Moonlighting has become more common for those looking to earn additional income, but do employees need to disclose their side businesses to their employers, especially when a conflict of interest is possible?
This was recently dealt with in the case of Bakenrug meat (PTY) Ltd t/a Joostenberg Meat v CCMA. The employer’s business in this matter was the production and sale of a range of meat products. The employee was a sales representative at the business. However, the employee also operated a business of her own in which she marketed biltong.
When the employer became aware of this, the employee was dismissed after being found guilty for failing to inform her employer that she ran a business of her own in the meat trade and, as a result of her focus on this business, neglected to give her full attention to her duties with her employer.
Aggrieved by this, the employee then referred the matter to the Commission for Conciliation, Mediation and Arbitration (CCMA), alleging that her dismissal was substantively unfair.
The Commissioner found there was an obligation on the employee to inform her employer of her side business so that it could decide whether this was a conflict or not. Her decision not to do so was dishonest and unacceptable. As such, he CCMA commissioner found that the dismissal was substantively fair.
Aggrieved by the commissioner’s findings, the employee launched a review application in the Labour Court. The Court found that the dismissal was substantively unfair for reasons that there is no duty for an employee to inform their employer about a potential conflict of interest. An employee is only required to inform an employer of a potential conflict where there is competition of some sort. Additionally, it was found that the employee operated her business on the weekends. Accordingly, there was no link that her “side-line” business negatively affected/impacted the performance of her duties towards the employer during the week.
The Labour Court reviewed and set aside the arbitration award.
Labour Appeal Court
The Labour Appeal Court (LAC) overturned the Labour Court’s decision on appeal. The LAC held that there was clear evidence that the employee did not disclose an essential and material fact that she was independently operating a business in marketing meat products, even if the meat products were not identical to that sold by the employer. Whether this affected her work performance was irrelevant.
The LAC found that the Commissioner arrived at a reasonable decision and set aside the judgment of the court a quo.
The importance of this case is that it illustrates the extent of the “duty of good faith” that employees owe to their employer and the consequences that an employee may face if this duty is breached.