The balancing act: Employer/employee reciprocal duty of good faith

© Tsung-Lin Wu – 123RF.com

Let's turn the clock back to August 2012, when the strike broke out. In terms of South African labour law, an employer is not entitled to dismiss an employee for participating in a protected strike, or for any conduct in contemplation or in furtherance of a protected strike. However, an employer is not precluded from fairly dismissing an employee for a reason related to an employee's conduct during a strike. Dunlop relied on this provision to dismiss its striking employees after an interdict to stop the violence was ignored and the negotiations between Numsa and Dunlop likewise failed to end the violence.

The violence included setting alight the homes of a manager and foreman, damaging a number of vehicles belonging to staff and visitors, physical violence, throwing of stones and petrol bombs and scrawling death-threats on a billboard. This conduct is unacceptable and extremely dangerous. In the ordinary course, an employer would rightly be entitled to dismiss any employees who participated in this conduct. The problem for Dunlop - it not only dismissed identified culprits of the violence, but it also dismissed employees on the basis of "derivative misconduct". Derivate misconduct occurs where an employee, innocent of actual perpetration of misconduct, has knowledge of wrongdoing against its employer but chooses not to disclose this information to its employer.

Dunlop's basis for dismissing the employees for "derivative misconduct" was that the employees owed a duty of good faith to provide information to the employer regarding their colleagues' participation in the violence. The employees either (i) refused to disclose this information to Dunlop; or (ii) failed to exonerate themselves by coming forward and stating that they did not participate in the strike and therefore cannot identify the perpetrators.

The employees disputed the fairness of the dismissal and, represented by Numsa, referred the matter to arbitration at the employment tribunal. The arbitrator distinguished between three categories of Dunlop employees that participated in the strike:

• those positively identified as committing violence;
  
• those identified as present when the violence took place; and
  
• those not positively and individually identified as being present when the violence was committed.

Based on this distinction, the arbitrator found that the dismissal of the first two categories of employees was substantively and procedurally fair, but that the dismissal of the third category of employees was substantively unfair. The arbitrator ordered Dunlop to reinstate the third category of employees.

This award of reinstatement by the arbitrator has been the subject of dispute for the past seven years, meeting its ultimate fate at the Constitutional Court. Dunlop took the award on review to the Labour Court, and was satisfied with the Labour Court's order setting aside the arbitration award. Numsa, on behalf of the third category of employees, appealed to the Labour Appeal Court, and again Dunlop was successful. Numsa was not prepared to give up the fight, and sought leave to appeal to the Constitutional Court.

In whose best interests...

The Constitutional Court disagreed with the judgments of the previous courts, specifically regarding the duty of good faith the employees owed Dunlop. Froneman J pointed out that there are circumstances in the employment relationship where employees are entitled to act in their own best interests, contrary to the interests of the employer. In doing so, an employee does not breach the duty of good faith owing to its employer. In other words, the employment relationship does not impose a fiduciary duty on employees to their employer. In addition, our criminal and civil law does not require us to be our neighbours' keepers. In the same vein, an employee is not expected to be their employer's keeper during a strike where the unity of workers is important in the power play between employee and employer. At the very least, there needs to be a reciprocal obligation on the employer.

Imposing a unilateral obligation on the employees to inform Dunlop of the misconduct of their co-employees during the protected strike would amount to imposing a fiduciary duty on the employees. The employer must at least have a reciprocal duty to ensure the safety of its employees prior to and following the disclosure of information.

Balance of rights

The image of a seesaw comes to mind - employment law is about balancing the rights and obligations of the employer and employee. On one side of the seesaw, the employer has to deal with the impact of the violent conduct and the breakdown of trust in the employment relationship after the strike. On the other side, employees that are either not striking, or striking within the confines of the law, should not be subjected to intimidation and threats on disclosing information. In the context of a strike, a balance will be achieved where an employee's duty to disclose is accompanied by the employer's duty to protect individual rights, including the fair labour practice right to collective bargaining.

Numsa ultimately succeeded at the Constitutional Court due to Dunlop's failure to exercise its reciprocal duty of good faith in, at the very least, ensuring that its employees were safe before expecting them to come forward and disclose information or exonerate themselves.

The Constitutional Court's judgment does not mean that an employer can never dismiss an employee for derivative misconduct. Remember the balancing act - where an employer provides a reciprocal duty of good faith and its employees still refuse to disclose information - an employer may be entitled to kick its employees off the playground.