Employees are contractually obliged to render their services to their employer during the agreed-upon working hours as captured in the employment contract. The employee, in return, is free to pursue their commercial interests outside the agreed-upon working hours. One crucial consideration to bear in mind, however, is the employee’s implied duty to serve the employer in good faith. The duty of good faith has been described by the Supreme Court of Appeal (SCA) in the matter of Ganes and Another v Telecom Namibia Ltd 2004 (3) SA 615 (SCA). This aspect is one of the cornerstones of the employment relationship, and certain employee activities after working hours could interfere with this duty.
In the recent matter of Bakenrug Meat (Pty) t/a Joostenberg Meat Ltd v The Commission for Conciliation Mediation and Arbitration and Others  JDR 0102 (LAC), the Labour Appeal Court (LAC) had to decide whether the dismissal of an employee was fair. The employee was found guilty of dishonesty and ultimately dismissed because she failed to disclose to her employer that she was operating a side-line business. The employee was a sales representative for a company that produced and sold meat products. In addition, the employee had a side-line business operated from rented premises. This business also sold meat products and biltong, the latter of which the employer did not sell at the time of her employment. Subsequently, the employer discovered her side-line business and dismissed the employee for dishonesty because she had not informed the employer of her business. The Commission for Conciliation, Mediation and Arbitration (CCMA) first adjudicated the matter after a referral from the employee. The CCMA found that the employee was obliged to inform her employer of her side-line business. Accordingly, the non-disclosure of her side-line business was deemed dishonest, and the CCMA found her dismissal substantively fair.
The employee launched a review application under the auspices of the Labour Court (LC). The Court held that because the employee’s business only operates on weekends, it was acceptable to run this business and not disclose same to her employer. The Court held that the employee’s side-line business did not interfere with her employment and obligation towards her employer. Furthermore, no conflict of interest existed as the employer did not sell biltong at the time of her employment. The Labour Court (LC) held that the employee had no duty to inform her then-employer of her side-line business, whereafter the award was set aside.
Essentially, the Labour Court’s (LC) approach was that unless employees informed their employers that they were moonlighting to the extent that there was some competition with their employer’s business, no dismissible misconduct had occurred. The matter was then brought before the Labour Appeal Court (LAC). The Court held there was clear evidence that the employee did not disclose an essential and material fact that she was independently operating a business in marketing meat products, even if the meat products were not identical to that of the employer. The Court ruled that the mere fact that the employee was running a business did not cause her to not fulfil her role successfully as a sales representative. Significantly, the employee was employed by the employer as a sales representative to market meat products, while she was also involved in marketing meat products for her own business.
The employee’s failure to inform the employer of her side-line business amounted to dishonesty and a violation of her duty of good faith towards the employer; therefore, the Court found that based on the evidence, the Commissioner arrived at a reasonable decision that the dismissal was substantively fair and set aside the judgment of the Court a quo. Thus, the duty of good faith owed by the employee to act in the employer’s best interest extends to the obligation to inform their employer of any side-line business that may be a conflict of interest, even though no real competition comes about.
Therefore, not disclosing same would be unacceptable, and grounds for dismissal based on dishonesty may arise. As an employee of a company and in the absence of an agreement to the contrary, the employee owes the company a duty of good faith.
Article By: Chris Pio
Dispute Resolution Official – CEO Pretoria