A case currently before the Federal Circuit Court highlights the dangers of cutthroat, “win-at-all-costs” work cultures. But where do courts draw the line between a competitive culture and a psychosocially unsafe work environment?

Healthy competition at work can be an invaluable tool to drive performance and growth. But encouraging employees to adopt a “win-at-all-costs” attitude can quickly land employers in hot water. 

The dangers of a cutthroat work culture have been highlighted in a case currently being heard by the Federal Circuit Court, where a former executive is seeking $919,400 after allegedly being told to show “less ’emotional’ actions” and to be “more Machiavellian”, using “whatever means necessary to win”.

The executive also alleges she was dismissed after raising concerns about the firm’s business decisions and aspects of her employment.

The employer maintains the dismissal resulted from a breakdown in the working relationship and denies terminating the executive because she exercised workplace rights. 

These allegations are yet to be determined since the matter remains before the Court. That said, the case raises broader questions for employers about the line between a competitive, high-performance culture and one that encourages toxic behaviour. 

According to Michael Byrnes, Partner at Swaab, employers should be especially alert to this distinction in light of their obligations to manage psychosocial safety – which recently became legally enforceable in NSW. 

“That should be of concern to employers who try to adopt a ruthless, dog-eat-dog work culture,” he says.  “If you’ve got staff who not only undermine or ‘white-ant’ colleagues, but are encouraged to do so, how can you say that you genuinely have a workplace that is satisfying the obligations under the Work Health and Safety Act in relation to psychosocial hazards?”

To help employers strike the right balance, Byrnes spoke with AHRI to explain where healthy competition crosses the line into unsafe conduct.

The legal risks of a “win-at-all-costs” approach

Encouraging employees to engage in cutthroat behaviour can expose employers to legal risk in more ways than one, says Byrnes.

As well as potentially breaching psychosocial safety laws, encouraging employees to target or undermine colleagues might satisfy the legal definition of workplace bullying, he explains. In these circumstances, the Fair Work Commission has the power to issue formal stop-bullying orders.

“If you’re too ruthless about trying to create this ‘Machiavellian’ culture, paradoxically, that can work against you, because you may end up with the Fair Work Commission putting in place orders that are highly prescriptive and closely dictate the way in which relationships and interactions then need to be managed.”

These cultures can also create uncertainty around accountability. Employees who believe they are simply following directions from senior leaders may find themselves personally exposed if complaints are later made about their behaviour.

“A lot of employers will have a code of conduct in place which says employees need to be collegiate, that they need to be supportive and they need to subscribe to company values.

“So, if you’re an employee who’s been told by their manager, ‘Don’t worry about all of that. You just be Machiavellian’, and then you are, it quite possibly won’t be a sound defence to say one was told to just ignore the code of conduct.”

Responding to the red flags of an overly competitive culture

Competitive workplaces are not inherently problematic, says Byrnes. But employers should keep an eye out for red flags that competition has shifted from striving for personal achievement to actively bringing others down.

“[A warning sign] is when employees see everything through the prism of a zero-sum game – ‘Another employee is doing well, so I must be doing badly,’” he says. “So it’s not about trying to build growth, synergies and mutual achievement. It’s about this Darwinian, dog-eat-dog environment.”

This could manifest in behaviours such as: 

• Deliberately undermining or disparaging colleagues
• Withholding information, resources or training opportunities
• Excluding people from meetings or important conversations
• Damaging colleagues’ relationships with clients or stakeholders.

“Behaviour like that is toxic, it’s negative and it can understandably cause great distress to people – and that’s where it crosses the line,” he says.

By contrast, healthy competition encourages employees to use high-performing colleagues as inspiration or benchmarks while continuing to support one another and contribute to shared organisational goals.

Because psychosocial safety laws focus on preventing harm rather than simply responding to it, early intervention is critical once red flags are identified.

“It’s a matter of identifying the behaviour, raising it with the employee – and perhaps with the employee’s manager if that manager wasn’t the party who raised the issue in the first place – and then putting in place warnings, coaching or counseling on the way the employee should be conducting themselves,” says Byrnes.

If these steps don’t result in meaningful change, depending on the gravity of the ongoing misconduct, employers may have grounds to terminate the employment relationship. 

By identifying and addressing these behaviours as soon as they arise, HR can help ensure competition remains a driver of performance rather than a source of legal risk.

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