Mining Bitcoins not a justification for summary dismissal

The meteoric rise of the bitcoin and the dizzying sums that can be earned with it have exerted an irresistible attraction on many. Because mining (earning) bitcoins makes such demands on one’s attention and requires promptness of action, a growing number of enthusiasts have started attending to their ‘hobby’ during working hours. In a recent action before Midden-Nederland Subdistrict Court, one such employee however discovered that doing so can have dramatic consequences for one’s employment status.

What was at issue?

The employee, who had been working as a system administrator since 1 July 2011, had initially mined bitcoins in his spare time. Early in 2017, though, he installed a so-called bitcoin machine in the server cupboard of his employer, which enabled him to mine bitcoins virtually, whilst at work.

Summary dismissal

When the machine was discovered, the employer summarily sacked the system administrator. The standpoint of the employer was that the system administrator had violated both his ancillary-activities clause and the company’s internal rules concerning internet use, which only permitted internet use if it was required for work-related tasks. Internet for private purposes was, in principle, prohibited. The employer also accused the system administrator of exposing the company to such external dangers as viruses and hacking.

The system administrator found the summary dismissal unjustified and brought the matter before the subdistrict court. He did not seek reinstatement in his position, but, rather, the award of a reasonable remuneration amounting to € 50,000 and payment of both transition compensation and of his salary for the period for which it would have continued in the case of regular termination (so-called fixed loss compensation).

Culpability, but not serious culpability

The subdistrict court ruled that no violation of the ancillary-activities clause had been involved, as such a clause pertains to activities that an employee executes for another company, not to situations such as the one in question. And the fact that the system administrator had earned money through his mining activities does not change this. Further, the subdistrict court found that whilst the system administrator had broken the rules about internet use, based on European case law, an employer does not have the right to reduce to zero an employee’s use of the internet for private purposes. The court also found that it had not been made sufficiently plausible that the system administrator had exposed the company to the risks of viruses or hacking, as the bitcoin machine was not connected to the company’s network and thus could not cause damage to company operations.

The subdistrict court did however confirmed the employer’s view that the system administrator should have realised that he was crossing a line, especially in view of the fact that had kept his actions a secret. In so doing, he had made a great mistake in judgement. Integrity and reliability are things one must be able to expect from a system administrator, and installing a bitcoin machine  for private use in a company environment does not fall under those qualities.

Nevertheless, the summary dismissal did not stand up to judicial scrutiny. The system administrator’s mistake was not serious enough for it to be treated with such severity that, in consideration of all relevant circumstances, it qualified as urgent grounds. Summary dismissal is the heaviest sanction in employment law and therefore is to be regarded as an ultimum remedium, in view, amongst other things, of the substantial financial consequences it has for an employee. Also of relevance is the fact that the system administrator in all other respects had an immaculate record as an employee and that his work had not suffered as a result of his bitcoin-mining activity. The employer should have opted for a lighter sanction than termination of employment to achieve his aims.

Financial settlement

As the system administrator had been culpable, but not seriously culpable, the subdistrict court awarded him the transition compensation demanded. The fixed loss compensation was awarded, as well. However, although the employer carried blame for sacking the system administrator without urgent grounds, the subdistrict court did not award the system administrator the reasonable remuneration claimed. This had to do with a number of considerations: Firstly, the system administrator had acted in a substantially culpable manner. Further, the employer could have terminated the employment relationship in another manner, and, in addition, the system administrator had been able to find a new job after only six weeks.

Ensuring clear, up-to-date policy

Although the summary dismissal had not stood up to scrutiny, this judgement should nevertheless not be seen as licence for employees to mine bitcoins during working hours. A clear and up-to-date policy, as well as making sure to choose the right dismissal route are however of great importance, and would have saved the employer in question a significant amount of money.

Eric van Dam ( / +31 20 820 0330)