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Leading a side hustle can be a conflict of interest that…

Moonlighting has become more common for those looking to earn extra money, but should employees disclose their side activities to their employers, especially when a conflict of interest is possible? In the case of Bakenrug Meat (Pty) Ltd v/a Joostenberg Meat v CCMA et al this issue has been considered by the court.

The business of the employer in this case was the production and sale of a range of meat products. The employee was a sales representative in the company. However, the employee also operated her own business in which she traded biltong.

When the employer found out about it, she was fired after being found guilty on the count of “taking up employment while performing another job”. Injured by this, the employee then seized the Conciliation, Mediation and Arbitration Commission (CCMA) alleging that her dismissal was substantially unfair.

The commissioner concluded that the dismissal was substantively fair because the employee was independently operating a formal business that marketed a meat product while the employer was also engaged in the production and sale of meat products in which she was the saleswoman.

Therefore, the employer should have been made aware of the employee’s activities so that it could decide whether there was a conflict of interest. Failure to inform the employer amounted to dishonesty and it was immaterial that the employee did not market identical meat products to the employer.

Injured by the commissioner’s conclusions, the employee filed an application for review before the Labor Court.

Judge H Cele concluded that the dismissal was materially unfair. He gave two main reasons for this finding.

First, he acknowledged that there is no obligation for an employee to inform his employer of a potential conflict of interest. An employee is only required to inform an employer of a potential conflict if there is any competition.

Second, after weighing the evidence, Judge Cele concluded that the employee operated her business on weekends. Therefore, there was no “connection” that his “secondary” business negatively affected the performance of his duties to the employer during the week.

Judge Cele then found that the evidence did not establish that the employee was guilty of the charge that she “took up employment while also working in another capacity”. The judge concluded that the commissioner’s decision that the dismissal was substantively fair would not have been made by a reasonable decision-maker, and set aside the decision.

On appeal, the Labor Appeals Court (LAC) overturned the Labor Court’s decision. Judge Dennis Davis found there was clear evidence that the employee had failed to disclose an essential and material fact that she was independently operating a meat products marketing business, even though the meat products were not were not identical to those of the employer.

The fact that the operation of his business did not affect his performance was insignificant. What was significant was that she was employed as a sales representative in a meat product marketing business while she was also involved in the marketing of meat products.

His failure to inform the employer of these activities constituted dishonesty and a breach of his duty of good faith to the employer. Judge Davis therefore found that, based on the evidence, the commissioner had reached a reasonable determination that the dismissal was substantively fair and set aside the court’s judgment. a quo.

The significance of this case is that it illustrates the extent of the “duty of good faith” that employees owe to their employer and that there can be far-reaching consequences for an employee should this duty be breached. DM

Kerrie-Lee Olivier is an Associate in the Employment Department of the law firm ENSafrica. Article reviewed by Peter le Roux, executive consultant of the department.

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