Transcript Eskom Holdings Ltd v Fipaza and others
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
LC [2002] 11 BLLR 1117 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 non disclosure 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