Representation at a Disciplinary Hearing

 

It is a requirement for procedural fairness for an employee to be assisted by a fellow employee or a trade union representative at a disciplinary hearing.

 

1. Representation by a fellow employee

 

• Schedule 8 to the Labour Relations Act 66 of 1995 (LRA), the Code of Good Practice: Dismissal (the Code) provides that employees are entitled to be assisted by a fellow employee during disciplinary hearings at the workplace. The employee needs to be informed of this and of the fact that it is his/her responsibility to make arrangements for such representation if it is required.

 

• If the employee wishes to arrange for the release of his/her representative to attend the enquiry, s/he needs to notify management at least 24 hours before the time of the hearing.

 

2. Representation by a trade union representative (shop steward)

 

• The Code provides that employees are entitled to be assisted by a trade union representative (shop steward). However, this only applies if a registered trade union has been granted organisational rights to have elected shop stewards for this purpose.

 

• A trade union representative who does not satisfy this criterion may only assist the employee if s/he is a fellow employee. Under these circumstances, the employee must be made aware of the procedure that needs to be followed as discussed under item 1 above.

 

3. Representation by a labour consultant or legal representative

 

• The Code does not mention whether the employee may be assisted by an attorney, an advocate or by a labour consultant during disciplinary proceedings.

 

• Sometimes, a contract of employment, disciplinary code or a collective agreement will state who may represent an employee during disciplinary proceedings at the workplace, in which case, this should be applied.

 

• Traditionally disciplinary codes or collective agreements are based on the view that workplace discipline is a function of line managers and that representation of employees should therefore also be limited to fellow employees or shop stewards.

 

• Furthermore, as most line managers do not have any legal background, in the interest of fairness, it has not been considered advisable to allow employees legal representation at workplace proceedings.

 

• According to our courts there is no general and unrestricted constitutional right to legal representation at disciplinary proceedings.

 

• However, where a disciplinary code or a collective agreement does not allow for legal representation at disciplinary proceedings, this does not prevent an employee from requesting this.

 

• According to the courts, in order for disciplinary proceedings to be fair, it is necessary for the person presiding over the hearing to allow and consider a request for representation based on the company procedures, the comparative ability of the parties, and-
  • the nature of the allegations against the employee;
  • the factual or legal complexity raised by the allegations;
  • the potential seriousness of a finding against the employee; and
  • the prejudice that an employer may suffer in permitting legal representation.

 

4. Disciplinary action against a trade union official

 

• The Code provides that where disciplinary action may be taken against an employee who is a trade union representative, office bearer or official of a trade union, this should not happen without first informing and consulting the trade union.

 

• While the Code is silent on whether this should be extended to allowing representation by a trade union official who is not employed by the employer, it is suggested that the same considerations that apply to legal representation should apply here.

 

5. General

 

• While there is no automatic right to representation during a workplace disciplinary hearing by a person other than those listed in a collective agreement, contract of employment, disciplinary procedures or the Code, it may be manifestly unfair for a the person chairing the hearing to dismiss such a request without first having applied his/her mind to the particular circumstances of the case.

 

• The guidelines set out above would also apply to an incapacity hearing.

How to end the employment relationship in a fair manner based on the employee’s conduct

 

In the guide on “How to manage the employment relationship in a fair manner where the employee’s behaviour requires addressing”, guidelines are provided on how to manage cases of less serious acts of misconduct and more serious acts of misconduct. In the case of more serious misconduct, it was recommended that an investigation be conducted to:

• determine whether there are grounds for taking action against the employee;
• find facts which support the allegations against the employee; and
• determine whether the facts are likely to stand up at a disciplinary hearing.

 

Where an investigation confirms alleged serious misconduct where dismissal could be an outcome, a disciplinary hearing should be convened. This could be a formal or informal hearing.

What does the law say about a fair dismissal?

 

The Labour Relations Act 66 of 1995 (LRA)

Section 188 (1) (a) and (b) of the LRA states that an employer who dismisses an employee for a reason based on the employee’s conduct, will have to prove that such a dismissal was a for a fair reason and was carried out in accordance with a fair procedure.

 

Simply put, in terms of the law:

• There must be a fair and valid reason for dismissing an employee (this is referred to as substantive fairness); and
• The employer must follow a fair procedure during this process (this is referred to as procedural fairness).

 

If either or both of these requirements are not met, the dismissal will be unfair.

 

Schedule 8 to the Labour Relations Act 66 of 1995, the Code of Good Practice: Dismissal (the Code)

 

In ensuring that a dismissal is fair, employers should refer to and be guided by:

• The Code of good practice: Dismissal ;
• Their own contract of employment or disciplinary code and procedures (if they have one); or
• The procedures agreed to in a collective agreement (if there is one).

 

The CCMA guidelines on misconduct arbitration (CCMA guidelines)

 

The CCMA guidelines serve as a guide for CCMA arbitrators when they are deciding on the fairness of a dismissal disputes referred to the CCMA. They serve as a useful guide to employers embarking on disciplinary action for misconduct.

The guidelines will give guidance to employers on factors to consider when dealing with discipline in the workplace, what they can expect from arbitration proceedings, and how to prepare for arbitration.

 

What is a fair reason for dismissing an employee based on his/her conduct (Substantive fairness)?

 

Item 7 of the Code sets out factors that should be considered when determining whether or not a dismissal for misconduct is based on a fair reason. The same factors should therefore be considered by the person chairing an internal disciplinary hearing or conducting and considering the outcome of a disciplinary investigation:

• Whether the employee broke a rule or standard regulating conduct in the workplace.
• Whether the rule or standard was valid or reasonable.
• Whether the employee was aware of or could have been reasonably expected to be aware of the rule or standard.
• Whether the employer has been consistent in applying the rule or standard.
• Whether dismissal is the appropriate sanction for contravention of the rule or standard.

 

The following enquiry should be carried out by an employer:

 

a) Is there a Rule?
A rule or standard is often contained in a disciplinary code, collective agreement or written policy.  Where these do not exist, the existence of the rule may be proved by the testimony of a witness, from the contract of employment, legislation or universal rules that are commonly known.

Universal rules include:

• Duties relating to performance, e.g. the duty to work, to keep time, and to comply with lawful and reasonable instructions.
• Duties relating to good order, e.g. the duty to co-operate, to respect co-employees, not to assault or harass co-employees and not to disrupt the business.
• Duties relating to trust, e.g. the duty not to be dishonest or to undermine the employer’s business or reputation.

 

b) Was the employee aware of the rule?
In the absence of a disciplinary code, contract of employment provisions or policy which is known to the employee, the employer will need to provide evidence of past practice of which the employee was aware or show that the employee could reasonably be expected to know that his/her conduct was unacceptable.  Where there is no written disciplinary code, contract or policy, it is necessary to establish whether the employee could reasonably be expected to have known of the rule or standard.  It may also be that the rule or standard is so well known or established that it is not necessary for an employer to communicate it, for example in the case of theft.

 

If an employee has been provided with a copy of the disciplinary code, or has access to the code via computer or on notice boards, for example, it will usually be found that the employee should reasonably have been aware of the rules contained in the code, regardless of whether s/he had actual knowledge of the rule.

 

c) Did the employee contravene the rule?
Unless the employee admits to having contravened the rule, evidence must be led about how the rule was broken. The duty lies with the employer to prove, that the employee probably broke the rule; this applies both in disciplinary hearings and at arbitration.

 

d) Is the rule or standard a valid or reasonable rule or standard?
While it is the employer’s responsibility to determine the rules and standards in the workplace, it is an arbitrator’s role to determine whether the rule was valid and reasonable. Employers should therefore ensure that the rules which they seek to enforce are valid and reasonable.

• Validity
  A rule or standard must be lawful and not contrary to public policy.  Examples of unlawful instructions as provided in the CCMA Guidelines include:

• An instruction to perform work in contravention of a safety standard.
• An instruction to perform work that falls outside the scope of duties that the employee may reasonably be expected to perform.
• An instruction to seduce clients.
• An instruction not to give evidence against an employer.
• Reasonableness
  In determining whether a rule is reasonable, an employer may compare the rule with the norms in the sector which reflect the approach taken by other employers. Employers must establish whether the standard or rule is reasonable and what sanction is appropriate if the rule is broken.

 

e) Was dismissal an appropriate sanction?
It is generally not appropriate to dismiss an employee for a first offence unless the offence is so serious that it makes a continued working relationship intolerable.

The CCMA Guidelines point out that dismissal is not a punishment, but rather a rational response by the employer to risk management in the organisation.

Three enquiries are required to determine whether dismissal is an appropriate sanction:

• An enquiry into the seriousness of the contravention of the rule.
• An enquiry into the consistency of the application of the rule and sanction.
• An enquiry into other considerations that may justify a different sanction.

 

The seriousness of the contravention of the rule.

The Code promotes progressive discipline where appropriate. Serious acts of misconduct, including gross dishonesty, wilful damage to property, endangering the safety of others; gross insubordination, gross negligence, sexual harassment, assault, and racial abuse may justify the sanction of dismissal for single contraventions. This is not a closed list, and some offences may be regarded more seriously in some workplaces than in others, depending on the nature of the workplace. Less serious acts of misconduct that accumulate may also justify dismissal.

The circumstances of the contravention may aggravate for or mitigate (lessen) against a harsh sanction. Aggravating factors might include, for example, wilfulness (i.e. doing something intentionally), lack of remorse, effect of the misconduct on the employer, loss of trust, previous warnings etc. Mitigating factors could include remorse, confession, absence of damage or loss, provocation and a clean disciplinary record.

 

f) Has the rule been consistently applied?
It would be inconsistent for an employer to discipline one employee for breaking a rule, but to take no action against another employee who breaks the same rule. With regard to sanction, should an employer dismiss one employee but not another for breaking the same rule, the employer must justify why the employees are treated differently. If the employer is unable to do so, the difference in treatment may be unfair even if the employee is otherwise guilty of the transgression.

 

Factors that may lead to treating employees charged with the same offence differently may include for example, mitigating factors, aggravating factors and the employees’ disciplinary records.

 

The general rule is that cases that are substantially similar should be treated in the same way. If two employees commit the same offence, but one has substantial mitigating factors and the other does not, the employer may be justified in applying a different sanction in each case. For example, if two employees are found to have been fighting, but the evidence shows that the one was severely provoked and did not use a weapon, while the other provoked the fight and used a weapon, the employer may be justified in dismissing the latter, but giving the former a warning.

 

An employer is also required to be consistent over time. This means that if employees have not been dismissed for a particular form of misconduct in the past, it would be unfair to do so now. However, an employer can justify a change in approach (for example regarding an offence as dismissible while employees have not been dismissed for that offence in the past) provided that the employees are made aware of this change of approach in advance.

 

g) Other considerations that may justify a different sanction to dismissal:
Three factors might weigh in favour of not dismissing an employee:

1. the employee’s circumstances;
2. the nature of the job; and
3. the circumstances of the contravention.

 

a) Employee’s circumstances
The CCMA Guidelines state that the personal circumstances of the employee should be work-related, such as the effect of dismissal on an employee close to retirement.  Further factors to consider include long service, a clean disciplinary record and a disability caused by an accident at work. It is, however, unlikely that factors such as long service and a clean record will outweigh the seriousness of the offence in cases of serious misconduct such as dishonesty.

 

b) Nature of the job
Here one should consider the extent to which the contravention of the rule might make the risk of continued employment intolerable. For example, an airline pilot who drinks alcohol whilst on duty would pose a greater risk for the employer than may a cleaner who does the same.

 

c) Circumstances of the contravention
Circumstances that may justify a different sanction include: remorse, provocation, coercion, use of racist or insulting language, and the absence of dishonesty. This is not a closed list.

The Constitutional Court has included the following factors as being relevant when determining the fairness of the sanction: 

• The general vulnerability of employees to unfair decision making.
• The importance of security of employment.
• The importance of the rule that was broken.
• The reasons for establishing the rule including its reasonableness.
• The harm caused by the employee’s conduct.
• The impact it had on the employment relationship.
• The effect of setting a precedent.
• The reason why the employer imposed the sanction of dismissal.
• The basis of the employee’s challenge to the dismissal.
• Whether additional training and instruction may result in the employee not repeating the misconduct.
• The effect of the dismissal on the employee.
• The employee’s long service record.

 

Alternative sanctions to dismissal

Alternative sanctions to dismissal could be:

• suspension without payment for a limited period; or
• preventative action, including demotion.

 

Suspension as a sanction

 

Suspension without pay may also be used as a less harsh alternative to dismissal, and this too will have a deterrent effect, both on the employee concerned and on other employees. It requires the agreement of the employee. If the employee does not agree to the suspension without pay the employer would be entitled to proceed with the dismissal, provided that the offence is one that is serious enough to warrant dismissal.

 

Preventative action

 

Preventative action may be taken where an offending employee is retained, for example by moving the employee to an area where the offence is unlikely to be repeated, or restructuring the job to ensure stricter control mechanisms. This could involve a demotion. If the employee does not agree to the demotion the employer would be entitled to proceed with the dismissal, provided that the offence is one that is serious enough to warrant dismissal.

 

What is a fair procedure to follow before dismissing an employee based on his/her conduct (procedural fairness)?

 

Item 4 of the Code sets out the requirements for a fair procedure.

 

According to the CCMA guidelines, if there is no workplace disciplinary procedure, the Code must be applied.

 

An informal enquiry

 

The CCMA Guidelines indicate that item 4 of the Code contemplates an investigation into the misconduct which includes an inquiry which need not be formal. The Code contemplates a flexible and less onerous procedure to follow.

 

Avoiding ‘over-proceduralism’

 

Disciplinary codes agreed to between trade unions and employers or developed by employers need not go further than the requirements set out in the Code.

 

There has, however, been a trend for employers and trade unions to agree on very formal disciplinary procedures at the workplace.

 

This has led to the coining of the term “over-proceduralism” which essentially suggests that a disciplinary procedure leans more to the criminal justice model of procedural fairness instead of the standard expected in terms of the Code.

 

For information on a formal disciplinary hearing see:

In Avril Elizabeth Home for the Mentally Handicapped v CCMA and others (2006) 27 ILJ 1644, Judge van Niekerk of the Labour Court stated that “the LRA thus recognises not only that managers are not experienced judicial officers, but also that workplace efficiencies should not be unduly impeded by onerous procedural requirements.”

In terms of the Avril Elizabeth judgment, read with the CCMA Guidelines, for a dismissal for misconduct to be procedurally fair, the following is required:

a) The employer must conduct an investigation into the alleged misconduct to determine if there are grounds for dismissal. The investigation need not be formal. The disciplinary hearing could also constitute such an investigation.

b) The employee must be made aware of the allegations against him/her in a language and form that s/he can reasonably understand. It is preferable to set out the allegations in writing, and then have these explained to the employee in his/her own language, especially if she/he is illiterate or does not understand the language in which the allegation(s) are written. The objective of this requirement is to ensure that the employee is reasonably able to state a case in response to the allegations.

c) The employee should be allowed a reasonable time to prepare a response to the allegations. In very complex matters, more time is required to prepare. Giving less than a day to prepare will, in most cases, not be reasonable. The nature of the opportunity to respond may vary. In some instances, the employee can be given an opportunity to prepare a written response, which may be found to be sufficient to decide whether there are any grounds to continue with the hearing. If the matter does proceed to a disciplinary hearing s/he may be given an opportunity to make oral representations.

 

d) The employee should be allowed to be assisted by a fellow-employee or trade union representative (shop steward). Assistance by a trade union official only applies if a trade union has been granted organisational rights to have elected shop stewards for this purpose. A trade union representative who does not satisfy this criterion may only assist an employee if s/he is a fellow employee. Where the hearing is conducted in a language which the employee may not understand well, the employee should be advised that s/he may bring a fellow employee to assist as an interpreter.

e) The employee should be given an opportunity to state a case in response to the allegations. This can be done in writing or at a meeting and there is no requirement to hold a formal hearing. An important factor in assessing the fairness of the process is whether the employee was given a proper opportunity to state a case. This may mean being given the opportunity to call and question witnesses in some cases. In others it may mean no more than giving an explanation. If an employer holds a formal hearing, then it must be conducted in a manner that allows an employee to state a case.

 

f) The employer should communicate the decision that has been taken, preferably in writing. The employee should also be furnished with reasons for the decision. If the sanction is dismissal, the employee must be informed of his/her right to refer a dispute to a bargaining council or the CCMA (and the relevant time periods in which to do so). There is no automatic right of internal appeal, but if the employer’s policy provides for an appeal process this must be followed.

 

The Code permits an employer to dispense with procedures provided for in the Code in exceptional circumstances for example where an employer acts to protect lives and property.

The following checklist serves as a summarised guide to procedural fairness:

• Has the employer conducted an investigation, even if informal, into the alleged misconduct to determine if there are grounds for dismissal?
• Was the employee made aware of the allegations against him/her in an understandable manner?
• Was the employee given a reasonable time in which to prepare a response?
• Was the employee given the right to interpretation by a person conversant in the applicable languages?
• Was the employee advised of the right to be assisted by a fellow employee or union representative if applicable?
• Was the employee allowed an opportunity to state a case?
• If the sanction was dismissal, was the employee given an outcome and made aware of the right to refer a dispute to the CCMA / bargaining council?

How to end the employment relationship in a fair manner where an employee is on probation

 

The guide on “How to manage the employment relationship in a fair manner where an employee is on probation”, sets out the meaning and purpose of probation and provides guidelines for employers on how to manage and assess an employees’ suitability for continued employment.

How must an employer deal with an employee who underperforms during probation?

 

If it becomes clear that the employee is not suitable and will not be able to perform or fit in satisfactorily, the relationship may be terminated before the end of the probationary period. This should not be done too soon, as it may not allow the employee sufficient time to improve or fit in.

 

Should the employee not improve, the employer must advise the employee of the potential consequences, being that the employee’s employment will be terminated or that the probation period may be extended where after assessing the employee, the employer is of the view that more time could potentially cure the problem.

 

There must be a valid reason for dismissing an employee who is on probation (substantive fairness)

 

In terms of item 8 of schedule 8 to the Labour Relations Act 66 of 1995 (LRA), the Code of Good Practice: Dismissal (the Code), the purpose of probation is to evaluate and ensure that a new employee meets the required standards before his/her employment is confirmed.

 

Although the Code is not specific about the standard of substantive fairness, it does state that the reasons for dismissing a probationary employee for poor performance can “be less compelling than would be the case in dismissals effected after the completion of the probationary period”.

 

A fair must procedure must be followed before for dismissing an employee who is on probation (procedural fairness)

 

The Code sets out the procedures an employer should follow:

• The employer must explain to the employee what aspects of his/her performance or competence is not satisfactory and explain why this is so.
• The employer should give the employee reasonable evaluation, instruction, training, guidance or counselling in order to help the employee to improve his or her performance.
• If, after a reasonable period of time, the employee still fails to meet the required levels of performance or competence, the employer may invite the employee to make representations on either whether the probation period should be extended for a reasonable period of time or whether the employee’s services should be terminated.
• The employee is entitled to be assisted or accompanied by a fellow employee. Assistance by a trade union representative (shop steward) only applies if a registered trade union has been granted organisational rights to have elected shop stewards for this purpose. A trade union representative who does not satisfy this criterion may only assist the employee if s/he is a fellow employee.
• The employer should consider the employee’s representations before making a decision to dismiss the employee or to extend the probation period. It is advisable for the employer to reply to the employee in writing, so that there is a record of the representations made and the employer’s response.
• Once the employer has made a decision to dismiss the employee, the employer should advise the employee of his/her rights to refer the matter to the CCMA or a bargaining council if s/he is unhappy with the decision.
• An employee also has the right to challenge the fairness of a decision to extend a period of probation in the form of an alleged unfair labour practice.
• Any person making a decision about the fairness of the reasons for the dismissal of a probationary employee for poor work performance (i.e. at arbitration) ought to accept reasons that may be less compelling (less strict) than would be the case in dismissals for poor work performance effected after the completion of the probationary period.
• After probation, an employee should not be dismissed for unsatisfactory performance unless the employer has: (a) given the employee appropriate evaluation, instruction, training, guidance or counselling; and (b) after a reasonable period of time for improvement, the employee continues to perform unsatisfactorily.
• The procedure leading to dismissal should include an investigation to establish the reasons for the unsatisfactory performance and the employer should consider other ways, short of dismissal, to remedy the matter.

 

It is not always necessary to wait until the end of the probationary period before dismissing an employee, if it is clear (after appropriate training, guidance, instruction, counselling and evaluation have been given) that the employee will not be able to perform satisfactorily.

 

However, employers must be cautious not to dismiss the probationer too soon, as it is necessary to give the employee a reasonable opportunity to show that they are able to do the job. For example, the dismissal of a gym membership salesperson after three days of a one-month probationary period has been found to be unfair.

 

How must an employer deal with an employee who commits a misconduct during probation?

 

Where an employee commits a misconduct during probation, an employer must manage the situation and may terminate the employment relationship in the same manner as it would in the case of an employee who is not on probation.

An overview of how the employment relationship can come to an end (Part 2)

 

An employment relationship can end through dismissal in terms of the Labour Relations Act 66 of 1995 (LRA)

 

What are the different forms of dismissal in terms of the Labour Relations Act?

 

The concept of ‘dismissal’ in terms of the LRA is not the same as the lawful cancellation of a contract of employment in terms of the common law. It has a wide definition of ‘dismissal’ which encompasses much more and attempts to address any shortcomings in terms of the common law.

 

Dismissal can take on a number of different forms in terms of the LRA:

 

1. Section 186: The meaning of dismissal

Section 186(1) (a) to (f) provides the meaning of dismissal by describing six types of circumstances which may be defined as a “dismissal”.

 

The usual form of a dismissal is where the employer gives the employee notice of termination. The other forms of dismissal each deal with a specific problem that arises from the nature and effect of the employment contract itself, for example:

 

• Section 186(1) (b) deals with the renewal of a fixed-term contract;
• Section 186(1) (e) deals with what is known as a “constructive” dismissal.

2. Section 187: Automatically unfair dismissals

Automatically unfair dismissals are covered by Section 187 of the LRA. Automatically unfair dismissals are often related to the infringement of a fundamental right enshrined in section 23 of the Constitution. For example, automatically unfair dismissals take place when the reason for the dismissal is where the employee was exercising a lawful right to strike, or was dismissed for whistle blowing, or being pregnant, or on a ground of unfair discrimination. An automatically unfair dismissal may be conciliated by the CCMA or a bargaining council with jurisdiction.  If the dispute is not resolved at the conciliation hearing, the matter may be referred to the Labour Court for adjudication. The maximum compensation payable to an employee for such a dispute is 24 months’ remuneration.

3. Section 188: Other unfair dismissals

Section 188 recognises three grounds on which a termination of employment may be unfair if the employer fails to prove the fairness of the dismissal related to:

 

• The conduct or behaviour of an employee;
• The capacity of an employee to undertake the work due to ill health, injury or poor performance; and
• The operational requirements of the employer due to economic, structural or technical reasons (retrenchment).

If an employee is dismissed without a valid reason and not according to a fair procedure, then the dismissal will be unfair.

 

The following Codes of Good Practice need to be taken into account when dealing with various forms of dismissal in terms of section 188 of the LRA:

• The Code of Good Practice: Dismissal
• The Code of Good Practice on dismissal based on operational requirements
• The Code of Good Practice: Employment of people with disabilities

4. Section 67 (5): Dismissal where employees go on a protected strike

An employer may not dismiss an employee for participating in a protected strike. A protected strike is one that complies with the requirements of the Labour Relations Act.  However, in terms of section 67 (5) of the Labour Relations Act, an employer can dismiss an employee who is participating in a protected strike for reasons based on the employees conduct or for reasons based on the employer’s operational requirements. Such a dismissal will be fair provided it is for a fair reason and in accordance with a fair procedure.

5. Section 68 (5): Dismissal where employees go on an unprotected strike

 

In terms of section 68(5) participating in an unprotected strike, in other words a strike that does not comply with the law, may be a fair reason for dismissing an employee. In determining whether or not such a dismissal is fair, the guidelines in the applicable Codes of Good Practice must be taken into account.

6. 6. Section 198A: Dismissal related to a Temporary Employment Services (TES)

 

This type of dismissal is specific to situations where an employee of a Temporary Service (TES) Provider is placed with a client company. An employee of the TES can refer an unfair dismissal dispute against the client or the TES if his/her services with a client are terminated in order to avoid being deemed to be an employee of the client, or because the employee exercised a right in terms of the LRA. In this instance the nature of the dismissal is linked to specific provisions in section 198A and not to grounds relating to conduct, capacity and operational requirements.

 

7. Dismissal of an employee who is on probation

 

In terms of item 8 of the Code of Good Practice: Dismissal, the reason for dismissing an employee who is on probation for poor performance can “be less compelling than would be the case in dismissals effected after the completion of the probationary period”. In such a case, a fair procedure must still be followed. Should it become necessary to dismiss a probationary employee for a reason other than poor performance (for example conduct, capacity or operational requirements), it must be for a fair reason and in accordance with a fair procedure.

An overview of how the employment relationship can come to an end (Part 1)

 

An employment relationship is based on an agreement between the employer and the employee. When the agreement ends, we say that the contract of employment terminates.

Contracts of employment can terminate in terms of the common law or through ‘dismissal’ in terms of the Labour Relations Act 66 of 1995 (LRA).

 

An employment relationship terminates naturally in terms of the common law, in the following ways:

 

1. By mutual agreement

The start of the employment relationship is based on agreement and therefore the parties can also agree to terminate the contract. Termination of an employment contract by mutual agreement does not constitute a dismissal, but there must be genuine agreement to terminate.

 

2. Upon completion of the specific task or expiry of a fixed-term period

At the time an employer and employee enter into a contract of employment, they can agree that the employment relationship will be for a fixed period or upon completion of a specific task. For example, if an employee agrees to a two-year contract, when the two years are complete, the contract comes to an end.  In terms of the LRA, where an employee earns below the threshold of payment as stipulated in the Basic Conditions of Employment Act 75 of 1997 (BCEA), and the employer employees less than 10 employees (or less than 50 employees if the business has been in operation for less than two years under certain conditions) such agreement must be in writing.

 

This type of termination does not amount to dismissal, unless:

• The employee expected the employer to renew the contract on the same or similar terms but the employer offered to renew it on less favourable terms, or did not renew it; or

The employee expected the employer to retain the employee in employment on an indefinite basis, but on the same or similar terms and conditions of employment, but the employer offered to retain the employee on less favourable terms or did not offer to retain the employee.

3. By the death of either party

If an employee dies the employment contract comes to an end. If an employer is a natural person, and he/she dies then the employment contract comes to an end (for example, in the situation of an employer who employees a housekeeper in his/her personal home). However, if the employer is a juristic person, like a company, the death of one of its members, directors or office bearers will not terminate the contract of employment.

 

4. By supervening impossibility of performance

When there is some factor outside the employment relationship that prevents a party from performing its duties for an unreasonable period, the other party is entitled to terminate the contract on the grounds of supervening impossibility of performance.

 

This may happen in the case of a war, natural disaster, or as a result of state action. For example, if an employee is sentenced to a prolonged period of imprisonment, the employer could terminate his or her contract.

 

5. By Insolvency / liquidation

If an employer is sequestrated or liquidated, an employee’s contract would be automatically terminated on the date of the sequestration or liquidation. The employee would have a right to claim common law damages for losses caused by the termination, but these must be claimed from the insolvent estate (individuals) or liquidated estate (juristic persons).

6. Upon retirement

 

Where an employee has reached the normal or agreed retirement age applicable in the employer’s business, a contract of employment terminates by agreement and is not a dismissal. However, where an employee is dismissed on an arbitrary ground based on his or her age, it could amount to an automatically unfair dismissal in terms of section 187 of the LRA. This could happen if one employee is required to retire at a certain age, yet this is not generally applicable to other employees.

7. By resignation

Resignation is when the employee decides to end the employment relationship. An employee is required to give an employer notice that s/he intends to resign. A voluntary resignation is where the employee intends to terminate the employment relationship of his/her free will. Where an employee is forced to resign because the employer made continued employment intolerable, this could amount to a dismissal in terms of section 186 of the LRA. This is known as a constructive dismissal.

How to end the employment relationship in a fair manner where the employer needs to reduce the number of employees it employs based on its operational requirements, commonly known as “retrenchment”.

 

 

Operational requirements include requirements based on the employer’s economic (financial), technological, structural, or similar requirements.

The law places certain duties on all employers that are considering retrenching one or more of its employees. Before taking any decision to retrench, the employer is required to consult with the relevant parties. The consulting parties could include a workplace forum, registered trade union (where employees likely to be affected are members of the union) and the employees likely to be affected. Consultation requires joint meaningful engagement in an attempt to reach consensus.

Consultation sessions may result in an agreement between the consulting parties but this is not always the outcome. Employers must ensure that the process followed is fair and the underlying reasons for the retrenchment can be justified under the circumstances.

 

What happens when a retrenchment agreement is concluded?

 

If the consulting parties agree on the selection criteria for retrenchment and the terms of the retrenchment, an agreement should be drawn up and signed. This approach is advised as it reduces the likelihood of an employee successfully challenging the fairness of the dismissal at the CCMA, a bargaining council or the Labour Court.

What happens where no consensus is reached after consulting?

 

In the case of small-scale retrenchments, when the consultation process has concluded without reaching an agreement, the employer may proceed with the retrenchment by providing written notice to the affected employees.

 

The notice period is determined with reference to the employee’s employment contract, provided that the notice period is not less than the notice period as per the Basic Conditions of Employment Act 75 of 1997 as amended (“BCEA”) or any relevant bargaining council collective agreement. Where the employment contract does not specify the notice period then the BCEA or relevant bargaining council collective agreement applies.

 

The employer can choose between requiring employees to work during the notice period or requiring them to leave immediately and paying them for the notice period.

 

Each employee should be paid a severance package of no less than one week’s remuneration per completed year of continuous service, in addition to payment owing in respect of accrued leave, the final wage/salary payment, and any other amount owing by law or in terms of the employment contract. It is important to note that certain bargaining council’s collective agreement might prescribe severance pay which is greater than one week’s remuneration per completed year of service and employers must comply with this if applicable.

 

An employee who unreasonably refuses to accept the employer’s offer of alternate employment with that employer or any other employer, is not entitled severance pay.

 

The employer should provide the employee with a Certificate of Service.

When will a retrenchment be fair?

 

In terms of our law, for a retrenchment to be fair, two requirements must be satisfied:

• The employer must have a fair reason for retrenching an employee; and
• The employer must also follow a fair procedure when carrying out the retrenchment.

 

What is a fair reason for retrenchment?

 

As a guideline, the following questions should be asked in order to determine whether there is a valid reason to retrench employees:

• Was the retrenchment a result of the employer’s economic, technological, structural or similar needs?
• Was the retrenchment operationally justifiable?
• Was there a proper consideration of alternatives to retrenchment and a good reason not to implement any alternatives?
• Were the selection criteria fair and objective?

 

For the reason for the retrenchment to be fair, the answer to all the questions above should be “yes”.

 

What is a fair procedure to follow during the retrenchment process?

 

The requirements for the retrenchment procedure to be fair are as follows:

• The employer must invite the consulting party/parties, in writing, to consult with it and disclose the required information including the reasons for proposing retrenchment, alternatives considered, number of affected employees, proposed severance pay, selection criteria, proposed assistance for any retrenched employees and the possibility of re-employment for employees who may be retrenched. The employer must disclose the number of employees in its employ as well as the number of employees retrenched in the past 12 months.
• The employer must provide an opportunity for a meaningful joint consultation process before employees are retrenched. This includes attempting to reach consensus over a number of issues including appropriate measures to avoid or reduce the number of retrenchments, the timing of the retrenchments, selection criteria and the severance pay.
• The employer must disclose information that is relevant to the proposed retrenchments.
• The employer must allow consulting parties to make representations and proposals.
• The employer must consider and respond to the representations and proposals. If such representations or proposals are made in writing the employer must respond in writing.
• The employer must select employees to be retrenched according to fair and objective criteria, or criteria that the consulting parties have agreed upon. The selection criteria commonly used and which the courts have found to be fair is “LIFO”- last in, first out, in other words the employees with the shortest service will be the ones selected for retrenchment. However, this is just a guide and consideration should be given to the operational needs of the organisation and the need to avoid acts of unfair discrimination.