Fraudsters dismissals were justified even though the fraud occurred prior to employment, the Employment Relations Authority has held.

Inland Revenue employed Kim Murray and his wife, Karen Murray, as Customer Services Officers at its Wellington Call Centre. Like all prospective IRD employees, they were asked to declare any criminal convictions or pending prosecutions they might have. They truthfully answered none.

After being employed, the Murrays were charged with benefit fraud for claiming social welfare benefits while in paid employment. The fraud charges related to the period before they commenced employment with IRD. They sought time off work to attend Court to answer the charges. They also indicated to IRD management that they intended to plead guilty.

Management became concerned about the seriousness of the charges and the impact their guilty pleas would have on the employment relationship between the parties. They commenced an investigation.

While IRD accepted that the fraud had not occurred while in its employ, and that the Murrays had filled out their employment application forms properly and in good faith, it believed that they had committed behavior that was likely to bring the Department into disrepute. At the end of the investigation, the IRD dismissed the Murrays.

The Murrays brought personal grievances against IRD. The Employment Relations Authority held that the Murrays' fraudulent behavior did not constitute serious misconduct because it had occurred prior to them commencing employment with IRD. For the same reason, it could not be considered as behavior likely to bring IRD into disrepute under IRD's Code of Conduct.

Regardless, the Murrays' dismissals were justified. "Inland Revenue was entitled to conclude that there had been an irreconcilable breakdown of trust and confidence between it and the Murrays because they were about to plead guilty to three charges of benefit fraud each. I would have thought that it would go without saying that any government department could not have trust and confidence in an employee who was to plead guilty to criminal charges of defrauding another government department. They are both, after all, arms of the state", Authority member Greg Wood said.

The Authority dismissed the Murrays' unjustified dismissal claims. However, it ordered IRD to pay Mrs Murray $1000 compensation for suspending her during its investigation without giving her an opportunity to make representations about the appropriateness of suspension.