18 March 2019 by and Employment Alert

Intention is everything: The role of intent in employee discipline for dishonesty and/or fraud

Employers tend to charge employees who have received financial gain from misconduct with dishonesty or fraud even in cases where the “benefit” can be attributed to human error or negligence.

In the case of Drs Dietrich, Voigt and MIA v Bennet CM N.O CA 14/2016, the Labour Appeal Court confirmed that not all conduct that leads to financial benefit is nefarious. Sometimes, employees may have a reasonable explanation, and in such cases, a dismissal is not the appropriate sanction.

In December 2012, Mr Ngcobo was assigned to work on a project with the Head of Basic Haematology Research Group and he was expected to work overtime. He agreed to be paid at a rate of 1.0 per hour (his normal hourly rate).

After concerns from Mr Ngcobo’s line manager regarding his overtime claims, the employer audited his claims forms and the investigation revealed the following:

  • Mr Ngcobo claimed overtime at an incorrect rate for a period of three months in July, November and December 2013 - he had submitted claims at the rate of 1.5 per hour which was higher that his normal hour rate.
  • In addition, he had claimed payment for time that he was not at the workplace in that there were 13 instances where he had failed to “clock out” during lunch break thus representing an incorrect reflection of his actually hours worked.
  • The employer suffered a loss of R8,647.60 as a result of the employees conduct.

Mr Ngcobo was charged with dishonesty and/or falsification of overtime claims. He was found guilty and he was dismissed on 10 April 2014.

At the CCMA, Mr Ngcobo challenged the substantive fairness of his dismissal. During arbitration, he admitted to claiming overtime for time spent outside the workplace during his lunch hour however he explained that his actions were not dishonest and intentional and had apologised for the transgressions.

In relation to the second charge, Mr Ngcobo also explained that the claims submitted at the rate of 1.5 per hour were made in error. He explained that they were not submitted with an intention to deceive the employer because they were supported by time sheets which were approved by his manager.

The commissioner considered the evidence and held that the employer failed to prove that Mr Ngcobo had acted dishonestly and/or deliberately falsified his claims. He found Mr Ngcobo guilty of negligence, sanctioned him with a written warning valid for 12 months and ordered retrospective reinstatement.

On review, the Labour Court upheld the decision of the commissioner. Rabkin-Naicker J also observed that the Mr Ngcobo’s claims were approved by his line manager who had also recorded on email that she and Mr Ngcobo had learned a lesson from their mishaps.

On appeal, the employer argued that the employee was guilty of dishonesty and not negligence because during the arbitration proceedings, the employer had shown that the employee had deliberately submitted false claims. The Labour Appeal Court held that the main issue to be determined was whether the employee acted intentionally or negligently.

The court examined the test for “reasonable person” in the context of the workplace and held that the employee failed to act with the degree of care and standard expected of a person in his position. It assessed the evidence that was before the commissioner and held that the commissioner’s findings were reasonable.

This case cautions employers against charging employees with dishonesty simply because the employee has enjoyed some financial gain as a result of his or her misconduct. Although benefiting from a misconduct financially aggravates the misconduct, it does not always result in a finding of dishonesty or fraud. An employer must be prepared to look beyond the conduct and consider the explanation provided by the employee during the investigation or at the disciplinary enquiry.

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