No Written Rule Required - Dismissal in the Employment Relationship

Engling, Stritter & Partners

14 hours ago

4 min read

Dishonesty, trust, and dismissal in the employment relationship

A common misconception among employers is that an employee cannot be disciplined, still less dismissed, for dishonest conduct unless that conduct is expressly recorded as a transgression in a workplace policy or disciplinary code, together with a stipulated sanction.

The judgment of the Labour Court of Namibia in Melbro Retail (Pty) Ltd (t/a The Crazy Store) v Matheus (HC-MD-LAB-APP-AAA-2025/00015) [2025] NALCMD 2 (23 January 2026) reaffirmed that this is exactly that: a misconception. The Court confirmed that the duty to act honestly is inherent in every employment relationship and exists independently of any express provision in an employment contract or disciplinary code. Engling, Stritter & Partners acted for the successful appellant.

The duty of honesty needs no written rule

The Labour Court found it “of no moment” that no employment policy expressly prohibited dishonesty, because honesty is already “embodied within an employment relationship between the employer and employee” and is “not only one of the pillars of an employment relationship, but it is one of the major factors that breathes life into such relationship.”

Drawing on earlier decisions the Court reaffirmed that, at common law, “an employee contracts to act honestly in dealings with the employer,” and that a breach of that duty “goes to the root of the contract of employment.” The obligation to act honestly therefore arises from the employment relationship itself and does not depend upon an employment contract or disciplinary code spelling it out in express terms. On this reasoning, the arbitrator's (whose decision was appealed) insistence on proof of a written rule prohibiting dishonesty, and proof that the rule had been breached, was, respectfully, legally misplaced.

When dishonesty will justify dismissal

Establishing that no written rule is required does not, on its own, justify dismissal. The Court still had to satisfy itself, on the record presented, that the misconduct was sufficiently serious to warrant the ultimate sanction. Several features of the employee's conduct weighed heavily in that assessment. His course of conduct was calculated and comprised more than one deliberate step of dishonesty. As area manager, he held a position of trust and supervisory authority. His conduct created what the Court called a “false state of affairs,” designed to conceal a discrepancy rather than account for it honestly. When confronted, he showed no remorse, which further appeared to serve as an aggravating factor.

The Court described this as “the calculated nature of the dishonesty,” finding that the coordinated steps demonstrated “not just mere dishonesty but also an abuse of the trust bestowed” on the employee, and that this had caused “a decay in the employment relationship” warranting dismissal, the most severe sanction available for misconduct.

Notably, the employee argued that the appellant had suffered no commercial loss as a result of his conduct, and that this ought to have counted against dismissal. The Court's reasoning did not turn on proof of financial prejudice. Rather, it focused on the harm done to the relationship of trust between employer and employee.

The judgment is accordingly a useful illustration of the principle that the absence of proven financial loss does not necessarily preclude dismissal where dishonesty has seriously undermined the relationship of trust.

Practical implications for employers

The judgment should not be read as authority that any act of dishonesty, however minor, automatically justifies dismissal, nor does it dispense with the ordinary requirements for a fair dismissal under the Labour Act 11 of 2007.

For employers, the judgment offers a welcome reaffirmation of an existing legal principle. The absence of a specific clause in a disciplinary code or employment contract prohibiting dishonesty is not, by itself, a bar to a fair dismissal for dishonest conduct. The duty of honesty arises from the employment relationship and need not be spelled out in writing before it can be enforced.

That said, well-drafted disciplinary codes remain good practice. Clear policies assist employers in demonstrating consistency, guide managers through the disciplinary process, and reduce the scope for dispute, even though their absence will not excuse dishonest conduct.

Employers should therefore distinguish between the existence of the duty itself and the separate question whether the particular breach is sufficiently serious to justify dismissal. Relevant considerations may include the nature and extent of the dishonesty, the employee's position and responsibilities, the surrounding circumstances, the impact on the relationship of trust, and whether dismissal is proportionate.

Employers should also be careful not to treat this judgment as a licence to dismiss for any and every act of dishonesty without a proper enquiry. The sound course remains to investigate thoroughly, follow a fair procedure, build a clear evidentiary record of what occurred, and assess proportionality in the circumstances of the particular case.

Conclusion

Melbro Retail (Pty) Ltd (t/a The Crazy Store) v Matheus confirms that an employee's duty of honesty does not depend upon an express provision in an employment contract or disciplinary code, but arises as an incident of the employment relationship itself. Employers faced with dishonest conduct are not without a remedy simply because their disciplinary code is silent on the point, provided the misconduct is proved, a fair procedure is followed, and dismissal is a proportionate response to conduct that has genuinely broken down the trust between the parties.

Geremy Schmidt

Associate– Litigation Department

Engling, Stritter & Partners