Does dishonesty during the recruitment process justify dismissal of an employee after his/her employment?

Gbenga – Oluwatoye v Reckitt Benckiser South Africa (Pty) Limited and Another (JA – 2014) [2016] ZALAC (3 February 2016)

By Christina Pfalzgraf


  1. The Employee had commenced employment as the Company’s (“Reckitt”) Human Resources Director. The Employee was in the employ of Unilever in Dubai and was approached by a recruitment agent with a job opportunity in the Republic of South Africa, which opportunity he did not take.
  2. In the following month, the Employee left the employ of Unilever and commenced employment with Standard Chartered Bank in Dubai.
  3. Subsequent to his employment with Standard Chartered Bank the employee contacted the aforementioned recruitment agency regarding the job opportunity he had previously been offered.
  4. In his curriculum vitae provided to Reckitt, the Employee did not record that he was no longer employed by Unilever nor did he disclose the fact that he was at that stage employed by Standard Chartered Bank.
  5. Moreover, during his interview the Employee advised Reckitt that he was employed at Unilever and that he would forego, on termination of his employment with Unilever, his sign – on bonus for Unilever Shares/share options.
  6. It was on this basis that his remuneration package was negotiated. More specifically, Reckitt agreed to pay the Employee $ 40 000 for the share options that he purportedly owned.
  7. The Employee subsequently took up employment with Reckitt. On 21 February 2014, the Employee was suspended from duty, pending the outcome of a disciplinary hearing. The charges against the Employee related to misconduct in that he had inter alia made certain representations during the recruitment process (more specifically those in relation to his employment with Unilever, including the period and currency of his employment, the loss of shares and remuneration he earned at the time), which were false.
  8. During the disciplinary hearing, which took place on 3 March 2014 the Employee admitted that “[…] there is really nothing that I am going to say to justify […] my actions […]”, which he acknowledged had breached the trust relationship between him and his Employer[1].
  9. On the same day the Employee’s employment with Rickett was terminated with immediate effect on the basis if the misrepresentations which he had made[2]. Such misconduct was deemed to be serious and it had a significant and negative impact on the employer in that it eroded any confidence or trust that the Employer had in the Employee.
  10. Thereafter, the Employee approached the Employer and requested that the Employer afford him a “softer exit”[3]. A Separation Agreement was subsequently signed between the respective Parties.
  11. It was recorded in the Agreement that the Agreement was entered into “in full and final settlement of all claims of whatsoever nature and however arising between the Parties” and that the agreement was signed “without duress or undue influence”[4]. Moreover, the Employee “waived his right to any notice pay and his right to approach the CCMA and/or Labour Court[5].”


  1. A week after the Separation Agreement was signed, the Employee approached the Labour Court on an Urgent basis, contending that he was coerced into signing the separation agreement (against his will and under duress). He also contended that the clauses, which waived his right to approach the courts were contrary to public policy and therefore invalid[6].
  2. The Labour Court held that the Employer had been entitled to terminate his employment on the grounds of misconduct and there were not facts that supported his submission that he had been coerced into signing the Separation Agreement.
  3. The Employee then appealed the Labour Courts decision.


  1. Contractual Principles apply to any agreement entered into between an Employer an Employee[7].
  2. The Employee knew what he was signing in that he was employed in a senior management position. Nothing indicates that their bargaining power was such that the Employee did not understand the contractual limitation on seeking judicial redress[8].
  3. Such terms are a practical approach to dispute resolution and are by their nature neither unlawful nor contrary to public policy.
  4. “The intention of the Parties is apparent from the language of the agreement in its context and the principle of caveat subscriptor […] applies.”


  1. Dishonesty during the recruitment process may warrant dismissal, even after employment.
  2. It shows that separation agreements can still be set aside in the event that they are signed under duress or undue influence.
  3. It emphasizes the fact that a separation agreement, just like any other contractual agreement, is binding as long as it is validly concluded and as a consequence thereof its provisions remain binding and enforceable.

[1] At Paragraph 4

[2] At Paragraph 5

[3] At Paragraph 7

[4] At Paragraph 8

[5] Ibid

[6] At Paragraph 9

[7] Paragraph 12

[8] Paragraph 25

Newsflash – Emotional Shock

Written by: Wayne Venter

Of late, we have been called upon to defend several insureds who are being sued for damages sustained by plaintiffs who have suffered emotional shock upon hearing of the death of a loved one in a motor vehicle collision. The death in question was ostensibly occasioned by the negligent driving of the insured driver, or by an employee of the insured.

The legal validity of claims for emotional shock has been recognised in SWARTBOOI v RAF 2013 (1) SA 30 (WCC), where the plaintiff was advised of her son’s death in a collision by means of a telephone call.

Your initial reaction will probably be to associate a death caused in the road accident with a claim against the Road Accident Fund. You will also now doubt be thinking that due to the changes in the Road Accident Fund relating to, for example, fare –paying passengers, that passenger liability cover as part of an insurance policy is not required.  If this was your reaction, please re-think it.

The Road Accident Fund Act has certainly changed. Although the changes occurred some time ago, it is only now that we are starting to see the practical effects of these changes and in particular the changes around emotional shock claims.

The Road Accident Fund Act 56 of 1996 (as amended), specifically Section 19 (g) excludes liability for emotional shock:

“The Fund or an agent shall not be obligated to compensate any person in term of section 17 for any loss or damages –

(g) suffered as a result of an emotional shock sustained by that person when that person witnessed or observed or was informed of the bodily injury of the death of another person as a result of the driving of a motor vehicle. “


The long and the short of it is that there will be a delictual claim for emotional shock directly against the insured driver, or the insured in the event that the insured is vicariously liable, for the negligent driving in question. The claim for emotional shock will not lie against the Road Accident Fund.

In the motor section of a common market wording, the wording will often still (if not removed) provide as follows under subsection B – Liability to Third Parties:

Defined events

Any accident caused by or through or in connection with any vehicle described in the schedule or in connection with the loading and/or unloading of such vehicles against all claims including claimant’s cost and expenses which the insured and/or any passengers shall become legally liable to in respect of…

Death or bodily injury to any person but excluding death of or bodily injury to any person in the employ of the insured arising from and in the course of such employment or being a member of the same household as the insured”.

The above wording was framed at a time when the Road Accident Fund Act did not have the limitation in respect of emotional shock. The old version of the Road Accident Fund Act covered injuries sustained to third parties arising from the negligent driving of a motor vehicle, the subject to a R25 000 cap on the Accident Fund’s liability instances where the injured person was either a fare paying passenger or was a passenger in a so-called single vehicle collision.  These provisions drove the need for so-called passenger liability cover.

In terms of the interpretation of the phrase ‘bodily injury’, the meaning of this phrase  has been considered in  BESTER v COMMERCIAL UNION VERSEKERINGSMAATSKAPPY VAN SA BPK 1973 (1) SA 769 (A). The relevant part of the judgement is set out below:


In iedere geval, soos ek reeds hierbo probeer aantoon het, is die brein-en senustelsel deel van die menslike liggaam, en is ‘n psigiatriese besering dus inderdaad ‘n ‘liggaamlike besering’ binne die bedoeling van art. 11 (1) (a) van Wet 29 van 1942. Daar is veel te sê  vir die betoog namens die appellant dat die uitdrukking ‘liggaamlike besering’ in art. 11 (1) gebruik word in teenstelling met saakbeskadiging en nie in teenstelling met ‘n psigiese besering nie.”


If there is such a claim against the insured, the question then arises as to whether the insured will be able to claim against a policy that they may hold. Although relevant to all drivers, these claims become particularly relevant in the case of companies that transport volumes of people. Remember, if there are children involved, there are usually two parents and siblings who may have a claim for emotional shock. The current high-water mark for these claims is R200 000.00 per claimant and the potential scale of liability must not overlooked.

As matters stand at present, it seems that a policy may respond, provided that the wording (or a similar wording) we quoted above is present in the policy.


If you are an insurance broker, you will need to check that the wording issued to the insured still provides this cover. Please bear in mind that it is not only the exclusions to the Road Accident Fund that are relevant to this enquiry – an insured may conduct cross border transport and the jurisdiction in question might not have an equivalent of the Road Accident Fund.


Your enquiry will not end there and you will need to assess the limit of indemnity required.


Failure to take the above steps may render an insurance broker liable for not having properly assessed the insured needs. The broker should keep a written record of its advice to clients – memories fade, especially in adverse times.


If it is your intention as underwriters not to cover secondary emotional shock, then you must make this clear in your wordings.  Consider adding the words “, but excluding emotional shock” after the words ‘bodily injury’.


Not all claims for emotional shock are valid and the claims should be investigated and assessed as soon as they are made against the insured.


Renasa Insurance Company Limited v Watson and Flachcor 201 CC (32/2014) [2016] ZASCA 13

Written by Wayne Venter

What is this decision about?

This is an appeal about a repudiation based on fraud and a failure to take reasonable precautions to avoid loss.

The underlying claim has its origin in a fire that erupted during the morning of 10 January 2011 in industrial premises in Elsies River, Cape Town (the premises) owned by the second respondent, Flashcor 201 CC (Flashcor). The premises were let to the first respondent, Mr C B Watson (Watson), who conducted a print finishing business from the premises under the name and style of Canterbury Coaters.

Renasa indemnified Watson as the sole proprietor of Canterbury Coaters against the loss or damage of plant, machinery and stock suffered as a consequence of fire for an agreed insured sum of R17 545 871. In addition, Renasa insured Flashcor against the loss of or damage to the buildings on the premises as a consequence of fire for an agreed insured sum of R640 001-91.

The facts are interesting and give rise to the two grounds on which Renasa sought to avoid liability. Watson had arrived at the premises in question, only to find it primed for arson. He had reported this to the police, who attended the premises. The policemen concerned, requested Watson to go to the local SAPS – but did nothing else. That is, they left the premises unguarded and did not summons the local fire brigade. After the police and Watson had left, the fire erupted.

The Alleged Fraud

“If any claim under this policy is in any respect fraudulent or if any fraudulent means or devices are used by the insured or anyone acting on their behalf or with their knowledge or consent to obtain any benefit under this policy or if any event is occasioned by the wilful act or with the connivance of the insured, the benefit afforded under this policy in respect of any such claims shall be forfeited.‟

Ironically the insurer and the insured were in agreement that there had been arson.

What Renasa set out to prove through their witnesses is that Watson was the arsonist. This necessarily involved establishing how, on the probabilities, Watson would have initiated the fire.

As emphasised by Van Blerk JA in Taljaard v Sentrale Raad vir Koöperatiewe Assuransie Beperk 1974 (2) SA 450 (A) at 451A-B:

“Die bewyslas het deurgaans by die respondent [the insurer] berus om ‘n brandstigting te bewys en dat appellant [the insured] die huis aan die brand gesteek het. Die brandstigting en die identiteit van die brandstigter is onderling afhanklik van mekaar. Alhoewel daar nie ‘n plig op die respondent gerus het om deur getuienis alle moontlike oorsake van die brand uit te skakel nie . . . moet hy die hof oortuig dat sy verduideliking van hoe die brand ontstaan het die korrekte een is . . . op grond dat dit die mees aanneemlike en waarskynlikste is. . . .‟ [Translated: the evidentiary onus laid with the insurer who had to establish an arson and that the insured set the house on fire. The arson and the identity of the arsonist are independent of each other. Although there was no duty on the insurer to exclude through evidence all possible causes of the fire… the insurer must persuade that court that its explanation as to how the fire started is correct… on the basis that it is the most plausible and reasonable

With regard to the discharging of the onus on a balance of probabilities Holmes JA said the following in Ocean Accident and Guarantee Corporation Limited v Koch 1963 (4) SA 147 (A) at 159B-C:

“As to the balancing of probabilities, I agree with the remarks of Selke J in Govan v Skidmore 1952 (1) SA 732 (N) at p 734, namely ‘. . . in finding facts or making inferences in a civil case, it seems to me that one may, as Wigmore conveys in his work on Evidence, 3rd ed, para 32, by balancing probabilities select a conclusion which seems to be the more natural, or plausible, conclusion from amongst several conceivable ones, even though that conclusion be not the only reasonable one.’ ‟

In this instance, there was no evidence on how the fire had been started (when Watson was not there).

In addition to this, there were some improbabilities at play as well, such as the fact that Watson would have had to have foresight into the lack of action on the part of the SAPS. The finances and order book also did not show any motive for committing arson.

Failure to take reasonable steps to prevent loss

The insured shall take all reasonable steps and precautions to prevent accidents or losses.‟

Renasa was of the view that in breach of the foregoing and aware that the premises, and the goods situate thereon were subject to a fire risk on 10 January 2011, the insured failed to take any or all reasonable steps and precautions to prevent the fire, and losses sustained in consequence thereof, in circumstances where had the first and/or second plaintiff done so, a fire would have been avoided.  The steps that Watson and Flashcor ought to have taken to prevent or avoid the fire were: not to leave the property unattended, ensure that the accelerants deployed therein for the purposes of setting fire thereto were not ignited, secure the property to prevent access by an intruder, direct employees to remain in attendance to deter an intruder from gaining access to the property, summon the fire department and discontinue the electricity supply to the premises.

The case law dealing with the interpretation of provisions in insurance contracts relating  to the taking of precautions to prevent loss  was considered by the full court in Santam Limited v CC Designing CC 1999 (4) SA 199 (C).  A clause of this nature should not be construed as an exclusion of liability where the loss was caused merely by the negligence of the insured, but that proof of recklessness is required.

Having regard to the wording of the clause, it is at the very least clear that to require an insured to take steps to prevent a loss, proof of foreseeability of loss eventuating is required. This would require proof that the reasonable person in the position of the insured would have foreseen the reasonable possibility of the loss eventuating and would therefore have taken reasonable steps to prevent same.  Renasa itself contends that it is inconceivable that an unknown arsonist would have risked manually igniting the fire during time that the fire was started (normal operating hours).

It therefore became common cause that a reasonable person in the position of Watson would not have foreseen, as a reasonable possibility, that an unknown arsonist would have attempted to manually ignite the fire after Watson’s departure from the premises. It accordingly follows that a reasonable person would not have foreseen, as a reasonable possibility, that his or her conduct in leaving the premises unattended during this period, would cause loss to eventuate by virtue of the fire being ignited manually by an unknown arsonist. Therefore, in these circumstances, Watson could hardly have been required to take steps to guard against loss caused by an eventuality which was inconceivable.


The appeal was dismissed with costs.

If an insurer is going to rely on fraud, it needs to do so, based on evidence which makes this conduct probable.

There will often not be direct evidence available (the assertion of a person who claims to have perceived it with their own senses).  Insurers will often need to rely on circumstantial evidence (a fact from which a fact in dispute may be inferred).

In relying on circumstantial evidence, the inference sought to be drawn must be consistent with all the proved facts. If it is not, then the inference cannot be drawn.  The cogency of circumstantial evidence usually arises from a number of independent circumstances which all point to the same conclusion. A court is not obliged to consider each of these independent facts in isolation (see Hoffman and Zeffert, “The South African Law of Evidence”, page 591).

With respect, it appears from the record that the evidence of fraud, especially the financial evidence, was not consistent with an inference of fraud.

As to the alleged failure to take reasonable steps to prevent losses, this decision, again confirms the difficulty in relying on this clause.  Although not emphasised in this judgement, the first step in this enquiry is fact whether there is a causal link between the insured’s conduct and the insured risk materialising.  The wording used by the insurer is also important and it ought to be remembered that the failure by the insured to take reasonable precautions in relation to the insurer is not necessarily the same as negligence in the delictual sense. The standard in respect of the wording in question is whether the insured was reckless. A different wording may yield different results.

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