This issue of conflicts of interest is becoming a trend and may reflect avarice, shortage of income in the current economic climate, the ambition to earn additional income and occasionally lack of commercial understanding. On a number of occasions, clients have had to deal with employees registering between one and (amazingly) up to ten private businesses. Some of these private businesses have been used as schemes to obtain contracts from employers where employees have direct access to confidential information on services required.
Case Law
In Chauke v Northwest Cranes (Pty) Ltd (2023) 44 ILJ 651 (CCMA), Mr Chauke, a technician assistant, was charged with having a direct conflict of interest with his employer.
The employee admitted the conflict but contended that he had not signed an employment agreement containing a clause prohibiting such conduct. He added that although he had started his own company, he had not conducted any business because he did not have any clients yet. The Commissioner relied upon Phaswana and Figo Putso Construction CC (2018) 39 ILJ 1676 (CCMA) and the Labour Appeal Court decision in Sappi Novoboard (Pty) Ltd v Bolleurs (1998) 19 ILJ 784 (LAC), where it was held that:
“there can be no doubt that during the currency of his contract of employment the servant owes a fiduciary duty to his master which involves an obligation not to work against his master’s interest and that it is an implied term of the contract of employment that the employee will act in good faith towards his employer and that he will serve his employer honestly and faithfully”.
Furthermore, the LAC in Bakenrug Meat (Pty) Ltd t/a Joostenberg Meat v CCMA and others (2022) 43 ILJ 1272 (LAC) confirmed the CCMA commissioner’s conclusion that “the employees act in bad faith if a conflict of interest may arise even though no real competition actually results”.
The Commissioner found that the employee was obliged to honour his fiduciary duty to his employer which included him not working against the employer’s interests and that this is an implied standard imposed to regulate conduct within the workplace and it is applicable notwithstanding that it was not recorded as a contractual term.
This award points out that the absence of profitability of a business venture by an employee in direct conflict with an employer’s interest is immaterial to spare the employee from being found guilty of gross misconduct.
Declarations Of Interest And Conflict Clauses
Clients are encouraged to require employees at least to sign declarations of interest once every two years or yearly and a conflict of interest clause should be added to the employment contracts.
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