In a recent Labour Court ruling of Dunlop Mixing and Technical Services (Pty) Ltd and Others v National Union of Metalworkers of South Africa (NUMSA) obo Nganezi and Others, the Judge held that an employee bound implicitly by a duty of good faith towards the employer, breaches that duty by remaining silent about knowledge possessed by the employee regarding the business interests of the employer being improperly undermined. Derivative misconduct thus arises where employees possess information that would enable an employer to identify wrongdoers, and those employees fail to come forward. Such conduct violates the trust upon which the employment relationship is founded. This should be considered when drafting employment contracts.

The concept of derivative misconduct is usually applied in the context of strikes, where there is a breach of picketing rules and an employer wishes to take action against the employees who fail to report breaches of the picketing rules by their fellow employees. Often, the employer then has to consider how to proceed with an enquiry involving a large number of employees. It is impractical to have numerous, sometimes tens or hundreds, of enquiries relating to the same or similar facts. Therefore, employers generally elect to hold collective enquiries.

The general rule is that the employer must afford an employee an opportunity to be heard (the audi alteram partem rule) which usually comes in the form a disciplinary hearing, and this process must be procedurally fair, and in accordance with the employment contracts. An additional requirement would need to be satisfied, namely the issuing out of an ultimatum which should include an invitation to employees to come forward and disclose to the employer any information pertaining to the collective misconduct and those involved.