In a March 29 2015 decision an industrial arbitration tribunal found that an employee had been disloyal when he carried out work in his own name for one of the employer's customers and had used the employer's premises to that end.
An employee in an employment relationship is subject to a duty of loyalty towards his or her employer, which implies that the employee is prohibited from carrying out competing business against the employer. The case at hand related to whether an employee had breached his duty of loyalty to the effect that the employer was entitled to dismiss him summarily.
Without the employer's knowledge and consent, the employee had performed work for one of the company's customers. The work was invoiced through the employee's own company, but he had used the company's premises, machines and tools to carry it out.
The fact that the staff manual authorised "moonlighting and spare time work" outside of normal working hours in connection with the use of the company's premises and tools could not be regarded as permission to use the premises to carry out competing business.
The employee pointed to the fact that he had merely executed an order from a customer which the employer had previously refused to undertake. However, the arbitrator found no proof that the employer had refused an order or enquiry from the customer.
Further, the arbitrator stated that the employee should have been aware that he was not entitled to carry out work in his own name for the company's customers without its consent.
The arbitrator found that the employee had disregarded his duty of loyalty by carrying out competing business without the company's knowledge or consent. As such, the summary dismissal was justified and the employer was exonerated from the claim for payment of compensation and salary during the notice period.
The decision is in line with previous case law and as such confirms that carrying out competing business against an employer is contrary to the duty of loyalty.
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