Can an employer dismiss for derivative or team misconduct?

Employers are sometimes faced with misconduct but no evidence to prove it as the witnesses refuse to come forward or to testify. The common law duty to act in good faith towards the employer flies out the window and the employer is faced with the difficult decision as to whether it is going to start charging witnesses for failing to report misconduct or to come forward with information and evidence. Employers in the retail industry faces huge losses to theft or industrial espionage and the guilty party or parties are never identified although many are aware of the misconduct, but they are either sharing in the proceeds or are just not prepared to come forward with information to assist the employer in identifying the thieves.

In Foschini Group v Maidi & others (2009) 18 LAC 1.25.2; [2010] 7 BLLR 689 (LAC) five employees (the full staff compliment in that store) were charged with “failure to secure assets of the company” after substantial stock losses were detected at the clothing store where they had been employed. The employer could not prove that they were in fact stealing the stock, however they were dismissed in their absence for “Gross negligence by failing to take proper care of company property under their control resulting in a financial loss of R 207 000 as well as an irretrievable breakdown in the trust relationship. The stock losses reached a level in excess of 28% (some 1 553 items over a period of six months) which was contributed to their lack of commitment towards the company. The company conducted a thorough investigation by sending a manager to the store in question, who conducted the investigation himself, which preceded and founded his report.

The Commissioner in the arbitration proceedings (and as confirmed by the LAC) looked at various cases where the question of collective misconduct or sanction was considered. Grogan is of the view that, in the context of employees in a small store, who are unable to point to some cause for the stock loss, the species of misconduct upon which the company relies when it calls members of an entire staff to book for stock loss, although collective in nature, would be better described as ‘team misconduct. The team is responsible for maintaining the stock and in the case of ‘team misconduct’ the employer dismisses a group of workers because responsibility for the collective conduct of the group is indivisible. It should be noted therefore that the principle is not that some (the innocent) must suffer because the employer cannot pin point the guilty. In this case, all are held responsible for not complying with the rule and not acting in good faith in executing their duties. It therefore lies in each employee’s individual culpability for the failure of the group to attain the performance standard set by the employer.

In Chauke & others v Lee Service Centre CC t/a Leeson Motors (1998) 19 ILJ 1441 (LAC) [also reported at [1998] JOL 3076 (LAC), the Labour Appeal Court held that an employer, who suffered continuously under industrial sabotage perpetrated by unidentified employees, was entitled to dismiss all the employees on the shop floor where the damages occurred, on the basis that the employees must have known who the perpetrators were and failed to come forward and identify them. Again, the employees made them guilty of a special misconduct – breach of trust and duty of care towards the employer.
Although the principle in question causes problems in light of the principle of fairness in our law, Cameron JA in the Chauke case formulated two lines of justification for a fair dismissal in such circumstances. The first is where an employee, who is part of the group of perpetrators, is under a duty to assist the employer in bringing the guilty to book. The second is where an employee has or may reasonably be supposed to have information concerning the guilty but fails or refuse to disclose same. His or her failure to come forward with the information may itself amount to misconduct as the relationship between employer and employee is in its essentials one of trust and confidence, and, even at common law, conduct clearly inconsistent with that essential warranted termination of employment. The LAC found failure to assist an employer in bringing the guilty to book violates this duty and may itself justify dismissal.”
The learned Judge of Appeal further held that this derived justification is wide enough “to encompass those innocent of the main misconduct, but who through their silence make themselves guilty of a derivative violation of trust and confidence.