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

 

FACTS:

  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.
  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. 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”. 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”. Moreover, the Employee “waived his right to any notice pay and his right to approach the CCMA and/or Labour Court.”

 

ISSUE BEFORE THE LABOUR APPEAL COURT

  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.
  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.

 

LABOUR APPEAL COURTS RULING

  1. Contractual Principles apply to any agreement entered into between an Employer an Employee.
  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.
  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.”

 

WHY IS THIS JUDGMENT IMPORTANT?

  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.