There are 6 ways that an employment contract can be terminated:
1. One method by employees
2. Two methods through contractual terms, and
3. Three methods where the employer terminates the employee’s contract.
How the employer handles these terminations and the process the employer follows, is critical to how this termination may evolve, or even worse, land the employer in hot water with the CCMA.
Resignation is the only option where termination that is initiated by the employee. The Basic Conditions Employment Act requires that the employee places their resignation in writing provided the employee is not illiterate. As an employment contract is a legal and binding document, always ensure that resignation is given to you as the employer in writing. Some employees act out of anger and then want to retract their verbal resignation. Once you have a written resignation, respond immediately acknowledging the resignation in writing confirming acceptance of the resignation thus ensuring that there are no grey areas as to whether the employee can retract the resignation or claims of unfair dismissal if you proceed on a verbal resignation.
Ensure that all contracts contain a retirement clause indicating a retirement age and align this with your pension fund rules retirement dates. Once the employee’s retirement age is reached ensure that they retire. If you wish to retain their services, you are welcome to place them on a fixed-term contract. Bear in mind fixed-term contracts cannot be rolled over indefinitely and that you would need to make succession plans for this position.
3. FIXED-TERM CONTRACTS
Fixed-term contracts can be used for a specific reason and are not be used in a way to put a new employee on probation, “try them out” or to evade the payment of benefits by using a temp against a permanent position. Fixed-term contracts can be used to: temporarily replace a sick employee, a fixed project, training or articles of clerkship contract, using the services of a retired employee or if the business is funded by external sources, as is the case with many Non Profit Organisations.
The dangers of fixed-term contracts are, if you retain the employee beyond the date of expiry of the contract without ending or renewing the contract the employee is deemed permanent. My advice is to manage fixed-term contracts properly and ensure you have your dates correct and take the necessary action before the stipulated termination. Fixed-term contracts are often renewed again and again. This is not a temporary assignment if this occurs and thus creates an expectation of continuous renewal and employment when the employer terminates the contract the employee will have a claim of unfair dismissal and there will be repercussions for the employer at the CCMA.
The three types of termination of employment contracts by the employer are the trickiest – the reason for dismissal (substantive fairness), the procedure (procedural fairness) and the employer elects to follow must match and are critical in avoiding an unfair dismissal dispute.
4. DISMISSAL – MISCONDUCT
This dismissal is due to an employee’s behaviour, either intentional or negligence. This occurs when an employee has broken a rule numerous times or has committed a serious offence where the trust relationship between employer and employee has broken down and cannot be repaired. Where an employee has committed a dismissible offence, the employer is obliged to hold a disciplinary enquiry and afford the employee the opportunity to be heard.
5. DISMISSAL – INCAPACITY
A dismissal for incapacity occurs when an employee is incapable of fulfilling the requirements of his job and employment contract either due to poor work performance or ill health. These are no-fault dismissals on the part of the employee.
In the case of poor work performance where the employee shows an inability to reach the required standard of work. For this dismissal to be fair, the employee must be aware of the standards required of him or her and be given a reasonable period to achieve such standards. The employer must mentor, train and coach the employee to reach the required standard of performance. Failing, the employer may hold an incapacity hearing where the employer should firstly look for alternative positions or solutions for the employee. If none can be found the employer can dismiss the employee. Employers usually delay taking action in poor work parlance cases, hoping the problem will go away and eventually reaching the point of severe frustration and want the employee out of their sight immediately, then wanting to be creative and usually suggesting retrenchment as a solution. A word of caution, deal with poor work performance timeously and use the correct process for this problem to ensure a fair dismissal.
In terms of incapacity ill health where the employee is too ill to fulfil their contractual obligations, the employer is to assess the employee’s health through valid medical evidence to determine the extent of the employee’s illness and whether there are reasonable accommodations that can be made in the workplace for the employee. The onus to seek alternatives by the employer is far greater if an employee has been incapacitated by an injury on duty. Where no suitable alternatives are found the employer may hold an incapacity enquiry and dismiss the employee.
Dismissal for operational requirements, otherwise known as retrenchments, is another form of a no-fault dismissal on the part of an employee. The reasons to consider retrenchments are economic, structural or technological reasons. The process to follow is strictly set out by Section 189 of the Labour Relations Act. The employer is required to invite the employees to consult regarding the retrenchment. The process of consultation is a joint consensus-seeking process to look for alternatives to retrenchments, delay retrenchments, mitigate the negative effects of retrenchments and discuss the finer details of the retrenchments. Should it go ahead such as selection criteria, severance pay and proposed date of retrenchment.
In summary, get your ducks in a row. Where you as an employer need to terminate an employee, ensure that the process you follow matches the cause of the problem. If in doubt, or if you have identified that you are going down a path where you may have taken the wrong approach and the process is not complete, give me call and let’s see how we can best turn things around to ensure you don’t get burnt at the CCMA. Always remember, a CCMA case is not won by what happens at the CCMA, but what is done before you get there.
For more information contact 087 073 6940 or 083 305 6219.