DERIVATIVE MISCONDUCT – IGNORENCE IS NOT ALWAYS BLISS

The word ‘derivative’ might take your mind to your maths classes in high school and beg the question of what on earth does it have to do with my employment. We are not going to bore (or excite) you with mathematical problems that needs solving, but need to stress the concept of derivative misconduct in an employer-employee relationship and environment. Almost as tricky and intense as maths.

Derivative misconduct is the principle of knowing about colleagues engaging in misconduct such as theft; misappropriation of company assets; dishonest behaviour; fraud and similar but not notifying the employer thereof. Your silence, after being present during; or aware of the primary misconduct, you will make yourself guilty of the misconduct by association.

• The Labour Appeal Court

The court defined the principle of ‘derivative misconduct’ in Chauke and Others v Lee Service Centre cc t/a Leeson Motors (1998) 19 ILJ 1441 as ‘This approach involves a derived justification, stemming from an employee’s failure to offer reasonable assistance in the detection of those actually responsible for the misconduct. Though the dismissal is designed to target the perpetrators of the original misconduct, the justification is wide enough to encompass those innocent of it, but who through their silence make themselves guilty of a derivative violation of trust and confidence.’ (Paragraph 33)

• The Constitutional Court

A number of employees were dismissed as a result of violent behaviour during strike action at Dunlop. The Constitutional court confirmed that even though not everyone was involved in the violence, many employees were aware of the violence but did nothing to stop it and as a result were guilty by association. The violent actions included, but were not limited to damage to vehicles; throwing of stones; propelling a petrol bomb; and death threats. (National Union of Metalworkers of South Africa obo Khanyile Nganezi and Others v Dunlop Mixing and Technical Services (Pty) Limited and Others [2019] ZACC 25)

Three categories of employees were identified during the violent strike action:

• Actual perpetrators of the violence;
• Employees, present but not identified as a perpetrator of the violence;
• Employees whose presence and participation in the violence were not confirmed.

During the initial arbitration, the arbitrator found that dismissal of the first two categories of employees had been substantively fair, as they participate or were present during the violence. The dismissal of the third category of employees was found to be substantively unfair and the arbitrator awarded them reinstatement.

Aggrieved by the outcome, the employer took the award on review to the Labour Court who subsequently set the award aside and ruled that the dismissal of these employees identified in the third category were fair. NUMSA on behalf of their members applied for leave to appeal the Labour Court ruling, but leave to appeal was denied. NUMSA then continue to refer the dispute to the Constitutional Court based on section 23(1) of the Constitution of the Republic of South Africa, 1996, namely the ‘right to fair labour practice.’ The Constitutional Court agreed to have jurisdiction based on the following: ‘the right not to be unfairly dismissed is one of the most important manifestations of the constitutional right to fair labour practices. Derivative misconduct also speaks to the nature and scope of common law duties of both the employee (the duty of good faith; the duty not to commit misconduct; and the duty to obey lawful and reasonable employment-related orders) and the employer (the general duty of fair dealing with employees). The right to strike guaranteed in section 23(2)(c) is also implicated. This is because derivative misconduct in this case concerns the participation or presence of striking employees in a protected strike.’ (Paragraph 10)

In assessing the legal principles in similar circumstances, the Constitutional Court overturned the Labour Court decision and upheld the arbitration award in which the third category of employees were awarded reinstatement.

Identifiable elements in derivative misconduct disputes

In terms of the above mentioned judgment the Constitutional Court confirmed the following:

• Legislation implies a fiduciary duty into all employment relationships;
• there is a mutual obligation when an employer expects employees to report misconduct – the employer must provide for the safety of the employee(s) who report the misconduct;
• once the above obligation by the employer is fulfilled, an employer can expect employees to report any forms of misconduct;
• a strong inference should be drawn of those employees who were present at the time of the misconduct based on evidence and witness testimony;
• there is no need to be in a supervisory role in order to establish and report misconduct.

What about the second group of employees?

These employees were present at the ‘scene’ even though not actively engaged in the misconduct. In this instance the Constitutional Court held that there are various ways that employees can indirectly participate or associate themselves with misconduct. Any evidence of such association may be sufficient to establish and prove complicity or involvement in the misconduct.

Conclusion

A word of caution, evidence of association or participation in misconduct may be sufficient to establish complicity in the primary misconduct. Awareness of misconduct and not informing your employer goes to the heart of the trust relationship.

Let MISA be your voice and your protection.

(Article by Anel Oosthuizen, Edited by Tiekie Mocke)

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