DENEYS REITZ LABOUR SEMINAR 5 AUGUST 2010

DISHONESTY IN THE WORKPLACE DO YOU REALLY TRUST YOUR EMPLOYEES

AND IS IT STILL AN OPERATIONAL REQUIREMENT?

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It is hard to believe that a man is telling the truth when you know that you would lie if you were in his place. Henry Louis Mencken, 1916 For decades employers have relied on the broken trust relationship to justify charging and dismissing employees for a whole range of misconduct. In many instances employers actually used the phrase broken trust relationship as an actual charge or complaint against an employee. Others who relied on other forms of misconduct only argued that as a result of the misconduct the trust relationship between employer and employee was broken. In defending unfair dismissal disputes in bargaining councils or in the Commission for Conciliation, Mediation and Arbitration (CCMA), employers or their representatives inevitably submit that the employment trust relationship no longer exists between the parties, that the sanction of dismissal was fair and that the arbitrator should accordingly not reinstate or re-employ the employee.

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LABOUR SEMINAR 5 AUGUST 2010 DISHONESTY IN THE WORKPLACE DO YOU REALLY TRUST YOUR EMPLOYEES AND IS IT STILL AN OPERATIONAL REQUIREMENT?

Our courts have always emphasised the importance of a trust relationship between employer and employee and have relied on the common law principle, namely that the relationship between employer and employee is based essentially on trust and that any conduct calculated or likely to destroy such trust warrants termination. Based on this principle, it has generally been accepted that where an employee acts in a dishonest manner, dismissal is the appropriate sanction. When one pages through the case law reports, it is however quite clear that dishonest behaviour does not automatically warrant termination of the employment contract and that employers should not assume as much. In some instances, our courts were quite willing to accept that employees acted dishonestly and that the dismissals were fair. These scenarios included the following: 1. An employee who attempted to defraud the in-house medical aid scheme by using his medical aid card to gain his brothers admission into a private hospital1; 2. Claiming overtime for hours not actually worked, for instance where employees were found sleeping on duty where they claimed payment for the time sleeping; 3. 4. The falsifying of clock-in cards; An employee failing to disclose material facts relating to past employment before appointment2; 5. Where an employee placed a recorder in the boardroom where management conducted their meetings; 6. An employee, in a letter to his employer, stated that the relationship between himself and his superior was finished. In this particular scenario, the employee concerned was charged
1

Maduna v Brollo Africa (Pty) Ltd [1995] 1 BLLR 33 (IC)

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LABOUR SEMINAR 5 AUGUST 2010 DISHONESTY IN THE WORKPLACE DO YOU REALLY TRUST YOUR EMPLOYEES AND IS IT STILL AN OPERATIONAL REQUIREMENT?

with breaching the employers disciplinary code. The employees immediate superior was the only witness at the disciplinary hearing which followed. The employee was found not guilty but in his view, his immediate superior had no faith in the outcome of the hearing and still regarded him and treated him as if he was guilty. The employer ultimately dismissed the employee for having made these remarks and having indicated that the trust relationship between the employer and employee had broken down and the dismissal was upheld. In all the aforementioned matters, the breakdown in the trust relationship was the determining factor in concluding that the dismissals were fair. In many respects, the phrase broken trust relationship has been abused during disciplinary enquiries and ensuing arbitrations in order to ensure that dismissals are upheld. This phrase has, to a certain extent, almost become a standard submission regardless of whether or not the dismissed employee actually fulfilled a position demanding trust and regardless of whether the employees misconduct actually affected the trust relationship. Over the years our courts have alluded to the fact that an employee may not necessarily be dismissed for dishonest behaviour since dishonest behaviour does not automatically destroy the trust relationship. In this regard, our courts have found the following: 1. An employee who did not complete his training but who falsely claimed that he had done so was dishonest, but the dishonesty did not breach the trust relationship3; 2. An employees refusal to obey an instruction to cease operating a private business in conflict with the employers interest did not destroy the employment relationship4;

2 3 4

Hoch v Mustek Electronics (Pty) Ltd [1999] 12 BLLR 1287 (LC) Cash Paymaster Services North West (Pty) Ltd v CCMA & Others [2009] 5 BLLR 415 (LC) Jefferies v President Steyn Mine [1994] 10 BLLR 76 (IC)

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LABOUR SEMINAR 5 AUGUST 2010 DISHONESTY IN THE WORKPLACE DO YOU REALLY TRUST YOUR EMPLOYEES AND IS IT STILL AN OPERATIONAL REQUIREMENT?

3.

An employee who was unfairly dismissed but who rejected a subsequent offer of reinstatement acted unreasonably in circumstances where no breach of the trust relationship was proved5.

It follows from the above that in conducting hearings and defending dismissals, one must draw a distinction between the concept of dishonesty and that of the broken trust relationship. The following principles apply in this regard: 1. Dismissal is an appropriate sanction in cases involving dishonesty6, provided that the employer has shown that the trust relationship has been destroyed; 2. There is a difference between an employer-employee trust relationship that has been destroyed irretrievably and a trust relationship that has been damaged. Where an employee is guilty of misconduct, effectively destroying the relationship or rendering its continuation intolerable, dismissal will be the appropriate sanction and our courts have even gone as far as to hold that the submission of mitigating evidence would be pointless in such circumstances. Where this is not the case and the employees conduct only damaged the trust relationship, dismissal is not necessarily the appropriate sanction and mitigating evidence will play a role and must be considered7; 3. Whether there is a breakdown in or damage to the trust relationship must be decided objectively and the court may not have regard merely to the employers subjective feelings, since this will place the employee in an untenable position8. Edcon v Pillemer The principles highlighted above were recently dealt with by the Supreme Court of Appeal.
5 6 7 8

Burger v Alert Engine Parts (Pty) Ltd [1999] 1 BLLR 18 (LC) Kalik v Truworths (Gateway) [2008] 1 BLLR 45 (LC) Pitcher & Another v The Golden Arrow Bus Service (Pty) Ltd [1994] 8 BLLR 105 (IC) Concord Plastics (Pty) Ltd v NUMSA & Others [1998] 2 BLLR 107 (LAC)

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LABOUR SEMINAR 5 AUGUST 2010 DISHONESTY IN THE WORKPLACE DO YOU REALLY TRUST YOUR EMPLOYEES AND IS IT STILL AN OPERATIONAL REQUIREMENT?

In Edcon v Pillemer9 the Supreme Court of Appeal made it clear that even an act of dishonesty does not necessarily imply that the trust relationship between employer and employee has broken down irretrievably and that dishonesty always warrants dismissal. In the Edcon matter, Mrs Reddy was employed as a quality controller who was entitled to a company car. Edcons car policy stipulated that employees were required to report collisions of company vehicles to the employer, the SAPS and the insurance company within 24 hours of the accident occurring. Employees were not allowed to carry out repairs by themselves and without the approval of the insurance company. At some point, Reddy gave the company vehicle to her son to drive who was then involved in an accident. Reddy contravened the company car policy by failing to report the accident to her employer, the SAPS or the insurance company. In fact, in an attempt to conceal the damage, Reddys husband carried out repairs to the vehicle. When Reddys vehicle was serviced subsequently, it was discovered that the vehicle had been involved in an accident and that the damage was not properly repaired. Only then did Reddy approach her manager to authorise payment for the repairs but she still did not disclose the fact that the vehicle had been in a collision. Only when she was confronted by her manager, did Reddy admit that the vehicle was involved in an accident. From the facts in the matter, it appears as if Reddy was never truly honest with her employer about the circumstances and the timing of the accident. For a period of 8 weeks she persisted with her dishonesty during the companys internal investigation. In particular, Reddy gave three different statements whilst her son provided the employer with a fourth version. Only in her third statement, did Reddy admit that she was not in the vehicle when the collision occurred and concede that her conduct breached the confidence and trust of her employer. Reddy was then charged with dishonesty for failing to report that her company vehicle had been involved in an accident. She pleaded guilty and was dismissed.

(2009) ZASCA 135 (5)

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LABOUR SEMINAR 5 AUGUST 2010 DISHONESTY IN THE WORKPLACE DO YOU REALLY TRUST YOUR EMPLOYEES AND IS IT STILL AN OPERATIONAL REQUIREMENT?

When the matter was arbitrated at the CCMA, Edcon led unchallenged evidence regarding its disciplinary code which provided that dishonesty is regarded as serious misconduct, generally warranting dismissal. The arbitrator found that that Edcon did not give any direct evidence to show that the trust relationship had been destroyed by Reddys dishonesty. The arbitrator found that to dismiss a person with Reddys track record of 43 years unblemished employment, the company had to show that the misconduct was extremely gross and had to give evidence to show that the trust relationship was in actual fact destroyed. Edcon was unsuccessful on review in the Labour Court and on appeal to the Labour Appeal Court. In previous papers in which I have dealt with the Constitutional Courts judgment in the Sidumo matter10, I have emphasised that employers are now tasked to lead additional evidence to show that the sanction of dismissal was appropriate. This evidence includes: 1. 2. 3. 4. The importance of the rule that had been breached; The reason the employer imposed the sanction of dismissal; The harm caused by the employees conduct; Whether additional training and instruction may result in the employee not repeating the misconduct; 5. 6. The effect of dismissal on the employee; The employees service record.

In matters involving dishonesty and where employers want to allege that the trust relationship was destroyed irretrievably, the list of evidence referred to above that must be presented to arbitrators has been expanded in light of the Edcon judgment.
10

Sidumo & Another v Rustenburg Platinum Mines Ltd & Others [2007] 12 BLLR 1097 (CC)

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LABOUR SEMINAR 5 AUGUST 2010 DISHONESTY IN THE WORKPLACE DO YOU REALLY TRUST YOUR EMPLOYEES AND IS IT STILL AN OPERATIONAL REQUIREMENT?

The following principles derived from the Edcon judgment are crucial in preparing for arbitration hearings involving dishonest behaviour: 1. It is not sufficient to rely on a disciplinary code only, even if the disciplinary code states that dishonesty is serious misconduct and generally warrants dismissal; 2. The disciplinary code is just a policy and it does not constitute evidence relating to the consequences of the misconduct. In essence, just because the code prescribes dismissal does not mean that the actual trust relationship in a particular matter was destroyed; 3. A witness, who has to be sworn in, must give evidence regarding the employment set-up and the trust relationship. The Supreme Court of Appeal specifically stated that this kind of evidence must be given by someone in management who had dealings with the employee; 4. Management must testify in what respects the employees conduct destroyed the trust relationship. In the Edcon matter, it was not sufficient for the employer to merely state that Reddy was employed as a quality control auditor. The evidence has to include at least the following: 4.1 4.2 4.3 4.4 The nature and scope of the employees duties; The place of the employee in the hierarchy; The importance of trust in that particular position or in the performance of work; The adverse effects, either directly or indirectly, on the employers operations because of the dishonesty i.e. the setting of precedents or an example to subordinates.

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LABOUR SEMINAR 5 AUGUST 2010 DISHONESTY IN THE WORKPLACE DO YOU REALLY TRUST YOUR EMPLOYEES AND IS IT STILL AN OPERATIONAL REQUIREMENT?

Conclusion With regard to sanction and defending dismissal as the appropriate sanction, the principle of less is more is definitely not applicable. No submission regarding dismissal, the appropriateness of dismissal or a broken trust relationship should merely be made as a passing remark and must be substantiated by a witness testifying under oath.

KAREN AINSLIE DIRECTOR DENEYS REITZ INC.