Annadale v Pasdech Resources (SA) Ltd (2007) 28 ILJ 849 (LC)
- Suspension of an employee on full pay during an investigation of alleged misconduct, while not found in the common law, is part of modern labour law practice and is not unfair.
- Suspension does not amount to a repudiation or breach of the employment contract justifying cancellation of the contract by the employee before the outcome of the investigation.
The employee, the company's joint managing director employed on a 3-year fixed-term contract, was suspended on full pay pending an investigation into alleged irregularities. He was notified that it would take 5 to 6 weeks to complete the investigation. While he was suspended an organogram containing a new structure of the company was circulated which indicated that he was no longer an employee or director. He regarded this as a fundamental breach which entitled him to cancel his contract. Before the period of suspension was up, he resigned.
A few weeks after resigning the employee ought to be reinstated into his position. He sought damages arising from alleged unlawful repudiation or breach of contract of employment. The employee contended that there was no common law right to suspend an employee and that unless this was specifically provided for in the employment contract, the employer could not lawfully suspend him.
The court accepted the company's evidence that the company was suffering financially and had recovered after the employee's suspension.
The court held that the right to suspend is inherent in the principles of fairness which underlie labour law. Suspension on full pay, with reasons given why he was being suspended, was not a violation of the principle of fairness. The court noted that it was a common practice for an informal investigation to precede a disciplinary hearing to see if there was merit in the allegations, and to suspend an employee during this period of investigation.
The court did not regard the company's conduct a breach or repudiation of the contract. The employee was not entitled to cancel his contract.
Extract from the judgment:
[Para 32] It seems to me, particularly in the light of our equity legislation (which even though silent on this issue [ie suspension], propounds equity in the workplace and the proper balancing of employer and employee rights) that it may be time to answer the question whether such a right can be derived from the principles of fairness in the affirmative. A suspension implemented in the manner followed in the present case (where the employee was informed of the relevant reasons and was not deprived of his salary and other benefits for the relevant duration) hardly seems to offend such principles.
[33] Further, it must be considered that it is acceptable and common practice for an informal investigation by the employer to determine if there is merit in the charges brought against the employee to precede a disciplinary hearing and, pending such investigation, to suspend the employee. This, in my view, is exactly what happened here. I find no fault with the respondent's conduct insofar as this aspect is concerned.
[36] In determining the question whether the respondent's conduct amounted to a repudiation of the employment contract, regard must be had to the relevant test - whether fairly interpreted such conduct exhibits a deliberate and unequivocal intention no longer to be bound... The respondent's conduct can by no stretch of the imagination amount to a breach or repudiation of the employment contract. It must follow, therefore, that the applicant was not entitled to cancel his employment contract.