To say, or not to say - that is the question

recruitment Oct 24, 2019
How much must you disclose to (or hide from) a prospective employer about your reasons for leaving your previous job? The Labour Court weighs in.

The nature and extent of the obligation that rests on an applicant for employment to disclose the circumstances surrounding a termination of employment with a previous employer were examined by the Labour Court in the recent case of Intercape Ferreira Mainliner (Pty) Ltd v Mcwade and Others (JR158/17) [2019] ZALCJHB 274 (18 September 2019).

Background

The employee was employed by Intercape in May 2015 with a view to be groomed for the position of CEO. However, on June 2016 he was dismissed after a disciplinary hearing on allegations that included his failure to disclose to Intercape, prior to his appointment, the circumstances surrounding the termination of his employment with Cargo Carriers Zimbabwe.

The circumstances that he had failed to disclose, were as follows:

  • During August to October 2014, Cargo Carriers had made allegations against the employee regarding bribery, corruption and the use of company assets without prior permission.
  • He was suspended on 15 October 2014 and during the course of the suspension, the presidency of Zimbabwe, the Zimbabwean Labour Court and the Zimbabwean Trade Union Congress all became involved in the dispute.
  • The employee did not heed various summonses to appear at the Presidency and at the Labour Court and military personnel had to physically take him to the Department of Labour to answer questions regarding his suspension.
  • At some point he decided to sue his employer; negotiations between them started and it resulted in a settlement agreement that included a non-disclosure agreement.

The employee’s approach regarding these circumstances during the recruitment process was as follows:

  • On his application form, the employee stated that his reasons for leaving the employ of Cargo Carriers were ‘New owners, Zim economy’.
  • At the first interview, he was asked about the circumstances of his departure from Cargo Carriers, but did not mention any of the above circumstances.
  • When the CEO of Intercape asked him the same question at a meeting in Harare, he responded that there had been a ‘difference of opinion’ on ethical standards.
  • When during his meeting with the Intercape board he was specifically asked if there was anything that should concern the company in relation to his departure from Cargo Carriers, he also did not mention any of the events referred to above.

At the CCMA

At the CCMA, the arbitrator found his dismissal to have been substantively and procedurally unfair for the following reasons:

  • In order to be guilty on the misconduct, the employer had to prove that the employee had the intention to defraud – the mere failure to disclose certain information during recruitment can however not be viewed as submitting false information. As there was no legal duty / obligation to disclose the information, there had therefore been no misrepresentation of facts or any element of dishonesty on the part of the employee.
  • Intercape could not show that it had had sought specific information from the Applicant during the recruitment process and that his responses had been false. Only if it had asked specific questions and the Applicant then lied about the circumstances related to his departure, the non-disclosure agreement and the mutual separation agreement, could he have been dismissed for misrepresentation of facts.
  • Much was also made at the arbitration about a non-disclosure agreement signed by the employee on his departure from Cargo Carriers.

Review by the Labour Court

The Labour Court considered the nature and extent of the obligation to disclose facts during the recruitment process.

It criticised the arbitrator’s decision in this case and held as follows:

  • Intercape’s allegation had never been that the employee had made a material misrepresentation of fact or that he had given false information during the course of the interview process.
  • Intercape’s case before the arbitrator was that, given the circumstances (the employee being interviewed for the post of CEO designate of a family business whose operations extend to Zimbabwe), the employee ought to have responded to the question regarding the termination of his employment with Cargo Carriers by disclosing the facts surrounding the termination of his employment, and that his failure to do so, constituted a serious act of misconduct.
  • The employee’s case was that he had nothing to disclose, since in terms of the settlement agreement, he had voluntarily resigned and was never found guilty of any misconduct - accordingly there had been no contractual duty to disclose the circumstances surrounding the termination of his employment with Cargo Carriers. He also claimed that it was never proven that anything he did disclose had been false.
  • This argument by the employee was based on the contractual principles of non-disclosure and misrepresentation by silence or omission - however, the current dispute was not a contractual dispute, but ultimately one of ethics.
  • In Galesitoe v CCMA & others [2017] 7 BLLR 690 (LC) it was held that -

“..... it is not unreasonable to ensure that a person applying for the senior level of post in question would have realised that the nature of his relationship with his former employer was a material consideration for his prospective new employer and could affect his employment prospects. That would have given rise to the obligation to disclose having regard to the principle enunciated in ABSA v Fouche which the LAC and the LC followed .....”

  • The arbitrator had accordingly failed to ask the right question, i.e. whether in all the circumstances, the employee was obliged to disclose the facts surrounding the mutually agreed termination of his employment with Cargo Carriers. The arbitrator had failed to “recognise that outside of the category of deliberate, false representations of fact, a prospective employee may nonetheless be required to disclose information not specifically requested, if that information is material to the decision to employ; or where (as in the present instance) a question is asked, that a less than honest and complete answer might form the basis of a dismissal when the truth is ultimately discovered”.
  • Accordingly, applying these principles -
    • given the seniority of the position for which the applicant had applied; and
    • given the nature of the circumstances surrounding the employee’s termination of employment with Cargo Carriers; and
    • where the prospective employer (Intercape) is a family owned business with business in Zimbabwe; then
    • information concerning allegations of bribery, corruption, intervention by the military, the president, and litigation against his former employer would be objectively regarded as material, in that any reasonable employer would wish to investigate these facts before concluding a recruitment process and determine the applicant’s eligibility or suitability for employment as a consequence; and
    • accordingly, notwithstanding the fact that it was effected by mutual consent, the employee ought to have made full and proper disclosure of those facts.
  • The Court also found that the reliance on the non-disclosure agreement was a red herring and that what mattered for present purposes, were the factual circumstances that led to the signature of the agreement - not the agreement itself or its contents, which provided for little more than the notice and other payments to which the employee was in any event entitled.
  • The award was reviewed and set aside.

 

Conclusion

An interesting judgement by Judge André van Niekerk, and one worth taking note of. It is important to realise that the matter was decided with reference to the specific facts of this case and would not necessarily be applied exactly the same in all instances.

Nevertheless, there are some important principles to take away from this judgement – particularly the confirmation (once again) that in labour law we are never dealing with purely contractual or academic legal principles in isolation, but that fairness, equity, ethics, good faith and trust are always thrown into the mix and inextricably interwoven into the employment relationship.

 

Judith Griessel

 

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