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Chapter 6 - Labour Law
What is a dismissal?
Dismissal means that:
- An employer terminates a contract of employment with or without notice
- With notice means the employer tells the employee to leave work after working for the required term of notice as prescribed in the contract of employment. The employee gets paid for the time he or she worked, plus any leave pay (if this is owing).
- Without notice means the employee leaves immediately and is not paid out notice . Dismissal without notice is called ‘Summary Dismissal’. Whilst Summary Dismissal might take place where an employee is guilty of a very serious act (for example theft), it will still be unfair procedurally if a fair hearing has not been held before the dismissal.
Where notice is to be paid, the notice pay must be what is prescribed as notice in the contract of employment, for example, 1 week's pay instead of 1 week's notice. The payment must include the value of payment in kind if this applies to a particular sector. Employees must therefore get wages for the hours worked, plus any leave pay plus payment in lieu of notice. If the employee has been summarily dismissed (with fair reasons and following a fair hearing), this means the employee has to leave immediately and the employer does not have to make any payment in lieu of notice.
- A contract employee whose fixed-term contract is suddenly ended or renewed on less favourable terms, where the employee expected the contract to be renewed because it has often been renewed before or because an expectation exists that the employment will be ongoing.
- A woman who is not taken back into her job after her maternity leave
- An employer dismisses a number of employees for some reason (for example for being on strike) and offers to re-employ one or more but not all.
- An employee who was forced to walk out or resign because the employer made the working environment impossible to tolerate.
- The employee leaves his / her work (with notice or without notice) because a new employer has taken over the business and is not paying the employee the same wages and conditions of employment which he / she enjoyed before.
- Employees have been retrenched. The employer must pay the employee severance pay of at least 1 week's remuneration for every full year that the employee worked for the employer. The payment must include the value of payment in kind. So the employee must get wages for the hours worked, plus any leave pay, plus notice or payment in lieu of notice, plus severance pay.
Employees in these circumstances are entitled to fair dismissal reasons and fair dismissal procedures under the LRA. An employee could claim unfair dismissal through the CCMA or relevant Bargaining Council.
Automatically unfair dismissals
The following reasons for dismissal are invalid. The dismissal will be regarded as automatically unfair if the worker is dismissed for:
- exercising any of the rights given by the LRA or participating in proceedings in terms of the Act.
- taking part in lawful union activities
- (ie organising members in the trade union)
- taking part in a legal strike or other industrial action or protest action
- refusing to do the work of someone who was on strike
- being pregnant, or any reason related to pregnancy
- refusing to accept a change in working conditions
- reasons that are due to arbitrary discrimination (except that an employer may retire someone who has reached the normal or agreed retirement age, or if the reason is based on an inherent requirement of the job, for example being able to speak a certain language in order to do the job properly)
- a reason related to a transfer following a merger of the company with another organisation
- where the employee is dismissed following a disclosure made by him in terms of the “Disclosure of Information Act”.
When is a dismissal fair?
The LRA has a Code of Good Practice for Dismissals that employers must follow. The 'fairness' of dismissal is decided in two ways – substantive fairness and procedural fairness.
Is a dismissal unfair?
See Chart on page 201
- Was there a 'fair' reason to dismiss the employee?
- Was dismissal appropriate under the circumstances?
The employer must have a proper and fair reason for dismissing the employee.
A 'fair' reason can be one of these:
- misconduct (the employee has done something seriously wrong and can be blamed for the misconduct.)
- incapacity (the worker does not do the job properly, or the employee is unable to do the job due to illness or disability or a lack of skill))
- retrenchment or redundancy (the employer is cutting down on staff or restructuring the work and work of a particular kind has changed
Was there a fair procedure before the employee was dismissed?
The employee must always have a fair hearing before being dismissed. In other words, the employee must always get a chance to give his or her side of the story before the employer decides on dismissal.
If an employee feels a dismissal was unfair, either substantively or procedurally, then this can be referred to the CCMA for conciliation and thereafter arbitration, if this is necessary. Other aspects of a fair procedure are explained below under the different reasons for dismissal.
Dismissal for Misconduct
Employers are encouraged to adopt clear rules of conduct that are known to all workers. Some rules may be so well established or obvious that everyone can be expected to know them, for example that violence at work is not acceptable.
Dismissals for misconduct will only be fair if:
- the employee broke a rule of conduct in the workplace
- the rule was reasonable and necessary
- the employee knew of the rule or should have known of the rule
- the employer applied the rule consistently (there are not other employees who have been allowed to get away with this misconduct)
- it is appropriate to dismiss the employee for this reason, rather than taking disciplinary action or imposing a lesser penalty such as a final warning
For minor mistakes the employer must use informal advice. Corrective or progressive discipline must be used for misconduct. The aim of corrective discipline is to correct the employee and help him or her overcome the problem. Progressive discipline can get stronger every time the employee repeats the misconduct.
Employees should not be dismissed for a first offence, unless it is very serious, such as gross insubordination or dishonesty, intentional damage to the employer's property, putting others' safety at risk, or physical assault of a co-employee.
Employees can be dismissed for misconduct if they go on strike without following the procedures. The employer must contact a trade union official and tell the official of the planned dismissals, and try to give employees an ultimatum with enough time to consider the ultimatum.
Before deciding to dismiss the employee for misconduct, the employer must consider:
- the employee's circumstances (for example length of service, previous disciplinary record, personal circumstances)
- the nature of the job
- the circumstances in which the misconduct took place
Employers must keep records for each employee, which say what offences a employee committed, what disciplinary action was taken, and why the action was taken.
If there is repeated misconduct, the employer must give the employee warnings. A final warning for repeated misconduct or serious misconduct must be given in writing.
There must be a fair hearing:
- If the employee is a shop steward, the employer must first inform and consult the union
- The employee must know in advance what the charges are against him or her.
- The employee must be given enough time to prepare for a hearing.
- The employee must be present at the hearing and be allowed to state his or her case.
- The employee must be allowed to be represented at the hearing by a shopsteward or co-employee.
- The employee must be allowed to see documents and cross-examine evidence used against him or her.
- The employer should bring all witnesses against the worker to the hearing. The worker should have a chance to cross-examine witnesses called against him or her.
- The employee should be allowed to call witnesses.
- The employee must be given reasons for any decisions taken.
Sometimes, if the employer there might be some leniency as to how the employer meets all these requirements.
Dismissal for incapacity
A dismissal for incapacity can be for:
- poor work performance
- physical disability or ill health
When deciding whether a dismissal for incapacity was fair or not, the following must be considered:
- whether the employee failed to work to a required standard
- whether the employee was aware of the standard
- whether the employee was given a fair chance to meet the standard
- whether dismissal is the appropriate outcome for failing to meet the standard
- whether the incapacity is serious and what the likelihood is of an improvement.
- whether the employee could be accommodated in an alternative position should one be available.
Dismissals for poor performance will only be fair if the employer:
- has given the employee proper training, instructions, evaluation, guidance and advice
- assessed the employee’s performance over a reasonable period of time
- investigated the reasons for continued poor performance
- investigated ways of solving the problem without resorting to dismissal
- gave the employee a chance to be heard before deciding to dismiss
- considered employing the employee in an alternate and appropriate position should one be available.
Dismissals for (temporary/permanent) ill health or disability will only be fair if the employer:
- investigated the degree and duration of the injury or incapacity
- considered ways of avoiding dismissal, for example getting a temporary employee until the sick employee is better
- tried to find alternative work for the employee to do
- tried to adapt the work so that the employee could still do it
- gave the employee a chance to be heard before deciding to dismiss.
How badly ill or disabled the employee is (degree of incapacity) and for how long he or she is likely to remain ill or disabled (duration of incapacity), as well as the reason for the incapacity will be considered when deciding whether the dismissal is fair or not. More effort is expected of the employer if the employee was injured or got sick because of their work.
See Problem 18: Employee is injured on duty and loses the job.
Retrenchment or redundancy dismissal
An employer is allowed to retrench employees for 'operational requirements' based on the employer's 'economic, technological, structural or similar needs'. For example, maybe the employer says the business is losing money (economic reason), the employer is getting a machine to do work that employees did by hand before, or the employer's new machines need different skills to operate them than the existing employees' skills (technological reasons), or the employer is restructuring the business by combining two departments so she doesn't need two Heads of Departments anymore (structural reason).
When an employer considers retrenchment, he or she must consult:
- whoever a collective agreement says must be consulted, or if none exists:
- the workplace forum, or if none exists:
- the union, or if none exists:
- the employees themselves
The employer must issue a written notice inviting the other party to consult with it and make all the relevant information available in writing at the consultations, including:
- reasons for retrenchment
- alternatives considered including redeployment
- number of employees to be retrenched
- how it will be decided which employees to retrench
- when the dismissals will take place
- severance pay
- what other help the employer will give to the employees who will be retrenched
- possibilities of future re-employment for these employees
- number of employees employed by the employer
- number of employees the employer has retrenched during the past 12 months
The employees the employer is consulting with must be allowed to have their say and make suggestions on any of these issues. If the employer rejects what they say, he or she must give reasons in writing if the employees have submitted their representations in writing.
The consultation process is a ‘joint consensus seeking’ process. In other words the parties try and reach an agreement on the different issues, such as:
- whether retrenchment is justified and ways to avoid retrenchments
- ways to reduce the number of people retrenched
- ways to limit the harsh effects of retrenchment
- the method and criteria for selecting employees to be retrenched: if there is no agreement, the employer must use fair and objective criteria
- severance pay: employees can negotiate for higher severance pay than the LRA prescribes (which is 1 week's pay for every year of service)
If employees and the employer cannot agree, disputes over the procedures for retrenchment can be referred to the CCMA for conciliation and thereafter the Labour Court. If the retrenchment involves a single employee, the employee can challenge the fairness of the dismissal at the CCMA rather than the Labour Court, if he or she wishes. A dispute about the amount of severance pay, is finalised at the CCMA by arbitration.
Section 189A of the Labour Relations Act, has special provisions for retrenchments in companies that employ more than fifty employees. The provisions can be used by parties, if both agree to this, to help them reach an agreement. The provisions allow for an outside facilitator to help facilitate the process and the right to strike over retrenchments as a final resort.
See Problem 5: Retrenchment.
What steps can be taken if there is an unfair dismissal?
If an employee thinks that the dismissal was unfair, in other words that the employer didn't follow fair procedures or there is not a 'good reason' for the dismissal, then the employee can try to challenge the dismissal. If a dismissal is found to be unfair, the employee will be able to get reinstated or re-employed, or get compensation money.
Reinstatement means the employee gets the job back as if she or he was never dismissed. Re-employment means the employee gets the job back, but starts like a new employee.
The employee is likely to get compensation if:
- the employee does not want the job back
- the circumstances surrounding the dismissal would make the relationship between employee and employer intolerable
- it is not reasonably practical for the employer to take the employee back
- the dismissal is unfair merely because the employer failed to comply with a fair procedure, but there was a good reason for dismissal (procedural or substantive unfairness).
The employee can get up to 12 months' wages as compensation for an unfair dismissal. If it was an automatically unfair dismissal the employee could get up to 24 months' wages as compensation.
The Labour Relations Act sets out the procedures to be followed to resolve disputes over unfair labour practices and unfair dismissals. The steps are summarised below. This section looks in detail at conciliation, arbitration and adjudication.
See Problem 4: Dismissed employee wants the job back - How to apply for reinstatement or compensation.
See Problem 6: Employee is dismissed for being drunk on duty (with no previous record of drunkenness).