Employers frequently suspect that serious misconduct has occurred but are unable to prove which employee or employees are responsible. Some case law has given the impression that, in such circumstances, group dismissals may be justified. This impression has been given by two important cases; those involving Score Supermarkets and Snip Trading.
In the case of NUSFRAW obo Gomez & others vs Score Supermarkets (2003, 8 BALR 925) a group of managers were dismissed as a result of stock losses amounting to six million rand. While there was no proof that these managers had stolen the missing stock, they were held responsible for the losses. They disputed their dismissals at the CCMA. The arbitrator found that the markedly poor management of the business by the dismissed employees (and others) had led to the losses, and the dismissal was justified.
Again in the case of FEDCRAW vs Snip Trading (Pty) Ltd the arbitrator ruled in favour of group dismissals. Here, the employer had a policy which held every employee responsible for stock losses. When stock disappeared several employees were fired despite the fact that the employer had not specifically proved that any one of these employees were guilty of the stock losses. The arbitrator found that the concept of group responsibility was fair under the circumstances as the employer’s interests had to be taken into account.
In the case of Foschini Group vs Maidi & others (2010, 7 BLLR 689) the store’s entire staff were dismissed due to the loss of 28% of the store’s stock valued at R207 000. The Labour Appeal Court found that:
- The stock losses at the store had, according to the employees, never previously exceeded 3%.
- A thorough investigation had been carried out establishing that there had been serious stock losses.
- The employees were unable to prove their claim that there had been a break in to the store on the night before they were challenged with the stock loss.
- The employees had been unable to prove that the losses were for reasons beyond their control.
- This meant that the employees were responsible for the losses.
- Each employee was culpable for the failure of the group to avoid the shrinkage.
- As it is extremely difficult for an employer to prove that shrinkage is due to the acts of particular employees, the employer is entitled to include, as terms in employment contracts, the employee’s duty to avoid shrinkage beyond reasonable limits.
- The dismissals were fair.
The outcomes of these three cases have misled a number of employers into believing that group dismissals are fair. However, whether this is true will depend on the extent, to which the employees specifically have responsibility for prevention of losses, and have the means of preventing losses.
For example, in the case of FEDCRAW obo Mthimunye vs Rewmoor Investments 543 (Pty) Ltd (2008, 2 BALR 142) the entire staff working the retail store were dismissed after the employer suffered serious stock losses.
The CCMA found that:
- The notion of collective guilt was repugnant;
- Despite the existence of a clause in each employee’s contract to the effect that prevention of stock losses formed part of their conditions of employment, the employer had failed to prove that the dismissed employees were responsible for the stock losses;
As a result all the employees were reinstated with full back pay.
The correct actions of the employer will differ from case to case depending on a number of legal subtleties and interpretations. An important difference between the Rewmoor case and the Foschini case appears that the employer in the latter case was able to convince the court that there were no other likely reasons for the stock losses - other than the negligence and/or dishonesty of the employees. The provision of such proof requires, amongst other things, tight security measures, meticulous records, and evidentiary techniques that show how tight security is.
The purpose of this approach is to show the court that:
- There was no way that a large volume of stock could go missing over the relevant period of time, other than due to the misconduct of staff; and
- The dismissed employees must either have been involved in the theft, or knew about it, or were negligent in not knowing about it.
This, combined with showing that the employees had a duty to protect the employer from such losses, will go a long way towards making a group dismissal stick.
BY Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or via e-mail address: [email protected]labourlawadvice.co.za. Website address: www.labourlawadvice.co.za.
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