is empowered to impose such sanctions as it deems fit, including imposing a suspension from the game. The sanction handed down by the Tribunal was that Folau’s contract with Rugby Australia be terminated. RA has since enforced that sanction.  

What next?

Folau has the right to appeal the Tribunal’s decision by way of a rehearing with a new three person appeal tribunal formed pursuant to the Code. Any decision of the appeal tribunal would be final, such that neither Folau nor RA would be able to have the decision further reviewed under the Code.  The reported 72-hour timeframe for an appeal has now lapsed, and Folau has confirmed that he has no intention of pursuing an appeal under the Code. Instead, it would seem that Folau will by-pass this internal procedure and immediately commence court proceedings against RA, alleging discrimination on the basis of religion. 

New South Wales has no statutory protection for religious discrimination. Should he choose to challenge the decision, Folau can make an unlawful termination application to the Fair Work Commission alleging RA contravened section 772(1) of the Fair Work Act by terminating his employment contract due to his religious views. RA will argue that the reason for his termination was solely his breach of the Code; not the content of his religious views. This is consistent with the message delivered by RA upon terminating Folau’s contract, during which RA CEO, Raelene Castle was at pains to assure players that “Rugby Australia fully supports their right to their own beliefs and nothing that has happened changes that”.  

By contrast, in his response to RA’s decision, Folau was also at pains to make it clear that, in his view, RA’s decision was an infringement on his right to freedom of religion, stating “As Australians, we are born with certain rights, including the right to freedom of religion and the right to freedom of expression. The Christian faith has always been a part of my life and I believe it is my duty as a Christian to share God’s word. Upholding my religious beliefs should not prevent my ability to work or play for my club and country”.

If the parties cannot negotiate an outcome, Folau could apply to have the matter determined by the Federal Court of Australia. He may also bring proceedings for breach of contract in the New South Wales Supreme Court.

Conclusion 

Employees, including athletes, must act in a manner which accords with their employer’s expectations as set out in any employment contract or workplace policies. If an employee fails to abide by his or her employer’s policies, the employee may be breaching express or implied terms of his or her employment contract. This includes the obligation to follow the lawful and reasonable instructions of the employer. If an employee breaches his or her obligations, including by behaving in a manner that brings the employer into disrepute or otherwise does not align with an employer’s values, an employer is entitled to act on the breach by imposing the appropriate disciplinary action, including, in some circumstances, the termination of employment. In doing so, an employer should afford their employee procedural fairness.  

It remains to be seen as to whether the court will view this circumstance as one involving an infringement on an employee’s rights to express his religion, or one simply involving an employee failing to comply with his employer’s lawful and reasonable instructions. Whichever way it may be decided, it will be a landmark case and will shape the way that sports administrators deal with players, both at the front-end and back-end of professional sport, moving forward. 

Takeaways for employers in the sporting context 

Employers should consider:

  • adding terms to their employment contracts, such as a morals clause and social media clause, that provide for disciplinary action (including an express right of termination) in the event that an employee engages in conduct that brings the employer into disrepute; 
  • ensuring workplace policies and Codes of Conduct are up-to-date and reflect the employer’s values and expectations, as well as those of their sponsors or stakeholders;
  • ensuring that their employees are on notice of workplace policies, and have agreed to abide by them; and
  • providing social media and marketing training to their employees to reduce the risk of social media breaches.

We will be closely watching any court proceedings which may ensue with great interest and will report on the outcome of the dispute in due course. 

In the meantime, if you wish to discuss any aspect of this matter please contact HopgoodGanim Leisure, Sport and Entertainment team. 

Authors
Andrew Tobin
Partner
Andrew is a Partner and the head of HopgoodGanim Lawyers’ Workplace and Employment practice.
Richard Gardiner
Partner
Richard is a Partner in our Dispute Resolution practice with extensive experience in advising clients in disputes related to property, digital commerce and disciplinary and regulatory matters.
Jon Erbacher
Senior Associate
Jon is a Senior Associate in our Dispute Resolution practice.
Robert Dickfos
Associate
Robert is an Associate in our Dispute Resolution practice.
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