Dismissals and Termination of Employment in South Africa

In terms of the Labour Relations Act 66 of 1995 (“LRA”), an employee has the right to be fairly dismissed.  

A fair dismissal must be both substantively and procedurally fair. 

In terms of the LRA, there are three recognized fair grounds of dismissal – 

1. Misconduct; 
2. Operational Requirements (redundancy/retrenchment); or 
3. Incapacity (this is inclusive of ill health, poor work performance and incompatibility).

Each reason for dismissal has a distinct procedure which must be followed in terms of the LRA.  On a high level – 

1. Misconduct – an investigation should be conducted by the employer and a disciplinary enquiry should be held to determine, on the balance of probabilities, whether the employee committed the alleged misconduct; 
2. Operational Requirements (redundancy/retrenchment) – a consultation process should be embarked upon, in which the employer and affected employees should engage in a meaningful and consensus seeking manner.  The LRA sets out specific issues which, at a minimum, the parties must consult on.  No decisions about the proposed redundancies may be made or implemented before the consultation process has been exhausted; or
3. Incapacity – depending on the form of incapacity being pursued, this process could involve, inter alia, counselling, providing the employee with reasonable assistance and/or time to improve and/or seeking alternatives to accommodate the employee.  

In terms of the Basic Conditions of Employment Act 75 of 1997 (“BCEA”), a contract of employment is terminable by a party to the contract on giving notice of not less than – 

1. one week, if the employee has been employed for six months or less;
2. two weeks, if the employee has been employed for more than six months but not more than one year;
3. four weeks, if the employee has been employed for one year or more. 

The above notice periods are a minimum requirement and consequently, such notice periods may be increased by agreement in the employee’s contract of employment.

During an enquiry, an employee has the right to be represented by a fellow employee. 

During a redundancy/retrenchment process, affected employees may request the assistance of a fellow employee. 

During an enquiry, an employee has the right to be represented by a trade union representative (shop steward). 

During a redundancy/retrenchment process, all trade unions of which an employee may be a member must be invited to consult with the employer on their member’s/s’ behalf.

Following a dismissal, a trade union may refer and represent their member in an unfair dismissal dispute.  

An employer does not require any state authority approval prior to dismissing employees. 

Section 189A of the LRA regulates large-scale redundancies. 

In terms of section 189A, a large-scale redundancy may be referred to facilitation (whereby a facilitator is appointed by the CCMA) or it could be conducted on a non-facilitated basis. 

In terms of the facilitated process, following the issuing of a notice, notifying employees of the proposed redundancies, no letters of termination may be issued until 60 days have elapsed. 

In terms of the non-facilitated process, after notifying employees of the proposed redundancies, no letters of termination may be issued or disputes referred to the CCMA or the Labour Court until 30 days have elapsed. The non-facilitated process remains controversial and is not recommended. 

An employee may be dismissed summarily if found guilty of gross misconduct, as soon as an appropriate disciplinary process has been conducted. 

An employee may refer an unfair dismissal dispute to the Commission for Conciliation Mediation and Arbitration, a statutory arbitrational tribunal body. If successful, the employee could be awarded reinstatement with full back pay, or compensation up to a maximum of 12 months’ remuneration.  

If an employee were to refer an automatically unfair dismissal, the employee, if successful, could be awarded reinstatement with full back pay, or compensation up to a maximum of 24 months’ remuneration.  Automatically unfair dismissals are considered to be the most egregious forms of dismissal and generally relate to dismissals based on unfair discrimination. 

In terms of the BCEA, employees who are retrenched are entitled to a minimum severance payment of one week’s remuneration for each completed year of service.  

Notwithstanding the above, an employer is required to consult on the proposed severance pay during the retrenchment consultation process. 

Non-competition clauses may be included in employee’s contract of employment. 

The enforceability of a non-compete clause will be dependent on, inter alia, the position the employee holds or held, whether the employer has a protectable interest, and whether the scope, jurisdiction, and time period of restriction are reasonable. 

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South African employment law does not distinguish between categories of employees and therefore all requirements, as set out above, are applicable to managing directors. 

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