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The duty of good faith owed by an employee to the employer

It is trite that a director owes a fiduciary duty to his employer company. Fiduciary duties exist in order to ensure that directors act for the benefit of the company and not for themselves, or for third parties. In this context, the expression, fiduciary duty, connotes a duty of good faith and trust owed by the director to the company. A director also has a duty to act with due care and skill in performing his or her functions diligently. A breach of this duty of good faith is committed where a director does not act in accordance with the fiduciary duties.

Do mere employees, as opposed to directors, owe a duty of good faith to their employer?

But what about employees of a company, who are not directors? What kind of duty do they owe their employer?

The answer is that they owe a duty to act in good faith toward the employer, similar although not identical to a director’s
fiduciary duties. Thus, as the Supreme Court of Appeal recently held in Ganes v Telecom Namibia 2004 (3) SA 615 at 626E:

“in the absence of an agreement to the contrary . . . [the employee in question] owed the [employer] a duty of good faith.
This duty entailed that he was obliged not to work against the [company’s] interests; not to place himself in a position where his interests conflicted with that of the [employer]; not to make a secret profit at the expense of the [company]; and not to receive from a third party a bribe, secret profit, or commission in the course of or by means of his position as an employee of the [company]”

An employer can sue to recover bribes and secret commissions received by the employee.

In this case, the court held that bribes or secret commissions received by an employee in the course of his employment
or by means of his employment and without the employer’s consent, are regarded, in law, as having been received for the employer. Consequently, an employer can sue the employee to compel the latter to pay such bribes and secret commissions into the coffers of the company.

An employer’s claim against an employee in this regard is based on the premise that the bribes and secret commissions received by the employee are, in law, regarded as having been received for the employer. The employer can thus institute legal action against the employee to recover these amounts, regardless of whether or not the employer has in fact suffered any actual financial loss.

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