The employer and the employee have a mutually beneficial relationship, one in which the employee undertakes to provide services, expertise and skills in the interest of their employer in return for remuneration. The question that often comes into mind is whether an employee must only represent their interest with one employer or if they are free to engage in other activities that serve the interest of another employer or even themselves. This question is dealt with under the concept of conflict of interest and traverses the underlying principle of good faith owed to the employer. This article will consider South African case law to dissect the conflict of interest concept.

  1. Conflict of Interest and the Employment Relationship

There is an underlying principle in common law which refers to a general duty of good faith, which forms a critical aspect of the foundation of the employer-employee contractual relationship. The case of Sappi Novoboard (Pty) Ltd v Bolleurs (1998) 19 ILJ 784 (LAC) re-emphasised the common law position by stating that it is implied in the law of contract that the employee will act in good faith towards his employer.

Although there are employment contracts which specifically deal with conflict of interest clauses and policies, it is not a requirement that the employer specifically outlines it. As stated in the case of AMCU obo Mabale v CCMA;
There are certain rules that would apply in the workplace even if they are not written down. For example, an employee is expected to act in good faith and not in conflict of the employer’s interests; not damage the employer’s reputation or expose the employer to any form of risk.”
The above makes it clear that the duty of good faith exists in all employment relationships regardless of whether or not they have been specifically mentioned in the employment contract of the employee.

  1. Awareness of Conflict of Interest

An employee may be subjected to a disciplinary hearing and may face a dismissal sanction should they fail to disclose a conflict of interest or violate a conflict of interest policy. However, it is important that employees are made aware of the policy which exists. The case of SAMA obo Craven vs Department of Health perfectly depicts the impact that intention and knowledge of conflict may have on dismissals related to conflict of interest, as the Applicant’s dismissal was found to have been unfair due to the Applicant not being aware of the policy and that he did not break it intentionally.

  1. A “Word” of advice in conflict of interest clauses/policies

Employers must also bear in mind the wording contained in the policy/clauses during disciplinary proceedings. An extract from the case of Hillside Aluminium Ltd Industrial v Kuppusami, went on to state the following:
“An employer who has an intrinsically convoluted conflict of interest policy, ought to make allowance for difficulties of interpretation and accept that imposing the most extreme sanction would generally be inappropriate, where there is a bona fide reason to believe that the disclosure was not necessary and when reasonable persons could differ on whether a conflict was involved or not.”

Therefore, it is advisable that conflict of interest policies or clauses are made to be as simple as possible for them to be enforceable. Should employers have any queries regarding the drafting, interpretation, or enforcement of conflict of interest clauses/policy, it is best to consult a labour consultancy or legal professional for assistance.

Article By: Zothani Maseko
Dispute Resolution Official – CEO Durban