Conflict of Interest not always dismissible.
De Beers Consolidated Mines vs Evodia Landela (November 2019)
Our Constitution protects the rights of the people of South Africa to be economically active. To this end, people seek to do business with one another and some people exercising their rights to employment. The workplace is often characterized by the seemingly competing interests of the employer (capital) and that of its employees (labour). Of course both parties has the right to have their interests protected, but not at the expense of the other, unless of course if there are genuine interests to be protected.
In an effort to protect its interest, employers typically design policies that prevents employees from entering into situations that may be in conflict with the interest of its business. Typical examples would be that of Restraint of Trade Agreements and Conflict of Interest Policies, either within a contract of employment or stand alone HR policies. Unfortunately and due to contending interests, employees often involves themselves in compromised situations and enter into interests that are in conflict with the employer. Once the employer find out, these employees are often dismissed for misconduct due to their failure to disclose their conflict of interest and involvement in such situations.
However, is it a foregone conclusion that an employee who enters into a conflict of interest with its employer and who potentially may cause serious harm to the employer, that such a person should be dismissed for this misconduct? The CCMA, Labour Court and Labour Appeal Court does not necessarily think so.
In De Beers Consolidated Mines vs Evodia Landela, the employee was working at the company for about 15 years before her dismissal. At the time of her dismissal she had a clean disciplinary record and was employed as a procurement clerk, responsible for contract management and procurement of outside service providers for De Beers. De Beers had two security service providers, one GRACE Security and the other GENESIS. At one stage, the employer approached GENESIS to fix an alarm system. Upon assessing the project, GENESIS, realized that they cannot do the work and sub- contracted the work to GRACE SECURITY. During the negotiations, GRACE approached GENESIS and asked them for a loan of R20 000 to complete the project, which GENESIS approved. The employee of the company was present during the negotiations. The two technicians from the security companies also happened to be her tenants. GRACE approached her to make her bank account available as apparently they did not have a bank account, which she accepted. GENESIS then paid R20 000 into the bank account of the employee.
After completion of the task, GRACE billed GENESIS for the work done who, in turn, billed De Beers an amount of just over R11 000. GENESIS then failed to pay GRACE and offset the outstanding loan against the payment received. GRACE did not accepted this and threatened to sue De Beers as, ultimately, the work was done for them. At this point, the employee disclosed the contention between the parties, to her employer. An investigating officer was appointed and the employee was charged and dismissed for failure to disclosed her Conflict of Interest, a direct breach of a well-established company policy.
The employee referred an unfair dismissal dispute to the CCMA, at which the Commissioner found that the dismissal was substantively unfair as the employee was the ‘sacrificial lamb’ who merely tried to facilitate the transaction. The employee argued that she only knew the two technicians on their first names and that she had no idea who the contracting parties were and where the money was coming from. Her facilitation of the payment is merely a private matter and has nothing to do with her employer. In addition, considering she did not have any understanding of the contracting parties and what the money was for, she could not be guilty of failing to disclose her Conflict of Interest as one cannot disclose information if you did not have an understanding to this effect in the first place.
Upon Review at the Labour Court the Court supported the finding of the Commissioner and argued that there was no evidence that the employee was involved or received any benefit from the transaction. Upon Appeal at the Labour Appeal Court, the Court disagreed with the rationale of both the CCMA and the Labour Court. The LAC argued that evidence that was placed before the Commissioner at arbitration was clearly ignored. The evidence showed that the employee was present at the negotiations between the parties where it was agreed that R20 000 for the project would be paid into her account. The court further found that the employee’s argument that she did not know who they were contracting parties is far-fetched. The court further took exception from the fact that the employee’s argument is that she withdrew R17 000 of the money and gave it over and for the remainder of the balance she gave them her bank card. It is highly unlikely that a person will give one’s bank card and password to ‘strangers’ of who you only know their first names.’
In addition, the court argued that her very presence at the negotiations was a conflict of interest. Whether she benefitted or not was irrelevant. Even though De Beers could easily have defended themselves in terms of a potential lawsuit the fact of the matter remains that the employee was a company representative and could have caused reputational harm to the employer.
The LAC noted that during the disciplinary enquiry the line manager of the employee testified that the employee should not be dismissed, which suggested that the trust relationship could be restored, but that the mere fact that a witness testified to this effect does not mean that the presiding officer is bound by the testimony. In a bizarre decision (in my opinion), the LAC ruled that the dismissal was substantively unfair and ruled Reinstatement but on a shorter term so that the employee can understand the seriousness of the offence.
Unfortunately the court failed to provide us with its reasons for this decision and presumably it probably had to do with the employee’s 15 years’ service, clean record and the testimony of her line manager. What we learn from this case is that even with conflict of interest disputes, a dismissal is not automatic and one still have assess the prejudice or potential prejudice to the employer and whether damages are real.