24 October 2011

Be warned: a decision to discipline an employee can give rise to a claim for damages by the employee in the civil courts

In a recent judgment out of the Eastern Cape High Court (the Court), the Court had to consider whether an employee was entitled to damages as a result of her employer setting in motion disciplinary proceedings against her, in which she alleged that her employer had falsely accused her of misappropriating the amount of R100 000.

An amount of R100 000 went missing from a money bag at the time that the employee was employed as a teller at a commercial bank. The employee was suspended and criminal charges were laid against her with the South African Police Service. In due course, internal proceedings were conducted and she was found not guilty. The State did not criminally prosecute her. As a result, the employee instituted action against her employer, claiming damages.

After the disappearance of the money, the employer's forensic investigator undertook an investigation including the viewing of video footage showing the preparation of the funds by the employee. The forensic investigator compiled a report in which he made certain findings: the employee did not seal the bag in full view of the surveillance camera; the video recording showed that a co-employee did not observe the entire sealing process of the money bag by the employee; the employee had in her possession a bag that had previously been empty, but when she left the branch of the bank it was no longer empty and she was not searched on leaving the bank by security personnel as they were on strike. The report concluded by process of elimination based on the above factors, and other information gleaned from these investigations, that, on the balance of probabilities, the employee had misappropriated the funds.

The employee instituted action for malicious prosecution arising out of the instigation of criminal proceedings as well as arising out of the institution of the disciplinary proceedings. In order to succeed with a claim, the Court found that the employee had to prove that:

  • the employer instigated or instituted proceedings;
  • the employer acted with malice;
  • the employer acted without a reasonable and probable cause; and
  • the prosecution or civil proceedings failed.

The Court held that the test of reasonable and probable cause has both subjective and objective elements. Not only must the employer have subjectively an honest belief in the guilt of the employee, but his or her belief and conduct must have been objectively reasonable, as would have been exercised by a person using ordinary care and prudence.

In the trial of the matter, the bank's forensic investigator was subjected to intense scrutiny including the evidence that he had assembled. The Court was then required to consider the conclusions drawn by the forensic investigator and, in particular, to consider whether such conclusions were reasonable. Having concluded that the set of facts the forensic investigator had investigated were reasonable and sufficient, the Court had to consider whether there were reasonable grounds for instituting the disciplinary enquiry on the basis of these facts. Again, the Court had to undertake a detailed consideration of the available facts to ascertain whether a reasonable person considering the facts would have concluded that the employee could reasonably have committed the offence with which she was charged.

In this case, the Court concluded that the employee did not prove that the employer acted without a reasonable and probable cause in instituting the disciplinary enquiry.

Although not pleaded in the case before the Court, the Court did consider whether the employer's conduct of reporting the matter to the South African Police Services and arranging for the employees house to be searched had infringed and violated the employee's personality and dignity. The Court held that the employee, in order to succeed, would have to establish the further requirement that she suffered an impairment of her dignity. This involves a consideration of whether the employee's subjective feelings have been violated, for the very essence of an injuria is that the aggrieved person's dignity must actually have been impaired. It is not sufficient to show that the wrongful act was such that it would have impaired the dignity of persons of ordinary sensitivities.

The important lesson from this case is that employers can face civil action for initiating disciplinary action against an employee which may be compared to a malicious prosecution. Employers should therefore exercise caution when initiating disciplinary action against employees and, in particular, should be mindful that the employer must act with reasonable and probable cause.

Tim Mills

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