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One of the common law duties of any employee is acting in good faith and maintaining integrity and honesty at all times. This duty lies at the root of the trust relationship between the employer and the employee, just as with any other type of personal relationship.

Every labour law professional is well versed with this trust relationship which is tested most profoundly when an employee is faced with disciplinary action and a decision must be made whether or not to dismiss.

South African labour law gives this some practical shape through the Code of Good Practice. The Code provides that, where employers are considering dismissing an employee, they should be able to justify this drastic sanction by proving that the employee’s misconduct is so serious that it makes continued employment intolerable e.g. through breach of the trust relationship.

Where an employee has been found guilty of dishonesty, the employer can usually claim that the trust relationship has automatically broken down beyond repair. However, one must not lose sight of the fact that it is not always the case that a damaged relationship cannot objectively be repaired.

The Burden of Proof Under Scrutiny

In the case of Autozone v Dispute Resolution Centre of Motor Industry and Others [2019] JOL 41073 (LAC), the above issue arose.

Autozone had employed Allen Sikhakhane as a driver. Sikhakhane received an instruction from his regional manager to employ casual workers to perform certain cleaning duties and to pay them a certain amount for their efforts. After their duties were completed, he was instructed by his branch manager to obtain the full amount from the cashier and pay it over to the casual workers. While Sikhakhane obtained the money as instructed, he failed to pay the full amount to the casual workers and allegedly kept a share for himself.

The employer dismissed Sikhakhane for dishonesty (theft, misappropriation of company funds, attempted theft, or misappropriation). Sikhakhane lodged an unfair dismissal dispute at the Commission for Conciliation, Mediation and Arbitration (CCMA). The commissioner concluded that the employer had discharged the onus of proving on a balance of probabilities that the dismissal was substantively fair.

Sikhakhane, aggrieved with this outcome, took the matter on review to the Labour Court (LC). He reiterated his version that he was not guilty of the conduct whereas Autozone argued that the arbitrator’s award was reasonable. The LC accepted that the misconduct had been proven but made no attempt to analyse the evidence to determine the nature of the transgression. The LC held that there was no evidence that showed how the conduct affected the trust relationship. It held further that the test is whether the trust relationship has been breached to the extent that it renders continued employment intolerable, which becomes a factual determination to be established by evidence. In the absence of such evidence, it was found that the dismissal was unfair. The LC set aside the CCMA’s award and ordered Sikhakhane’s reinstatement. It was also ordered that Sikhakhane be issued with a written warning for the misconduct. This indicated that the LC accepted that misconduct had indeed been proven.

The employer appealed to the Labour Appeal Court (LAC) on the grounds that the LC erred by failing to assess the facts and circumstances of the case, and in finding that no evidence was led relating to the breakdown of the trust relationship. Sikhakhane persisted with his denial of the misconduct.

Clear Direction from the LAC

The LAC was tasked with answering the legal question of whether Sikhakhane’s conduct breached the trust relationship to the extent that it rendered continued employment intolerable.

The LAC held that, undeniably, the evidence on the issue was somewhat thin. Where an employer relies on irreparable harm to the employment relationship to justify a dismissal, it would be prudent to lead evidence to support that claim, unless the conclusion that the trust relationship has broken down is apparent from the nature of the offence or the circumstances of the dismissal.

In cases where the offence reveals a stratagem of dishonesty or deceit, it can be accepted that the employer probably will lose trust in the employee, who by reason of misconduct alone will have demonstrated a degree of untrustworthiness rendering the person unreliable and the continuation of the employment relationship intolerable or unfeasible.

It was further held that employees who engage in dishonest or deceitful conduct pose an operational risk to the employer’s business. This operational risk alone would suffice to justify dismissal. In this case, the appellant was entitled to require a driver to act in good faith and to advance and protect the businesses’ interests. Sikhakhane’s conduct showed that he was not adhering to this common law duty to act in good faith.

The appellant did not need to present evidence that the trust relationship had been irreparably damaged, as the nature of the offence and the manner of its commission were indicative of such a conclusion.

The LAC held that the Labour Court had erred in its finding that the sanction of dismissal was too harsh in light of no evidence having been led to prove a breakdown in the trust relationship and set aside award.

Where the Law Now Stands

The LAC’s decision illustrates that an employer need not always present evidence of a breakdown of the trust relationship in order to justify dismissal for dishonesty. If the nature of the offence is such that it would lead to a breakdown in trust, no further evidence would be required.

In Impala Platinum Ltd v Jansen and others [2017] 4 BLLR 325 (LAC), the LAC held that “this Court has repeatedly stated that where an employee is found guilty of gross misconduct, it is not necessary to lead evidence pertaining to a breakdown in the trust relationship as it cannot be expected of an employer to retain a delinquent employee in its employ”.

Despite the above stated in the Impala case, it is always wise to lead evidence on the trust relationship, no matter what the alleged offence. The LAC in Woolworths (Pty) Ltd v Mabija [2016] 5 BLLR 454 (LAC) noted that it is always “better if evidence of the breakdown in trust is led by people who are in a position to testify to such break down…” However, it noted that “it is established law that the serious misconduct itself would warrant an inference that the trust relationship has broken down.”

A Principled Approach to a Difficult Decision

The analogy of broken glass being irreparable captures something real about trust in the employment relationship. There are circumstances in which damage to that trust is simply irreversible, leaving dismissal as the only appropriate response. However, in determining the sanction, it is necessary to consider the evidence on a case-by-case basis and to evaluate all of the facts pertaining to the specific misconduct.

Employers must be mindful of removing emotion from decisions regarding sanction. They should treat dismissal as a means of mitigating operational risk rather than as a form of personal retaliation or punishment, which may result in adverse outcomes at an arbitration.

Written by Kobus le Roux