Beyond this basic observation, though, the judgment opened for consideration a broader question about the proper construction of the Public Service Act 1999 and the extent that it governs private conduct. Resolution of this dilemma could have a far-reaching impact on Commonwealth agencies' ability to regulate their staff's out-of-hours behaviour.

In the 2014 case of Cooper v Australian Taxation Office, Deputy President Jeff Lawrence dismissed an unfair dismissal application brought by Kevin Cooper after he was sacked in response to a code of conduct breach. A long-standing APS employee, Cooper had been convicted of "indecency on a person who was under 16 years of age outside of Australia" and was serving a prison sentence.

The Australian Taxation Office submitted that this conduct had breached section 13(11) – "An APS employee must at all times behave in a way which upholds APS values and the integrity and good reputation of the APS" – because the (since amended) value 10(1)(d) – "The APS has the highest ethical standards" – was not upheld. In totality, the ATO argued, these provisions created "an overriding obligation, not just in work time or workplaces, for an employee to behave with the highest ethical standards".

Cooper countered by suggesting that, as the offence occurred outside Australia, in a private context, and there was no indication of damage to the ATO's reputation, his conduct "had no link to the employment relationship". Accordingly, he said the code of conduct breach finding was incorrect and his dismissal unfair.

In his decision in November last year, Lawrence first turned to the case of Rose v Telstra, which held that private conduct will be sanctionable if it is "likely to cause serious damage to the [employment] relationship" or "damages the employer's interests" or "is incompatible with the employee's duty as an employee". In sum, the conduct must "be of such gravity or importance as to indicate a rejection or repudiation of the employment contract by the employee".

Given the "special value" of public sector employment and the need for the general public to maintain confidence in the Tax Office, Lawrence concluded that, in behaving as he did, Cooper breached the code and, in turn, was not dismissed unfairly. His conviction "for such unethical actions" caused serious damage to the employment relationship, the ATO's reputation was "potentially damaged" and the conduct was incompatible with Cooper's duties as an employee, particularly given his supervisory role. Consequently, the ATO's actions were considered "a reasonable response to a difficult situation".

Although understandable in the circumstances, this reasoning appears to significantly expand the traditional interpretation of Rose and the breadth of the Public Service Act. As Cooper argued in his appeal submissions, Lawrence's literal approach to "at all times" had "the effect of greatly increasing the scope of a public sector employer's ability to intrude into the private lives of public servants".

Considering this application, the full bench of the Fair Work Commission refused Cooper's request for permission to appeal in March.

Sidestepping Cooper's more substantive arguments, the full bench simply held that, regardless of whether he had breached the code of conduct, the dismissal was valid because his continued imprisonment meant he "could not be said to be ready, willing and able to perform his duties". The full bench commented, rather dryly, that it was "fanciful ... to suggest as the appellant did, that the appellant might have been permitted to carry out his duties whilst incarcerated". Arriving at this position, it must be said, hardly requires the expertise of an employment law specialist.

However, the real significance was in the commission's pragmatic refusal to grapple with Cooper's primary contentions: that the initial broad construction of the act was incorrect. The full bench noted that the approach at first instance "may not be correct having regard to the text of the provisions themselves and the legislative context in which those provisions appear", but nevertheless concluded that "this case is not an appropriate vehicle through which the breadth and reach of [the act] should be tested".

As a result, determination of the exact extent of the Commonwealth's ability to regulate the private conduct of its employees must wait another day. Yet whether it is through sacking convicted criminals, controlling public servants' social media activities or conducting widespread drug testing, the metes and bounds of this nebulous line will likely confront the judiciary sooner rather than later.

Given his conviction, there will be little sympathy for Cooper. But the issue he litigated has significant ramifications for all Australian Public Service staff: at a time of increasing regulatory intrusion, protective barriers against the Commonwealth's powers must, some might argue, be maintained.

Until a court or tribunal locates an "appropriate vehicle" to determine the matter, policymakers should heed Justice Paul Finn's oft-quoted words: such encroachment "needs to be carefully contained and fully justified".

John Wilson is the managing legal director at Bradley Allen Love Lawyers and an accredited specialist in industrial relations and employment law. john.wilson@bradleyallenlove.com.au