Eskom Holdings Ltd v Fipaza and others

Report
Riaz Itzkin
Advocate of the High Court of South Africa
The extent of the duty of an applicant for
employment to disclose information to the
prospective employer
Introduction
“Information”
• Employers may wish to be appraised of various
information by prospective employees
•
Criminal records, misconduct / transgressions during
previous employment, areas of weakness, pregnancy
and medical conditions, business interests which may
lead to conflicts of interest, qualifications, etc.
Broad Legal Framework
• Common law contractual principles
•
•
Misrepresentations
The duty to disclose
• Statutory interventions
•
Notion of fairness
• Constitutional aspects
Common Law
Common Law
• General effect of misrepresentation and fraud on
contract: party induced to conclude contract is
entitled to rescind provided:
•
•
•
Misrepresentation was material
Misrepresentation was intended to induce party to
conclude contract
Misrepresentation induced party to conclude contract
• Silence / omission may amount to
misrepresentation
Common Law
ABSA Bank Ltd v Fouche 2003 (1) SA 176 (SCA):
• “The policy considerations appertaining to the
unlawfulness of a failure to speak in a contractual
context – a non-disclosure – have been synthesised
into a general test for liability. The test takes account
of the fact that it is not the norm that one contracting
party need tell the other all he knows about anything
that may be material (Speight v Glass and Another
1961 (1) SA 778 (D) at 781H–783B). That accords
with the general rule that where conduct takes the
form of an omission, such conduct is prima facie
lawful (BOE Bank Ltd v Ries 2002 (2) SA 39 (SCA)
at 46G–H)…”
Common Law
ABSA Bank Ltd v Fouche 2003 (1) SA 176 (SCA):
• “A party is expected to speak when the information
he has to impart falls within his exclusive knowledge
(so that in a practical business sense the other party
has him as his only source) and the information,
moreover, is such that the right to have it
communicated to him ‘would be mutually recognised
by honest men in the circumstances’ (Pretorius and
another v Natal South Sea Investment Trust Ltd
(under Judicial Management) 1965 (3) SA 410 (W)
at 418E–F).”
Common Law
ABSA Bank Ltd v Fouche 2003 (1) SA 176 (SCA):
• “Having established a duty on the defendant to
speak, a plaintiff must prove the further elements
for an actionable misrepresentation, that is, that
the representation was material and induced the
defendant to enter into the contract.”
Is it necessary for a party relying on a
misrepresentation to prove that the fact was
covered by the questions addressed to the other
party?
• Colonial Industries Ltd v Provincial Co Ltd
1922 (AD) 33: The fact that the questions were
not covered in the insurer’s proposal forms,
were not material in the assessment of whether
or not there was a duty to disclose a material
fact
Effects at Common Law of
Misrepresentation
•
Innocent party is entitled to rescind irrespective of
whether misrepresentation was fraudulent or innocent.
•
Trollip v Jordaan 1961 1 SA 238 (A):
“In the first place, an innocent misrepresentation renders a contract
voidable and not void, and the mere fact that it results in a unilateral
mistake on the part of the representee can make no difference to its
effect.”
•
Brink v Humphries & Jewell (Pty) Ltd 2005 2 SA 419
(SCA):
“Where the misrepresentation results in a fundamental mistake, the
‘contract’ is void ab initio.”
Statutory Principles
Statutory Provisions
• Section 186 of the LRA
“(1) “Dismissal” means that—
(a) an employer has terminated a contract of
employment with or without notice…”
• Section 185 of the LRA
“Every employee has the right not to be—
(a) unfairly dismissed…”
• Existence of dismissal is questionable where
misrepresentation results in fundamental
mistake
Statutory Provisions
• “Employee”
• (a) any person, excluding an independent
contractor who works for another person or for
the State and who receives, or is entitled to
receive, any remuneration; and
• (b) any other person who in any manner assists
in carrying on or conducting the business of an
employer
Statutory Provisions
• Section 188 of the LRA
“(1) A dismissal that is not automatically unfair, is unfair if
the employer fails to prove—
(a) that the reason for dismissal is a fair reason—
(i) related to the employee’s conduct or capacity;
or
(ii) based on the employer’s operational
requirements; and
(b) that the dismissal was effected in accordance with
a fair procedure.”
Jurisprudence
Selected Case Law
• Wium v Zondi and others [2002] 11 BLLR 1117
LC
•
•
•
Employee had been convicted of theft in a criminal
court
4 years later, applied to become a deputy principal of
a primary school. Later the same year, he applied for
the post of principal of the same school.
On both occasions the employee submitted a
curriculum vitae in which he stated that he had no
previous criminal conviction.
Selected Case Law
• Wium v Zondi and others [2002] 11 BLLR 1117
LC
•
•
The criminal case in which he was convicted was the
subject of a pending appeal. The employee argued
that he was therefore entitled not to disclose the
criminal offence because the appeal was pending
and because he assumed that the employer knew of
his criminal conviction.
The Court found that the facts established that the
employee had misrepresented the true state of affairs
with regard to his criminal record and that he was
guilty of gross dishonesty by submitting two false and
misleading curricula vitae.
Selected Case Law
South African Post Office Ltd v Commission for
Conciliation Mediation and Arbitration and
Others (2011) 32 ILJ 2442 (LAC)
•
•
•
•
Position for an internal investigator was advertised.
Minimum advertised requirement was that the
candidate must be in possession of a valid code 8
driver’s licence to qualify to fill the position.
An employee who only had a learner’s license
applied for the position, and her CV stated that she
had a driver’s license.
She was dismissed for dishonesty.
Selected Case Law
South African Post Office Ltd v Commission for
Conciliation Mediation and Arbitration and
Others (2011) 32 ILJ 2442 (LAC)
•
•
•
The employee’s case was that it was an innocent
misrepresentation.
CCMA: dismissal substantively unfair as “error was
genuine”.
Labour Court: false information was supplied in
“error” and declined to interfere with the award
because there was no evidence that the third
respondent was appointed because she was in
possession of a driver’s licence.
Selected Case Law
South African Post Office Ltd v Commission for
Conciliation Mediation and Arbitration and Others
(2011) 32 ILJ 2442 (LAC)
• Labour Appeal Court (condonation):
“The misconduct was indeed serious. This is evident from the
consequence that followed the supply of the false information.
It led to the [employee] being short-listed and being appointed
at the expense of other properly qualified applicants. The
unchallenged evidence of the appellant was that had it known
that the third respondent only had a learner’s licence, she
would not be short-listed and therefore she would not be
considered for the job. It appears to me that the
Commissioner ignored the fact that it was a requirement of
the job that the applicant for that post should possess a valid
driver’s licence.”
• MEC for Education, Gauteng v Mgijima &
others [2011] 3 BLLR 253 (LC)
•
•
During interview, applicant was asked whether she
had any “skeletons in her closet”, to which she said
“no”.
She did not disclose the circumstances of the
termination of her employment with her previous
employer (i.e. resignation after being suspended and
charged with several disciplinary offences, following
signature of a settlement agreement in terms of
which the employee withdrew all allegations on
condition that she resign).
• MEC for Education, Gauteng v Mgijima &
others [2011] 3 BLLR 253 (LC)
•
Employer convened a “pre-dismissal” arbitration in
the bargaining council, and the commissioner found
that the employee was not obliged to disclose the fact
that she had been suspended pending disciplinary
action, and that the applicant could not rely on nondisclosure of allegations of misconduct which had
never been proved.
• MEC for Education, Gauteng v Mgijima &
others [2011] 3 BLLR 253 (LC)
•
On review, the Labour Court set the award aside and
held that:
•
•
The post was a senior post that required unimpeachable
honesty and integrity on the part of its incumbent.
The applicant’s failure to disclose material information in
response to an express invitation to do so, deprived the
employer of the opportunity to make an informed decision.
• Eskom Holdings Ltd v Fipaza and others
[2013] 4 BLLR 327 (LAC)
•
•
•
Employee worked for Eskom and was granted
sabbatical leave to undertake post-graduate studies
in the United Kingdom. She failed to return to work on
the required date at the end of her sabbatical, and
was dismissed for absence without leave.
Eskom advertised another position which the
employee applied for.
She applied, and did not disclose in her CV that she
had been dismissed by Eskom
• Eskom Holdings Ltd v Fipaza and others
[2013] 4 BLLR 327 (LAC)
•
•
•
She was not asked during her interview about the
circumstances relating to the previous termination of
her employment.
Her application was successful, and she was
presented with an offer of employment which she
accepted.
Eskom withdrew the offer of employment on the basis
that the employee had failed to disclose that she was
previously dismissed for misconduct.
• Eskom Holdings Ltd v Fipaza and others
[2013] 4 BLLR 327 (LAC)
•
•
The employee referred an unfair dismissal dispute to
the CCMA.
The CCMA found that the Employee's non-disclosure
amounted to fraudulent misrepresentation, and that
the dismissal was substantively fair and only
procedurally unfair.
• Eskom Holdings Ltd v Fipaza and others
[2013] 4 BLLR 327 (LAC)
•
•
The CCMA decision was set aside by the Labour
Court on review, and the Labour Court held that the
only way that the non-disclosure could be
characterised as a misrepresentation was if there
was an obligation on the employee to disclose the
information concerned.
The Labour Court stated that the employee was not
obliged to disclose the information given that the
information was contained in Eskom's records
•
Eskom Holdings Ltd v Fipaza and others [2013] 4
BLLR 327 (LAC)
•
Labour Appeal Court:
"According to the dictionary meaning, a resume or curriculum vitae
(“the CV”) refers to “a brief account of one’s life or career, especially
as required in an application for employment”... it is generally not a
requirement that a CV should provide reasons for leaving previous
employment. It is a sort of document whereby a job seeker aims to
advertise or market himself or herself concisely and succinctly to
potential or prospective employers. In short, it is a personal
advertisement for purposes of seeking employment. On this simple
definition it would appear that the information provided by [the
employee] in her CV was more than adequate for its purpose."
•
Eskom Holdings Ltd v Fipaza and others [2013] 4
BLLR 327 (LAC)
•
Labour Appeal Court:
"In my conclusion, [the employee] sufficiently complied with
what was reasonably expected or required of her to do in
terms of the contract and the law. She owed no further duty,
either ex contractu or ex lege, to disclose to the interviewing
panel that she was dismissed by the appellant for misconduct
in 2006 because, as already stated, this information was not
within her exclusive knowledge, but also within the knowledge
of the appellant. "
•
Eskom Holdings Ltd v Fipaza and others [2013] 4
BLLR 327 (LAC)
•
Labour Appeal Court:
"To sum up, her “failure” to mention to the [employer] anything about
her 2006 dismissal did not, strictly speaking, amount to a material
non-disclosure, as alleged by the appellant, but rather to a simple
and immaterial omission on her part to remind the appellant of that
fact, which, after all, was not necessary or compulsory of her to do.
The word “disclose” means “make secret or new information known .
. .” As I have alluded to earlier, in this instance there was simply no
secret or new information pertinent to [the employee's] previous
employment with [Eskom] which was to the appellant unknown and
which, therefore, warranted [the employee] to disclose. "
Principles to be Gleaned
• If the employer is itself aware of the information
in question, there is no duty to disclose
• If the employer is not aware of the information in
question and is not asked questions regarding
the matter, there is no general duty on the
employee to disclose the information in his CV
or in the interview unless the information is such
that the legal convictions of the community
require disclosure
Principles to be Gleaned
• An applicant for a senior position has a more
onerous obligation to disclose information
• If the employer is not aware of the information in
question and is asked questions regarding the
matter, there is a legal duty on the employee to
disclose honestly
• Where there is a legal duty to disclose
information which is material to the conclusion of
the contract, the employer may sever the
relationship based on the non-disclosure
Practical Measures
Practical Steps for Employers
• Conduct thorough pre-employment assessments
and checks regarding applicants
• If information is considered material:
•
•
Ask specific and direct questions to applicants
regarding the matter prior to making an offer of
employment; and
Obtain express warranties in the contract of
employment regarding such aspects
Practical Steps for Employers
• If information subsequently comes to light during
employment where no questions were asked,
assess the materiality of the information and
determine whether there was a duty to disclose,
and the impact of non-disclosure
• Adhere to the prescripts of fairness in
terminating employment
Questions

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