Employees must put employer’s interests first

By Ivan Israelstam, chief executive of Labour Law Management Consulting 

South African labour legislation gives employees a plethora of rights against the employer. So much so that many employers wonder whether the resultant burden on them makes it worth continuing to run the business.

For example, employees have, amongst others, the right to:

• Join trade unions
• Go on strike
• Procedural fairness at disciplinary hearings
• A fair reason for dismissal
• Protection form unfair demotions
• Be promoted under certain circumstances
• Minimum wages in many cases
• Sick leave, holiday leave, maternity leave and compassionate leave
• Overtime pay
• Consistent treatment
• Protection from unfair discrimination
• Representation at CCMA by a trade union representative

On the other hand, labour legislation gives employers few rights; and those that they do have are very restricted. That is, employers may exercise limited rights as long as, in doing so, they do not infringe the numerous rights given to employees.

However, one area that employers can exercise their rights is that of fiduciary duty. This means that the employee has, in certain ways, the duty to put the employer’s interests first. This does not mean that the employee must, as a way of benefiting the employer, forfeit his/her rights to leave, legal working hours or fair discipline. It does mean that the employee may not advantage himself/herself unfairly at the expense of the employer.

Specifically, this means that the employee may not:

• Place him/herself in a position where his/her interests conflict with those of the employer
• Make a secret profit at the expense of the employer
• Receive a bribe or commission from a third party
• Misuse the employer’s trade secrets
• Give a third party the employer’s confidential information.

While this principle applies generally to employees it applies more strongly to senior employees. In deciding on the extent of fiduciary duty that an employee has the courts consider a number of factors including:

• The degree of freedom that the employee has to exercise discretion in making and executing business decisions
• The opportunity for the employee to exercise this discretion in his/her own interests
• The extent to which the specific circumstances open the employer to abuse of the employee’s discretion
• The extent to which the employer relies on the employee for expertise and judgement in conducting the business
• The extent to which the employee is in a position of trust.

Clearly, the more junior the employee the less these fiduciary factors are likely to prevail. That is, with some exceptions, junior employees normally do not have the right or duty to make crucial business decisions or the opportunity to misuse decision-making power.

The line between who is a senior employee and who is not and the line between who is in a position of trust and who is not are blurred. Whether, for example, a junior salesperson is in a position of trust or not depends on the specific circumstances of each case. Therefore, in order to protect itself from employees acting against the employer’s interests every employer should:

• Build in checks and balances that prevent the abuse of power
• Inform all employees of their fiduciary duties in relation to their positions of trust
• Make sure employees at all levels know the seriousness of breach of their fiduciary duties
• Take swift, fair and consistent action against employees who breach their fiduciary duties
• Obtain expert legal advice before acting against suspects.

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