Derivative Misconduct – Guilty by association
Entrepreneurial thinking, innovative thinking, lateral thinking, thinking out of the box and other enterprising thought processes caused decision makers over many years to create certain “points of departure” or “foundational concepts” by means of which daunting and challenging aspects of decision making could be overcome.
By way of an example, one such a foundational concept is the rebuttable presumption based on the existence of certain relevant information on which to determine, in principle, “who is an employee”.
In this regard Section 83A of the Basic Conditions of Employment Act (BCEA) and in similar vein, Section 200A of the Labour Relations Act (LRA) specify seven criteria by means of which a presumption of an employment relationship is established in principle.
Any person who disputes this presumption bears the onus to conclusively challenge or rebut the presumption by proving that, objectively speaking, an employment relationship does not exist.
We find another example of such a foundational concept in family law where the pater est quem nuptiae demonstrant– presumption (informally referred to as the pater est -presumption) of paternity is based on the existence of a marital relationship between the mother and her current husband at the time of the birth of the child in question, being indicative of, or triggering the presumption that the current husband is the biological father of the child. Any other person who claims to be the biological father, thus disputing the presumption, has to rebut the presumption of paternity.
The concept of derivative misconduct or guilty by association, while not being the same as the rebuttable presumption concept, contains certain similarities in the way it operates as a foundational concept. Essentially, it aims to address a situation where misconduct is perpetrated in the workplace, but the culprit or culprits cannot positively be identified or singled out by the employer.
The conceptual foundation of Derivative Misconduct
The principles on which derivative misconduct is based are found in the common law obligations which characterise the employment relationship.
In common law the employee owes a duty of good faith towards the employer to always act in the best interest of the employer, not to commit misconduct, not to compete with the employer (business-wise) and to obey all reasonable instructions from the employer.
On the other hand, the employer has a common law duty to act fairly with its employees in all their interactions.
From this follows that where an employee has to his/her disposal or reasonably should have possessed information about misconduct perpetrated against the employer, the employee’s common law duty towards his/her employer obliges him/her (acting in the best interest of the employer) to disclose such information to the employer or to assist the employer to identify the perpetrators of the misconduct.
Failing to own up to the common law duty of good faith towards the employer violates the trust, which is inferred by the employment contract, which reciprocal trust should characterise the employment relationship. In essence, the employment relationship is a subordinate contractual relationship, which establishes a hierarchical relationship between the parties, as opposed to a lateral one.
Derivative misconduct defined
The concept or doctrine of derivative misconduct was coined in the LAC-case: Chauke v Lee Services Centre t/a Leeson Motors (1999).
Conceptually, derivative misconduct deals with a situation where an employer is justified to dismiss a group of employees amongst which may be the (unidentified) perpetrators, as well as non-perpetrators.
The latter individuals are included on the basis of their proximity to the perpetration of the misconduct. Their culpability in respect of the misconduct is derived from their failure to disclose information which they possess (or reasonably should possess) regarding the identity of the culprits.
The justification for dismissal in such a situation hinges on two premises, namely:
- Justified on operational grounds where indisputably innocent individuals are dismissed as a measure resorted to in order to “save the enterprise”.
- Justified on non-operational grounds, namely perpetrated misconduct where no innocent employees are dismissed but all those that are derivatively associated with the misconduct concerned.
Derivative misconduct, being coined in this way (see the second bullet point above) as a doctrine, however needed further development beyond the obiter statements (non-binding remarks made in passing) made in this regard. One such statement was articulated by judge Cameron in Food & Allied Workers Union v Amalgamated Beverage Industries Ltd (LAC) 1994 as follows:
“In the field of the industrial relations, it may be that policy considerations require more of an employee than that he merely remained passive in circumstances like the present, and that his failure to assist in an investigation of this sort may in itself justify disciplinary action”.
In these initial stages of the development of the doctrine of derivative misconduct the guilt of the ostensibly innocent employee in regard to the misconduct was premised on the employee’s silence and inaction to disclose information about the identity of the perpetrators of the misconduct when there was reason to assume that the employee possessed this information but chose not to disclose it.
Further development of the doctrine of derivative misconduct happened in the LAC-case: Western Platinum Refinery Ltd v Hlebela, Arnold, Van Wyk N.O. & CCMA (2015).
Principles that were considered as axiomatic concerning derivative misconduct in the above-mentioned case were:
- The undisclosed knowledge must be actual and not imputed or constructive.
- The knowledge must be withheld deliberately.
- The duty to disclose should not be dependent on the seriousness of the misconduct, nor on the rank of the employee who needs to disclose.
- Mere actual knowledge of the misconduct perpetrated should trigger the duty to disclose and not any specific request to do so.
- Negligent ignorance on the part of the employee to gain information regarding the misconduct however does not invoke the duty of good faith, but only actual
What are the prerequisites for dismissing employees derivatively?
The most authoritative case law on the concept of derivative misconduct is found in the Constitutional Court-case:
NUMSA obo Khanyile Nganezi & others v Dunlop Mixing & Technical Services (Pty) Ltd & others (2019).
Inextricably linked to any dismissal, including a dismissal based on derivative misconduct is the provision in Section 23 of the Constitution of South Africa providing that “everyone has the right to fair labour practices”. This constitutional requirement is echoed by Section 185 of the LRA providing that every employee has the right not to be:
- Unfairly dismissed, and
- Subjected to unfair labour practice.
With these statutory assurances foremost in mind, it crystalised from the other cases which dealt with the concept of derivative misconduct that derivative culpability of the employee rests on two failures on the employee’s part, namely:
- The failure to come forward and identify the perpetrators of the misconduct; or
- The failure to exonerate him/her by explaining conclusively that he/she was not present at the commission of the misconduct.
The findings in the Dunlop-case expanded somewhat on the duty of good faith inferred by the employment contract, by emphasising that such a duty has to a reciprocal duty.
The CC held that to impose a unilateral obligation on the employee to disclose information (incriminating as it will be – my addition) will be tantamount to imposing a fiduciary duty on the employee.
Specifically in a strike situation where violence was perpetrated, such a unilaterally imposed duty would unjustifiably undermine the collective bargaining power of the legally striking workers in the absence of a concomitant obligation on the employer to reciprocate by offering the employees at least some form of guarantee for their safety, before, during and after their required disclosure.
A balance of legitimate interests between employee and employer has to be struck in order to ensure safe disclosure. The CC concluded that the imposition of a duty of good faith can thus never be unilateral.
From the Chauke-case referred to above commentators derived the following procedural and substantive fairness requirements pertaining to derivative misconduct:
Substantive fairness requirements:
- Employees have to be pre-warned and informed of the consequences of collective responsibility when it being found that they associated themselves with the primary act of misconduct on the basis of “common purpose”.
- An employee’s silence when called upon to disclose the identity of perpetrators, may justify the inference of participation in or support of the misconduct.
- The failure of the employee to submit an exonerating innocent explanation would weigh in the balance against him/her.
- The failure on the part of the employee to refute the allegations of complicity in the misconduct could elevate the employer’s prima facie inference of complicity to that of conclusive evidence against him/her.
Procedural fairness requirements:
- Adherence to the audi alteram partem-principle of natural justice is of utmost importance. It is imperative that the case of the employee be heard and properly so before any conclusions in regard to complicity can fairly be drawn.
- The issuing of an ultimatum, inviting the employee to come forward and disclose the knowledge of the perpetrators he/she possesses, alternatively to submit an innocent explanation, is a procedural fairness prerequisite.
- Each employee needs to be charged with his/her own individual act of derivative misconduct based on either:
- Having failed to disclose the knowledge pertaining to the perpetrators when reasonably being able to do so; or
- Having taken part in the misconduct; or
- Being an accomplice in the perpetration of the misconduct by lending it his/her support.
With the introduction of the concept of derivative misconduct, employees can no longer rely on it that there is safety in numbers and especially not if they do not own up to their duty of good faith towards their employer.