5.
By letter dated 4 December 2006 Total wrote to Mr A as follows:
“It has been brought to the
Management’s attention that a company of which you are an office bearer has
been soliciting business with our main distributor, namely Messrs Yip Tong and
Sons Ltd. In view of the post you hold within the company, such an accusation
if proved could amount to a serious breach of your obligations towards the said
company.”
Total therefore invited Mr A to attend a hearing before a
disciplinary committee. On 15 December 2006 the hearing took place, following
which, by letter dated 19 December 2006, Total informed Mr A that he had “been
found guilty as charged and that Management [had] no other alternative than to
terminate [his] employment on grounds of gross misconduct with immediate effect”.
6.
The company to which Total referred in the opening sentence of its
letter dated 4 December 2006 was Pick N’ Pay Ltd. It was a company in which at
all material times Mr A and his wife each held 50% of the issued shares. It had
been Elf’s practice to require its employees to sign an annual declaration of
any secondary employment. In 2003 Mr A declared that he was an unremunerated
director of Pick N’ Pay Ltd, which he described, probably correctly at that
time, as a supplier and distributor of fresh and frozen food, albeit as passive
for the time being. At the foot of the declaration there was an annotation,
apparently made by the Director General of Elf, that, insofar as Mr A’s
directorship of Pick N’ Pay Ltd was non-executive, it was acceptable to Elf. When
in 2004 he came to make a further declaration, Mr A made no mention of having
any continuing directorship of Pick N’ Pay Ltd. The President seems to have
accepted his evidence that it was indeed in about 2004 that he resigned his
directorship; that from then onwards he was the company’s secretary but
resigned from that position some time in 2006; that thereafter his relationship
with the company was only as the holder of 50% of its shares; and that in 2006
its day-to-day management was conducted by his wife and in particular by his
brother and not by himself.
7.
The reference in Total’s letter dated 4 December 2006 to the
solicitation of business by Pick N’ Pay Ltd was a reference to a letter dated
10 August 2006 which Pick N’ Pay Ltd wrote to the manager of Yip Tong. The
letter was headed “QUOTATION” and the subject of the letter was described as
“GAS REGULATOR FOR RED GAS CYLINDERS”. The text of the letter began as follows:
“Further to your request, we have
the pleasure to submit hereunder our best quotation and our product
specification pertaining the above for your perusal.”
Then, in a box, the company quoted a price of Rs 136 for
each unit up to 1,500 units and of Rs 132 for each unit above 1,500 units.
There then followed a technical specification of the regulator and proposed
conditions in respect of packing, payment and delivery. The text ended as
follows:
“We hope that our offer will
satisfy your requirements and look forward to your most valued order. Should
you require any additional information, please don’t hesitate to contact us.”
At the foot of the letter was a signature, under which was
typed “S A RAHMAN DIRECTOR”.
8.
Red gas cylinders were sold by Total. The regulators which Pick N’ Pay
Ltd were offering to sell to Yip Tong were regulators of a type which fitted
the cylinders sold by Total and which Total itself sold.
9.
S A Rahman is the name of Mr A’s wife. In oral evidence to the President
Mr A denied that the signature on the letter was that of his wife. But Mr A’s
brother, whom he called to give evidence, confirmed that the signature was
indeed that of Mr A’s wife. There was also evidence that before the
disciplinary committee Mr A had admitted – surely inevitably – that, had Yip
Tong accepted Pick N’ Pay’s quotation, the interests of Total would have been
prejudiced.
10.
The President held that an employee had a contractual obligation not to
enter into competition with his employer during the period of his employment.
He found that Mr A was in breach of the obligation. He observed that, while the
main focus of Mr A’s employment within Total was the promotion of sales, he
held an interest in a company managed by his wife and his brother which was
trying to compete by making sales in an area, and to a distributor, directly
related to Total and therefore in the same market. In those circumstances – so
held the President – Total had established that it had been entitled summarily
to dismiss Mr A.
11.
In its judgment on Mr A’s appeal the Supreme Court roundly upheld the
President’s factual findings. It observed:
“… the appellant had direct and
close interests in a company, wholly owned by himself and his wife and managed
by his wife assisted by his brother, which was soliciting business from one of
the main clients of the respondent for the sale of the same type of products
which the appellant was employed by the respondent to sell and market.
On the basis of these proven
facts, which were unequivocally of a nature to destroy the bond of trust by
giving rise to a legitimate and bona fide suspicion on the part of the
respondent, it was perfectly justifiable for the respondent … to terminate the
employment of the appellant. The trust of the respondent … was at the material
time impaired to such an extent that it was no longer possible in good faith
for [it] to maintain the appellant in its employment in his capacity as Manager
responsible for the sole and marketing of similar products …
The appellant cannot therefore
succeed for any of reasons invoked in the course of the appeal. All the grounds
of appeal should accordingly fail.”
12.
In three concluding paragraphs, however, the Supreme Court addressed a
different question, which led it to the conclusion that Total was nevertheless
obliged to pay Mr A wages in lieu of notice and a severance allowance at the
normal rate.
13.
The different question was this: had Mr A been guilty only of a “faute sérieuse”
rather than a “faute grave”? The answer of the Supreme Court was: yes.
14.
Notwithstanding his expertise in the law of employment, it had not
occurred to the President that it was necessary in the present case to address
the distinction between a “faute sérieuse” and a “faute grave”. Nor, as already
appears, had counsel for Mr A included it in his grounds of appeal. At the
hearing before the Supreme Court, however, the court had pointed out to the
advocates that entitlement to compensation in the event only of “faute sérieuse”
was always a live issue even if it had not been pleaded. No doubt Mr Sauzier
SC, on behalf of Total, had not come prepared to address the distinction; but he
accepts that the court gave him an opportunity to make submissions about it.
15.
The distinction between dismissal for “faute sérieuse” and dismissal for
“faute grave” is not expressly found in the Labour Act 1975. Section 34
provides for payment by the employer to the worker of severance allowance in
three situations, of which the first is where the employer terminates the
employment. Section 36 provides for the amount of the allowance, including, at
subsection (7), for payment at the punitive rate where termination is
unjustified. Section 35(1) provides however that no worker shall be paid
severance allowance where he is dismissed pursuant to section 32(1)(b), which
in turn precludes dismissal for alleged misconduct unless the employer cannot
in good faith take any other course.
16.
Notwithstanding the absence of any express reference to it in the Labour
Act, Mr Sauzier accepts that the Supreme Court was – as a matter of law –
correct to draw a distinction between dismissal for misconduct amounting only
to “faute sérieuse”, for which severance allowance at the normal rate would be
payable, and dismissal for misconduct amounting to “faute grave”, for which no
severance allowance would be payable.
17.
The Supreme Court introduced its discussion of this distinction by quoting
with approval from the “Introduction Au Droit du Travail Mauricien” by Dr Fok
Kan, 1st ed, p 196, as follows:
“L’élément clef
dans l’appréciation de la faute semble être sa gravité. Il existe en effet
divers degrés de faute (Harel Frères Ltd v Jeebodhun 1981 MR 189). Au
bas de l’échelle il y a les fautes légères qui elles ne justifient pas un
licenciement et entraîneraient en cas de licenciement le paiement de l’indemnité
de licenciement au taux punitif de même que l’indemnité de préavis. … Le
deuxième degré de faute est la faute sérieuse. Bien que la
faute justifie ici la sanction ultime du licenciement, elle n’est pas considérée
comme suffisamment grave pour écarter l’application de la section 34, c’est-à-dire
le paiement de l’indemnité minimum légale et de l’indemnité de préavis. Au
sommet de la hiérarchie des fautes nous retrouvons les fautes graves qui elles
justifient un ‘summary dismissal’, c’est-à-dire sans préavis et donc éventuellement
sans l’indemnité de licenciement dans la mesure où l’employeur ne pouvait ‘in
good faith take any other course.’ Seul donc une telle faute grave constitue un
misconduct au sens de la section 32(1)(b).”
18.
In the Harel Frères case, to which the learned author makes
reference, the employer had employed the worker to cut sugar canes. One day
during crop time the worker wrongly absented himself from work and went to cut
canes for another planter for higher pay. He then falsely denied to the
employer that he had done so. The Supreme Court upheld the decision of the Industrial
Court that, although the worker was guilty of misconduct which entitled the
employer to dismiss him, he was nonetheless entitled to wages in lieu of notice
and severance allowance at the normal rate. The court cited paras 243 and 244
of the “Traité de Droit du Travail, Contrat de Travail”, by Camerlynck, 1st ed.
In his exposition of French law Camerlynck said:
“243 Ainsi ont été
considérés comme constituant une faute grave privative de l’indemnité de
licenciement: …”
Camerlynck then described ten situations, of which the
first was “les multiples absences irregulières et retards” and the ninth was
“la concurrence déloyale”. Camerlynck proceeded:
“244. Par contre, n’ont
pas été considérées comme fautes graves privatives de l’indemnité de
licenciement: …”
Then, again, he described ten situations which
were not to be considered faute grave, of which the fourth was “l’absence non
autorisée n’ayant causé aucune perturbation dans la marche de l’entreprise …”
19.
In concluding that the Industrial Court had been entitled to hold that
the worker had not been guilty of “faute grave”, the Supreme Court in the Harel
Frères case stressed that his misconduct had been “an isolated act
committed by someone who had given 19 years’ loyal service to his employer”. It
made clear, however, that length of service would not always negative “faute
grave” for “if a worker steals a hundred rupees from his employer’s drawer, it
is certainly not the length of his service which will determine whether or not
he gets any severance allowance”.
20.
In the light of Mr Sauzier’s concession that the issue before the Board
is whether the Supreme Court was entitled to hold that Mr A was guilty of “faute
sérieuse” rather than “faute grave”, it is unnecessary for the Board to explain
how the distinction fits together with the provisions of the Labour Act set out
above. But the Board confesses that it perceives a conundrum which at present
it feels unable to resolve. The conundrum is as follows:
(a)
An employer cannot dismiss a worker for misconduct otherwise than
pursuant to section 32(1)(b) of the Act (ie where, apart from being required to
effect the dismissal speedily, the employer cannot in good faith take any other
course).
(b)
If dismissed pursuant to section 32(1)(b), the worker is not entitled to
severance allowance: section 35(1).
(c)
So how can a median situation exist in which, if the misconduct is “sérieuse”
but falls short of “grave”, an employer can dismiss a worker for it but the
worker remains entitled to severance allowance?
21.
Perhaps in another appeal the Board will be persuaded that the conundrum
can somehow be resolved by reference to the terms of the Labour Act.
Alternatively, however, it may be that the application of French law has
imposed a gloss either on section 32(1)(b) of the Act (with the result that
there can be dismissal for misconduct outside its terms) or on section 35(1)
(with the result that a dismissal for misconduct under section 32(1)(b) does
not always preclude a right to severance allowance). To the Board it appears
more likely that any such gloss is on section 32(1)(b). The final sentence of
the quotation in para 17 above from Dr Fok Kan’s work – “therefore only a
‘faute grave’ constitutes misconduct within the meaning of section 32(1)(b)” –
so suggests. So does the judgment of the Supreme Court in Mandary v State
Informatics Ltd, 2013 SCJ 396, which it delivered two months prior to its
making the order under appeal.
22.
In the Mandary case the court rejected an employee’s appeal
against a decision of the Industrial Court that, following its dismissal of
him, the employer was not obliged to pay him wages in lieu of notice or
severance allowance. The employee had been the employer’s finance manager. A
new company had been set up. It was designed to try to compete with the
employer. The employer did not allege that, while working for itself, the
employee had also been working for the new company. Its allegation, denied by
the employee but found proved in the Industrial Court, was that, in his
handwriting, he had helped to complete the statutory returns to the Registrar
of Companies made by the new company (which perhaps was not then even
operational) and that he had thereby assisted it. The Supreme Court described
the conclusion of the Industrial Court, which it upheld, as being “that the
appellant who was in breach of his duty of loyalty had committed a “faute
grave” [and that the] employer had therefore acted in good faith
in terminating the appellant’s employment” (emphasis supplied).
23.
It seems to follow therefore that, as Mr Sauzier submitted to the Board,
an employee’s “faute grave” is misconduct for which, within the meaning of
section 32(1)(b)(i) of the Labour Act, the employer “cannot in good faith take
any other course” than to dismiss him, with the result that, by virtue of
section 35(1), he is not entitled to severance allowance; and that,
notwithstanding the terms of section 32(1)(b), there can be a dismissal for
“faute sérieuse” outside its terms and without that result.
24.
If so, however, a puzzle arises: for, in the passage of its judgment set
out at para 11 above, the gist of which it later repeated, the Supreme Court in
the present case observed that it had no longer been possible in good faith for
Total to have maintained Mr A in his employment. So why did it not follow that
the misconduct was “faute grave”? The Board resolves to hasten onwards and to
focus directly on the proper categorisation of Mr A’s misconduct.
25.
Camerlynck listed disloyal competition as an example of “faute grave”:
see para 18 above. In the second edition, published in 2009, of his book,
already quoted, on the Mauritian law of employment, Dr Fok Kan described the
boundaries of the employee’s obligation not to compete with his employer as
follows, at p 116:
“En dehors des
heures de travail, la liberté de l’employé reprend le dessus, celui-ci n’étant
plus sous la subordination de l’employeur. Il peut ainsi s’adonner à d’autres
activités, sous réserve d’une clause contraire prévue par le contrat de
travail. Ce droit toutefois est sujet à ce qu’il ne fasse pas concurrence à son
employeur. Cette obligation de non-concurrence de plein droit de l’employé peut
être justifiée par l’obligation d’exécuter loyalement et en toute bonne foi ses
obligations. En cas de violation de cette obligation, l’employé commet une
faute grave, privative de l’indemnité de licenciement.”
26.
Mr Sauzier concedes that some breaches of an employee’s duty not to
enter into competition with his employer might not amount to “faute grave”.
Nevertheless it is clear from the quotations set out above from the works of
Camerlynck, approved in the Harel Frères case, and of Dr Fok Kan that
the starting point is that such a breach is “faute grave”.
27.
It is not clear whether the Supreme Court started from that point. At
all events it gave only one reason for concluding that Mr A’s misconduct was no
more than “faute sérieuse”, namely that he “had an unblemished record of
continuous employment for a period of more than 27 years”. On any view Mr A’s
long unblemished service was a relevant factor. Nevertheless it had been made
clear in the Harel Frères case that, if for example an employee was
guilty of theft even of a minor character, length of service would not by
itself negative “faute grave”: see para 19 above. Indeed, in Soriété de
Gérance de Mon Loisir v Ootim, 1991 MR 64, the Supreme Court observed:
“And, as the dictum in Harel
Frères Ltd … also implies, where the act of misconduct is serious, one would
require at least a combination of strong mitigating factors, and not merely
long good service, to conclude that the worker does not deserve to be summarily
dismissed.”
28.
The Board considers that on any view it was incumbent on the Supreme
Court, when applying the distinction between “faute sérieuse” and “faute
grave”, to set Mr A’s long unblemished record against the other factors which
informed the degree of blameworthiness of his misconduct. These factors were as
follows:
(a)
By May 2006 Total employed Mr A in a senior capacity.
(b)
It employed him to manage the development of an area of its business.
(c)
That area of its business was its sales of liquid petroleum gas and of
ancillary equipment such as regulators.
(d)
So Total’s employment of him in that capacity gave him particular
insight into that particular market.
(e)
Yet, although employed to manage the development of Total’s sales in
that area, he was a 50% shareholder in a family company which was taking steps
which would erode Total’s existing share of sales in that area.
(f)
He had never disclosed his shareholding to Elf or to Total.
(g)
The family company, managed by his closest relations, chose to
proposition the company which was the main purchaser of Total’s regulators.
(h)
It offered to sell to them an apparently unlimited quantity of the very
regulators which Total had been selling to them and which fitted Total’s
cylinders.
(i)
As a 50% shareholder, he was likely to derive financial benefit from any
success which the family company achieved in selling the regulators.
(j)
At the hearing before the disciplinary committee he appears to have
given no assurance that the family company would cease its efforts to sell the
regulators.
29.
The Board concludes that, taken together, the ten factors set out above
render the breach of Mr A’s duty of non-competition so fundamental that, even
when placed in the context of his long unblemished record, it could not
reasonably be regarded as other than “faute grave”. On any view it was far
worse than the breach in the recent Mandary case, which, according to
the Supreme Court, the Industrial Court could not be faulted in having
categorised as “faute grave”.
30.
The Board therefore allows the appeal and sets aside the order of the
Supreme Court, with the result that the orders of the President, which included
an order for Mr A to pay Total’s costs, again take effect. In relation to the
costs of the present appeal, the Board reminds itself of the letter from Mr A’s
attorney quoted at para 2 above. No doubt the effect of Mr A’s decision not to
participate in the hearing before the Board saved him from incurring further
costs on his own behalf. But he did not consent to the allowing of the appeal
and so did not obviate the need for Total to attend before the Board by counsel
and to establish its case. The Board considers that it should order Mr A to pay
Total’s costs of its appeal to the Board, together with those of his appeal to
the Supreme Court.
