Derivative misconduct

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The relationship between an employer and an employee is a reciprocal relationship, which means that employers hire employees to provide labour, produce commodities or to render services. These contribute to the business goals and objectives of the company, the chief aim of which is profit. Employees on the other hand provide their labour in return for remuneration and the opportunity to exercise and improve their marketable skills. In other words, when the relationship is entered into, both parties get rights and duties (obligations) to which they must adhere. The employer is entitled to the employee’s labour, and the employee is obliged to supply it; the employee is entitled to remuneration, and the employer is obliged to pay it. Furthermore, employees have a duty to act in good faith towards their employer and also to be respectful, obedient, and to have the best interest of the employer at heart at all times.

It is often the case that employers find themselves in a situation where the employer suffered damages or losses due to the misconduct of an employee. The employer will then start a process of investigation, and could have difficulty in identifying the culprits responsible for the misconduct. The question that arises is what options does an employer have left when the culprits cannot be identified. The answer is collective disciplinary action on the basis of Derivative Misconduct.

Derivative misconduct refers to a situation where an employee who has knowledge of wrongdoing towards his or her employer, subsequently fails to disclose such knowledge to their employer. In failing to make such a disclosure, the employee breaches the duty of good faith owed to the employer and may be disciplined for such misconduct. The aforementioned conduct then violates the trust on which the employment relationship was built, and the breach of the duty of good faith justifies dismissal.

The employer employs the employee to be an asset to the organization, and to further the business interest of the organization. When an employee commits an act where he withholds information from the employer, the employee no longer acts in the best interest of his/her employer, and becomes a risk for the organization, and therefore becomes a liability.

When an employer faces a situation like Derivative Misconduct, and when the end result of the misconduct could possibly lead to the dismissal of employees, the employer needs to ensure that the dismissal of those employees is both procedurally and substantively fair.

In terms of substantive fairness, the employer must prove that the employees were aware of the act of the primary misconduct committed against the company, which resulted into the company suffering damages or losses. The employer therefore needs to ensure that management either had a consultation with the group of employees, warning the employees of the consequences of failing to disclose the misconduct. The employer must ensure that the consultation is documented and signed by the employees involved or by witnesses present.

The rationale for collective disciplinary action is based on the principle that the employees have all associated themselves with an act of misconduct and accordingly all act with a ‘common purpose’. It has been held that derivative misconduct has as its core, the employee’s silence when called upon to disclose misconduct from within a collective unit and that this justified an inference that the employees participated in or supported the particular misconduct which was not disclosed to the employer. An example of this could be when an employer suffers damages to company property due to aggrieved striking employees. Some employees may have caused the damages and not the others. The silence of other employees who may not have been directly involved in the act of damaging company property, after the employer called upon them to disclose who the culprits are, will then be viewed as derivative misconduct.

In terms of procedural fairness the employer will need to prove that he applied the “audi alteram partem” principle, which means that the employer will have to give the employees an opportunity to state their case. This comes in the form of a formal disciplinary hearing, prior to the employer deciding on a finding and imposing a sanction against the employees.

In terms of derivative misconduct an additional requirement is needed to ensure that the procedure followed by the employer was fair. The requirement is that the employer will have to prove that an ultimatum was given to the employees. The ultimatum should include an invitation to employees to come forward and disclose to the employer any information pertaining to the collective misconduct and those involved. The employees need to be informed of the primary misconduct, and their duty of good faith, and furthermore, what the consequences of failure to disclose could be. More than one ultimatum is recommended to ensure that the employer did everything in its power to get the employees to come forward and disclose. Accordingly, an employee can only be held liable for acts of misconduct committed by members of a group to which he/she is a member in three circumstances:

  1. If the employee is one of the persons in the group who actually committed the acts of misconduct;

  2. If the employee did not actually commit the misconduct, but associated himself with the acts of misconduct or associated himself with the common goal of the group concerned (common purpose); or

  3. The employee’s guilt is based on the fact that the employee did not co-operate with the employer in that the employee failed to identify those employees who were guilty of the “primary misconduct” in circumstances where he or she was able to do so.

For more information on the above topic, please contact the LabourNet Helpdesk at

0861 LABNET (0861 522638).

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