Are you Allowed to Manage a Side Business whilst working in another Capacity?

By 10th Jun 2022Employment
side business

Most people opt to manage different side businesses to generate more cash flow to stay afloat. The South African economy has forced people to search for other means to live comfortably and to ensure that they have enough essentials to survive throughout each month.

It has been submitted that a duty of good faith is a reciprocal duty between an employer and an employee. Resultantly, the employee has to inform their employer of any information that undermines the business interest of the employer. The employee breaches the implied duty placed on an employee to act in good faith when he/she chooses to remain silent about information that undermines the employer’s business interest and constitutes a justified dismissal.

Further, the case of Bakenrug Meat (PTY) Ltd t/a Joostenberg Meat v CCMA and Others enforced some restrictions on employees to operate independent businesses whilst being employed. The case involves the applicant operating a business whilst being employed as a sales representative by her employer. The employee was dismissed based on the fact that the employee was producing and selling meat products similar to that of the employer which caused the employee to be found guilty of a charge of dishonesty.

The employee referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (hereafter “CCMA”). The CCMA awarded that the dismissal was substantively fair and stated that the employee operated a formal business with at least one employee from rented premises. Further, the CCMA stated that the employee had to inform her employer about her side business to establish whether a conflict of interest might have persisted. Therefore, the mere fact that the employee assumed that her employer was aware of her side business was unacceptable resulting in the employee acting dishonestly and unacceptably.

The employee undertook the award of the CCMA to the Labour Court for review. The Labour Court found that the dismissal was substantively unfair and the award of the CCMA was set aside. The reasons listed by the Labour Court were the following- Firstly, no duty persisted between the employee and the employer for the employee to inform the employer of the potential conflict. In this regard, it was only a prerequisite if there was a potential conflict of competition of some sort. Secondly, the employee operated her business on weekends and there was no nexus that her side business negatively affected her work performance towards the employer during the week. Therefore, the evidence failed to portray that the employee was guilty of the charge of dishonesty.

The matter was brought before the Labour Appeal Court for consideration. The Labour Appeal Court found that the employee had a duty to act in good faith by informing her employer of her side business and the material activities taking place therein. The Labour Appeal Court found that the dismissal was substantively fair and that the employee failed to inform her employer of her side business conducting the same material activities as her employer. Thus, the order of the Labour Court is set aside and the dismissal persists.

 

Kindly contact our office if you require further clarification or assistance in respect of a dismissal dispute.

 

 

Shervona Tia Marshall
Candidate Attorney
shervona@bbplaw.attorney

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