Business owners often struggle with shrinkage, also known as stock loss. Although shrinkage itself is easy to prove, it is usually difficult to conclusively prove the cause of the shrinkage.
Due to this difficulty in proving the guilt of individual employees, employers sometimes charge a group of employees with team misconduct. With team misconduct, the employer alleges that the blame for the misconduct is shared amongst a group of employees. The legal justification for this approach is that each of the individual employees in the group must have been aware that the misconduct occurred and who the perpetrators were and failed to report the misconduct to the employer.
In the recent Labour Appeal Court case of SACAWU and others v Makgopela and others (2023) 32 LAC 1.11.22, the employer learned that dismissing all employees to address a shrinkage problem is not straightforward.
The employees were charged with and dismissed for team misconduct for failing to comply with the rule to prevent stock loss.
The court, however, pointed out that the employer had failed to properly investigate how the stock was disappearing from the store, nor had they proven that employees in one area of the store would necessarily have known that stock was being stolen from other areas. The company had also not given proper attention to the suggestions made by the employees to combat the stock loss. It, therefore, ruled that the employer failed to prove that the employees were guilty of team misconduct.
The proven facts did not support the inference that all the employees were aware that the misconduct occurred, who the perpetrators were, and therefore had a duty to report the misconduct to the employer.
The employer was ordered to reinstate the employees retrospectively.
This case does not mean employers can no longer rely on a shrinkage policy and team misconduct to deal with stock losses. However, it clearly illustrates the high burden of proof on employers when they dismiss employees for team misconduct.
Employers are advised to use specialised legal advice to draft and implement shrinkage policies in their workplaces and to assist them in any disciplinary action resulting from these policies.
SEESA offers a wide range of Labour Law consulting services, including consultation on and implementation of shrinkage policies and related chairing of disciplinary hearings.