Holding The Line: Discipline, Fiduciary Duty And Executive Accountability In The Public Sector

Together, Public Investment Corporation v More & others (2025) 46 ILJ 1775 (LC) and Mogale and Another v National Health Laboratory Services (JS958/2019) [2024] ZALCJHB draw a line: discipline is a fairness-based power that does not prescribe and fiduciary failures by senior officials may attract personal liability where proven losses flow.

The legal landscape: prescription, fairness and fiduciary accountability

In PIC v More, the Labour Court corrected a material error of law by CCMA commissioners who had held that the employer’s right to discipline had “prescribed” under the Prescription Act 68 of 1969 because charges were brought five years after the misconduct. The Labour Court held that the Prescription Act applies to civil litigation over “debts,” not to internal disciplinary enquiries. Key principles emerged:

• Disciplinary hearings are not civil proceedings, are not courts of law, and do not litigate a “debt.” A charge sheet is not “process” commencing legal proceedings as contemplated by section 15(6) of the Prescription Act.
• Section 17 (that prescription must be pleaded in court filings) underscores that prescription is a litigation concept, inapplicable in workplace hearings.
• The Constitutional Court’s line of cases, particularly FAWU obo Gaoshubelwe v Pieman’s Pantry, confirms that LRA time-bars and prescription coexist for litigation steps; prescription may be interrupted by a CCMA conciliation referral, not by workplace discipline.

The Court therefore set aside the award and remitted the matter for fresh arbitration, anchoring a clear position: the right to discipline does not “expire.” Nonetheless, delay still matters to fairness -undue or unexplained delay can support pleas of waiver, condonation, procedural unfairness, or substantive prejudice.

In NHLS v Mogale, the Labour Court tested the other boundary: executive accountability for procurement decisions that breach delegations, PFMA duties and constitutional procurement principles. The CEO and CFO were dismissed for misconduct linked to three transactions. The Court:

• Found the dismissals substantively fair, citing egregious breaches of delegations, PFMA section 57 duties of officials (diligence, prevention of irregular or wasteful expenditure), and section 217 constitutional procurement principles (fairness, equity, transparency, competitiveness, cost-effectiveness).
• Awarded damages where the NHLS proved loss and causation: R22,135,346.70 against the former CEO and R342,545 jointly against both executives.
• Declined damages where loss was not proved, despite irregularity.

The Court’s message is unambiguous: senior officials owe contractual and fiduciary duties of diligence, lawful compliance and financial stewardship; reliance on subordinates or legal advisors is no shield where the breach is plain and the authority lacking.

Application to the public sector: what these rulings mean

Disciplinary rights are durable but must be exercised fairly. Prescription is not a refuge against discipline. Employers in government and SOEs can and should act on historical misconduct once discovered. But the duty to act “as soon as reasonably possible” remains: unexplained delay may taint process, suggest condonation, or prejudice an employee’s defence.

Executives carry the fiduciary can. Courts will scrutinise senior executives conduct against express delegations, procurement policy and PFMA obligations. Open-ended SLAs, price uplifts outside approvals, penalty-heavy terms, and bypassing competitive processes invite not only dismissal but personal liability – provided the employer proves the quantum and the causal chain.

Proof of loss matters. The damages award in NHLS turned on evidence: a specific price uplift not authorised; penalties foreseeably incurred under an imprudent clause; and a hardware overpayment compared to a competitive benchmark. Where the entity received value, global contract sums could not simply be clawed back. Employers must quantify loss, show causation, and address mitigation.

Reviewability of legal errors. a material error of law by an arbitrator is a discrete, reviewable ground under section 145 of the LRA, read with the constitutional standard of lawfulness. When the issue admits of a single correct legal answer, the reviewing court determines correctness – not mere reasonableness.

Practical takeaways for accounting authorities and HR leaders

• Act swiftly on misconduct once discovered. Note the date of discovery, reasons for any investigative delay, and steps taken to avoid prejudice. Do not bank on prescription; bank on fairness.
• Calibrate delegations and keep them current. Publish and train against them. Require explicit board approval for price changes, scope extensions, and capital commitments above thresholds.
• Fortify supply chain management guardrails. Ban open-ended clauses that permit off-tender purchases or vague “other services/equipment.” Insist on itemisation, quantities, ceilings and competitive benchmarks.
• Document the cluster of responsibility. While “the buck stops” with the relevant executives, ensure role clarity with audit trails on approvals and dissent.
• Prove loss before you claim it. Collate invoices, delivery receipts, comparative quotes, utilisation reports and mitigation steps. Separate irregularity from damages; courts will do the same.
• Train the C-suite. Mandatory PFMA, section 217, supply chain management policy and fiduciary duty training for incoming executives and board members.
• Align contracts and conduct. Executive employment contracts should codify fiduciary duties, consequences for breach, and cooperation duties in post-dismissal investigations.

To adapt Macbeth’s warning, “things bad begun make strong themselves by ill.” The law now gives institutions both the compass and the courage: discipline that does not prescribe, and accountability that does not evaporate in the boardroom’s fog. Used together – promptly, lawfully and diligently – they can steady public entities against both drift and storm.