Employment Newsletter

Derivative Misconduct: Who’s Guilty?

The doctrine of derivative misconduct was recently examined by the Labour Appeal Court (“LAC”) in National Union of Metalworkers of SA obo Nganezi and others v Dunlop Mixing and Technical Services (Pty) Ltd and others.

The LAC examined the principle of derivative misconduct and had to determine whether employees charged with derivative misconduct must be identified by the employer or whether the employer must prove that the employees who were present at the time the misconduct was being committed had actual knowledge of the perpetrators committing the misconduct and if so, whether their silence constituted a breach of duty of good faith towards their employer.

The facts of the case were as follows:

  • On the 26th of September 2012, all associated companies collectively referred to as “Dunlop” dismissed their entire workforce, after a protected strike turned violent and the striking employees blatantly defied a court interdict which prohibited the use of violence.
  • The striking employees and their union were requested to identify and/or provide the names of the culprits guilty of the actual misconduct.
  • A disciplinary hearing was held and only one employee attended.
  • 107 employees were dismissed after the violent strike and 29 of the 107 employees dismissed, were found guilty of specific offences.
  • The remaining 78 were found guilty of derivative misconduct because they failed to disclose the identity of those involved in acts of violence, intimidation, harassment as well as denying that any violence occurred.

At the arbitration, it was held that the dismissal of the employees who had been proved to have committed unlawful acts and those who were found to be present when the acts were committed was procedurally and substantively fair, but that the dismissal of those not found to have been present unfair and the employees were reinstated.

The matter was then referred to the Labour Court who declared the dismissal substantively and procedurally fair. The Labour Court’s view was that the crux of the issue was whether an inference can be drawn from the evidence that all the employees were present during the strike and, if so, whether their presence obliged them to provide an explanation for why their decision to remain silent did not strike at the heart of their employment relationship.

The Labour Court ultimately held that, on a balance of probability, there was sufficient which placed the dismissed employees on the scene of the misconduct and drew the inference that the employees had knowledge of the actual culprits.

NUMSA appealed the decision to the LAC. The LAC held that due consideration was not given to the fact that the employees presence and knowledge was capable of proof by means of indirect evidence and that it had not been established whether those facts had indeed been proven by an inference in the current circumstances.

The LAC held that that an assessment of derivative misconduct involves a factual inquiry aimed at establishing whether the members of a group can reasonably be suspected of knowing any material information which might be relevant to harm being caused to the employer, and which will identify the actual culprits of the primary misconduct, which must be proved on a balance of probabilities.

The LAC further held that the arbitrator erred in not assessing the evidence of inferences from which the employees were shown to have been present during the perpetration of violence, and that the Labour Court was correct to conclude that the award ought to be set aside and substituted with an award that the employees breached their duty of good faith towards their employer by failing to disclose the identity of the culprits.

It is important to note that the rationale behind 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, at its core, the employee’s silence when called upon to disclose misconduct from within a collective unit and that this is a justified inference that the employees participated in or supported the misconduct which was not disclosed to the employer.

As in this case of Dunlop, 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.

It has also been held that a dismissal for derivative misconduct will be procedurally fair provided that the employer has observed the audi alteram partem principle and that and additional requirement namely, an ultimatum must be issued.

Furthermore, employees should also be cautious to know, that when they have knowledge of wrongdoing that is being done towards their employer, a failure to disclose such knowledge might breach the duty of good faith owed to the employer and as a result such an employee may be disciplined for misconduct.

However, before an employer dismisses an employee for derivative misconduct, employers must ensure that the dismissals are both procedurally and substantially fair.

Gershwin Boonzaaier
Associate

 

 

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Note: This information is published for general information purposes and is not intended to constitute legal advice. Specialist legal advice should always be sought in relation to any particular situation. BLC Attorneys will accept no responsibility for any actions taken or not taken on the basis of this publication.

 

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