In the South African workplace, Human Resource (HR) policies play a vital role in the managing employees. These policies not only ensure compliance with the country’s labour laws but also help foster a productive and respectful work environment by covering key areas such as recruitment, performance management, disciplinary procedures, and leave entitlements.[1] HR policies serve as a framework for fair and consistent practices across organisations[2] and deterrence of unethical behaviour and practices. The aim of this article is therefore not only to deal with how HR policies can be utilised to deter and prevent fraud, but how such policies, when properly and purposefully implemented, can minimise and reduce the occurrence of fraud.
Generally, in practice, HR is considered and administered as an administrative tool in an attempt to establish the ethical culture within an organisation by providing limited and, at times, co-ordinated structure for the organisation in which to perform.[3] The most valuable source and widely applied intervention in the fight against fraud and unethical behaviour is the enforcement and consistent development of the entities code of conduct[4] that is applied equally and fairly across all levels of the organisation. The aged old saying still holds true – ‘the tone is set at the top’.
The role of HR is therefore to be actively enforcing the code of conduct of a business and do so practically free from any bias. A strong and successful code of conduct is one that is not only effectively addressed during the onboarding process when new employees join the organization, but one that is continually and regularly enforced throughout organization.
A Code of Conduct should clearly outline:
- the consequences of non-compliance,
- emphasising everyone’s obligation to adhere to set standards, and
- the ethical responsibility to report any observed misconduct (actual or perceived) by colleagues.
The code of conduct should be available in an accessible format, and regular training to reinforce values and an understanding of rules is to be provided. In the case of Pick n Pay Retailers (Pty) Ltd v Maluleke and Others (JA26/2019), a senior employee who had been in the employ for 24 years was dismissed for breaching company policies.[5] It was found that the employee was guilty of misconduct – not for having accepted chocolates from a customer and attempting to exchange these for cash, but for using the login details of fellow employees to reverse the transaction.[6] Despite her seniority and clean record, the Labour Appeal Court upheld her dismissal.[7] This case emphasises the importance of consistently enforcing organisational policies, especially among senior staff, who play a pivotal role in setting the standard for ethical conduct and demonstrating how such matters are addressed.
This case further demonstrates the importance of employees having clear, practical knowledge of the correct procedures to follow in situations where power dynamics exist between junior employees and senior staff – the latter more so where the junior employees maybe be inhibited to feel a sense of loyalty to senior staff. While the Code of Conduct is central to the organisations efficiency, its true value lies in how it informs and strengthens all other organisational policies. [8]
It is important that an entity’s Code of Conduct and other policies are aligned with the laws which create a legal compliant workplace in order to manage and reduce fraud, corruption and unethical behaviour.
To achieve this organisational integrity, HR can make use of the following South African laws as a guideline:
- Labour Relations Act (LRA) – This foundational act prohibits unfair labour practices, including discrimination, victimisation, and unfair dismissals. [9]
- Basic Conditions of Employment Act (BCEA) – Outlines minimum standards for employment, including working hours, leave entitlements, and termination procedures. [10]
- Employment Equity Act (EEA) – Promotes equal opportunities and fair treatment in employment, addressing issues like affirmative action and addressing historical disadvantages. [11]
- Occupational Health and Safety Act (OHSA) – Ensures a safe and healthy working environment for all employees. [12]
- Companies Act (CA) – Is the primary legislation governing company law in South Africa. It modernizes and simplifies the legal framework for companies.[13] (See below for additional comment)
- Protected Disclosures Act (PDA) – Is South Africa’s key legislation for protecting whistleblowers —employees or workers who report unlawful or irregular conduct in the workplace.[14] (See below for additional comment)
The most notable and effective method of addressing unethical behaviour and fraud is whistleblowers. Whistleblowers play an important role in the public and private sectors to expose corruption, criminal activity, infringement of human rights and conduct threatening the environment.[15] The Companies Act, 2008, Section 159(7) requires certain companies to establish whistleblowing mechanisms.
Although not compulsory for all companies, we note that every company should encourage whistleblowing and provide the necessary protection for these individuals. The Protected Disclosures Act (PDA) seems to be South Africa’s only statute providing whistleblowers with protection.[16] Although the Constitution of South Africa emphasis the principles of transparency, accountability and a just society, these principles are fundamental to ensure whistleblowing is effective. Hence any victimisation of a whistleblower would violate their rights. Together with the whistleblowing policy, an anti-harassment policy should be implemented to empower the employee to become a whistleblower and eradicate instances where whistleblowers are harassed, victimised, called into disciplinary hearings, dismissed and financially ruined.[17]
Where the reward of financial gain has been implemented for whistleblowers, such measure in some sectors appears to be effective. The root of such effectiveness is usually found where a high degree of actual or perceived marginalization is present. Section 9 of the PDA further holds that a disclosure made where financial gain is at play, does not necessary result in the protection that accompanies such disclosure being forfeited. It is important to note that the offer of financial gain encourages people to come forward, address unethical behaviour and fosters an environment of hesitance to commit fraud, corruption and unethical acts.
Though fragile in nature, such reward system, where considered for implementation, should be done with strict rules, including that disclosures have to lead to successful judicial or administrative action before one can be rewarded. We note that the Dodd Frank Act, established in America, which protects whistleblowers from retaliation and rewards them for information could aid in South Africa’s plight to combat fraud, corruption and unethical behaviour.
In the fight against fraud and unethical behaviour, Human Resource policies are far more than just administrative tools—they are foundational to building a culture of integrity, accountability and legal compliance. By actively enforcing a Code of Conduct, aligning internal policies with national labour laws, and empowering employees through whistleblower protections, organisations can foster environments where ethical behaviour is not only expected, but supported.
The integration of HR practices with legal frameworks, such as the Protected Disclosures Act and the Companies Act, ensures that ethical leadership is embedded at every level. As South Africa continues to confront challenges of corruption and misconduct, the strategic use of HR policies remains one of the most cost-effective and impactful defences available to organisations.
[1] Basic Conditions of Employment Act 75 of 1997 (BCEA)
[2] chrome-extension: https://repository.up.ac.za/server/api/core/bitstreams/14860c9c-cbed-4c9a-a0ff-f74c71b9a1a4/content
[3] chrome-extension: https://repository.up.ac.za/server/api/core/bitstreams/14860c9c-cbed-4c9a-a0ff-f74c71b9a1a4/content
[4] chrome-extension: https://repository.up.ac.za/server/api/core/bitstreams/14860c9c-cbed-4c9a-a0ff-f74c71b9a1a4/content
[5] Pick n Pay Retailers (Pty) Ltd v Maluleke and Others (JA26/2019) [2020] ZALAC 39; [2020] 12 BLLR 1229 (LAC) (7 September 2020)
[6] Pick n Pay Retailers (Pty) Ltd v Maluleke and Others (JA26/2019) [2020] ZALAC 39; [2020] 12 BLLR 1229 (LAC) (7 September 2020)
[7] Pick n Pay Retailers (Pty) Ltd v Maluleke and Others
[8] Pick n Pay Retailers (Pty) Ltd v Maluleke and Others
[9] Labour Relations Act 66 of 1995 (LRA)
[10] Basic Conditions of Employment Act 75 of 1997 (BCEA)
[11] Employment Equity Act 55 of 1998 (EEA)
[12] Occupational Health and Safety Act 85 of 1993 (OHSA)
[13] Companies Act 71 of 2008
[14] Protected Disclosures Act 26 of 2000 (PDA)
[15] S Malo ‘The protection of whistleblowers in South Africa and United States of America’ – University of Johannesburg
[16] The Protected Disclosures Act 26 of 2002 (PDA)
[17] Dungan J ‘The Psychology of Whistleblowing’, Psychology, Volume 6, Pages 129–133 (2015)
