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Worklaw is a subscription based labour law service developed by leading South African labour lawyers and arbitrators. Worklaw gives you all you need to manage labour law at the workplace. Go to

Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. Worklaw's October newsletter looks in depth at the rules of evidence to be applied at disciplinary hearings. This is the first part in a series on this topic. We also look at new decisions dealing with corporate restructuring and the notion of applying for your own job, consultation and the final decision to retrench, and an employer`s liability for the fraud of an employee.

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


Corporate restructuring and applying for your own job

When an employer restructures its business and redefines existing posts, what are the rights of employees?

In Vancoillie v Sanlam Life Insurance Ltd (2003) 24 ILJ 1518 (LAC) Sanlam desired to improve its quality of service and competitiveness. It initiated a restructuring exercise that resulted in employees having to re-apply for their existing restructured jobs. In selecting for the new restructured posts, 'job content' was said to be the primary selection criterion, although past performance was also used as a significant criterion. An opportunity was given to consult. When the applicant was not appointed to his 'old' position, he referred the matter to the CCMA on the basis of unfair dismissal.

The matter found its way to the Labour Appeal Court, which made no finding on the fairness or justification of the restructuring process itself. However the LAC was satisfied that the appellant 'did not have what the respondent was looking for' and that the non-appointment was 'fully justified' and found the dismissal fair.

Consultation and the final decision to retrench

S 189(3) of the LRA requires the employer to disclose, for the purposes of consultation, a scenario that goes beyond a vague suggestion of retrenchment to actually saying why alternatives to retrenchment were rejected, the number of employees to be affected and the job categories in which they are employed, and the time when the dismissals are likely to take effect.

If this information is made available for the purpose of pre-retrenchment consultation, does it mean that the employer has already made up its mind to retrench prior to consultation?

This issue arose in Mabaso & others v Universal Product Network (Pty) Ltd (2003) 24 ILJ 1532 (LC). The court found that because the employer had made up its mind to retrench employees and had identified those employees prior to the first consultation, the subsequent dismissal was procedurally unfair.

The employer's liability for the fraud of an employee

Two insurance brokers were alleged to have accepted money from clients and, instead of investing the money, had stolen it for themselves by fraudulent means. The employer claimed for these losses in terms of an insurance policy covering theft, fraud and dishonesty by employees. The insurance company denied liability because it said the brokers were not employees and even if they were, an employer is not vicariously liable for the fraud of its employees.

In Absa Makelaars (Edms) Bpk v Santam Versekeringsmaatskappy Bpk & another (2003) 24 ILJ 1484 (LC) the court first had to decide if the brokers were independent contractors or employees. Finding that they were employees (in spite of the fact that they were paid for completed work only), the court had then to decide if the wrongful acts were committed in the course of employment. The court said this will depend on whether there is a sufficiently close link between the unlawful conduct and the employer's business, and the work that the employees were authorized to perform. The court found that a sufficiently close link did exist and that Santam was obliged to compensate Absa for the losses.


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Bruce Robertson
October 2003
Copyright: Worklaw