Can an employer collectively dismiss employees, where it is difficult to establish individual guilt, after discovering astonishing stock losses?


Employers are sometimes faced with misconduct, but no evidence to prove it, as the witnesses refuse to come forward or to testify. The common law duty to act in good faith towards the employer is not honoured, and the employer is faced with the difficult decision to charge witnesses for failing to report the misconduct or to come forward with information and evidence.


When an employer contemplates a disciplinary hearing involving many employees, the practicality of having various individual hearings will be challenging, and employers therefore generally elect to have collective hearings instead.


Concepts such as “collective/derivative/team misconduct” are used to justify the termination of employee’s services who is suspected of being involved in these forms of misconduct.


In a Labour Appeal Court case it was held that “an employer who suffered continuous industrial sabotage, perpetrated by unidentified employees,” was entitled to dismiss all employees on the shop floor where the damages occurred, on the basis that these employees should have known who the perpetrators were, and they failed to report the incident and further failed to identify these perpetrators.


It is, however, vital for a company to have an existing stock loss or shrinkage policy in place which regulates this rule and specifies the applicable sanction to be implemented should the rule be contravened. An employer must further take heed of the audi alterem partem rule, affording the employees the opportunity to respond to allegations against them.


Relevant Case Law

In the case of True Blue Foods (Pty) Ltd t/a Kentucky Fried Chicken (KFC) v Commission for Conciliation Mediation and Arbitration and Others (D441/11 (2014) ZALCD 70: (2015) 2 BLLR 1994 (LAC); (2015 36 ILJ 1375 (LC) (28)2015 ) 36 ILJ 1375 (LC) (28 November 2014) the concept of team misconduct had been thrown into the spotlight where the Labour Court concluded that it was lawful to dismiss employees working on the same shift at a local Kentucky Fried Chicken outlet because of astonishing stock losses. In this case, none of the employees admitted that they observed anything or had anything to do with the alleged theft. Throughout their employment, employees were informed of the “zero policy” for theft within the workplace and that they were responsible for the stock during their shift. The group of employees were subsequently dismissed and referred a matter to CCMA, where it was concluded that their dismissals were unfair considering the fact that the company was unable to prove their participation in the alleged theft or that they knew who was involved in the misconduct.


On review, the Labour Court held that as with the principle of “common cause purpose”, there was no need to prove individual guilt. It was sufficient that the individual was a member of a team, which has failed to meet its obligation to ensure that there were no stock losses. They were given an opportunity to come clean but chose not to do so.  The CCMA award was set aside.


In another relevant reported case (The Foschini Group v Maida & 4 Others (2010) ZALC 5) the LAC had unanimously decided that it is preferable to use the term “team misconduct” first introduced by John Grogan in an arbitration award several years ago. Foschini terminated the employment of 5 employees in 1999. It seems that there were 4 separate attempts at arbitrating the dispute and eventually it was determined that Foschini terminated their services for a valid and fair reason – collective misconduct.



It can be accepted that these types of matters will present a difficult problem for fair employment practices and the Labour Appeal Court illustrated this by posing the following question:

Where the misconduct justifies disciplinary action, but management is unable to identify the perpetrator(s), in what circumstances will it be permissible to dismiss a group of people which incontestably included them?

Firstly, where an employee, who is part of the group of perpetrators, is under a duty to assist the employer in bringing the guilty party to light. The second is where an employee has or may reasonably be expected to have information concerning the guilty employees, his/her failure to come forward with the information may itself amount to misconduct.

The relationship between employer and employee is based on trust and confidence. This type of misconduct would breach exactly that, which would justify a dismissal.


Article by: Morné Fourie

Dispute Resolution Official – Gauteng