The recent case of Alan Bates and Others v Post Office Limited revisits the issue of when a duty of good faith can be implied into a contract and thereby potentially limit the actions that one or more parties may wish to take. the duty to bargain and its good faith component in South Africa, Lesotho and Canada and the obvious role played by legislative enactments in this development. Given this additional obligation that is imposed on them, employers are required to also prove that it guaranteed the employees’ safety and protection, before, when and after the employees disclose the identity of the perpetrators, before the employer can rely on derivative misconduct. The principle of good faith now forms part of the umbrella defence of public that the violence took place and the conduct of the employee at 3 of 2019 (the "ECA"). Three points of importance emerge from this decision. The employee’s fiduciary duty in terms of trust and confidentiality. In terms of the common law, the fiduciary duties of directors require that a director acts in good faith and in the best interests of the company. Always act in good faith, be loyal and have the employer’s best interest at hart. Both courts held that the arbitrator had acted unreasonably in finding that there was no evidence that the applicants were present during the episodes of violence, as inferential reasoning would suggest that they were. This fiduciary duty includes the following: The employee’s interests may not conflict with those of the employer. Tags. We need this to enable us to match you with other users from the same organisation, it is also part of the information that we share to our content providers ("Contributors") who contribute Content for free for your use. DA - 2011-06-01 DB - OpenUCT DP - University of Cape Town J1 - South African Law Journal KW - Law KW - Contract KW - Duty to Negotiate KW - Good Faith KW - South Africa LK - https://open.uct.ac.za PB - University of Cape Town PY - 2011 T1 - Agreements to agree: can there ever be an enforceable duty to negotiate in good faith? employees had been unfair. Furthermore, the right to fair labour practices in the Constitution envisages fair labour practices for employees and employers alike. Because of the high level of trust and responsibility imposed on an individual with a fiduciary duty, this duty is unilateral. identified as committing acts of violence; employees who were shown to be As is all too common with strikes in South In other countries, a legal duty to rescue may make people to provide resuscitation as volunteers. PRINT employees were guilty of derivative misconduct, the Constitutional This website uses cookies to ensure you get the best experience. finding on other facets of the employment relationship remain to be employer to rely on the concept of derivative misconduct. On this basis, the Constitutional Court upheld the decision of the arbitrator that the dismissal of the third category of employees had been unfair. This occurred in its recent decision in NUMSA obo Nganezi & Others v Dunlop Mixing and Technical Services (Pty) Ltd & Others. You’ll only need to do it once, and readership information is just for authors and is never sold to third parties. | In contract law, the implied covenant of good faith and fair dealing is a general presumption that the parties to a contract will deal with each other honestly, fairly, and in good faith, so as to not destroy the right of the other party or parties to receive the benefits of the contract. Section 76(3) of the Act states that a director of a company, when acting in that capacity, must exercise the powers and perform the functions of a director: relation to the duty of good faith will undoubtedly be applied in Dunlop Dunlop obtained an urgent interdict from under the obligation to report misconduct of their fellow employees seen. The chapter seeks to highlight in particular the role of the old Industrial Relations Court in South Africa in developing duty to bargain in when, and after the disclosure. the Labour Court held that their derivative misconduct was the In the strike situation, an employee would only be under the obligation to report misconduct of their fellow employees if the employer has guaranteed their safety and protection, before, when, and after the disclosure. 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. is the explicit acceptance that an employer owes a duty of good committed. However, Dunlop experienced Good faith The employee undertakes to serve you honestly and faithfully. The Constitutional Court drew a distinction between a fiduciary duty and the duty of good faith. This concept was confirmed in the case of Dunlop Mixing and Technical Services (Pty) Ltd and others v National Union of Metalworkers of South Africa (NUMSA)obo Nganezi and others [2016] 10 BLLR 1024 (LC), where the Labour Court held that an employee bound implicitly by a duty of good faith towards the employer breaches that duty by remaining silent about knowledge possessed by the employee … These were: The arbitrator found that the dismissal of the first two categories of employees had been fair but that the dismissal of the third category of employees had been substantively unfair. acts of violence; and. about your specific circumstances. On this basis, the Constitutional Reviewed by Peter le Roux, an executive consultant in ENSafrica’s employment department. However, Dunlop experienced difficulty in doing so, and decided to dismiss all striking employees – some having been identified as having been the perpetrators of the violence, and others on the basis of “derivative misconduct”. arbitrator's award that found that the dismissal of the third practices in the Constitution envisages fair labour practices for who is being asked to disclose information. Africa, violence emerged. But a contract of sale is a contract in which the law merely requires the parties to act in good faith, not in the utmost good faith, and does not impose a general duty of disclosure. the Labour Court to stop the violence, but the violence continued It prevents you and the other party from lying to or knowingly misleading each another about any matters related to your contract. This is known as the employee’s fiduciary duty. Sign Up for our free News Alerts - All the latest articles on your chosen topics condensed into a free bi-weekly email. foreman's homes were set alight, petrol bombs were thrown and The kinds of loss which arise if such risks eventuate may be either patrimonial or non-patrimonial. Agreements to Agree: Can There Ever Be an Enforceable Duty to Negotiate in Good Faith. On this basis, the Constitutional Court upheld the decision of and escalated – to the point where a manager and a POPULAR ARTICLES ON: Employment and HR from South Africa. Always act in good faith, be loyal and have the employer’s best interest at hart. Dunlop obtained an urgent interdict from the Labour Court to stop the violence, but the violence continued and escalated – to the point where a manager and a foreman’s homes were set alight, petrol bombs were thrown and death threats were written on billboards. Importantly, the critical point made by both FAWU v ABI and Leeson ("NUMSA"). is underpinned by the power play between employer and employees and perpetrators of the violence, and others on the basis of Hutchison, A. An employee breaches the implied duty of good faith towards his employer if he is aware of but remains silent about information which undermines his employer’s business interests. Ltd & Others. If you continue to use this site without changing your cookie settings we assume you consent to the use of cookies on this site. Breach her common law fiduciary duties to the applicant, by disclosing, divulging, exploiting and/or used in whole or in part by the respondent, or This occurred in its recent decision in NUMSA obo Nganezi & Others v Dunlop Mixing and Technical Services (Pty) Ltd & Others. Furthermore, the right to fair labour strike is no longer implicated in the analysis. All Rights Reserved. Although this judgment was issued in the context of strike This occurred in its recent decision in NUMSA obo The court in reaching its conclusion reasoned that an employee is bound by a duty of good faith to the employer and if the employee breaches such duty, this can justify dismissal. other contexts within the employment relationship. if the employer has guaranteed their safety and protection, before, 98:629). On the other hand, the duty of good faith is a lesser duty than a fiduciary duty. requires the employer to exercise its duty of good faith towards The duty of good faith is a fiduciary duty and requires, inter alia, that employees always act in the best interests of their employers. Nganezi & Others v Dunlop Mixing and Technical Services (Pty) Section 91 of the Labour Act goes further to exclude certain categories of persons from the above definition and, thereby, from the provisions of the Labour Act. important to have regard to the point made by the Constitutional misconduct" and that this constituted a breach of the Court interrogated the nature and scope of the duty of good In determining whether or not Dunlop had proven that the violence at least, the duty of good faith owed by an employer positively identified as being present when violence had been Employee Compensation For Workplace Injury In Nigeria – Legal Remedies, New Initiatives For Private Sector Workers To Launch In March 2021, Overview Of Employment Related Laws In Nigeria, Forced Leave, Retrenchments And Dismissals – Lockdown Labour Questions Answered, Amended (and Extended) Alert Level 3 Regulations: The Key Takeaways For Employers, Constitutional Court Finding: The High Court And The Labour Court Have Concurrent Jurisdiction On The Unlawful Termination Of Employment Contracts, If At First You Do Not Succeed, Try Again. employees who were positively identified as committing acts of violence; employees who were shown to be present when violence took place but did not participate in these acts of violence; and. Dunlop attempted to identify the individuals who took part in the Labour Appeal Court's findings was the view that the third Because of the high level of trust and responsibility … fiduciary duty, this duty is unilateral. beneficiary, which duties must be exercised for the sole purpose of But a contract of sale is a contract in which the law merely requires the parties to act in good faith, not in the utmost good faith, and does not impose a general duty of disclosure. 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. ... Get the latest information about COVID-19 from the South Africa Resource Portal. subordinated employee. These were: The arbitrator found that the dismissal of the first two For the first time in employment law jurisprudence, the South African Constitutional Court has considered the nature and scope of the duty of good faith within the context of the contract of employment. Specialist advice should be sought The judgments in these two cases emphasise that an express obligation in an agreement to act in good faith imposes an obligation on the parties to exercise good faith in the overall implementation of the agreement and to refrain from doing anything that might prejudice or detract from the rights of the other. Both courts held that the arbitrator had acted Mondaq uses cookies on this website. On this basis, the Constitutional Court held that the duty of good faith is a reciprocal duty, which the employer and employee both owe to each other. South African Law Journal, 128, 273. the arbitrator that the dismissal of the third category of Court held that the duty of good faith is a reciprocal duty, which To print this article, all you need is to be registered or login on Mondaq.com. that time, that the employee participated in or associated himself category of employees had been unfair. possible to infer, from the presence of the employee at the place The court held that a fiduciary duty applies to those persons Central to both the Labour Court and the majority decision in the Labour Appeal Court’s findings was the view that the third category of employees had been guilty of “derivative misconduct” and that this constituted a breach of the employees’ common law duty to act in good faith with regard to their employer. Because of the high faith. present when violence took place but did not participate in these Accordingly, perhaps a good faith duty is not so foreign a concept to English law and it may be that English law will eventually follow other legal systems in recognising this duty. Employers are not precluded from dismissing employees during the national lockdown, provided that such dismissals are implemented in terms of the LRA. 4. protected strike. The Constitutional Court drew a distinction between a fiduciary Through that decision, the Supreme Court articulated a duty of good faith as an "organizing principle", meaning that in carrying out a contract, a contracting party should have "appropriate regard to the legitimate contractual interests of the contracting partner" and "not seek to undermine those interests in bad faith". or herself with the violence. Employers Can Ensure Compliance With Popia Quickly And Easily, © Mondaq® Ltd 1994 - 2021. faith towards its employees. This means that the employee may not: - Compete with you; - Steal or be dishonest; or - Be disloyal. Non-disclosure of knowledge relevant to misconduct committed by fellow employees is an instance of a breach of the duty of good faith. called the strike, the National Union Metalworkers of South Africa employees who were positively their employees. Callow Inc. v Zollinger et al, 2020 SCC 45 ("Callow").In this decision, the Supreme Court sheds some further light on the duty of good faith contractual performance by examining what constitutes "active deception" and knowingly misleading another party about contractual performance. During August 2012, Dunlop’s employees embarked on a protected strike. death threats were written on billboards. The court said (see the judgment at para [66]) that the obligation to observe "the utmost good faith", imposed by this clause of the agreement, had a wider impact than simply requiring Woolworths to abide by the letter of the agreement. employment. The content of this article is intended to provide a general The duty of good faith is a fiduciary duty and requires, inter alia, that employees always act in the best interests of their employers. employees' safety and protection, before, when and after the This is known as the employee’s fiduciary duty. The reciprocal duty of good faith in strike situations. African Constitutional Court has considered the nature and scope of For the first time in employment law jurisprudence, the South NUMSA was then granted leave to appeal to the Constitutional Court. Parties to an agreement may include open terms which leave certain particulars open to future negotiation. Particularly, There are many other acts that go against the duty of good faith, and whenever an employee acts for his own advantage or benefit against you, he breaches his duty of good faith. Imposing an obligation to report misconduct of other employees would undermine that solidarity, and therefore requires the employer to exercise its duty of good faith towards their employees. A fiduciary duty requires total trust, good faith and honesty. Uncontroversially, and on general principle, a breach of the duty of good faith can justify a dismissal. A failure to comply with this fiduciary duty constitutes a material breach of the employment relationship and may render the employee liable for any loss occasioned by … This means the employee must put your interests before his own during and after working hours. The duty of good faith stands for the principle that directors and officers of a corporation in making all decisions in their capacities as corporate fiduciaries, must act with a conscious regard for their responsibilities as fiduciaries. a fiduciary duty. themselves by explaining that they were not present at the scene of SUBSCRIBE. Where the Bon Samaritain Law exists as in most developed countries, these volunteers are protected against lawsuits if they were only trying to help with good faith. By using our website you agree to our use of cookies as set out in our Privacy Policy. ... facts were that Speight had purchased the entire shareholding of a company that owned the Kingsburgh Hotel on the Natal South Coast for £33 500. © Mondaq® Ltd 1994 - 2021. On the other hand, the duty of good faith is a lesser duty than An employee breaches the implied duty of good faith towards his employer if he is aware of but remains silent about information which undermines his employer’s business interests. Thirdly, it is 48 of 2020 on 11 May 2020 pursuant to section 2(2) of the Employment Code Act No. level of trust and responsibility imposed on an individual with a The Constitutional Court held that the principles of Ubuntu ought to be infused into the employment contract, as the Breach her common law duty to act in good faith towards the applicant, to protect the interest of the applicant and not to place herself in a position where her interest conflicts with said duty. directors. Secondly, in the context of strike violence at least, the duty of good faith owed by an employer requires that the employer can guarantee the safety of an employee who is being asked to disclose information. the employer and employee both owe to each other. The most common example is a trustee of a trust, but fiduciaries can include attorneys, guardians, administrators of estates, trustees of … requires that the employer can guarantee the safety of an employee applicants were present during the episodes of violence, as In determining whether or not Dunlop had proven that the employees were guilty of derivative misconduct, the Constitutional Court interrogated the nature and scope of the duty of good faith. The court held that a fiduciary duty applies to those persons who have access to, or power in relation to, the affairs of a beneficiary, which duties must be exercised for the sole purpose of promoting the beneficiary’s interests. paper highlights the importance of fiduciary relationships with regard to implied terms of loyalty, good faith and discharge of duty in the best interest of the company by responsible senior managers and directors. The Constitutional Court further stated that the fact that a protected strike turned violent does not mean that the right to strike is no longer implicated in the analysis. The Constitutional Court further stated that the fact that a third category of employees had been substantively unfair. The duty of good faith. the violence and could, therefore, not identify the challenged the reasonableness of that part of the of the of other employees would undermine that solidarity, and therefore For the first time in employment law jurisprudence, the South African Constitutional Court has considered the nature and scope of the duty of good faith within the context of the contract of employment. Company. difficult to argue that a duty of good faith could or should be implied into an English law contract. This fiduciary duty includes the following: The employee’s interests may not conflict with those of the employer. The arbitrator distinguished Its challenge was successful failure to identify the perpetrators of the violence or exonerate duty and the duty of good faith. relationship, where the employer has unfair power over its duty of directors by compelling them to act honestly, in good faith and in a manner they reasonably believe to be in the best interests of, and for the benefit of, their companies. In the result, the good faith clause in the applicable agreement, quoted, above, proved decisive. The reciprocal duty of good faith undercuts derivative misconduct. During August 2012, Dunlop's employees embarked on a The employee’s failure to disclose the information to his employer would be a breach of the duty of good faith … The Constitutional Court drew a distinction between a fiduciary duty and the duty of good faith. The minimum obligatory annual increase is set at no less than 7% of the basic salary which is the basis for calculation of social insurance. Its challenge was successful in both the Labour Court and the Labour Appeal Court. The Constitutional Court held that the principles of Ubuntu ought to be infused into the employment contract, as the employment relationship is an unequal and hierarchical relationship, where the employer has unfair power over its subordinated employee. By Andrew Hutchison. Because it is not the intention of the legislator to … 3. who have access to, or power in relation to, the affairs of a categories of employees had been fair but that the dismissal of the The impact of this finding on other facets of the employment relationship remain to be seen. protected strike turned violent does not mean that the right to employees disclose the identity of the perpetrators, before the employer can rely on derivative misconduct. Dunlop challenged the reasonableness of that part of the of the arbitrator’s award that found that the dismissal of the third category of employees had been unfair. The right to strike is underpinned by the power play between employer and employees and employees only have the power to strike if there is solidarity amongst the employees. The duty of good faith is a general duty and encompasses various aspects, including the duty of employees to act in a subordinate manner and comply with the directions and instructions of the employer in regard to their daily duties and work. in both the Labour Court and the Labour Appeal Court. The dismissed employees referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (“CCMA”). In the strike situation, an employee would only be Section 76(3) of the Act states that a director of a company, when acting in that capacity, must exercise the powers and perform the functions of a director: The arbitrator distinguished between three categories of employees. The employee’s failure to disclose the information to his employer would be a breach of the duty of good faith … the Commission for Conciliation, Mediation and Arbitration However, whilst the difficulty with such an argument almost certainly remains, a number of recent cases have indicated that, in certain circumstances, an implied duty of good faith … The first is the explicit acceptance that an employer owes a duty of good faith towards its employees. If he breaches this duty of good faith, you can dismiss him. Although this judgment was issued in the context of strike violence and derivative misconduct, the principles articulated in relation to the duty of good faith will undoubtedly be applied in other contexts within the employment relationship. employees and employers alike. Introduction. A fiduciary duty requires total trust, good faith and honesty. As is all too common with strikes in South Africa, violence emerged. employees – some having been identified as having been the The duty of loyalty also precludes acting for unlawful purposes and affirmatively requires directors to make a good faith effort to monitor the corporation’s affairs and compliance with law.” (Strine, Hamermesh, et al., “Loyalty’s Core Demand: The Defining Role of Good Faith in Corporation Law,” Georgetown Law Journal, Vol. It may be This includes: without limitation avoiding conflicts of interest, not exceeding the company’s powers and accounting for secret profits. The court held that a fiduciary duty applies to those persons who have access to, or power in relation to, the affairs of a beneficiary, which duties must be exercised for the sole purpose of promoting the beneficiary's interests. The first Imposing an obligation to report misconduct their employer. Court that, in some instances, it may not be necessary for the employees only have the power to strike if there is solidarity 26.2. the Applicant had a duty to act in good faith, including the duty to work honestly, to desist from any form of nepotism or favouritism, to act within their authority and to comply with the Respondent's procurement rules and policies, as well as section 57 of the Public Finance Management Act, 1999; 26.3. ("CCMA"). The most common example is a trustee of a trust, but fiduciaries can include attorneys, guardians, administrators of estates, trustees of … the duty of good faith within the context of the contract of then granted leave to appeal to the Constitutional Court. Free, unlimited access to more than half a million articles (one-article limit removed) from the diverse perspectives of 5,000 leading law, accountancy and advisory firms, Articles tailored to your interests and optional alerts about important changes, Receive priority invitations to relevant webinars and events. (2011). perpetrators. between three categories of employees. Accordingly, perhaps a good faith duty is not so foreign a concept to English law and it may be that English law will eventually follow other legal systems in recognising this duty. Central to both the Labour Court and the majority decision in The Minister of Labour issued the Employment Code (Exemption) Regulations, Statutory Instrument No.