Dismissal due to breakdown of the Trust Relationship

Aug 26, 2020

When an employee commits a dishonest offence and acts deceitfully, it is accepted that a reasonable employer will lose trust in such employee as the misconduct demonstrates untrustworthiness which makes the employee unreliable and a continued employment relationship intolerable. Such conduct poses an operational problem for the employer as it makes it difficult to trust the employee.

In the case of Autozone v Dispute Resolution Centre of Motor Industry and Others [2019] JOL 41073 (LAC), such an issue arose. The facts of the case are briefly as follows:

Facts

Allen Sikhakhane was employed by Autozone as a driver. He was instructed by the regional manager to employ three casual workers to clean up waste and rubble. In the presence of Sikhakhane, the regional manager informed the casuals that they would each be paid R50 for the work. Once the task was completed, the regional manager, in the presence of the branch manager, instructed Sikhakhane to obtain R150 from the cashier. He requested R180 from the cashier. He only paid R150 to the casual employees. It subsequently came to the branch manager’s attention that Sikhakhane withdrew R180 and only paid over R150. When confronted about the missing R30, Sikhakhane could not provide an explanation but later explained that he had acted out of his own initiative to pay the workers more and had withheld the balance until the work was complete.

Autozone dismissed Sikhakhane for dishonesty (theft, misappropriation of company funds or attempted theft or misappropriation). Sikhakhane lodged an unfair dismissal dispute at the CCMA and testified to the same version. The arbitrator concluded that Autozone had discharged the onus of proving on a balance of probabilities that the dismissal was for a fair reason and was accordingly substantively fair.

Aggrieved by this outcome, Sikhakhane took the matter on review to the Labour Court (LC). He reiterated his version. The appellant argued for the reasonableness of the arbitrator’s award. The LC accepted (without explicitly finding as such) that the misconduct had been proven but made no attempt to analyse the evidence to determine the nature of the transgression.

The LC held that there was no evidence that showed how the conduct for which the employee was found guilty of impacted on the relationship of trust. The LC held that the test is whether the trust relationship has been breached to the extent that it renders a continued employment intolerable. This is a question of fact to be established by evidence. In the absence of such evidence, it was found that the dismissal was unfair. The LC set aside the CCMA’s award and ordered Sikhakhane’s reinstatement to the date of dismissal. It was also ordered that Sikhakhane be issued with a written warning for the misconduct. This indicated that the LC accepted that misconduct had indeed been proven.

Court’s evaluation

Autozone appealed to the Labour Appeal Court (LAC) on the grounds that the LC erred by failing to assess the facts and circumstances of the case and in finding that no evidence was led relating to the breakdown of the trust relationship. Sikhakhane persisted with his denial of dishonesty.

The LAC was tasked with answering the legal question – whether Sikhakhane’s conduct breached the trust relationship so as to render continued employment intolerable.

The LAC held that “undeniably, the evidence on the issue was somewhat thin. Where an employer relies on irreparable harm to the employment relationship to justify a dismissal, it would be prudent to lead evidence to support that claim, unless the conclusion that the trust relationship has broken down is apparent from the nature of the offence or the circumstances of the dismissal. In cases where the offence reveals a stratagem of dishonesty or deceit, it can be accepted that the employer probably will lose trust in the employee, who by reason of his misconduct alone will have demonstrated a degree of untrustworthiness rendering him unreliable and the continuation of the employment relationship intolerable or unfeasible”

It was further held that employees who engage in dishonest or deceitful conduct pose an operational risk to the employer’s business. This operational risk alone would suffice to justify dismissal. In this case, the appellant was entitled to have a driver who would act in good faith and advance and protect the appellant’s interests. Sikhakhanbe’s conduct showed that he was not such a driver. The appellant did not have to present evidence that the trust relationship had been irreparably damaged as the nature of the offence and the manner of its commission were indicative of such a conclusion.

The LAC held that the CCMA’s finding was one which a reasonable decision-maker would reach and set aside the LC’s award. Sikhakhane’s dismissal was declared to have been substantively fair.

Importance of the case

The LAC decision illustrates that an employer need not always present evidence of a breakdown of the trust relationship in order to justify dismissal for dishonesty. If the nature of the offence is such that it would lead to a breakdown in trust, no further evidence would be required. Nevertheless, employers should err on the side of caution and present some evidence of this breakdown.

Author:

Wallace Albertyn

Wallace Albertyn is a Senior Associate and Legal Advisor at LabourMan Consultants.

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