May 26, 2022
“Signs of the “Great Resignation” are rippling across South Africa” (Business Insider report, 22 April 2022)
The global pandemic-induced “Great Resignation” trend is upon us, and both employers and employees need to be aware of how our law views the whole question of employee resignation.
A recent Labour Court decision gives some valuable guidance –
The sick employee who tried to withdraw his resignation after a “miraculous” recovery
- The Deputy Financial Officer of a municipality under administration tendered in writing his immediate resignation from his post on the grounds of ill health.
- Two weeks later he sought to withdraw his resignation stating “It gives me pleasure that my health as prompted resignation has miraculously improved that I am normal to endure the temperature in the area”.
- The municipality told him his withdrawal of resignation was not accepted and he applied to the Labour Court for an order reinstating him to his position with full salary and benefits.
- Many of the facts were in dispute, but critically the Court found that the employee “has by word shown a clear and unambiguous intention not to go on with his contract of employment”, that he did not act in the heat of the moment, that his failure to report for duty thereafter “confirms his subjective intention to quit”, that he communicated his resignation to the correct municipal official who had not objected to it and could be presumed to have accepted it, and that his request to withdraw his resignation was indeed refused by his employer.
The Court held accordingly that the employee’s resignation stood. In doing so, it answered a variety of important questions as follows –
The law on resignation: 7 critical questions answered
- What is resignation and how does it affect the contract of employment?
“Resignation as a voluntary act is a unilateral act that ends the employment relationship.” (The “voluntary” part is important here! In this case the employee “…consciously elected to resign. He must be allowed to remain in that freely chosen path”.).
- When does resignation take effect?
“Resignation takes effect once communicated to an employer…”.
- Who must resignation be communicated to?
When it comes to a corporate employer “In my view anyone superior to an employee is sufficient. He or she represents an employer one way or another.” (No doubt some contracts of employment will specify exactly how and to whom a resignation must be communicated).
- Must an employer accept a resignation to make it effective?
No, “…there is no legal requirement that the resignation must be accepted.”
- What if the employee must serve a notice period?
This makes no difference; the resignation is effective once communicated: “…This is so even if an employee is contractually obligated to serve a notice period and does not serve it.”
- Can an employee unilaterally withdraw a resignation?
No, “… it is incapable of being withdrawn unless an employer consents thereto”.
- If an employer does accept a withdrawal of resignation, is that a reinstatement?
No, “…where an employee withdraws a resignation, all it means is that such an employee is seeking to be rehired or re-employed … A contract of employment can only be brought back from the ashes in the same way it is conceived; namely offer and acceptance.” (The lesson for employers here is to be crystal clear in rejecting a request to withdraw a resignation, as anything less might be construed as re-employment).
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
May 17, 2022
“The criterion that harassment involves unwanted conduct distinguishes acts of harassment from acceptable conduct in the workplace” (extract from the Code, emphasis added)With effect from 18 March 2022, a new “Code of Good Practice on the Prevention and Elimination of Violence and Harassment in the Workplace” came into effect. Every employer and employee should know about it. The new Code has replaced the old “Code of Good Practice for the Handling of Sexual Harassment Cases in the Workplace”. It is much wider in every way possible because it “… is intended to address the prevention, elimination, and management of all forms of harassment that pervade the workplace” (extract from the Code, emphasis added). Of necessity, what is laid out below is no more than an overview of an extremely complex topic so in any doubt seek professional advice specific to your circumstances!
In a nutshell…There’s a lot more detail below, but in essence –
- The Code applies to all employers, employees, and workplaces (office-based or remote)
- Its reach is extremely wide in prohibiting any and all forms of workplace harassment
- Employers have a raft of duties to comply with in relation to assessing workplace risks of harassment, and in formulating and applying procedures to prevent and deal with it
- Failure to comply risks substantial liability.
Who does the Code apply to?In a nutshell, it applies to pretty much everyone involved in any business with one or more employees, the Code making it clear to start with that all employers and employees, in both the formal and informal sectors, are included. Specifically mentioned as possible perpetrators and victims of harassment, in addition to employers and employees, are owners, managers, supervisors, job seekers and job applicants, persons in training including interns, apprentices and persons on learnerships, volunteers, clients and customers, suppliers, contractors, and (the very wide catch-all at the end) “others having dealings with a business”.
When and where does it apply?It applies virtually everywhere, including remote and out-of-office situations – “in any situation in which the employee is working, or which is related to their work”, including the workplace itself (widely defined), “work-related trips, travel, training, events, or social activities”, “work-related communications, including those enabled by information and communication technologies and internet based platforms”, employer provided accommodation and transport, and “in the case of employees who work virtually from their homes, or any place other than the employer’s premises, the location where they are working constitutes the workplace.”
What must you as an employer do about it?In broad terms you must –
- Take proactive and remedial steps to prevent all forms of harassment in the workplace
- Conduct an assessment of the risk of harassment that employees are exposed to while performing their duties (emphasized as this is probably the best place to start!)
- Apply an attitude of zero tolerance towards harassment
- Create and maintain a working environment in which the dignity of employees is respected
- Create and maintain a climate in the workplace in which employees who raise complaints about harassment will not feel that their grievances are ignored or trivialized, or fear reprisals
- Adopt a harassment policy, which should take cognisance of and be guided by the provisions of the Code
- Develop clear procedures to deal with harassment, which should enable the resolution of problems in a gender sensitive, confidential, efficient, and effective manner.
What is “harassment”?The following extract from the Code gives an idea of just how broad the general definitions of harassment are –
What is “sexual harassment”?Again, the definitions here are extremely wide and include any form of unwanted conduct of a sexual nature including physical, verbal, or nonverbal conduct, whether expressed directly or indirectly. Specific examples that seem to have attracted the most media attention include sexual innuendos, comments with sexual overtones, sex related jokes, whistling of a sexual nature, sexually explicit texts, and “unwelcome gestures”, but there are many more.
What about “racial, ethnic or social origin harassment”?Again, the definitions are wide here, including the concept that “Racial harassment is unwanted conduct which can be persistent or a single incident that is harmful, demeaning, humiliating or creates a hostile or intimidating environment” and illustrated by this extract from the Code – Bottom line: If you think something could possibly be classified as “workplace harassment”, it almost certainly will be! Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
March 1, 2022
“She failed to disclose these obviously material activities to her employer and was therefore manifestly acting in violation of her duty of good faith to her employer.” (Extract from judgment below)“Moonlighting” is the practice of employees boosting their monthly income with a “side-job” or “side-business”. It has been a feature of working relationships since the dawn of history, but now the pandemic lockdowns and the shift to the “gig economy” (where independent contractors and freelancers are paid for short-term assignments) have seen dramatic increases in the number of employees forced to supplement their incomes in this way. Some stats suggest that now almost half of all employees have a second source of income, and both they and their employers need to take note of a recent Labour Appeal Court decision confirming the dismissal of an employee for failing to disclose her side-business to her employer.
Selling biltong secretly
- A sales agent for a meat products company was found to be running her own “formal business” (with at least one full-time employee and from rented premises) selling biltong over weekends. She had not only kept that fact from her employer but had positively stated in a letter to it that she had no source of income other than her salary and maintenance from her divorce.
- Found guilty of dishonesty because she failed to advise her employer of her side-line business, she was dismissed.
- She referred an unfair dismissal dispute to the CCMA (Commission for Conciliation, Mediation and Arbitration) and, long story short, she ended up before the Labour Appeal Court which confirmed her dismissal, finding that –
- “[She] failed to disclose an essential and important fact that she was running ‘a side-line business’ in the market for the sale of meat products, albeit that they might not have been identical to the meat products which were sold by [her employer]”.
- “That she was able to discharge her duties to [her employer]” does not take her case any further.”
- The CCMA’s conclusion that “employees act in bad faith if conflict of interest may arise even though no real competition actually results” was, held the Court, unassailable.
- “She was employed as a sales representative in a business that was involved in the sale of meat products. As a side-line business, she conducted a business which involved the sale of biltong, namely a meat product. She failed to disclose these obviously material activities to her employer and was therefore manifestly acting in violation of her duty of good faith to her employer.” (Emphasis supplied).
A note for employers…Avoid any doubt in your workplace with a clear, balanced and fair policy on the question of employees holding second jobs or running “side-hustles” and include a clause to that effect in your employment contracts. Professional advice is vital given the stakes in any labour law dispute.
And a note for employees…Many employers will be very understanding if you are totally honest with them about any moonlighting you get involved in, whether it’s through economic necessity or just a desire to pursue something you are passionate about. Disclose everything in writing (keep proof!), whether or not you will be impinging on your working hours. You risk dismissal even if there is “no real competition” with your main job, and even if your work performance is not impacted – it’s the “bad faith” element of secreting your side business that will sink your case. Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
March 1, 2022
Employers and employees need to keep an eye on the annual increases in both the National Minimum Wage and the Earnings Threshold, summarised below for your convenience. Both are effective from 1 March 2022.
The National Minimum Wage increase
The National Minimum Wage (NMW) for each ordinary hour worked has been increased by 6.9% from R21,69 to R23.19.
To quote from Minister of Employment and Labour Thulas Nxesi’s announcement –
“As in previous years, the adjustment provides exceptions for several worker groups, including:
- Farmworkers are entitled to a minimum wage of R23.19 per hour.
- Domestic workers are entitled to a minimum wage of R23.19 per hour.
- Workers employed on an expanded public works programme are entitled to a minimum wage of R12.75 per hour.
- Workers who have concluded learnership agreements contemplated in section 17 of the Skills Development Act, 1998 (Act No 97 of 1998), are entitled to allowances contained in schedule 2.
It is illegal and unfair labour practice for an employer to unilaterally change working hours or other employment conditions in order to implement the NMW. The NMW is the amount payable for ordinary hours of work and excludes payment of allowances (such as transportation, tools, food, or lodging), payments in kind (board or lodging), tips, bonuses, and gifts.”
For the first time domestic workers have been brought into line with the NMW via a 21.5% increase from 2021’s R19.09 per hour. Assuming a work month of 21 days x 8 hours per day, R23.19 per hour equates to R3,895.92 per month. The Living Wage calculator will help you check whether or not you are actually paying your domestic worker enough to cover a household’s “minimal need”.
The Earnings Threshold Increase
The annual earnings threshold above which employees lose some of the protections of the Basic Conditions of Employment Act has been increased from R211,596.30 p.a. to R224,080.48 p.a.
“Earnings” (for this purpose only) means “the regular annual remuneration before deductions, i.e. income tax, pension, medical and similar payments but excluding similar payments (contributions) made by the employer in respect of the employee: Provided that subsistence and transport allowances received, achievement awards and payments for overtime worked shall not be regarded as remuneration”.
To quote again from the Minister’s announcement: “These sections protect vulnerable employees by regulating, among other things, working hours, overtime,… compressed schedules, working time, average hours of work, meals interval, daily and weekly rest periods, pay for work on Sundays, night work, and work on public holidays.”
The threshold also impacts on some of the protections provided in the Labour Relations Act –
- Employees earning less than the threshold, if contracted to a client for more than three months through a temporary employment service (“labour broker”) are deemed to be employed by the client unless they are actually performing a temporary service.
- Fixed-term employees earning below the threshold are deemed to be employed indefinitely after three months unless the employer has a justifiable reason for fixing the term of the contract.
Turning to the Employment Equity Act, employees earning over the threshold can only refer unfair discrimination disputes (other than disputes based on sexual harassment) to the Commission for Conciliation, Mediation and Arbitration (CCMA) with the consent of all parties. Otherwise they must go to the Labour Court for arbitration.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
November 12, 2021
“The seriousness and gravity of offences involving racism and racial hatred cannot be over-emphasised. Employers are under a duty to provide a safe working environment and to protect all employees from harm, whether physical or emotional, whether they are black or white. An employer can be held liable for failure to take any action against its employees who are guilty of such conduct. South Africa is a country plagued by a history of racism and violence and social media plays a significant role in the incitement of racial hatred and violence. The power of such posts on social media inciting racial hatred cannot be undermined.” (Extract from judgment below)Here’s yet another warning from our courts to tread with extreme care when posting anything online. Social media channels (particularly it seems Facebook) are favourite arenas for insults, threats and incitements to hatred and violence. “Think before you post” is the only safe option here. Misusing social media unlawfully is dangerous for anyone and at any time – a damages claim for defamation or a subpoena from the Equality Court could be the least of an offender’s worries. When it comes to employees, the spectre of summary dismissal will always loom large if any form of racism or other serious misconduct is involved. A recent Labour Court decision illustrates –
Off duty, but still dismissed for a racist Facebook comment
- A “general worker” with 10 years’ service in a high-profile company with a multicultural workforce posted a comment on the Eyewitness News Facebook page that all white people must be killed (“Whites mz b all killed”) and was charged at a disciplinary enquiry with two offences –
- Making a racist comment on social media, and
- Thereby acting contrary to the interests of his employer.
- At the disciplinary enquiry, the employee denied that he had posted the Facebook comment and claimed that his Facebook page had been hacked.
- Found guilty on both charges, he referred a dispute to the CCMA (Commission for Conciliation, Mediation and Arbitration), alleging unfair dismissal. It was at this stage that he changed his story to admit that he had in fact made the offending Facebook post.
- The commissioner ultimately upheld the dismissal as both substantively and procedurally fair, a decision taken on review by the employee to the Labour Court.
- The Labour Court dismissed the review application, finding firstly that even if the employer had had no disciplinary code in place “any employee would know that it was an extremely serious offence for a member of one race group to call for the killing of all members of another race group.” In any event, the employee had in fact been trained in the employer’s disciplinary code, and that prescribed dismissal for the offence of racism.
- The employer had a duty to protect its employees from racist misconduct and had “consistently charged people for offences involving racism. The last employee that had been dismissed for racism was charged and dismissed for using the “K” word.”
- It was irrelevant that the employee had made the Facebook post outside his workplace and outside his working hours as “it is the attitude that persists which, when on duty, affects the employment relationship.”
- He had also exposed his employer to a risk of reputational damage and had acted contrary to its interests as per the second disciplinary charge.
- The employee’s dismissal stands.
October 7, 2021
As the Covid-19 pandemic continues to wreak havoc around the world, an increasing number of businesses find themselves walking a tightrope between their obligations to, on the one hand, both protect the public and provide a safe and healthy workplace, and on the other hand to respect the individual constitutional rights of employees to make their own choices in matters of bodily and psychological integrity, religion, belief and opinion.
These deeply conflicting rights and obligations have left employers asking themselves questions like: “Must we insist on our employees having the vaccination to protect their colleagues, our visitors, our customers and the public at large?” and “If so, can we actually force unwilling employees to get jabbed or are we in for unfair practice or wrongful dismissal claims?”
The Minister’s “Amended Consolidated Direction”
On 11 June 2021 the Minister of Employment and Labour issued an “Amended Consolidated Direction on Occupational Health and Safety Measures in Certain Workplaces” under the National Disaster Regulations in an attempt to address those questions.
The Direction is long, detailed and complex, setting out a host of “minimum measure” requirements for workplace safety during the pandemic, so specific professional advice is essential here. But in a nutshell there is now an official guideline for employers wanting to make vaccination compulsory or partially compulsory. At a minimum, comply with all these specified obligations –
- Undertake a risk assessment
This risk assessment (supposed to have been completed by 2 July 2021) was to determine (a) whether vaccinations were to be made mandatory considering the “operational requirements of the workplace” and if so (b) who was to be compulsorily vaccinated, taking into account the risk of transmission to employees through their work and their risk for severe Covid-19 disease or death due to their age or co-morbidities.
In assessing whether or not your particular workplace needs a mandatory vaccination policy, include factors such as the ongoing requirement to enable employees to work from home where possible (still applicable even under Adjusted Level 1), the nature of the work in question, whether adequate ventilation is possible, whether adequate social distancing measures are possible and so on – the list is endless.
As regards that 2 July deadline, it seems likely that many (perhaps most) employers missed it. If you are in that boat, what should you do now? There is no clear guidance on that, but the consensus of expert opinion seems to be that you should still comply, as soon as possible.
- Develop or adjust a vaccination and protective measures plan
Based on the risk assessment, this plan must outline both what protective measures you have in place, and what vaccination measures you intend to implement.
- Consult on the risk assessment and plan
Consultation must be with any representative trade union and any health and safety committee or representative. We should discuss under this heading also the questions of communication, education and training. We all know that together with some rational and valid concerns, there is an avalanche of fake news around Covid-19 and vaccinations. Inform your employees fully of their rights, help them to distinguish fact from fake, address their individual fears and concerns, explain the benefits of your plan to everyone, and strive for consensus.
- Make the plan available
The plan must be available to an Occupational Health and Safety Act inspector and to the person/s listed in point 3 above.
- Other requirements and factors
No list of this nature can ever be comprehensive but consider factors such as paid time off and transport to vaccination sites, sick leave for employees who suffer side-effects, counselling for “vaccine hesitant” employees and the like. There are also defined procedures to be followed when employees raise medical or ethical objections to being vaccinated (for example, the employer may need to try to find an alternative position in the business for such an employee).
And of course every workplace will be different, which leads us to …
The bottom line
There is talk of workplace vaccination being officially made compulsory either across the board or in certain sectors, whilst media reports suggest that an increasing number of large employers are already implementing compulsory vaccination policies on the basis of legal advice received. There is also much speculation that our courts will support dismissal of employees who refuse vaccination in appropriate cases, and there is even a report of a High Court Judge insisting on either proofs of vaccination or negative PCR tests “for the general well-being of all parties in attendance at court”.
Bear in mind however that every situation, every workplace, and every employee will be unique – and with the high stakes involved, tread with extreme care and only after taking professional advice.
June 30, 2020
Unemployed, Can’t Pay Bond and Credit Instalments?
“Credit Life Insurance” May Save You
If you are one of the many employees retrenched or put on short pay or unpaid leave as a result of the COVID-19 crisis and lockdown, you will be wondering how to cover the monthly instalments on your mortgage bond and other credit agreements. You have no doubt heard of the “payment holidays” banks are offering, but remember that although these are a lot better than losing your house, car etc, they are no free lunch. Interest and fees will still be building up.
Credit life insurance is not just death cover
That’s why you need to check right now whether or not any of your credit agreements are covered by “credit life insurance”. Many people don’t even realise they have this cover in place, and those that do may look at the “life” part of the name and think “well that’s no good to me or my family, I’m unemployed not dead”. The good news there is that most policies cover a host of other events leaving you unable to pay instalments – see below for more.
Do you have cover?
You may well have this cover in place without even realising it because it is commonly required when you take out any form of credit – think mortgage bonds, vehicle finance, credit cards, retail credit (store cards etc) and so on.
If you aren’t sure, check your latest bond or credit statement for any sign of an insurance premium deduction (it may be called “balance protection” or the like). Then contact the bank (or whichever credit grantor you are with) and ask them to check. You may not have it for example if at the time you ceded another life policy to the credit grantor.
What are you covered for?
Check what the terms of your particular policy are, but the minimum cover required by National Credit Act Regulations (which only affect credit agreements entered into on or after 9 August 2017) is –
- Death or permanent disability: The outstanding balance of your total obligations under the credit agreement is covered.
- Unemployment or inability to earn an income: You are covered until you find employment or are able to earn an income, with a maximum of 12 months’ instalments.
- On temporary disability: You are covered until you are no longer disabled, with a maximum of 12 months’ instalments.
Exclusions – the Regulations allow a long list of exclusions to be incorporated in your policy so check which apply to you. Most of them are common sense – for example lawful dismissal, retirement or resignation from employment – but if you are told that a particular exclusion applies to you and you don’t agree ask your professional advisor for advice before conceding anything. Employers may be able to assist in this regard when structuring crisis outcomes with staff, but remember to do so only after taking your own legal advice!
Self-employed people and pensioners should check what cover they have under their particular policy, and what terms apply to them.
April 17, 2020
“The secret of crisis management is not good vs. bad, it’s preventing the bad from getting worse” (Andy Gilman)
We can only guess at how the COVID-19 coronavirus outbreak will end, but let’s all take whatever concrete steps we can right now to lessen its impact on our personal lives, on our businesses, and on our country.
One of those steps is for businesses to find ways of continuing to operate as normally as possible, given of course the exceptional times we are living through. And as employers, many businesses will find themselves facing some novel challenges, particularly during the National Lockdown…
Small businesses – the new relief programs
A whole raft of support and relief programs has been announced. Some still need to be finalised and the situation is changing daily, so keep an eye on the media and incorporate into your business survival plan all relief channels you think may be open to you. At date of writing, these are the main ones –
- The DSBD (Department of Small Business Development) will provide relief to businesses in several categories. Call the DSBD on its 0860 663 7867 hotline or email firstname.lastname@example.org to see if you quality. Apply at https://smmesa.gov.za/.
- The DTI (Department of Trade and Industry) is set to provide relief for large businesses as well as small. Keep an eye on the DTI’s website for developments.
- The Solidarity Fund has been set up with R150 million from the government to, amongst other things, assist and support those affected (contact details here).
- Employer and employee relief: Access the “Easy Guide for employers on COVID19” here and read up on the “Temporary Employer/Employee Relief Scheme” and UIF benefits from a special R30bn National Disaster Benefit Fund. Confirmation that employees who fall victim to the virus will be paid through the Compensation Fund – details here.
- Other funds and relief measures: The Rupert and Oppenheimer families have pledged R1 billion each to help struggling small businesses and employees – the details are not available at date of writing. Read the President’s speech here for more on planned or implemented measures involving tax relief, changes to the Competition Act, a fund to support the tourism sector, and more.
Employers – comply with the law!
From a legal perspective, employers in particular need to have a solid action plan in place to ensure that they comply with all our many employment laws, which will continue to apply as is, unless and until government announces any new measures to the contrary.
Detailed planning will not be easy. With the situation changing daily, keep informed of developments and keep all your plans flexible.
In any event there is unfortunately no “one size fits all” answer to questions like “Can I dismiss an employee who tests positive for COVID-19?”, “Can my employees insist on working from home?”, “Can I start retrenching?”, “Can I prohibit employees from travelling abroad for personal reasons?”, “What steps must I take to ensure a safe working environment and what rules can I put in place to underpin them?”.
The list is endless and the answers to these questions will depend upon your Lockdown exemption status, your particular employment contracts, business circumstances, operational needs, and so on.
Your employee action plan
We need to get used to constant change and uncertainty, but there are steps you can take now to plan for as many eventualities as possible –
- As a start, incorporate into your “COVID-19 Business Plan” all the possible scenarios you can think of, both during the National Lockdown and after it ends.
- Then brainstorm – with your employees where you can – a list of all the employment-related problems you and they might face. Use that in turn to make a list of questions you will need the answers to under each scenario.
- Then, make sure you are fully prepared to deal with whatever may come your way by taking specific legal advice on each and every one of those questions.
March 30, 2020
“…the default position is that an executive director or a senior employee may not carry on business activities which fall within the scope of his company’s business during the time when he serves as director or works as employee. The default position however changes on resignation.” (Extract from judgment below)
What happens if relations between you and your fellow company directors sour to the extent that a director leaves? Can he or she immediately open up a new business in direct competition to you?
A recent High Court decision both addresses that knotty question, and highlights a quick and easy solution.
Fishing for business: “Big Catch” claims R24m
- Big Catch Fishing Tackle (Pty) Ltd markets and hosts fishing and fly fishing tours in both local and international waters.
- The company’s two directors and shareholders fell out, culminating in one director accusing the other of serious breaches of his duties as director.
- Although hotly disputing any wrongdoing he resigned his directorship (under, he says, duress and coercion). He remains a shareholder.
- Big Catch is now suing the ex-director for some R24m in “past” and “future” damages, relying on disputed claims of improper or unlawful conduct which include the channeling away of business from Big Catch, misappropriating stock, diverting payment of commissions and acting recklessly and without authority. Whether or not these allegations will be proved eventually will only be determined when the main case finally goes to trial.
- What is of interest to us at this stage is Big Catch’s interim application to the High Court to interdict the ex-director and his new business (Upstream Fly Fishing) from competing with Big Catch.
Ex-director off the hook
- Directors have a range of fiduciary duties towards their companies. They must at all times act in good faith and in the best interests of the company. They must avoid conflicts of interest. They cannot compete with the company nor make secret profits. “The default position”, as the Court in this case put it, “is that an executive director or a senior employee may not carry on business activities which fall within the scope of his company’s business during the time when he serves as director or works as employee.”
- Big Catch had to convince the Court that those duties survive resignation unchanged. But, held the Court, that “default position” changes on resignation and “the director or employee does not commit a breach of his fiduciary duty merely because he takes steps to ensure that, on ceasing to be a director or employee, he can continue to make a living even by setting up a business in competition with his former company or by joining a competitor and then pursuing opportunities similar in nature to those targeted by his former company.”
- Although a director’s fiduciary duty does indeed survive departure, “the content of that duty does not remain the same … The duty will only be breached after resignation if it involves the use of confidential information or violates an interest of the company that is worthy of protection in some other way” (emphasis supplied).
- In other words, a company cannot simply say “our ex-director is breaching an ongoing fiduciary duty towards us”, it must go further and actively prove a right to protection. Big Catch in this case being unable to make out its case, the Court dismissed the application with costs and the ex-director is off the hook, at least for now.
Big Catch’s big mistake – no restraints of trade
Round 1 therefore to the ex-director; a victory made easier by Big Catch’s failure to put restraints of trade in place for all its directors and senior employees.
As the Court put it “…in the absence of a restraint of trade, the onus shifts to the director’s former company to justify the interdict both in law and in fact” and “…a company that wishes to prevent a director or employee from competing with it after resignation should either do so by way of imposing a reasonable restraint of trade or it will have to persuade a Court that it has an interest worthy of protection, such as confidential information, client lists or connections, that justifies an interdict.”
Bottom line – make protecting your company easy with restraints of trade!
February 20, 2020
“People who say they sleep like a baby usually don’t have one” (Psychologist Leo J Burke)
It has taken over a year of confusion and delay around when new changes will be implemented, but finally your extended rights to parental leave and to an Unemployment Insurance Fund (UIF) claim have fully commenced.
Here’s an update/refresher –
- New mothers are still entitled to 4 consecutive months’ maternity leave.
- New “parents” (which would include fathers and same-sex partners) are entitled to 10 consecutive days’ “parental leave”.
- An adoptive parent of a child under 2 years old is entitled to 10 consecutive weeks’ adoption leave. Where there are two adoptive parents, the other is entitled to only the 10 consecutive days’ “parental leave” (the two adoptive parents should decide between them who gets 10 weeks and who gets 10 days).
- Commissioning parents in a surrogacy agreement have the same entitlements as adoptive parents.
- The law does not force your employer to give you paid leave – the above entitlements are for unpaid leave only. So unless your employment contract entitles you to paid leave you are limited to claiming from the UIF (assuming you are a qualifying contributor). That will give you 66% of your salary subject to a standard earnings cap.
And a note for employers: if you haven’t already done so, take advice now on reviewing your maternity and parental leave policies.