One of the most fundamental of employee common law employment obligations is, at all times in all circumstances, to further, protect and guard the interest of one’s employer at all times.  Put differently, the employment contract is one of the utmost good faith and fidelity.

In Sappi Novaboard (Pty) Ltd  v  Bolleurs (LAC), this obligation was described as an implied term of a contract of employment wherein an employee is required to act in good faith towards his or her employer and that he or she will serve his or her employer honestly and faithfully.

In short, this obligation prohibits an employee, inter alia, from competing with his/her employer whilst in the employ of the employer.  However, what of the conundrum whereby an employee plans to start a business to compete with the employer at a future date subsequent to resigning from the employ of the employer?

This scenario was addressed in Stey-Anet  v  Crown National (Pty) Ltd [CCMA Arbitration; Case No.GA124482.  In her defence, the applicant, who had been dismissed, argued that her conduct did not amount to misconduct and that her actions were no different between that of an employee who had gone for a job interview with a competitor.

The commissioner was required to determine whether the applicant’s attempts to open a business, “which could have been in direct competition with the respondent amounted to gross dishonesty or breach of good faith towards her employer”.

Interestingly, the commissioner acknowledged that the applicant had an intention to open a  business in competition with the respondent, but that the respondent could not have been prejudiced by such planned business venture without such intention on the part of the applicant having been implemented.

As such, the commissioner held that no actual competition took place therefore no conflict of interests arose.  Furthermore, it was held that “one cannot be dismissed for having an intention to commit an act ….. unless that intention has manifested itself into the actual act”.

This award appears to have been harsh.  It is wholly inappropriate for an employee to clandestinely plan to prejudice the employer at a future date whilst being beyond reproach until s/he resigns from which date the employer’s recourse all but disappears.

Such circumstances may be addressed by way of a restraint of trade agreement wherein the employee agrees not to directly or indirectly approach clients of the employer to canvass for business for a specified period of time.

Conflict of interests policies focus on a non-competition undertaking wherein the employee confirms that s/he will not compete with the employer during the course of the employment relationship or act in any manner in which the employee’s conduct places the interests of the employer at risk and the employee’s allegiance to the employer is in question.

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