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The Importance for an Employer to Exercise Good Faith in Terminating Employment Reaffirmed 

by Shrivan Dabee

Published: August, 2019

Submission: August, 2019

 



 

Section 38(2)(a) of the Mauritian Employment Rights Act provides that:


“(2) No employer shall terminate a worker’s agreement –


(a) for reasons related to the worker’s misconduct, unless –


(i)he cannot in good faith take any other course of action…” (our emphasis added)


In its judgment in the case ofUnited Docks Limited v De Spéville [2019] UKPC 28(delivered on 10 June 2019), the Judicial Committee of the Privy Council had to consider whether the termination of Mr de Spéville’s employment by United Docks Limited ("UDL") on grounds of gross misconduct was justified. The precise question was whether UDL had demonstrated that it could not in good faith take any other decision than that of terminating the employment of Mr de Spéville.


Although the case was decided based on the now repealed Labour Act, 1975, the obligation imposed on employers under section 38(2)(a)(i) of the Employment Rights Act, as quoted above, is exactly the same as that imposed under the then section 32(b)(i) of the Labour Act.


The judgment confirms that, substantively, termination on grounds of gross misconduct is a two-step process under section 38(2)(a) of the Employment Rights Act: an employer, over and above showing that an employee committed an act of gross misconduct warranting summary termination of employment, has a duty to show that it cannot, in good faith, take any decision other than dismissing an employee. In other words, the employer has to show that termination of employment is the only option it has.


Indeed, the Judicial Committee of the Privy Council stated the following: “A question whether the company had a valid reason to dismiss the respondent is obviously different from a question whether it could not in good faith take any other course than to dismiss him. The former asks only whether the misconduct was a ground for dismissing him. The latter asks whether in all the surrounding circumstances the only course reasonably open to the employer was to dismiss him.”


Therefore, while certain acts and doings may constitute gross misconduct, any summary termination can only occur if the employer, in good faith, has no option other than dismissing the employee. In this case, the Judicial Committee of the Privy Council relied on a letter sent by UDLto Mr de Spéville offering the latterex gratiacompensation following the termination prior to concluding that summary termination of Mr de Spéville’s employment was not the only option available to UDL. Although the Judicial Committee of the Privy Council is careful to state thatex gratiacompensation should not by itself be viewed as UDL conceding that summary termination was unwarranted, it has attached some importance to two matters arising out of the wider circumstances surrounding this letter:


  1. the representative of UDL had, at trial stage, admitted that UDL had received legal advice to the effect that summary termination may not be lawful; and
  2. UDL amended its defence to include as a ground for summary termination, breach of trust.

Following this judgment, it is expected that absence of good faith is likely to be argued more frequently as a ground for finding unjustified summary termination. Given the reasons invoked by the Judicial Committee of the Privy Council in this case, it remains to be seen what factors the courts will consider in their assessment of good faith in similar cases in the future.


Reviewed by P. Maxime Sauzier SC and Ashley Ramdass, executives at ENSafrica in Mauritius.


 


 

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