Employment law update – Dishonesty in the fulfillment of a suspensive condition

May 1st, 2017
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Nadine Mather BA LLB (cum laude) (Rhodes) is an attorney at Bowmans in Johannesburg.

In Kawalya-Kagwa v Development Bank of Southern Africa [2017] 1 BLLR 33 (LC), the applicant and the bank entered into a fixed term contract of employment in which the applicant would be employed as a General Manager, subject to the condition that he obtain a valid work permit. While the applicant was in the process of obtaining his work permit, he suggested that he continue to work for the bank without pay. The bank agreed to the applicant’s proposal but set a deadline for him to secure a valid work permit, failing which the offer of employment would lapse with immediate effect. When the applicant ultimately presented a copy of his work permit to the bank, the bank addressed a letter to the applicant, welcoming him to the bank and confirming his fixed term contract of employment.

Subsequently, the bank formed suspicions about the authenticity of the applicant’s work permit and was advised by an immigration law expert that the work permit was in fact fraudulent. The bank informed the applicant that he need not report for duty and his salary was stopped. Following this, the bank instructed the applicant to provide it with information relevant to the investigation into the validity of his work permit. When the applicant refused, the bank informed the applicant that he had failed to comply with a reasonable instruction and that it would take appropriate disciplinary action against him.

The applicant then referred a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA), alleging that the bank had committed an unfair labour practice by unfairly suspending him without pay. Simultaneously, the applicant launched an urgent application to the Labour Court (LC) seeking interim relief that the bank pay him his salary of which he had been deprived from the date he presented his permit, pending the outcome of the unfair labour practice dispute. The bank opposed the applicant’s claim, alleging that the applicant had failed to fulfil the suspensive condition in his employment contract by not obtaining a valid work permit.

The question before the LC was whether, on production of the work permit, the suspensive condition in the employment contract was fulfilled and the applicant became an employee of the bank. In the court’s view, the bank had acknowledged that the applicant had satisfied the suspensive condition when he presented a copy of his work permit. The fact that the bank harboured suspicions about the authenticity of the permit could not in itself establish that the suspensive condition had not been fulfilled and at no stage did the bank categorically inform the applicant that the permit he had presented was invalid.

The conclusion that the applicant was in fact an employee was further supported by the bank’s threat of disciplinary action. In this regard, the court held that the bank could not have it both ways – it could not contend that the applicant was not an employee and at the same time, that he was subject to its disciplinary code and procedures. Accordingly, for purposes of the application, the court had to accept that the bank did, on face value, accept that the work permit was valid and that the applicant was an employee of the bank.

Although the court found that the applicant was indeed an employee of the bank, the applicant failed to discharge all the requirements for the urgent interim relief in that he had not produced evidence of irreparable harm or that there was no alternative satisfactory remedy. The application was accordingly dismissed.

The sanctity of settlement agreements

In Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Ltd and Another [2017] 1 BLLR 1 (CC), the employee was employed as a Regional Human Resources Director. It subsequently came to the employer’s attention that during the employee’s appointment interview, he had untruthfully identified Unilever as his then employer, whereas in truth it was Standard Chartered Bank. This misrepresentation had induced the employee’s current employer to pay him a sign-on bonus of US$ 40 000. Before the employee was dismissed for misrepresenting the identity of his then employer, he concluded a ‘mutual separation’ agreement in which he, inter alia, waived all rights to contest his dismissal under the Labour Relations Act 66 of 1995 (LRA).

The employee later claimed that he was coerced into signing the separation agreement and referred an urgent application to the Labour Court (LC) for a declaratory order to this effect. The employee’s application to the LC was dismissed, as was the employee’s appeal to the Labour Appeal Court (LAC). On a further appeal to the Constitutional Court (CC), the employee contended that he had been denied a fair pre-dismissal hearing and that the separation agreement denied him his constitutional right to approach the Commission for Conciliation, Mediation and Arbitration or the LC.

The CC found that the only issue worth pursuing was whether the separation agreement was against public policy for excluding judicial duress. In this regard, the LAC had held that the bar to redress under the LRA was permissible, given the relationship between the contracting parties. While the CC had already issued a warning against contractual provisions, which excluded one’s access to courts, it found that it was still required to consider the importance of giving effect to agreements solemnly concluded by parties with similar bargaining power and the need for parties to settle their disputes on terms agreeable to them.

In the present matter, the employee had engaged in outright deceit and misrepresentation. Knowing that he had no defence to the employer’s accusations, he agreed to part ways with his employer on terms that were final, and that protected him from further action by his employer. He had thus voluntarily entered into a separation agreement to put the present dispute to bed.

The CC held that the public and the courts have a powerful interest in enforcing agreements of this sort. When parties settle an existing dispute in full and final settlement, none should be lightly released from such a serious undertaking. This is particularly so if the agreement was for the benefit of the party seeking to escape the consequences of his own conduct. Even if the clause excluding access to courts was on its own invalid and unenforceable, the employee must still fail because he concluded an agreement that finally settled his dispute with his employer.

In light of this finding, the CC declined to consider the employee’s other grounds of appeal and the application for leave to appeal was dismissed with costs.

This article was first published in De Rebus in 2017 (May) DR 53.

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