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The recent judgment of Bakenrug t/a Joostenberg Meat v CCMA has reemphasized the importance of the duty of good faith owed by employees to their employers and employees’ obligation to disclose outside activities which may pose  a conflict of interest.

The Employee was employed as a sales representative by her Employer, which produced and sold a variety of meat products.

Without having disclosed this to her Employer, the Employee conducted her own side-line business which promoted dried meat products. When this came to light, the Employee was charged and dismissed for dishonesty.

The Employee lodged an unfair dismissal dispute with the Commission for Conciliation, Mediation and Arbitration (“the CCMA”). The CCMA found the Employee’s dismissal to be substantively fair on the premise that the Employee promoted meat products and should have disclosed and sought permission from her Employer, which could have decided whether there was a conflict of interest.

The Employee launched a review application at the Labour Court.  The Labour Court reviewed and set aside the CCMA’s award on the basis that the Employee conducted her business activities on the weekends and after hours, therefore there was no conflict of interest.  The Employee had no duty to inform the Employer of any potential conflict of interest.

The Employer took the matter on appeal to the Labour Appeal Court (“the LAC”) and argued that the lack of transparency by the Employee was a violation of her fiduciary duties to the Employer and that the Employee’s side-line business was in the same market as her Employer.  The LAC upheld the CCMA’s award  and found that the Employee had acted dishonestly. .

Employees are obliged to inform their employers of any potential conflict of interest. The employer has the discretion to decide whether there is a conflict of interest.  It is not for employees to make judgment calls on whether their actions may give rise to a conflict of interest and are thus reportable. 

Should you require any more information, please contact Refiloe Vengeni at refiloe@bv-inc.co.za or Melanie Hart at melanie@bv-inc.co.za.