Conflict of Interests

 


Avoid activities that clash with employer's interests

Ivan Israelstam

It is inherent in the nature of employment relationships that, as employers pay the employee for their services, the latter are obliged to be loyal to the employer and to devote their efforts to the interests of the employer.


The employee should therefore carry out his/her work diligently and according to the employer's instructions. He/she should also avoid bringing the employer's name into disrepute and avoid becoming involved in any activity that could clash with the employer's interests. 

For example:

• In order to avoid corruption, employees involved in procurement services should not have private relationships with the employer's suppliers.
• Employees who do not have permission should neither carry businesses that compete with that of the employer nor carry on any other work that could impair the employee's ability to serve his/her employer.

However, there are limits to the employee's duty of loyalty. That is:

• The employee is not obliged to carry out any illegal instructions issued by the employer.

For example, the employee would not be obliged to withhold illegally payments due to SARS.

• The employee would not be obliged to forego his or her own legal rights in order to satisfy the interests of the employer.

For example, there is a limit to the overtime the employee must work. Where a managerial employee joins a trade union this could well result in a conflict of interests. This is because often management and trade unions become adversaries.


This adversarial relationship exists because:

• management and trade unions hey bargain against each other at wage negotiation time
• unions organise strikes against management
• management sometimes dismiss union members who go on strike
• managers prosecute misconduct hearings against union members and union representatives attend these hearings to defend their members.

It is therefore natural for management to discuss confidentially the tactics they will use to protect the employer from union action. A manager who attends such meetings and then informs his trade union of management's plans has a conflict of interests and is behaving disloyally towards his/her employer.Employers have historically been quite successful in preventing managerial employees from belonging to trade unions.


This was because it was widely accepted that a manager could not properly carry out his/her duties if he/she also owed loyalty to a trade union. However, this state of affairs has changed since the advent of South Africa's new dispensation.


In the case of FAWU v The Cold Chain (2007, 7 BLLR 638) the employee accepted a management position but refused to relinquish his posts of shop steward and union office bearer. He was then retrenched. The employer claimed that the employee could not properly carry out his managerial duties if he was involved in trade union activity.


The Labour Court decided that:

• The employee had a right in terms of South Africa's Constitution and the Labour Relations Act (LRA) to be involved in union activity.
• The potential conflict between the roles of unionist and manager could be dealt with via the disciplinary procedure if the employee was unable to carry out his managerial role effectively.
• The dismissal was automatically unfair.
• The employer was to pay the employee nine months' remuneration in compensation.

In this case the court found that the employee's rights outweighed the employer's concerns of conflict of interest.From the above it appears that, where the law protects employee rights, the employer's interest will often come second. However, while employers must hesitate to act against employees merely due to the employees' affiliations, they still retain the right, in certain circumstances, to discipline employees if their affiliations actually interfere in practice with the execution of their duties.


For instance, the court in the FAWU case discussed above, said that the employer would be able to discipline the manager if he failed to do his job. For example, should the manager purposely hold back on disciplining his/her subordinates because they are his co-union members, he/she should be subject to discipline himself/herself.  As it is very difficult for employers to know in each case whether the conflict of interest is punishable or not they are advised to avoid taking any action until they have first consulted with a labour law expert.

• Ivan Israelstam is chief executive of Labour Law Management Consulting. He can be contacted on 011-888-7944 or at This e-mail address is being protected from spambots. You need JavaScript enabled to view it