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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article which looks at the latest piece of new labour legislation, the Employment Services Act, in force from 9 August. We also look at three new cases: The first case looks at the fairness of 'zero tolerance' policies. The second case looks at the obligation of a commissioner to give weight to all evidence. The third case looks at good faith and the notion of derivative misconduct.

This public newsletter is a free edited version of the subscriber newsletter.


Is 'zero tolerance' fair?

The employee, appointed in 2002 at Shoprite Checkers, progressed to the position of a supervisor. Every employee is required to 'register' personally owned items brought into the store which could have been bought there so that they are not accused of stealing the items when they leave work. This is called 'cancelling' or 'clearing' the item.

On 10 November 2009 when the employee left the store, she was found in possession of uncancelled/unpaid roll-on deodorant in her handbag. She pleaded guilty at a disciplinary hearing to the offence of being in possession of uncancelled/unpaid goods when leaving work. She gave evidence in mitigation of the sanction, saying that she had gone to see her doctor on 10 November and that the doctor had asked her not to apply deodorant when she came for an appointment. She put the deodorant in her handbag and forgot to clear it before coming into the store. She did not use deodorant every day and this is why she forgot to declare it. She was under the impression that the company would give her a warning for the first offence of this nature and that she would only be dismissed if she transgressed for the third time.

At arbitration the arbitrator was satisfied that as a supervisor, the employee was aware of the rule that she was required to declare goods in her possession, and did not accept her version that she had forgotten to declare the deodorant to the security staff when she arrived at work. The arbitrator was satisfied that the employer acted consistently and that employees who were found guilty of this offence were dismissed. The arbitrator found that the sanction of dismissal was appropriate and therefore the dismissal was substantively fair.

The Labour Court on review noted that the employee pleaded guilty on the understanding that she would receive a warning. The Court found that the commissioner had not assisted the employee when it became necessary for her to challenge the employer's version. The Court regarded this as a very material omission on the part of the commissioner and that it was unfair to turn around and blame the employee for her failure to contest this evidence. The Labour Court was not satisfied that the fairness of the dismissal had been proved and set aside the arbitration award, reinstating the employee with a final written warning.

On appeal to the LAC, the LC's approach was found to be correct. The LAC in Shoprite Checkers (Pty) Ltd v Tokiso Dispute Settlement and Others (JA49/14) [2015] ZALAC 23 (24 June 2015) took the opportunity to give guidance on 'zero tolerance' policies which make dismissal for the first offence obligatory. What we learn from this case is that an employer may not adopt a zero tolerance approach for all infractions, regardless of its appropriateness or proportionality to the offence. A zero tolerance approach will only be fair if the circumstances of the case warrant the employer adopting such an approach. This is in line with the case of South African Breweries Ltd v Commission for Conciliation Mediation and Arbitration and Others (C 665/2011) [2012] ZALCCT 17 (24 May 2012), dealing with zero tolerance relating to alcohol at the workplace.

One troubling aspect of the case is that the Labour Court regarded it as a flaw that the commissioner did not 'level the playing fields' by alerting the employee that she needed to challenge certain evidence, and did not assist the employee. What is an employer to do in such a case to avoid a challenge on review? Should the employer anticipate this and remind the commissioner of this duty? This seems a lot to ask of the employer in such circumstances.

Must the commissioner refer to all evidence led?

Here is a story in which it is hard not to feel sympathetic towards the employer. It is a story about a difficult employee who managed to turn misconduct into management's failure not to accommodate his mental state.

The employee, M, had been dismissed by Transnet for gross negligence following a disciplinary process. The charges concerned his inability to fit new glass to windows (the glass blew out; he blamed the putty). He contended that there had been no fair reason for his dismissal.

M. had a troubled employment history with Transnet. He had previously been dismissed but reinstated by an arbitrator in April 2008. Some 18 months later, he was again found guilty of serious misconduct involving malicious damages, negligence and dishonesty and was issued with a final written warning valid until 12 January 2010. In 2011, M was transferred to Transnet's employee wellness programme (EWP) by management, to receive counselling for absenteeism. M had on-going problems with his immediate supervisor and had referred a number of grievances against him. The employer was of the view that M had a pattern of responding to disciplinary action against himself by referring a grievance.

The arbitrator, in her award, found that there was a fair reason for the dismissal. On review in the Labour Court, the employee argued that the arbitrator had committed a gross irregularity or misconduct because she had failed to attach sufficient weight to various aspects of the evidence before her and had made erroneous findings of facts in various respects. The court singled out two specific contentions: the arbitrator had not referred to evidence of alleged victimisation or concerning the mental well-being of M, or compatibility problems and recommendations that he be transferred to another depot.

The Court concluded that the arbitrator's decision was "one that a reasonable decision-maker could not make in that she failed to take relevant evidence into account when considering the substantive fairness of the dismissal." It was also found that it was "not evident from her award that [the arbitrator] considered the personal circumstances of applicant or his years of service in coming to her decision that the dismissal was substantively fair." The Labour Court thus set aside the arbitration award and substituted it with an order that M be reinstated with retrospective effect.

On appeal to the LAC in Transnet Rail Engineering v Mienies and Others (CA20/2013) [2015] ZALAC 22 (18 June 2015) the judgment of the LC was upheld, and the reinstatement order was confirmed. This judgment leaves us feeling uncomfortable. We have no difficulty with the principle that 'at arbitration no evidence may simply be ignored, and a commissioner may be guilty of gross irregularity if s/he fails to factor in evidence which may have a bearing on the appropriate sanction'. But in our view the courts lost sight of the fact that the arbitrator in this case was asked to decide the fairness of a dismissal resulting from incompetence and negligence. The courts were however certain that had the evidence of the employee's psychological state been taken into account, it would have resulted in a sanction short of dismissal. But what the courts did not appear to do was give much weight to the employee's poor disciplinary history. We think the required balancing of all material factors was not achieved in this case.

Good faith & derivative misconduct

The police gave the employer information about the "wealth" of an employee and his immediate family. The family possessed a house worth some R582,000, bonded for R200,000 and another house acquired for R14,000 which had been substantially improved, and four cars. He was also the owner of a construction business. The employee earned R14,000 per month. It was thought that such wealth might be the proceeds of theft because it was not plausible that he could have accumulated such capital from his salary. His movements around the employer's plant were then monitored electronically, and after it was noticed that he accessed parts of the plant that he was not authorised to enter, he was charged as follows: 'It is alleged that you have knowledge of the enormous losses of PMGS at PMR but you have made no full and frank disclosure to PMR about what you know that could assist PMR in its investigations herein.' The "losses" refer to unexplained stock losses over several years.

The employee was dismissed, a sanction confirmed by the arbitrator. The disciplinary enquiry outcome was that the evidence of his wealth did not prove his culpable participation in theft. He was however found guilty of the non-disclosure charge. The "information" not disclosed, relied upon to convict him, was information specified in demands, made to him after he had been charged, to reveal details of his personal financial affairs. He refused, claiming he did so on union advice that he was under no obligation to do so.

The Labour Court reversed the finding and declared that the dismissal was substantively unfair, but it found that reinstatement was inappropriate, and granted compensation equivalent to 12 months' wages. The employer appealed against the decision setting aside the award, and, the employee in turn, cross-appealed against the compensation order, seeking a substituted order of reinstatement.

The LAC in Western Platinum Refinery Ltd v Hlebela and Others (JA32/2014) [2015] ZALAC 20 (3 June 2015) held that there simply was no case made against him. The undisclosed information relied on to substantiate the charge was not about wrongdoing and consequent stock losses, but about his personal finances. Even if this information was pertinent to the enquiry and appropriate to demand from an employee, this information is not of the species of information that could form the substance of culpable non-disclosure pursuant to a duty of good faith. The award convicting him was a decision that no reasonable arbitrator could have made based on a proper appreciation of all the evidence adduced. It was set aside and reinstatement granted.

The LAC judgment is important in that it sheds further light on the difficult notion of 'derivative' misconduct - the label used to describe the dismissal of an employee that is derivatively justified in relation to the primary misconduct committed by unknown others, where an employee, playing no part in the misconduct, consciously chooses not to disclose information about the wrongdoing.

The LAC gave clear guidelines on what constitutes 'derivative' misconduct, clarifying that it stems from a breach of the employee's duty of good faith toward the employer. The employee breaches that duty by remaining silent about knowledge possessed by the employee regarding the business interests of the employer being improperly undermined. Non-disclosure of knowledge relevant to misconduct committed by fellow employees is an example of a breach of the duty of good faith, and can justify dismissal. The undisclosed knowledge must be deliberate and actual. The duty to disclose is also not dependent upon a specific request for relevant information, because the wrongdoing might not be known to the employer.

We have some concerns about the last point above, namely that an employee is guilty of derivative misconduct even when not requested by the employer to disclose the information, having an obligation to volunteer this information once is becomes known. We suggest this situation should be judged differently to one in which the employee, when approached by the employer for information, deliberately refuses or avoids disclosing material facts relating to the wrongdoing.


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Bruce Robertson
August 2015
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