South African labour law


South African labour law regulates the relationship between employers, employees and trade unions in the Republic of South Africa.

History

The Native Labour Regulations Act 1911 prohibited strikes by trade unions, introduced wage ceilings and a pass system for moving around jobs. Over 70,000 Chinese labourers were brought in, and used by landowners to undercut the wages of other workers. Among white workers, there was significant unrest, and major strikes took place in 1907, 1913, 1914 and 1922
For a period of sixteen years, from 1979 to 1995, several critical developments occurred in the field of labour law in South Africa, beginning with a radical change in the first of these years, when a significant Commission of Enquiry was held, resulting in the establishment of an Industrial Court, which was given extensive powers to mould, change, shape and develop the law. Prior to 1995, most labour relations were based on contracts. In 1995, much of the law developed by the Commission and the Industrial Court was put together in the Labour Relations Act 1995. Since then, most labour law has been based on statute.
Prior to 1995, an employee could be dismissed in terms of the contract of employment, which could permit any reason for dismissal. Since 1995, an employee may be dismissed only for misconduct, operational reasons and incapacity. The Labour Relations Act 1995 is a pivotal piece of legislation, as it recognises the need for fast and easy access to justice in labour disputes. The Industrial Court had the status of a High Court, and therefore was not accessible to all labourers.
1995 also saw the introduction of the Commission for Conciliation, Mediation and Arbitration which is an administrative tribunal. The Commission for Conciliation, Mediation and Arbitration endeavours first and foremost to conciliate between the parties. If it is unsuccessful in this, the matter moves on to arbitration. The entire process is very informal, and at no charge, and is therefore very accessible to labourers, who often use it: About 300 new cases are brought before the Commission for Conciliation, Mediation and Arbitration daily. In addition to the Commission for Conciliation, Mediation and Arbitration, 1995 saw the introduction of bargaining councils, which allow for communication across the industry. A bargaining council is organised collectively and voluntarily, and must be registered. In order to be registered, an alternative-dispute-resolution mechanism, similar to the Commission for Conciliation, Mediation and Arbitration, must be put in place.
The Labour Relations Act 1995 also regulated the issue of fairness, not only in termination but during employment, too. In 1998, however, most of the law on unfair labour practices was removed from the Labour Relations Act 1995 and put into the Employment Equity Act. The EEA also deals with issues such as fairness regarding a worker's human immunodeficiency virus status or disability, as well as the issue of affirmative action.
The Basic Conditions of Employment Act, the Health and Safety Acts and the Skills Development Act, must be read with the EEA. The Skills Development Act provides that a small percentage of a labourer's salary must be contributed to the Department of Labour, enabling certain workshops to be run which are designed to develop skills.

Constitution

Chapter 2 of the Constitution contains several provisions of relevance to employment and labour law:
It is important to interpret all labour legislation in light of the Constitution.
Section 23 of the Constitution deals specifically with labour relations, providing that everyone has the right to fair labour practices, and specifically the right
Every employer, meanwhile, has the right
Every trade union and every employers’ organisation has the right
Finally, every trade union, employers’ organisation and employer has the right to engage in collective bargaining.
Section 23 is an unusual provision—only South Africa and Malawi expressly protect the right to fair labour practices — as it is so broad and overarching. An exact definition of fair labour practices is impossible, since this is a dynamic field of the law, rooted in socioeconomic rights. Section 23 refers to "everyone," encompassing far more than merely employees and workers; it also includes would-be workers, employers and juristic persons.
Section 23 is not entirely universal, however, as soldiers are excluded from its ambit insofar as they may not strike at a time of war.
The Labour Relations Act was promulgated as the "national legislation" referred to in subsections 23 and 23, which provide respectively that "national legislation may be enacted to regulate collective bargaining," and that "national legislation may recognise union security arrangements contained in collective agreements." Both subsections stipulate that, to the extent that such legislation may limit one of the rights in section 23, the limitation must comply with section 36, the limitations clause of the Constitution.
The current Basic Conditions of Employment Act is also designed to give effect to the right to fair labour practices. Both Acts are bolstered by the EEA, which replicates the equality clause in the Constitution in its totality, adding that one may not discriminate on the basis of human immunodeficiency virus status.
The general guarantee of fair labour practices has far-reaching effects on the civil courts’ approach to the interpretation of the rights of parties to employment contracts.
All courts are enjoined, when applying and developing the common law, to have due regard to the spirit, purport and objects of the Bill of Rights. This calls for a reconsideration of some of the assumptions underlying the common-law contract of employment, in particular the employer’s power of command and unfettered rights in respect of promotion and dismissal.
Furthermore, the labour courts’ judgments on such contentious issues as the dismissal of striking workers are subject to review by the Constitutional Court, so long as the applicants have exhausted the procedures available to them under the labour legislation.
In NUMSA v Bader Bop, the Constitutional Court overturned a decision of the Labour Appeal Court which restrictively interpreted the Labour Relations Act 1995. The court recognised the necessity of collective bargaining and bargaining councils which facilitate the establishment of trade unions. The court held that minority unions may not strike in support of demands for organisational rights reserved in the Act for majority unions.
In NEHAWU v University of Cape Town, the Constitutional Court overturned another decision of the Labour Appeal Court which restrictively interpreted the Labour Relations Act 1995. It had been argued that the term "everyone" did not include a university or a company, but the court held otherwise. Furthermore, the court ruled that, under the original section 197 of the Labour Relations Act 1995, contracts of employment transferred automatically when businesses were transferred, irrespective of the wishes of the employers.
SANDU v Minister of Defence, another Constitutional Court, case Judge O’Reagan dealt with the concept of a "worker," and held that, although the Labour Relations Act 1995 does not apply to South African National Defense Force members, they are still "workers" in terms of the Constitution, which protects the rights of every person in South Africa.

Employment contract

Parties

Identification

The first question to be asked, when seeking to resolve any labour law problem, is whether the parties are indeed "employees" and "employers" within the meaning of the applicable statute or the common law.
This has long been a difficult task in South Africa, as it is not always immediately apparent whether the parties have entered into the locatio conductio operarum or merely the locatio conductio operis.
Distinguishing between these two kinds of contracts is critically important, as different legal consequences flow from the various forms of contract. Most important is that South African labour legislation applies only in respect of employees, who are entitled to social security benefits and have access to the statutory mechanisms if they wish to seek remedies for violations of their employment rights. Similarly, only employers are bound by the labour statutes, and are vicariously liable for the delicts of their employees.

Common law

The first source to be examined, when seeking to determine whether parties to a work relationship are employers and employees, is the contract into which they have entered.
A contract of employment comes into existence when the parties conclude an agreement that conforms to the requirements of the locatio conductio operarum. The contract of employment is traditionally defined as "a contract between two persons, the master and the servant, for the letting and hiring of the latter's services for reward, the master being able to supervise and control the servant’s work."
This, however, raises the question of how much supervision or control is required to distinguish between employees and independent contractors.
Reported judgments have indicated that the task of distinguishing employees and employers from parties to other contractual relationships entailing the provision of work, or the rendering of services, is not a matter of definition; classification of such contracts is a "matter of substance, not merely of form."
The true nature of the contract, therefore, is determined from the relationship between the parties, not merely the label the parties have given their contract.

Statutes

Statutory definitions do not resolve the problem. "Employee" is defined
The difference between the Labour Relations Act 1995 and the EEA is that the Labour Relations Act 1995 excludes independent contractors only in section 213, while the EEA excludes independent contractors in both subsections. It is safe, however, to assume that even from the second part of the definition of an "employee," as it appears in the Labour Relations Act 1995 or the Basic Conditions of Employment Act, independent contractors are implicitly excluded.
At the core of subsection of both definitions lies a reference to the contract of employment: one person working for another in exchange for some form of remuneration.
The basic idea behind subsection of both definitions is that employees are those people who place their capacity to work at the disposal of others. This is the essence of employment.
The case of Liberty Life Association of Africa v Niselow reiterates the law set out above and the interpretation of the definition of "employee."

Courts

Labour legislation does not define "contract of service" or the concept of "work" at all.
This means that it is necessary to look outside the legislation to determine the meaning of these terms, in order to distinguish between an employee and an independent contractor.
The courts have formulated a number of tests for drawing the distinction.
Control test
The control test focuses on the element of "control" exercised by the employer over the employee.
The power to control has traditionally been regarded as the hallmark of the employment contract. With the advent of highly skilled employees who are given free rein in performing their duties, the courts no longer insist on de facto control, as once they did, but recognise that a right to control is sufficient.
The courts initially applied the requirement of a right to control rather strictly, as in R v AMCA Services, where the presiding officer spoke of "a right to control, not only the end to be achieved by the other’s labour and the general lines to be followed, but the detailed manner in which the work is to be performed."
It is now clear, however, that the courts have in mind, a right to control only in principle. The employer not choosing to exercise that right does not render the contract something other than one of employment.
The application of the control test in isolation is entirely inadequate, as certain employees have a wide discretion as to how to perform their work. Such discretion does not alone render them independent contractors.
The ultimate difference between an employee and an independent contractor is that the principal has no legal right to prescribe the manner in which the independent contractor brings about the desired result, but may prescribe methods by which the employee works. In Colonial Mutual Life Assurance Society v MacDonald, the court held that the employee was subject to the control of the employer in the sense that the latter had the right to prescribe not only what work had to be done, but also the manner in which that work had to be done. The independent contractor, on the other hand, could be directed only as to what work must be done, not how it was to be done.
In any event, to define a contract in terms of one of its characteristics is tautological.
Organisation test
The organisation test was developed in French law and adopted by South African law in R v AMCA Services and Another. It is based upon the assumption that whether or not one is an employee does not rest on submission to orders; it depends on whether the person is part and parcel of the organisation.
In other words, one looks at the extent to which a person is integrated into the organisation of the other person, or whether the person is performing work inside the organisation of another.
The work of an independent contractor, although done for the business, is not integrated into it; it is only accessory to it.
If a person is incorporated into or related sufficiently to the organisation, that person will be regarded as an employee or a worker even though the employer might exercise little actual control over him.
One of the problems with this test is that it is not always possible to measure the extent of integration, or to determine what degree of integration is sufficient for someone to qualify as an employee.
The test was rejected by the Appellate Division in S v AMCA Services on the basis of it being too vague.
Multiple or dominant-impression test
The deficiencies of the control and organisation tests led the courts to approach the question in the same way that they approach so many other problems: The relationship is viewed as a whole; a conclusion is drawn from the entire picture.
In Ongevallekommissaris v Onderlinge Versekeringsgenootskap AV-BOB, although the court did not spell out exactly what may be included in the general picture, guidance may be derived from the English case of Ready Mixed Concrete v Minister of Pensions and National Insurance, in which the presiding officer set out three possible components:
  1. The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.
  2. He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.
  3. The other provisions of the contract are consistent with its being a contract of service.
When courts examine the "other provisions of the contract," they will consider all relevant aspects of the relationship. These include:
The decisive difference between the control test and the dominant-impression test is that, in the latter, the existence or absence of control is only one of the factors to be taken into account.
In Smit v Workmen's Compensation Commissioner, the court had to decide whether Smit, who had been employed as an "agent" for an insurance company, was an employee or not. He had been
The dominant-impression test was followed in this case, and Smit was held to not be an employee of the insurance company.
In Medical Association of SA v Minister of Health, several district surgeons challenged the decision of the provincial MEC for Health for the Free State to terminate their contracts summarily as part of the restructuring of the district health service. The multiple or dominant impression test was followed, and the court used the factors discussed in Smit to assist it in obtaining the dominant impression that part-time district surgeons were in fact employees of the State.
The court held that the dominant-impression tests entails that one should have regard to all those considerations or indica which would contribute towards a determination of whether the contract is one of service or of work, and react to the impression one gets upon a consideration of all such indica. The Labour Court based its decision on the following factors:
The test has been subjected to severe criticism. Etienne Mureinik has said that it test
offers no guidance in answering the question whether the facts are of such a nature that the individual may be held to be servant within the meaning of the common law in difficult cases. Indeed, it is no test at all. To say that an employment contract is a contract which looks like one of employment sheds no light whatsoever on the legal nature of the relationship.

This criticism is based on the idea that it is not helpful to say a particular relationship exists because it looks like it does.
Productive capacity test
In other decisions, the courts appear to have resorted to what may be described as the "productive capacity" test.
This test was formulated in Martin Brassey’s article "The Nature of Employment" in the following terms:
The independent contractor “sells the job” whereas the employee “sells his hands” mployment is a relationship in which one person is obliged, by contract or otherwise, to place his or her capacity to work at the disposal of another n employee is to be distinguished from an independent contractor, who undertakes to deliver, not his or her capacity to produce, but the product of that capacity, the completed work.
Differences between employees and independent contractors
In SA Broadcasting Corporation v McKenzie, the Labour Appeal Court summarised the main differences between the contract of employment proper and what is called the "contract of work" :
There is very little work that cannot be outsourced. Outsourcing is generally not supported by trade unions, who represent employees. If work is outsourced, the worker is an independent contractor. Political pressure was placed on government to move away from outsourcing and more towards employment.
In 2002, accordingly, a new presumption was added to the Labour Relations Act 1995, providing guidelines on when it has to be ascertained whether or not someone is an employee. This presumption was introduced as a part of significant amendments to the Labour Relations Act 1995 and the Basic Conditions of Employment Act in 2002.
The effect of this rebuttable presumption is that, if one or more of the list of factors is present, the person is presumed to be an employee unless and until the contrary is proven. Many of the factors and issues discussed by the courts in the cases above resurface again: The presumption is thus created
The legislative provision has been taken by some to be merely a restatement or summary of the principles laid down by the courts with the passing of time.
Although this presumption is useful in determining whether a person is an employee or not, as it is closely linked to the principles and approaches developed by the courts, the Labour Court held, in Catlin v CCMA, that section 200A does not do away with the principle that the true nature of the relationship between the parties must be gathered from the contract between them. Section 200A is not the starting point, therefore; the court held that it is necessary to consider the provisions of the contract before applying the presumptions.

Essentials

The common-law concept of employment sets the scene for the interpretation of the Labour Relations Act 1995.
The contract of employment is the foundation of the relationship between an employee and his employer. It links the two parties in an employment relationship, irrespective of the form the contract takes.
The existence of an employment relationship is the starting point for the application of all labour law rules. Without an employment relationship between the parties, the rules of labour law do not apply.
The origin of South Africa's modern contract of employment lie in Roman law, where a distinction was made between the two types of contracts discussed above: locatio conductio operis and locatio conductio operarum.
In terms of the common law, one does not have to have a written contract; therefore, not having the contract in written form is not a fatal flaw, as the contract can be verbal. There are, however, a number of statutes which require specific contracts of employment to be in writing. Section 29 of the Basic Conditions of Employment Act, for example, states that the employer must supply the employee with certain written particulars concerning specific things, like hours worked and remuneration.
Like any contract, the locatio conductio operarum commences when the parties have agreed to its essential terms, unless both parties have agreed to suspend its operation for a particular period. If the contract's operation is suspended, the employer is obliged to allow the employee to commence work on the specified date. Failure to do so, without good cause, constitutes a breach of contract at common law and a dismissal under the Labour Relations Act 1995. It is important, therefore, to determine what the essentials of the contract of employment are.
Stripped to its essence, the contract of employment today may be defined as an agreement between two parties, in terms of which one party works for another in exchange for remuneration. Although this definition appears to be simple, it contains a number of important principles, aspects and implications. When they are taken into account below, the definition of the employment contract may be expanded as follows:
The contract of employment is a voluntary agreement between two legal personae in terms of which one party places his or her personal services or labour potential at the disposal of the other party for an indefinite or determined period in exchange for some form of fixed or ascertainable remuneration, which may include money and/or payments in kind. This entitles the employer to define the employee’s duties and to control the manner in which the employee discharges them.
Agreement
Firstly, it must be noted that the employment contract is based on agreement; the parties must enter into it voluntarily. This idea finds expression in section 13 of the Constitution, which provides that "no one may be subjected to slavery, servitude or forced labour," and section 48 of the Basic Conditions of Employment Act, which states that "all forced labour is prohibited."
Another implication of the fact that the employment contract is based on agreement is that it is a contract, and therefore must comply with the requirements of our law for a valid contract. If it does not comply with these requirements, it will not be regarded as binding and enforceable.
Consensus between the parties means that both must have a serious intention to create mutual rights and duties to which they will be legally bound. They must have each been fully aware of the nature of the duties, and that the other had this intention.
At common law, the parties are not required to observe any formalities. There is no requirement that the contract be in writing, but certain employment contracts are required by statute to be in writing, like those of merchant seamen and learners under the Skills Development Act. In addition, those of apprentices and candidate attorneys must also be registered with the appropriate authorities. Lastly, where parties wish to alter provisions of the Basic Conditions of Employment Act, this must be done in writing.
Work
Secondly, one of the pivotal concepts in the initial definition is that of work. Generally, to work means to place one’s labour potential at the disposal and under the control of another. This means that, when we work, we offer our services to another person, and agree that the other person will be able to tell us what to do, when to do it, how to do it and where to do it.
To place your labour potential at the disposal of another means to offer your ability to perform certain tasks to another person, and to offer, at the same time to follow that person’s instructions.
Remuneration
Remuneration normally takes the form of payment of money, or the provision of another benefit.
Payment may be made monthly, weekly, daily or even in irregular cash payments. The common law does not prescribe what form payment must take.
The Labour Relations Act 1995 contains a statutory definition of remuneration in section 213: "any payment in money or in kind, or both in money and in kind, made or owing to any person in return for that person working for any other person, including the State."
The contract may state that remuneration is the "normal going rate for a specific type of work," or state a specific amount or merely "minimum wage."
The common law does not indicate minimum wages; these are usually set by collective-bargaining councils and are industry specific.
Reciprocity
The contract of employment is a reciprocal contract. This means that one promise is made in exchange for another, and one obligation is incurred in exchange for the other. The employee works in exchange for remuneration; the employer remunerates the employee in exchange for the employee offering to place his labour potential at the disposal and under the control of the employer.
Summary
To summarise, the essential elements of the employment contract are as follows:
An employment relationship commences only when the parties conclude a contract of service. Prior to this, neither party has any rights against the other; they are merely a prospective employee and a prospective employer.
There are, however, two statutory exceptions to the principle that employers have no obligations to applicants for employment:
  1. The EEA prohibits direct or indirect unfair discrimination against an employee or applicant for employment on the basis of race, colour, gender, sex, religion, political opinion, ethnic or social origin, sexual orientation, age, disability, religion, conscience, belief, culture, language, family responsibility, marital status or any other arbitrary ground.
  2. The Labour Relations Act 1995 and the Basic Conditions of Employment Act protect both employees and persons seeking employment against discrimination for exercising rights conferred by the Acts.
    Employer
In addition to the three principle duties of the employer, discussed below, employers are further obliged to accord employees their rights in terms of the applicable contracts of service, collective agreements and legislation, as well as to adhere to certain statutory duties imposed in the interests of employees.
Receipt into service
The employer’s obligation to receive the employee into service is the corollary of the employee’s duty to enter and remain in service.
The duty to receive employees into service does not mean that employers must necessarily provide employees with work to keep them busy, although this general rule is subject to some exceptions: where, for example, remuneration is based on the volume of work done, as in the case of piece-workers or salespersons working on commission, or where the failure to allow the employee to work degrades his status. A duty to provide work may also arise where the employer has contracted to train the employee in a particular profession or trade, as in the case of article clerks and apprentices.
The common law permits the suspension of an employee, suspected of some form of grave misconduct, while the matter is being investigated, but the employee is entitled to his remuneration during the period of suspension.
Employers may deny their employees access to the workplace, or otherwise prevent them from working, in the course of collective bargaining. This is known as a "lock out," and is the employer’s equivalent of the employees’ strike. If a lock-out is lawful—if, that is, it complies with the Labour Relations Act 1995—the employer is relieved of its obligation to pay the locked-out employees their wages.
Since the contract of employment is personal, one employer cannot compel an employee to work for another if the first employer has no work for him, unless the first employer's business is transferred as a going concern.
Payment
This duty is so fundamental to the employment contract that the courts will assume, where there has been no agreement on remuneration, either that the contract is not a contract of employment, or else that the parties impliedly intended the payment of a reasonable sum according to the custom and practice of the industry and locality.
The duty to pay, and the commensurate right to remuneration, arises not from the actual performance of work, but from the tendering of service.
It has become a widespread practice for employers to make up remuneration "packages" for their higher-paid employees in a tax-effective way, by substituting various benefits for the cash component of the salary.
The periodicity of payment depends on the parties’ agreement or on custom.
An employer may not unilaterally deduct any amount from the remuneration to which an employee is entitled.
If the contract is terminated summarily for good cause, the employer must pay the employee for services rendered to the day of the dismissal. The same principle applies when the employee deserts mid-term before the end of a fixed-term contract or without proper notice.
Safe and healthy working conditions
Under the common law, employers are obliged to provide their employees with reasonably safe and healthy working conditions.
The scope of this duty extends to providing proper machinery and equipment, properly trained and competent supervisory staff, and a safe system of working.
If the employer fails to meet with this obligation, affected employees are not in breach of contract if they refuse to work until the dangerous situation is corrected.
Under the common law, employees had to rely on delict if the employer did not ensure that the working conditions were safe and healthy, but this was viewed to be imprecise, and the Legislature intervened. The situation is now governed by the Occupational Health and Safety Act, 1993, which implements strict liability on the employer, and states how much must be paid to the employee if accidents occur.
Remedies
If the breach is material, the employee may claim damages. Provided it is a material breach, the employee may also cancel the contract of employment.
The employee may also claim specific performance. This was seldom granted in the past but is now considered an option.
Finally, the employee may refuse to work, withholding labour until the contract is performed.
Employee
Entering and remaining in service
The main obligation of the employee under the contract is to place his personal services at the disposal of his employer.
The tender of service is a prerequisite to and the corollary of the employee’s right to claim payment of wages: "no work, no pay." The reverse also applies: "no pay, no work," so that employees who have not been paid may legitimately refuse to work without breaching their contracts.
If a number of workers engage in a concerted cessation of work for the purpose of obtaining some concession from their employer, they are deemed to be on strike. Under the common law, striking workers need not be paid. The common law also allowed employers summarily to dismiss striking employees, but this has since been changed by the Labour Relations Act 1995.
Subject to the right to take such paid leave as has been agreed upon or conferred by statute, once employees have entered service, they remain obliged to render service until the contract of employment ends.
If the employee fails to render service, the employer is entitled to deduct from the employee’s wage an amount proportional to the absence.
Reasonable efficiency
Employees are deemed by law to guarantee impliedly that they are capable of performing the tasks they agree to perform, and that they will carry them out with reasonable efficiency.
Where an employer seeks assurances about employees’ competence before taking them into service, the employees are bound by any representations they may make, whether those professions of competence are made by the employees themselves, or in testimonials of which they are aware.
The standard of competence employers are entitled to expect of their employees depends on the capacities in which the employees are engaged and the status and seniority accorded them.
The test for the standard of competence is that of persons comparable with the employees in question, having regard to training, experience and any special claims the employee might have made regarding his competence.
Where an employee has warranted that he possesses a particular degree of skill, he must satisfy that representation.
Furthering employer’s business interests
Employees are obliged to devote their energies and skills to furthering their employer’s business interests. They must devote all their normal working hours to the employer’s business; they may not, without the employer’s permission, simultaneously work for another employer during the hours they are contractually obliged to devote to their employer’s needs.
These duties arise because the relationship between the parties is of a fiduciary nature: Employees may not place themselves in positions where their own interests conflict with those of their employers and may not, by exercising their powers of agency, acquire interests or benefits without the knowledge of their employers.
The interests of Employees must be bona fide: They may not work for another employer if its business interests are in conflict with those of the principle employer.
In the absence of a contrary provision in the contract, there is nothing to preclude employees from holding two compatible jobs, provided the second is not conducted during the working hours they are obliged to devote to the first job. Contractual provisions limiting employees’ moonlighting activities are, however, permissible.
In addition, employees may not compete with their employer’s business for their own account.
Respect and obedience
Respect and obedience are regarded as an implied duty of every employee. Absence of the former renders the interpersonal relationship between employer and employee intolerable; denial of the latter undermines the employer’s right to decide how its employees will work.
The courts require all employees to show a reasonable degree of respect and courtesy to their employers, and to obey their employers’ reasonable and lawful instructions.
Respect, being a disposition, is a quality that is difficult to define with precision. It is not to be equated with deference in a manner compatible with the subordinate position in which the employee by definition stands vis-à-vis the employer.
Mere failure on occasion to greet the employer or superiors will not place employees in breach of their obligation to show respect. Disrespect must be gross if it is to justify termination of the employment relationship, or so frequent as to suggest that the employee has repudiated the employer's lawful authority, or that it has rendered the continuation of the employment relationship "intolerable."
Each case must be considered on its own merits to establish whether these inferences may be drawn.
Unless insolence is particularly gross, the proper sanction is a written warning in the first instance.
The employee’s duty of obedience applies only to work-related orders and generally during working hours and to those orders which are lawful and reasonable.
Employees are also entitled to disobey instructions that would subject them to personal dangers not normally connected with the performance of their duties.
An order is unlawful if it requires the employee to perform an illegal act or to do something that falls outside the scope of the contractual relationship.
Refraining from misconduct generally
Any misconduct that renders the continuation of the employment relationship intolerable or unworkable, or undermines trust and confidence between employer and employee, is regarded as sufficient to justify dismissal, provided it is serious enough to offset the importance which the courts otherwise attach to the work security of employees. Examples of misconduct are insubordination, theft, fraud.
With regard to misconduct committed before the formation of the conduct, the general principle is that there is no duty on prospective employees to disclose prejudicial information from their past to their future employers unless they are specifically asked to do so.
A duty may arise, however, where the non-disclosure is material and amounts to fraud. Whether or not an employee may be dismissed for non-disclosure depends on whether or not the employment relationship can reasonably be sustained after the discovery of the past misdeed.
Remedies
The employer may only dismiss the employee summarily for misconduct, incapacity or operational requirements. If damages are incurred as a result of a breach of one of these duties, the employer may claim compensation.

Basic employment rights

The Basic Conditions of Employment Act is aimed at low-income earners: those who earn less than R193,805 per annum.
No matter what the contract itself says, the Basic Conditions of Employment Act is applicable as the minimum standard that must be achieved.
The Labour Relations Act 1995 deals with strikes and unions and the like; the Basic Conditions of Employment Act is a fall back option for those vulnerable workers who are not able to unionize due to various reasons, such as the kind of work they do. Domestic and farm workers are pertinent examples in the South African context.
The purpose of the Basic Conditions of Employment Act is to advance economic development by providing basic conditions of employment.
The Basic Conditions of Employment Act also contains the definition of an employee, so that issue, discussed above, is relevant here, too. The Minister is empowered to extend the provisions of the Basic Conditions of Employment Act to non-employees in specific circumstances. Even, therefore, if a domestic worker is not considered an employee in terms of the Basic Conditions of Employment Act, the Minister may extend the provisions to her for her own protection.

Minimum Wage

The employer has no discretion to pay less than the minimum wage. As noted above, the Basic Conditions of Employment Act provides the minimum standard to be achieved; employers must, at the very least, abide by the Basic Conditions of Employment Act.
Minimum wages are the result of bargaining councils in most circumstances, but some professions have no bargaining councils. Their minimum wage is therefore regulated by the Basic Conditions of Employment Act.

Hours

A maximum of 45 hours per week is allowed to be worked. These stipulations are not applicable on the following persons:
Overtime is permitted on the basis of a voluntary agreement.
Payment for overtime is 1½ times the normal wage.

Sundays

Payment for working on a Sunday is twice the normal wage if the employee is not expected in terms of his/her contract to work on Sundays, however if the employee is expected to work on Sundays in terms of his or her contract, the employee shall receive 1.5 times the normal wage.

Public holiday

A worker is entitled to double pay only if it is stipulated in the employee's contract that he/ she is expected to work on public holidays.

Meal intervals

An employee is entitled to one hour off for every 5 hours of work.

Weekly rest periods

An employee is entitled to 36 consecutive hours off. Issues such as night work, holidays and public holidays are also covered.

Sick leave

An employee is entitled to 6 weeks off over a three-year period, it is often interpreted as one day for 26 days of work.

Maternity leave

An employee is entitled to four months off in total, the leave must start at least 4 weeks prior to the expected birth date, and end at least 6 weeks after the expected date of birth. It does not, however, stipulate that this is paid leave. In terms of the Unemployment Insurance Fund, when a woman is on maternity leave, she is entitled to Unemployment Insurance Fund benefits for half the time spent away. Usually the employer will pay the other half, but this is not required in the Basic Conditions of Employment Act.

Family-responsibility leave

If the employee has been working for more than four months, he is entitled to 3 days family-responsibility leave, as in the case where there has been a death in his family.

Remuneration

Employers must keep records of the hours worked and remuneration awarded for each employee for at least three years.
Employees are to be paid in South African currency at the place of work.
Employers may not deduct money from employees unless prior consent in writing is obtained.
Regarding severance pay, in cases of retrenchments or dismissals for operational reasons, employees are entitled to one week’s pay for every year worked.

Variations

The Basic Conditions of Employment Act is the very minimum standard required by employers. Employers may award more, but never less, than what is stipulated.
If an employer gives more than the minimum, he may be locked into always giving more, as he must then abide by the required annual increases, which are based on a percentage of the current pay.
An employer may vary the provisions in the contract by
In the past, the concept of "unfair labour practice" was broadly defined. The Industrial Court took several innovative approaches. The court formulated a set of rules to govern unfair dismissals. These rules are now contained in Chapter VIII of the Labour Relations Act 1995 and in the Code of Good Practice: Dismissal.
The employment relationship has three stages:
Unfair conduct by the employer at the beginning of the relationship normally takes the form of unfair discrimination. Unfair conduct by the employer at the end of the relationship normally takes the form of unfair dismissal. Unfair conduct by the employer during the subsistence of the relationship will take the form of unfair labour practice.
Section 186 of the Labour Relations Act 1995 defines an "unfair labour practice" as "an unfair act or omission that arises between an employer and an employee," and involves
The first part of section 186 speaks of an unfair labour practice as any unfair act or omission that arises between an employer and an employee. Only persons who are already in employment, therefore, enjoy protection against unfair labour practices; only persons, that is, who fall within the definition of "employee."
This concept may also cover ex-employees, if an employer refuses or fails to re-employ a former employee in terms of an agreement, for example.

Exhaustive list

Due to the use of the word "involving," the courts have held that the list of unfair labour practices, contained in section 186, is exhaustive. Therefore the definition of "unfair labour practice" in the current Labour Relations Act is considerably narrower than that of its predecessor, the Labour relations Act of 1956. This is because concepts such as unfair discrimination have been removed from its ambit and included in the EEA.
The fact that the list is exhaustive raises three issues, as the Constitution expressly affords everyone the right to fair labour practices:
  1. whether the limitation of the constitutional right is justifiable, which according to the general consensus it is;
  2. the actual interpretation of this definition; and
  3. the freedom of employees to rely directly on the Constitution, as opposed to the current Labour Relations Act.
With regard to the interpretation of this definition, the general principle is that legislation that limits constitutional rights must be interpreted in such a way as to minimise the limitation. The definition must be interpreted so as to give the maximum possible protection.
With regard to the freedom to rely directly on the Constitution, employees may rely directly on the Constitution to challenge practices not covered by the Labour Relations Act 1995, like transfers. This issue, however, remains to be developed by the courts.

Promotion and demotion

Basic principles

Many cases have been referred to the Commission for Conciliation, Mediation and Arbitration and the courts in this regard. From these cases, three main issues arise:
  1. the meaning of "promotion" and "demotion;"
  2. the unfairness of the employer's conduct; and
  3. remedies.
    Meaning
Employers commonly use one of two systems to promote employees:
  1. level progression, whereby employees are evaluated on a regular basis and progress to a higher level within the parameters of the job in question; and
  2. the application-for-vacancies system, whereby vacancies are advertised, and both current employees and external applicants are invited to apply for posts.
The second system is problematic. The Commission for Conciliation, Mediation and Arbitration and the courts have held that it is not promotion at all, as the employee is nothing other than a job applicant.
Firstly, in order to constitute a dispute concerning promotion or demotion, the aggrieved individual must be an employee of the employer to which he wishes to take action.
Secondly, one must compare the current job held by the employee with the job applied for.
Factors which are taken into account include any difference in remuneration levels, fringe benefits, status, levels of responsibility or authority or power, and the level of job security.
In Mashegoane v University of the North, the dispute was whether the university’s refusal to appoint a lecturer to the position of Dean of a faculty involved a promotion. The legislation governing the university provided that Deans were appointed by the Senate acting on the recommendation of the Faculty Board. The university argued
Once the court established that the applicant was a current employee, it found that his salary would have remained the same, but that he would have received a Dean's allowance and would have had a car at his disposal; these were the only benefits. His status would have been considerably elevated. He would have had more responsibilities, authority and powers. In light of this, the appointment amounted to a promotion.
In Nawa v Department of Trade and Industry, however, the court held that there was no promotion because there was no intention to change the existing terms and conditions of employment, even though there was an intention to change the way in which work was done.
Generally the Commission for Conciliation, Mediation and Arbitration and other institutions are quick to assume that there was indeed a promotion or demotion.
Disputes concerning Promotion and Demotion generally involve employees being denied a higher-level post within the structure of the employer's organization or being stripped of status or benefits.
Unfairness
Generally, unfairness implies a failure to meet an objective standard, and includes arbitrary, capricious or inconsistent conduct, regardless of whether it is intentional or negligent.
Mere unhappiness on the part of the employee is not unfair.
With regard to substantive fairness, it may be difficult to justify the choice of a particular candidate in precise terms. An employer is at liberty to take into account subjective factors, such as performance at an interview, when considering an appointment or promotion. The employer must still provide reasons, however.
With regard to procedural fairness, the employer must follow its own procedures: If there is a practice of advertising the posts, it may not, without good reason, depart from that policy. An employee may challenge the composition and competency of a selection panel.
Examples of unfairness include bias, nepotism and erroneous exclusion of an employee from a shortlist due to a mistake by the employer or selection committee.
Remedies
The relief must be determined on terms deemed reasonable by the Commissioner.
Relief may be in the form of a declaratory order, protective promotion, remitting the matter back to the employer for reconsideration, and reinstatement to a previous position.

Probation

Guidelines may be gathered from the rules which govern the obligations of the employer before a fair decision to dismiss on the grounds of poor performance is reached, and also from the Code of Good Practice: Dismissals.
In this context, unfair conduct may include the failure to inform the employee properly about required performance standards, and the failure by an employer to afford the employee reasonable guidance, evaluation, training, counselling and instruction.

Provision of benefits

An employer may commit an unfair labour practice through unfair conduct relating to the provision of benefits.
This provision, contained in section 186 of the Labour Relations Act 1995, does not appear to be problematic, but it has been beset by considerable uncertainties regarding the interpretation of "benefits."
Early decisions of the Commission for Conciliation, Mediation and Arbitration attached a wide meaning to the term "benefits."
The problem is complicated by section 65 of the Labour Relations Act 1995, which provides that employees may not strike over issues that may be referred to arbitration in terms of the Labour Relations Act 1995. A dispute over "benefits" may be referred to arbitration. If "benefits" is given a wide meaning, and is taken to include remuneration, this would mean that employees may not strike over wages and salaries.
There are two approaches to resolving the problem of interpretation:
  1. focus on the meaning of the word "benefit," and try define it; or
  2. focus on the nature of the dispute itself, bearing in mind the distinction between disputes over rights and disputes over interests.
Generally the courts take a narrow approach to interpretation. They apply a combination of the two approaches above. It has been held that the term "benefits" in the definition of an unfair labour practice includes only benefits ex contractu and ex lege: benefits that already exist in terms of a contract or law.
There is growing support for the notion that unfair labour practices should include not only disputes of right, but also disputes where there is an expectation of a right.

Training

This prohibition has had little effect in practice. In view, however, of the obligations placed on employers in terms of the EEA and Skills Development Act, it may become more important in the future.
Generally employees may challenge the denial of training where such training is a prerequisite for advancement in the workplace.

Unfair suspensions

There are two types of suspension:
In the context of section 186, one must consider whether both types of suspension are covered, and what the requirements for a fair suspension are.
Initially the view was taken that only punitive suspensions fell within the scope of the "unfair labour practice," but this view was rejected by the Labour Court.
The Commission for Conciliation, Mediation and Arbitration follows the Labour Court's view and assumes jurisdiction over both punitive and preventative suspensions.
The practice of preventative suspension is not in itself unfair so long as there is substantive and procedural fairness when the employer takes this decision.
Substantive fairness in this context refers to the reason for the suspension. The employer must have a reason for believing that the suspension is necessary. This could be, for example, where the seriousness of the misconduct creates rumours and suspicion, necessitating a suspension of the employee in order for work to carry on smoothly, or where the employer has reason to fear that the employee in question may interfere with the investigation or the witnesses. It may also be that the employer fears another recurrence of the misconduct, or that the seniority and authority of the employee in question has a bearing on the matter.
Procedural fairness does not necessarily mean that the employee must be given a hearing before the suspension. At least, though, that the employer must inform him of the suspension, the reasons for it, and the conditions of the suspension.
As a general rule, the employer must continue remunerating the employee during the course of the suspension. If he were to cease remuneration, this would constitute a breach of contract.
Suspension without pay is generally only possible if the employee consents, or if this is provided by legislation or the contract of employment itself.
If the suspension is grossly unfair, the employee may seek reinstatement as a remedy.
Where the unfairness is less serious, the employee may seek an alteration of the conditions of the suspension or require that the employer hold a disciplinary hearing within a specified time.

Other disciplinary action short of dismissal

Other disciplinary actions, like warnings, suspensions with or without pay, demotions and transfers, must also meet the requirement of fairness. The employer must be able to show that the warning, demotion or other disciplinary action was fair and appropriate in the circumstances.

Failure or refusal to reinstate

Section 186 of the Labour Relations Act 1995 protects employees against a "failure or refusal of an employer to reinstate or re-employ a former employee in terms of any agreement."
The wording is almost exactly the same as that in section 186, which deals with dismissal. Unlike section 186, however, section 186 does not deal with termination of employment; nor does it state that there must be an offer of re-employment to some employees and no offer in respect of others. Furthermore, section 186 does not refer to an agreement; section 186 does.

Protected disclosures

Any occupational detriment an employee may suffer due to the making of a protected disclosure is an unfair labour practice.
"Occupational detriment" and "protected disclosure" are defined in the Protected Disclosures Act.
"Occupational detriment" includes, inter alia, being subjected to disciplinary action; dismissed, suspended, demoted, harassed or intimidated; transferred against one's will, refused transfer or promotion, etc.
Once it is established that the employee has suffered an "occupational detriment," it must be proved that the detriment was due to a protected disclosure. This means that there must be a protected disclosure, and that there must be causality between the disclosure and the detriment.
As far as causality is concerned, the Labour Relations Act 1995 requires that the detriment must be "on account of" the protected disclosure.
"Disclosure" is defined as "any disclosure of information regarding any conduct of an employer, or an employee of that employer, made by any employee who has reason to believe that the information concerned shows or tends to show one or more of the following:
Generally, such disclosures become protected when they are made to certain persons and offices under certain conditions:
Furthermore, the employee must have reason to believe
Not every disclosure made by an employee will be protected. Only gradually are the courts beginning to consider the nature of a protected disclosure and the protection to be afforded to employees.
In Grieve v Denel, the employee was busy preparing a report for the employer’s board of directors relating to allegations of wrongdoing by a manager. The employee found himself charged with misconduct, suspended and told to attend a disciplinary enquiry. He approached the Labour Court for an interdict to stop the employer’s taking disciplinary action. The court held that the disclosures the employee intended to make were in good faith, and that, if the allegations were true, they could indicate possible criminal conduct. The disclosures were held to fall within the ambit of protection. The employer was ordered not to proceed with the pending disciplinary action.
In CWU v Mobile Telephone Networks, the Labour Court held that an employee’s accusation of fraud by management did not constitute a protected disclosure; it was merely the employee’s opinion and was not supported by any facts.

Resolution of disputes

The procedure for resolving unfair-labour-practice disputes is similar to the dispute resolution for unfair dismissals.
First, the dispute must be referred to a bargaining council for conciliation.
If conciliation does not succeed, the matter may be referred to arbitration.
Unlike unfair dismissal disputes, unfair-labour-practice disputes are required, by section 191 of the Labour Relations Act 1995, to be referred within ninety days of the relevant act or omission, or ninety days from the date on which the employee became aware of the act or occurrence.
In terms of section 193 of the Labour Relations Act 1995, an arbitrator has the power to determine any unfair labour practice dispute on "reasonable terms," which may include ordering reinstatement, re-employment or compensation.
The onus is on the employee to prove all the elements of the alleged unfair labour practice in question.

Discrimination law

Seen generally, there are three mechanisms designed to protect the individual employee:
  1. protection against unfair dismissal;
  2. protection against unfair labour practices; and
  3. the setting of minimum conditions of employment in the Basic Conditions of Employment Act.
The fourth mechanism of protection is protection against unfair discrimination.
The Labour Relations Act 1995 was the first piece of legislation to deal with discrimination in the workplace.
The EEA also contains detailed provisions to counteract and eliminate discrimination in the workplace.
The Constitution, with its right to equality, provides an important constitutional context for employment equity. A consideration of this constitutional provision indicates that the elimination of discrimination has two bases:
Section 6 of the EEA contains the main thrust of the Act's prohibition against unfair discrimination. It provides that
no person may unfairly discriminate, directly or indirectly, against an employee, in any employment policy or practice, on one or more grounds, including race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture, language and birth.

It is not unfair discrimination
Harassment of an employee is a form of unfair discrimination, and is prohibited on any of the above grounds.
Furthermore, the EEA places a positive duty on every employer to take steps to promote equal opportunity in the workplace by eliminating unfair discrimination in any employment policy or practice. In certain circumstances there may be a duty on the employer to take reasonable measures to accommodate certain groups of employees.
In this regard, the Code of Good Practice: Key Aspects of human immunodeficiency virus /acquired immunodeficiency syndrome and Employment, together with the Code of Good Practice on the Employment of People with Disabilities, provides guidelines on how HIV/AIDS and disability should be dealt with and accommodated in the workplace.
This is the only legislative provision that mentions human immunodeficiency virus status as a prohibited ground of discrimination. Its inclusion makes section 6 of the EEA even wider than section 9 of the Constitution.
Section 6 protects only an "employee," but it does not speak only of an employer; it provides that "no person" may discriminate. This is broader, and may include, inter alia, an independent pension fund or an independent medical aid scheme, or even a fellow employee.
In this regard, if an employee lodges a complaint of discrimination against another employee, and the employer does not consult in an attempt to eliminate the discrimination, the employer may be held liable.
The difference between discrimination and differentiation must always be kept in mind, as not all differentiations amount to discrimination. There may be a fair differentiation between employees on the basis, for example, of educational qualifications or experience or seniority.
Generally, differentiation will amount to discrimination if it is based on an unacceptable reason. Even if the discrimination suffered is not listed in section 6 of the EEA, it would amount to discrimination if, objectively, it is based on attributes and characteristics which have the potential to impair the fundamental human dignity of persons as human beings, or to affect them adversely in a comparably serious manner.
Once the employee has proven that there has been a differentiation, the EEA and Constitution provide that it is presumed to have been unfair discrimination. The employer then bears the onus of proving the differentiation to be fair.
Discrimination may be direct or indirect:
The EEA provides that harassment amounts to "a form of unfair discrimination," and as such is prohibited. The most prevalent forms of harassment encountered in the workplace are
Of these, sexual harassment is by far the most common.

Sexual harassment

The Code of Good Practice on Handling of Sexual Harassment Cases lists three types of conduct which could constitute sexual harassment:
  1. physical conduct ranging from touching to sexual assault and rape, and including a strip-search by or in the presence of the opposite sex;
  2. verbal conduct, including innuendoes, suggestions and hints, sexual advances, comments with sexual overtones, sex-related jokes or insults, graphic comments about a person's body, enquiries about a person's sex life, and even whistling at a person or a group of persons; and
  3. non-verbal conduct, including gestures, indecent exposure or the display of sexually explicit pictures or objects.
Another way to define sexual harassment is to consider the effect of the harassment. Three types of harassment may be so identified:
  1. quid pro quo harassment, which occurs when a person is forced into surrendering to sexual advances against her will, for fear of losing a job-related benefit;
  2. sexual favouritism, which occurs where a person in authority rewards only those who respond to his sexual advances; and
  3. hostile work environment harassment, which occurs when an abusive working environment is created.
The questions remain: From whose perspective does one analyse the conduct to see if it amounts to sexual harassment? What test does one apply? Does one look to the way in which the victim experienced the situation, or does one try to be more objective?
Decided cases are inconsistent on which test should be used.
The Code of Good Practice states that sexual harassment is "unwanted conduct of a sexual nature." This implies a subjective test. It goes on to say, however, that sexual attention will only become sexual harassment
The Code thus adopts a mixture of the subjective and the objective test.
Employer liability
The EEA states that the employer may be held liable if he was made aware of the conduct but did nothing, or did not do everything that could be expected of a reasonable employer.
Furthermore, the Code provides that, as a first step in expressing concern about and commitment to dealing with the problem of sexual harassment, employers should issue a policy statement, stipulating the following:
The Code recommends that management be given a positive duty to implement the policy, and to take disciplinary action against employees who do not comply with it. A policy on sexual harassment should explain the procedure to be followed by employees who are victims of sexual harassment. The policy should also state the following:
Finally, the Code recommends that policy statements on sexual harassment be communicated effectively to all employees.
Other remedies
The employee who resigns due to sexual harassment may argue that this was a constructive dismissal, which would provide grounds for finding an automatically unfair dismissal.
A victim of harassment may institute a civil claim, based on delict, against the perpetrator; she may also institute a claim against the employer, based on the common-law principles of vicarious liability.

Medical testing

The EEA prohibits medical testing of an employee, unless
Testing may be justifiable in the light of
Job applicants are also protected from medical testing.
The EEA prohibits "psychological and other similar assessments" of employees, unless such an assessment
The EEA lists HIV status as one of the grounds on which an employee may not be discriminated against. South African Airways, for example, formerly had a policy of not employing HIV-positive employees as cabin attendants, partly because it believed that HIV-positive people could not have vaccinations, a requirement for international travel, and were at risk of infection, which might be transmitted to others.
In Hoffman v South African Airways, the court found that people living with HIV constitute a minority, to which society has responded with intense prejudice, stigmatization and marginalization. Society's response has forced many of them not to reveal their HIV status, for fear of such prejudice, and has thus deprived them of the help they would otherwise have received. This stigmatization the court considered an assault on their dignity.
The EEA is designed to counteract
Such testing is prohibited unless it is held to be justifiable by the Labour Court, which may impose various conditions on such testing, including
Employers may make HIV testing available to employees as part of a "wellness" program, provided that it takes place confidentially and on the basis of informed consent. Authorisation from the Labour Court is not required for such testing.
The EEA does not forbid anonymous testing undertaken for epidemiological purposes, or to establish the prevalence of HIV/AIDS among the workforce.
In Joy Mining Machinery v NUMSA, the court held that the following considerations should be taken into account in determining whether or not HIV testing is justifiable:
The court will also want to be informed about the following, which do not go to the question of justifiability, but which are also relevant to arriving at a proper decision:
There is also a Code of Good Practice on Key Aspects of HIV/AIDS and Employment, which provides guidelines to employers and employees on how to deal with HIV/AIDS in general.
With regard to HIV/AIDS and disability, the Code states that an employee who has become too ill to work may be dismissed on grounds of incapacity. A mental or physical impairment will constitute a disability only if it is "substantially limiting" in respect of entry into, or advancement in, employment.

Disputes about discrimination

A dispute about unfair discrimination must be referred to the Commission for Conciliation, Mediation and Arbitration for conciliation within six months of the alleged discriminatory act or omission.
Disputes of this nature may not be referred to a bargaining council.
In referring the dispute to the Commission for Conciliation, Mediation and Arbitration, the referring party must indicate that it has made a reasonable attempt to resolve the dispute, depending on the circumstances.
If conciliation fails, the matter may be referred to the Labour Court, unless the parties consent to the jurisdiction of the Commission for Conciliation, Mediation and Arbitration for arbitration.
The Labour Court may make any appropriate order that is "just and equitable" in the circumstances, including compensation, damages, and orders directing the employer to take preventative steps.
Again, once the employee proves that there was discrimination, the onus shifts to the employer to prove that the discrimination was fair.

Affirmative Action

Alongside the prohibition against unfair discrimination, affirmative action is the second cornerstone of the EEA.
According to section 2 of the EEA, the goal of affirmative action is to ensure the equitable representation of certain groups in all occupational categories and levels in the workplace.
"Equitable representation" is not defined in the EEA, but section 42 states that it may be determined by a consideration of
Affirmative action is, by its very nature, a temporary measure. Once the goal of equality in the workplace has been achieved, the reason for the measure will fall away.
A potential beneficiary of affirmative action must meet two requirements:
  1. He must be "suitably qualified."
  2. He must be from a designated group.
There are, in this regard, four key definitions in the EEA:
  1. "Designated groups" are black people, women and people with disabilities.
  2. "Black people" include Africans, Colored people and Indians.
  3. "People with disabilities" are those who have a long-term physical or mental impairment which substantially limits their prospects of entry into employment.
  4. A "suitably qualified person" is one who may be qualified for a job as a result of any of his formal qualifications, prior learning, relevant experience, or his capacity to acquire, within a reasonable time, the ability to do the job.
Employees from one of the designated groups may approach the Labour Court, citing unfair discrimination, to enforce a lack of affirmative action. The Labour Court has held, however, that there is no individual right to affirmative action, which is collective in nature.
Designated employers
The prohibition of unfair discrimination applies to all employers, regardless of their size, but the affirmative-action provisions of the EEA apply only to "designated employers."
A "designated employer" is defined as follows:
Employers that do not fall within the ambit of this definition may still voluntarily indicate that they intend to comply with the Act.
Employment-equity plans
The employment-equity plan is the centrepiece of the procedure for implementing affirmative action in the workplace.
A designated employer has to consult with the workforce on
The analysis described above must also contain a profile of the employer's workforce. Using this profile, the employer must determine the degree of under-representation of people from designated groups in the various categories and levels.
The employment-equity plan must include
If there is an under-representation of people from designated groups, the plan must also outline
A copy of the plan must be made available to employees. The designated employer must assign one or more senior manager the responsibility and authority and means to monitor and implement the plan.
Designated employers must submit reports to the Department of Labour:
Designated employers are required to submit a statement to the Employment Conditions Commission about the remuneration and benefits received by employees in each occupational category and level. If this statement reflects disproportionate income differentials, the employer must take steps progressively to reduce such differentials.
Enforcement
The EEA provides for four ways in which compliance with its affirmative-action provisions may be ensured:
  1. self-regulation;
  2. administrative procedures;
  3. court action; and
  4. state contracts.
    Self-regulation
Employment equity plans must include dispute-resolution procedures. Employers and employees must use these procedures first.
Administrative procedures
A labour inspector, with reasonable grounds for believing that an employer is not complying with the EEA, may try to obtain a written undertaking from the employer that he will comply. If he refuses, the inspector may issue a compliance order, to which the employer may object within 21 days.
Court action
The Labour Court has the power
Designated employers who wish to enter into commercial contracts with organs of state must comply with the EEA. They must attach to their offer either
If these requirements are not met, the organ of state may reject the offer; it may even constitute grounds for the cancellation of a contract that has already been concluded.

Job security

Common law

The common law afforded the employee virtually no protection against unfair dismissal. Before the Labour Relations Act, as long as the employer gave the required period of notice, dismissal or probation was acceptable. The common law focused only on the lawfulness of the employment contract itself; the reason for the dismissal was irrelevant. The employer was not required to give the employee an explanation for the termination; nor was there any requirement that the dismissal be fair.
This had the effect of increasing the bargaining power of the employer, who could, essentially, do as he pleased, because of his more powerful position. The employer could threaten to dismiss the employee if the latter refused to accept less favourable terms and conditions of employment. The reason for this, it has been contended, is that, prior to 1980, this area of law was based on the incorrect assumption that there existed equal bargaining power between employer and employee.

International Labour Organization

South Africa has since subscribed to international labour standards, in the form of International Labour Organization instruments like the Termination of Employment Convention, 1982, which provides that an employer must have a fair reason to terminate the employment contract, and that the reason for dismissal must fall into one of three broad categories:
  1. the misconduct of the employee;
  2. the employee's incapacity or inability to do the work; and
  3. the employer's operational requirements.
Misconduct relates to the behaviour of the worker, usually involving some fault on his part, like insubordination, assault, theft, dishonesty, frequent late-coming or intimidation of co-workers.
Capacity relates to the worker's ability to do his job. It includes incompetence or incapability for medical reasons. It is viewed as a no-fault dismissal.
Operational requirements relate not to the employee, but rather to the business enterprise of the employer. If an employee is dismissed on this ground, his is a no-fault dismissal. The most common form that this category takes is dismissal based on the economic needs of the business, or on the employer's need to restructure the organisation.
The Convention states further that employers must notify employees or their representatives that dismissal is contemplated, and must provide relevant information to them. The employer is obliged to consult regarding measures to minimise the number of dismissals, and also to mitigate the adverse effects of dismissal.

Labour Relations Act

Unfair dismissal is now governed by the Labour Relations Act. Some have argued that the Labour Relations Act undermines the flexibility required for the free market to exist. Others have argued that a restrictive labour law promotes job security, loyalty and incorporation into companies.
The Labour Relations Act provides for the right not to be unfairly dismissed or subjected to unfair labour practices.

Unfair dismissal

Not only employees have the right not to be unfairly dismissed; non-employees enjoy such protection. The Labour Relations Act's approach to unfair dismissal may be summarised in the following three questions:
  1. Is the worker an employee?
  2. Has there been a dismissal?
  3. Is the dismissal substantively or procedurally unfair?
The employee has the onus to establish that there has in fact been a dismissal. If this is discharged, the onus shifts to the employer, who prove the fairness of the dismissal.
"Dismissal" is the termination of the employment relationship by the employer, with or without notice. It can also entail
An employer who has dismissed a number of employees for the same or similar reasons, but who now offers to re-employ one or more of them, while refusing to re-employ another, will have dismissed the latter.
The statutory definition also recognises as constituting dismissal certain circumstances in which the employee terminates the employment relationship. This is known as constructive dismissal.
Where, for example, an employee terminates a contract of employment, with or without notice, because the employer has made continued employment intolerable for him, he will have been constructively dismissed.
An employee may also be regarded as having been constructively dismissed if he terminates a contract of employment, with or without notice, because his new employer, after a transfer of the business as a going concern, provided him with conditions or circumstances at work which are substantially less favourable than those provided by his former employer.
Termination of the employment contract
Section 186 of the Labour Relations Act refers to the standard form of dismissal. Either the employee is given notice of the termination, or his contract of employment is terminated by way of summary termination. Note, again, that only "employees" may be dismissed.
The requisite period of notice may be expressly stated in the contract itself, in terms of a statute such as the Basic Conditions of Employment Act, or even in terms of a collective agreement. In terms of the Basic Conditions of Employment Act,
Summary termination by the employer may be justified if the employee has committed a serious or fundamental breach of a material term of the contract.
In CSIR v Fijen, an employee and his employer had quarrelled during negotiations, with the employee declaring their relationship "finished," and the employer interpreting this as a resignation. The employee subsequently denied having resigned; what he meant, he argued, was that the working relationship had become intolerable. The court held that, in the absence of a clear and unambiguous intention to quit, there could not have been a proper resignation. The employer, therefore, was mistaken in its interpretation of his words.
There were indications, in Ouwehand v Hout Bay Fishing, that the employee would be retrenched. Representations were made to him that he should find other work. He stopped going to work, therefore, on the assumption that he had been dismissed. The court, however, held that he had resigned, because the onus is on the employee to show that he has been dismissed. The employee in this case did not discharge that onus.
When dismissal may be effected is a question of some practical importance. It relates to the question regarding the commencement of employment: Does it commence when the contract is concluded, or rather when the employee starts working? The difficulty is that there may be a significant lapse of time between these two events.
The Labour Court held, in Whitehead v Woolworths, that, to qualify as an employee, it was insufficient for the employee to prove that a contract of employment had been concluded. The conclusion of the contract merely gives rise to contractual claims; it does not confer the status of an employee or employer on the parties for the purposes of the Labour Relations Act. "In terms of the definition," Waglay AJ found,
a person is only an employee when such person actually works for another person. The employee must therefore have rendered a service to another which services are not that of an independent contractor. In addition to working for another the employee must also "receive" or be "entitled to receive" remuneration. The remuneration referred to must correspondingly mean remuneration for work done or tendered to be done.

Two subsequent decisions of the Labour Court, in Jack v Director-General, Department of Environmental Affairs and Wyeth SA v Manqele, have taken a different approach.
The rights and remedies of a job applicant were considered in Jack, where the employer breached the contract by not allowing the party to commence work on the agreed date. The Labour Court, having examined the question of whether or not there was an employment relationship between the parties, decided that, once the parties have reached agreement on all the essential terms of the contract, it will be binding and enforceable.
In Wyeth, employer and employee had concluded a written contract on 15 March providing that the employee would commence work on 1 April. Before work commenced, the employer informed the employee that it was no longer prepared to employ him. The Labour Court held that the term "employee" in the Labour Relations Act encompasses a person who has concluded a contract to work, and that such person would also enjoy protection against unfair dismissal. This is in line with a purposive interpretation of the definition of "employee."
The employment relationship is wider than the employment contract. While the contract of employment is the foundation of the relationship, the relationship may begin before the employee commences working, and may endure for some time after the contract has been terminated. It ought also to be noted that, although abscondment by the employee constitutes a breach of contract, this by itself does not necessarily bring the contract to an end. Only when the employer accepts the employee's repudiation of the contract may it be said that there has been a dismissal.
In some cases, an employment relationship is terminated by neither the employer nor the employee, but by operation of law. This occurs, for example, when an employee's residence or work permit expires, and is sometimes called "automatic dismissal."
Failure to renew fixed-term contract
The employee must have a "reasonable" expectation that the fixed-term contract will be renewed. He bears the onus of proving that the expectation of continued or permanent employment is reasonable. The test is objective, inquiring into whether or not a reasonable person would anticipate renewal in such circumstances.
In addition, the employer must have created the impression that such an expectation was justified. The following are among the ways in which the employer or his representative may create such an impression:
There must, then, be some form of "prior promise or past practice." An offer on less favourable terms is also subject to the reasonable-expectation test.
In SA Rugby v CCMA, the coach of the team indicated to certain players that he had "plans for them." When it came to choosing the side, however, certain of those players were not even sent to training, and therefore were ineligible for the renewal of their contracts. It was held that the coach's representations to the players were such that they had a reasonable expectation of renewal.
What about the reasonable expectation of a permanent position? In Dierks v Unisa, the employee had been employed by means of a series of fixed-term contracts. He argued that he had been unfairly retrenched, and that he was entitled to a permanent position. It is important to draw a distinction between the employee's two expectations:
  1. that the fixed-term contract would be renewed on the same or similar terms; and
  2. that he would have permanent employment.
The court held that section 186 relates to the first expectation only, but the Labour Court later found, in McInnes v Technikon Natal, that its decision in Dierks had been incorrect. It took the view that the focus should be on the nature of the expectation, and whether or not in the circumstances the expectation was reasonable. In casu, the employee genuinely believed that she would be doing the same work as before, the only difference being that her appointment would in future be permanent. In this case, the "similar terms" referred to included the reasonable expectation of permanent employment on similar terms.
The uncertainty continued with Auf Der Heyde v University of Cape Town, where the Labour Court accepted that the approach in Dierks was correct, and that section 186 did not include a reasonable expectation of permanent employment. This case, however, went on appeal, where the judge found it unnecessary in the circumstances to decide the issue.
Dismissal for reasons relating to pregnancy
The Basic Conditions of Employment Act provides for four months' maternity leave, but does not require that it be paid. It is possible, however, for an employee to make a claim in terms of the Unemployment Insurance Act. Individual or collective agreements may provide for paid maternity leave.
An important concession in the Basic Conditions of Employment Act is that no employee may be expected to work for the first six weeks after the birth of her baby, but a midwife or medical practitioner may certify that she is fit to work if the employee wishes to do so. An employer's refusal to allow an employee to return to work after she has been on maternity leave will now fall within the ambit of "dismissal" for the purposes of the Labour Relations Act. If an employee does not return to work within the period permitted, this will probably be viewed as abscondment, in which case the normal sanctions will apply.
Selective re-employment
In a sense, in cases of selective re-employment, the employment relationship continues even after the employment contract itself has been terminated. Three elements are essential:
  1. There must have been a dismissal.
  2. The employees concerned must have been dismissed for the same or similar reasons.
  3. The employer must subsequently have offered to re-employ one or more of the previously dismissed employees, while refusing to re-employ one or more of the others.
    Constructive dismissal
The essential feature of a constructive dismissal is that the employee terminates the employment contract. His resignation is not entirely voluntary, however, as it is brought about or necessitated by the actions or omissions of the employer. These actions must be "intolerable." The employee, in resigning, indicates that he would have carried on work indefinitely had not the intolerable situation been created.
In considering whether or not there has in fact been a constructive dismissal, the courts will ask the following questions:
This is a relatively new form of statutory dismissal, added in terms of the 2002 amendment to the LRA. If a business is transferred, the employees must be transferred with it, and employed on the same or similar terms and conditions. Failure on the part of the new employer to do so constitutes dismissal.

Automatically unfair dismissal

This area of the law is highly problematic. The LRA states that certain dismissals are automatically unfair; there is no argument as to their fairness. The compensation payable to an employee who has been dismissed for reasons that constitute automatic unfairness is up to 24 months' salary, depending on the circumstances. For a normal, merely unfair dismissal, the compensation is up to twelve months' salary.

Section 187 of the LRA

Section 187 of the LRA lists the reasons for which an employee may not be dismissed under any circumstances. Such dismissals are "automatically unfair." Once it is proved that the employee has been dismissed for any of these reasons, the employer may not raise any defence save those provided for in the Act. Victims of automatically unfair dismissals will invariably be reinstated unless they choose compensation instead.
Section 187 is of particular importance. It designates as automatically unfair dismissals in response to the employee's taking action, or indicating an intention to take any action, against the employer by exercising any right conferred by the LRA, or by participating in any proceedings in terms of the LRA. Dismissal for any conduct regarding membership of a trade union, or for exercising the rights conferred by the labour legislation, is automatically unfair.
The rights referred to are found in section 5 of the LRA. They include lawful trade-union participation, non-compliance with an unlawful order and disclosure of information.
In CEPPWAWU & another v Glass & Aluminium, hostility from the employer in the workplace led to a constructive dismissal. The hostility was very closely related to the employee's work as shop steward. The court held that the employer had made the employee's life unbearable due to the fact that he was a shop steward; the dismissal was therefore automatically unfair. The court noted that victims of automatically unfair dismissal will invariably be reinstated unless they choose compensation instead.

What constitutes an automatically unfair dismissal?

This is a factual dispute. Whether the facts give rise to an automatically unfair dismissal, or merely an unfair dismissal, depends on the circumstances of each case.

Dismissals contrary to Section 5

Section 5 confers on employees a right to freedom of association and the right to belong to workplace forums. No employee may be dismissed for exercising these freedoms in any way: for example,
Section 5 further prohibits prejudicing employees for failing or refusing to do anything that an employer may not lawfully require of him.
No dismissal is permitted for the disclosure of information which the employee is lawfully entitled or required to communicate to other persons, or for exercising any right or participating in any proceedings in terms of the LRA. The mere fact that employees are exercising a right under the LRA does not mean, however, that they are immunised against disciplinary action for misconduct committed outside the scope of their duties.

Strike dismissals

The LRA distinguishes between protected and unprotected strikes. The dismissal of an employee for participating in a protected strike is automatically unfair. Participants in protected strikes, however, may be dismissed for misconduct during the course of the strike.
In cases where it is difficult to distinguish between a dismissal for striking and a dismissal for misconduct, the "true" and "proximate" cause of the dismissal must be identified.
Section 65 provides that participation in a strike which does not comply with the provisions of the LRA is misconduct. It "may constitute a fair reason for dismissal," but there are specific procedures to follow.

Dismissal to compel employee to accept demand in mutual-interest dispute

In terms of section 187, employers may not threaten employees with disciplinary action if they do not comply with a demand: a salary decrease, for example. The Labour Court has considered situations in which employees are threatened with dismissal for refusing to accept unilateral amendments of their terms and conditions of employment by their employers. In this regard,
Employers may lock out employees as a bargaining strategy. A lock-out does not constitute dismissal, as the employees are still employed by the employer.
The difficulty is that an employer may argue that he has the right to dismiss, for operational reasons, those employees who do not accept such a demand. It can be factually difficult in such cases to determine what was the true reason for the dismissal.
Section 187 does not prevent employers from dismissing employees who refuse to accept a demand if the effect of that dismissal is to save other workers from retrenchment. Nor does this form of automatically unfair dismissal preclude an employer from dismissing a grossly insubordinate employee.
In Afrox Limited v SACWU & Others, the company had a distribution system that resulted in its drivers working in excess of the overtime permitted by law. It decided to introduce a system of staggered shifts to overcome the problem. The employees, refusing to work under the new system, went on strike. They were subsequently dismissed for "operational reasons", as the deliveries from the branch that had been striking were outsourced. The employees contended that the real reason why they were fired was because they were on strike. The court held that, although the strike accelerated the dismissal, the workers did not comply with the Basic Conditions of Employment Act when they went on strike; therefore, regardless of the strike, the dismissal on operational reasons was upheld as fair.
In Fry's Metal v NUMSA, the court held that the dismissal of employees who refuse to accept a demand does not infringe section 187 if the employer intends to get rid of the workers permanently. In this case, the dismissal was not in an attempt to force compliance; it had gone so far as to constitute operational reasons.
In CWIU v Algorax Ltd, Algorax had not formally declared a lock-out. The court held, therefore, that the employer had infringed section 187, because it offered to reinstate the employees after dismissing them. Had Algorax formally declared the lock-out, it would seem that it could have kept the employees out for as long as it did without having to compensate them for unfair dismissal.

Insubordination

In retrenchment cases, it is difficult to decide when an employer is entitled to dismiss for insubordination when employees refuse to comply with instructions. One must distinguish between refusal to work and refusal to do work in the specific way required by the employer. A computer technician refusing to fix computers is refusing to work, but an employee refusing to use a particular computer programme is refusing to do work in a specific way.
If the employees are contractually obliged to perform the work demanded of them, and the employer's instructions are reasonable, the employees' refusal amounts to insubordination. It is not unfair to dismiss employees for refusing to comply with their employers' instructions to perform the work required by their contracts.
What if the employee refuses to carry out an order not in accordance with the contract, but with how the employer runs his business? This will depend on the facts: If the instructions are reasonable, such refusal could amount to insubordination.
In Kroukam v SA Airlink, Kroukam was an airline pilot who doubled as a shop steward. He was dismissed after deposing to an affidavit for the purposes of an urgent application by his union to have the company's senior manager committed for contempt of court. He was charged with a number of offences, including gross insubordination. The company claimed that he had divulged the content of an off-the-record discussion in his affidavit, and also that he had refused to submit to a health test required of pilots. The Labour Court ruled that this was not an automatically unfair dismissal. On appeal, however, the court held unanimously that the main or dominant reason for Kroukam's dismissal was his involvement in litigation against the company. The court held, accordingly, that such a dismissal was indeed automatically unfair.

Pregnancy dismissals

Section 187 is one of a number of statutory provisions aimed at protecting women in employment. Prior to these types of provisions, a woman who left work to have a baby was largely at the mercy of her employer. Under the common law, her absence could be treated as a reason for termination of the contract.
Now, according to the EEA and the LRA, dismissal is unlawful if it is for any reason regarding pregnancy or discrimination on the ground of pregnancy. The employee has no duty to inform her employer that she is pregnant; the employer has no right to ask and demand an answer. Accordingly, a woman may not now be dismissed in any circumstances merely because she is pregnant.
Section 187 also renders impermissible the dismissal of a woman on maternity leave.
Nothing precludes an employer from dismissing a pregnant employee for operational requirements, provided that the court can be persuaded that there was indeed a valid economic or related reason.
In Whitehead v Woolworths, the court held that an employer may have regard to economic considerations, including the woman's availability to perform her services, when considering whether to employ a pregnant applicant.
Section 187 embraces any reason "related to her pregnancy." It therefore includes reasonable absences for medical attention and changes in the woman's physical configuration, which may dispose certain employers to fire employees engaged in certain types of work.
If the main reason for the dismissal is the employee's pregnancy, the employer may not rely on an ancillary reason like the employee's alleged deceit in not disclosing her condition. Conversely, a pregnant woman may not rely on her pregnancy as a defence against conduct that constitutes a disciplinary offence.
Mashava, in Mashava v Cuzen & Woods Attorneys, was admitted as a candidate attorney at the firm. At the time of her employment, she was pregnant. She did not disclose this. The firm accordingly dismissed her, but the court held that this was automatically unfair. The employer could not rely on her deceit regarding her condition as a reason for dismissal.
Fair dismissal
Fair dismissals are composed of two golden threads: substantive fairness and procedural fairness. Both must be present in order for the dismissal to be fair and in accordance with the labour legislation. Employees may be dismissed fairly only for misconduct, incapacity and operational reasons. Each of these has its own procedure, which must be followed.
Any person considering whether or not the reason for dismissal is fair, or whether or not the dismissal was effected in accordance with a fair procedure, must take into account any relevant code of good practice issued in terms of the Act.

Discipline and dismissal for misconduct

Dismissal is the most severe penalty that an employer may impose against an employee guilty of misconduct. In determining whether or not dismissal is appropriate in the circumstances of a case, the employer may have to weigh up a number of factors to come to a decision.

Origin of employer’s right to discipline

Generally, the employer has the right to maintain and enforce discipline in the workplace. This right has its origin in common law as an implied term in the contract of employment. It is also inextricably linked to the employee’s duty to obey all lawful and reasonable instructions, and is linked to the employer’s right to give instructions. Today the employer’s right to discipline is regulated to a certain degree by the LRA and the Code of Good Practice: Dismissal, annexed to the LRA as Schedule 8.

Discipline and common law

Under the common law, the employer may summarily dismiss the employee if the latter’s misconduct is serious, or dismiss the employee merely by giving the required notice. Occasionally, the employer may prefer to impose a less severe penalty, but the employer’s action in imposing a penalty may not amount to a breach of contract. Suspension without pay or demotion, or ordering forfeiture of an agreed bonus or part of the wages, would constitute a breach of contract. The employer may, however, suspend the employee on full pay and give warnings.
The effectiveness of these penalties was questionable. Suspension on full pay, for example, was found to have little deterrent effect. In practice, the employer’s superior bargaining power, and his right to dismiss merely by giving notice, meant that the employer could "convince" the employee to agree to a penalty which would otherwise have amounted to a breach of contract.

The Code and employer’s right to discipline

The Code of Good Practice recognizes the employer’s common-law right to discipline employees by requiring, in item 3, that "all employers should adopt disciplinary rules which establish the standard of conduct required of employees."
If an agreed disciplinary code exists in the workplace, item 1 of the Code stipulates that disciplinary action against employees must comply with the disciplinary code and procedure.
If, however, the disciplinary code was unilaterally introduced by the employer, or if no such code exists, regard must be had to the Code’s provisions. The employer’s own code must be measured against the provisions of the Code; in the absence of an employer code, the Code will constitute the minimum guidelines for discipline.

Form and content of disciplinary codes of conduct

Form
The Code accepts that the form of the employer’s disciplinary rules will vary according to the size and nature of the business, but these rules must be clear and made available to employees so that there is certainty as to what the employer expects from them and as to what sort of behavior will not be tolerated.
A disciplinary code may take the form of a collective agreement between the employer and a trade union or unions; it may be a policy unilaterally imposed by the employer; or it may be incorporated into the terms and conditions of employment.
Very often a recognition agreement, in terms of which the employer recognizes one or more trade unions as the collective bargaining agent of a certain category of employees, will include, as an annexure, an agreed disciplinary code and procedure. In this way, a disciplinary code and procedure obtains the status of a collective agreement.
Content
The Code accepts that the content of a disciplinary code will vary according to the size and nature of the employer’s business. Some rules of conduct may be so well established and well known that it is unnecessary for the employer to communicate them to the employees. An employee who breaches such a rule cannot argue that the rule does not appear in the written disciplinary code. A rule will be so well established that it need not be communicated if the employees know that a particular act or omission will not be tolerated if the employer has always in the past disciplined employees who committed the particular act or omission.
Rules may also be considered to be well established by virtue of common-law contract principles, like a breach of the duty to act in good faith. Examples of acts and omissions that are held to constitute such a breach include
Employer disciplinary codes usually contain the disciplinary sanctions for each type of disciplinary infraction and the procedure to be followed.
In some cases, the industrial court has drawn a distinction between theft and petty pilfering, and has required that, to justify dismissal, the offence at issue should disclose a "thieving propensity" on the part of the employee. In Anglo American Farms Boschendal Restaurant v Komjwayo, however, this distinction was rejected. The court held that the true test was whether or not the employee’s action had the effect of rendering the relationship of employer and employee intolerable. Although it has been somewhat more lenient in some cases, the CCMA has generally followed a strict approach in cases of theft and other forms of dishonesty.
Due to South Africa’s apartheid past, racist abuse is viewed in a particularly serious light. In Lebowa Platinum Mines v Hill, an employee was dismissed for calling another employee a "bobbejaan". The court held the dismissal to be justified because the court found that the term had a racist connotation.

Corrective or progressive discipline

In terms of the common law, the employer may either condone the misconduct or elect to act against the employee. If the misconduct is of a sufficiently serious nature, the employer may decide to cancel the contract of employment and dismiss the employee.
Dismissal is only one of a number of penalties that the employer may impose against the guilty employee. Examples of other penalties are
The Code emphasizes the concept of corrective or progressive discipline. Item 3 requires that the employer try to correct employees’ behavior through a system of graduated disciplinary measures such as counselling and warnings. Formal disciplinary procedures do not have to be invoked every time a rule is broken. Informal advice and correction is the best way to deal with minor violations of work discipline.
Warnings may be graded according to degrees of severity, as with a verbal warning for a first offence, then a first written warning, then a final written warning or suspension without pay or demotion, and finally dismissal, which is reserved for repeated offences or serious misconduct. Item 3 gives a list of examples of serious misconduct that may result in a disciplinary enquiry and possible dismissal for a first occurrence. The list includes
As stated before, section 188 of the LRA requires that, if misconduct is the reason for dismissal, it must be with fair reason. Item 7 of the Code provides some guidelines as to when misconduct will constitute a fair reason for dismissal. The following must be considered:
The guidelines in item 7 for a substantively fair dismissal are not hard and fast rules. The employer’s non-compliance with a particular guideline will not necessarily make the dismissal unfair. The question of whether or not non-compliance with a particular guideline is permissible depends on the circumstances.

Contravention of rule by employee

There are two issues to be considered under this heading. In the first instance, it must be determined whether or not the rule existed; in the second, if the rule existed, it must be determined whether or not the employee contravened it.
Did the rule exist?
The formulation of disciplinary rules is the responsibility of the employer. The most important source of these rules is a written disciplinary code or rules of conduct. If such a written code or set of rules exists, it must be examined to determine whether the rule which the employee is accused of having contravened is contained in that code. If the disciplinary code does not contain the rule under consideration, this may be an important indicator that such a rule does not exist in the particular workplace.
If the particular rule which the employee is accused of having contravened is not included in the written code, this does not necessarily mean that the employee’s dismissal is unfair.
The particular rule may be contained in
Legislation such as the Occupational Health and Safety Act may also regulate the conduct of employees. Sections 14 and 15 impose a number of duties on employees, such as
Another important source for rules is the common law, which includes, for example, the duty to act in good faith.
Item 7 of the Code provides that one may also consider whether the employee contravened a rule regulating conduct "in, or of relevance to the workplace." The provision is broad enough to entitle the employer to proceed against the employee who has contravened a rule after working hours, or even outside the premises of the employer. The circumstances that this is possible are limited, however, to those situations where the misconduct in some way affects or is otherwise relevant to the employer’s business.
Was there a contravention of the rule?
Once it has been established that the rule exists, the next issue to be addressed is whether or not the employee has contravened it. This is an issue which must be determined on the facts. If, for example, the employee is charged with unauthorised possession of company property, this must be proven in the circumstances.
Section 192 of the LRA states that it is the employer who must prove that the dismissal was fair; therefore the employer must prove that the employee has contravened the rule. Neither the LRA nor the Code stipulates the standard by which the employer must prove the employee’s contravention of the rule, but it is submitted that the employer must prove the contravention on a balance of probabilities.
The LRA and the Code also do not stipulate on what facts the employer may rely to prove the contravention. The Industrial Court has given conflicting opinions on whether the employer is restricted to relying on those facts which are available at the time of the enquiry, or whether he may also rely on facts which came to light after the dismissal. It is submitted that the Commission for Conciliation, Mediation and Arbitration will probably adopt the second approach.
Validity and Reasonableness of the Rule
Once it is clear that the rule existed and the employee actually contravened it, attention must be focused on the rule itself. The first aspect which must be determined is whether the rule is valid or reasonable. This is a factual question. Generally a rule will be valid or reasonable if it is lawful and can be justified with reference to the needs and circumstances of the business. Factors which may determine whether or not a rule is justified include the following:
An important indicator of the validity or reasonableness of a rule is its inclusion in a disciplinary code that is contained in a collective agreement between the employer and a trade union. Unlike the rule the employer unilaterally enforces, this rule is the product of collective bargaining.
The reasonableness of a rule may be affected by the employer’s preparedness in the past to enforce it. If it has not been enforced in the past, it may be an indication that the employer does not regard the rule as reasonable. The employer’s failure to enforce a rule does not make that rule permanently invalid, however. It may regain its validity if the employer clearly and unequivocally informs the employees that the rule will be enforced in the future.
The fundamental issue is that the employer cannot act against the employee if the latter is unaware that the employer now regards a breach of the rule as serious.
Employee’s knowledge of rule
The employee must have known, or could reasonably be expected to have been aware, of the rule. The rationale for this is that the employee should only be penalised for actions or omissions which the employee knew were unacceptable. It is implied that the employee must also have known that a transgression of this rule may lead to dismissal.
Knowledge of the rule may be achieved through
Certain forms of misconduct may be so well known in the workplace that notification is unnecessary. This would be the case with theft assault, intimidation, insolence and insubordination.
Consistent application of rule
An employer must, as far as possible, treat employees in the same way if they have committed the same or similar offences. The employer must be consistent, in other words, in meting out discipline.
Two types of inconsistency may be distinguished:
Inconsistency will not always be unfair. The employer can justify inconsistency through factors such as the employees’ different circumstances: length of service, for example, or disciplinary records and personal circumstances.
In SA Commercial Catering & Allied Workers Union v Bonus Building, the court held that, if a distinction is drawn between different employees, this distinction must be properly motivated; otherwise it will give rise to a perception of bias.
The court in City of Cape Town v Mashitho & Others found that, if an employer intends to discipline employees for misconduct which he has not disciplined them for in the past, the proper course is to make it known that such discipline will now be effected and the reasons for this change.

Dismissal as Appropriate Sanction

Whether or not dismissal will be an appropriate sanction is a factual question. Item 3- of the Code lists factors to be taken into consideration. The employer should consider, in addition to the gravity of the misconduct, such factors as the employee’s circumstances, the nature of the job and the circumstances of the infringement itself. The employer should apply the penalty of dismissal consistently with the way in which it has been applied to the same and other employees in the past, and consistently as between two or more employees who participate in the misconduct under consideration. All these factors must be considered and weighed up together to decide whether dismissal is justified or whether a less severe sanction would be more appropriate.
It has been submitted that, even if the commissioner does not consider dismissal to be the appropriate sanction after considering all these factors, the penalty of dismissal will stand if the commissioner or judge is satisfied that a reasonable employer could also have decided to dismiss under the circumstances.
In the case of Sidumo and Another v Rustenburg Platinum Mines Ltd and Others 12 BLLR 1097, however, a security guard at a mine was not abiding by the search procedures he was obliged to employ for the workers at the mine. There was video footage available as proof that he was not adequately searching the workers. The security guard was dismissed on the suspicion that he could be fraternising with the workers in order to steal from the mines. The CCMA having held that this sanction was too harsh, the case was appealed to the Labour Court and then to Labour Appeal Court. When the case reached the SCA, the court held that employers have a discretion to dismiss. If the employer acts reasonably, his decision must be upheld.
On appeal to the Constitutional Court, it was held that the commissioner who hears the appeal must decide afresh if the decision was fair or unfair; therefore, it is not appropriate to look to the reasonable employer. The SCA approach, therefore, was found to be wrong. The test is what the reasonable commissioner would have done in those circumstances. The court, then, is not bound by the choice made by the reasonable employer. The "reasonable employer" test is no longer used.
Gravity of misconduct
The more serious the misconduct, the greater the likelihood that dismissal is the appropriate penalty. The seriousness of the misconduct depends on a number of considerations:
A serious offence does not automatically warrant the employee’s dismissal. It is not a "knee-jerk response" to all serious offences. There may be circumstances which have a tempering effect, not on the seriousness of the offence as such, but on the severity of the penalty: for example,
In the case of a brewery, the employer will be justified in taking a strict disciplinary approach regarding intoxication and the use of alcohol during working hours. A less strict approach to intoxication may be expected from an employer whose employees do not deal directly with the public or who do not work with dangerous machinery. This, however, does not mean that such an employer may never dismiss employees for intoxication; it only means that a greater measure of progressive discipline will be expected from such an employer.
Employee’s circumstances
These include the employee’s length of service, status within the undertaking, previous disciplinary record and personal circumstances.
Years of service generally count in the employees favor. It must be noted, however, that the employer often puts a great deal of trust in an employee with long service; therefore, it could count against the employee if he breaches this trust after many years of service.
The employer will also expect a higher degree of responsible behavior from a supervisor or manager than from an ordinary worker.
If there is a previous warning on the employee’s personnel file, stating that he will be dismissed if the same offence is committed in future, dismissal may be fair if this occurs. A warning does not remain valid indefinitely. The employer and trade union may agree on the period for which a warning will remain valid, or the employer’s code may stipulate this. In the absence of such agreement or stipulation, the default position is that the warning remains valid for six months, unless the infraction is particularly serious, in which case it may remain valid for the duration of the employee’s service.
Other personal circumstances which may be important include the employee’s age, marital status and number of dependents.
Other employees dismissed for same offence
The employer must, as far as possible, treat employees the same if they have breached the same rule or rules which are similar: There must be consistency when meting out discipline.

Procedural fairness of dismissal for misconduct

Section 188 of the LRA requires that a dismissal for misconduct must be effected in accordance with a fair procedure, which entails a fair disciplinary enquiry. The LRA does not regulate a fair disciplinary enquiry. The employer’s disciplinary code and procedure usually prescribes the procedure to be followed and the manner in which the hearing should be conducted. The Code provides a number of guidelines for a fair enquiry in item 4: This is not a substitute for a disciplinary procedure but merely a template by which the fairness of a dismissal must be judged.
Normally, the employer should conduct an investigation to determine whether there are grounds for dismissal. This does not need to be a formal enquiry. The employer should notify the employee of the allegations, using a form and language that the employee can reasonably understand. The employee should be allowed the opportunity to state a case in response to the allegations. The employee should also be entitled to a reasonable amount of time to prepare the response, and to the assistance of a trade union representative or fellow employee. After the enquiry, the employer should communicate the decision taken, and preferably furnish the employee with written notification of that decision.
Discipline against a trade union representative, or against an employee who is an office-bearer or official of a trade union, should not be instituted without first informing and consulting the trade union. If the employee is dismissed, the employee should be given the reason for dismissal and reminded of any rights to refer the matter to a council with jurisdiction or to the commission, or to any dispute resolution procedures established in terms of a collective agreement.
In exceptional circumstances, if the employer cannot reasonably be expected to comply with these guidelines, the employer may dispense with pre-dismissal procedures.
Elements of procedural fairness
Investigation
The purpose of the investigation is to determine whether or not there are grounds for dismissal. The investigation need not be a formal enquiry.
Notice of charge and investigation
The employer must notify the employee of the allegations against him. The employer must use a form and language that the employee can reasonably understand. Usually the charge will be in writing and in the language which is commonly used in the workplace. Notice of the charge and of the disciplinary enquiry is usually given simultaneously and in the same document
Reasonable time to prepare response
The question of what is a "reasonable time" is a factual one. The nature and complexity of the charges will certainly be relevant in ascertaining whether the employee has had sufficient time. Whether the employee had assistance in preparing a response will also be relevant.
Employee entitled to state case in response
This is the core of procedural fairness in the context of dismissal for misconduct. The employee may dispute the facts on which the charges are based, or may plead guilty to the charges but argue that dismissal is not the appropriate sanction.
Employee entitled to assistance
The employee is entitled to the assistance of a trade union representative or a fellow employee during the enquiry. "Trade union representative" is defined in section 213 of the LRA as a member of a trade union who is elected to represent employees in a workplace. "Fellow employee" includes a colleague, supervisor or even a director of the company for which the employee is working, provided that the director is also an employee.
The purpose of assistance is
Item 4 does not provide for assistance by a legal practitioner, such as an advocate or attorney, but some disciplinary codes provide for legal representation under certain circumstances.
Decision
The decision as to whether or not an employee is guilty of the alleged misconduct, and as to the sanction, is usually the responsibility of the chairperson of the disciplinary enquiry. Some disciplinary codes, however, provide that the chairperson may only may a recommendation to senior management. The latter must then take the final decision, which could differ from the chairperson’s recommendation.
An important question arises: Can senior management overturn the decision of a chairperson or order a second enquiry into whether or not the latter is empowered by the code not merely to make a recommendation but actually to decide the issue?
The court has indicated that this would be possible, subject to certain limitations, and that whether or not a second disciplinary enquiry may be opened depends on whether or not it would be fair to do so in the circumstances.
The court has also stipulated two cautionary remarks:
  1. The second enquiry must be permitted in terms of the employer’s disciplinary code.
  2. It would probably not be considered fair to hold more than one enquiry, save in "exceptional circumstances."
The important yardstick is that of fairness.
Communicating decision
Item 4 of the Code requires that the employer communicate the decision taken, preferably in writing. Both the verdict and the penalty must be communicated.
Employee to be informed of reason for dismissal
Item 4 of the Code requires that, if the penalty is dismissal, the employee must be given the reason for it, and must be reminded of any rights to refer the matter to a bargaining council with jurisdiction, or to the CCMA or any dispute resolution procedure established in terms of a collective agreement.
Appeal
Item 4 of the Code does not make a provision for an appeal to a higher level of management against the outcome of a disciplinary enquiry. If the employee is dissatisfied, he must implement the dispute-settling procedures provided by the LRA. If, however, the disciplinary code in the workplace makes provision for such an appeal, the employee will be entitled to appeal in accordance with the code.
Traditionally an appeal entails a re-hearing of the entire matter, including all the evidence presented, and a fresh consideration of the appropriate sanction.
Dispensing with pre-dismissal procedures
Item 4 stipulates that the employer may dispense with a disciplinary enquiry in exceptional circumstances if the employer cannot reasonably be expected to comply with this requirement. Two broad categories of exceptional circumstances are
  1. crisis-zone situations ; and
  2. where the employee waives his or her right to a hearing.
Waiver of the right may also be assumed if
Incapacity is one of the internationally recognized grounds for a fair dismissal, provided that a fair reason exists for the dismissal and that a fair procedure has been followed.
Section 188 of the LRA refers only to "incapacity." It does not distinguish between poor work performance and ill health or injury. This distinction is, however, drawn in the Code of Good Practice: Dismissal. Different sets of guidelines are provided for each: Item 11 deals with ill health or injury; item 9 deals with poor work performance. According to the former Prime Minister, "It will probably take a long time for the mods to find this."
While culpability or fault on the part of the employee is the essence of dismissal for misconduct, a dismissal for incapacity is a no-fault dismissal. Incapacity means that, unrelated to any intentional or negligent conduct or performance by the employee, the employee is not able to meet the standard of performance required by the employer. The employee is not capable of doing the work.
This ground of dismissal ties in with the common law duty of the employee to perform competently and without negligence. The difference between incapacity and misconduct in this regard is that
A dismissal for poor work performance implies that there must be an objective standard of performance against which the employee can be measured, before the employee may be dismissed for failing to meet that standard. It is generally accepted that the setting of performance standards is within the employer’s prerogative.
There are various ways in which an employer may establish performance standards and appraise an employee’s ability to do the job to the satisfaction of the employer. At the outset of the relationship the employer may decide to put the employee on a period of probation. The Code distinguishes between employees who are dismissed during the probationary period and those who are dismissed after probation.
Item 9 of the Code provides, as guidelines in cases of dismissal arising from poor work performance, that any person, in determining whether or not a dismissal for poor work performance is unfair, should consider
Item 8 of the Code sets out the basic principles in respect of probationary employees:
Different jobs may take different lengths of time to determine suitability. The requirement in terms of the length of probation is that of reasonableness.
If the probationary employee is not performing adequately, the evaluation, instruction, training, guidance or counselling referred to in the Code should focus on making it possible for the probationary employee to perform to the satisfaction of the employer. If the performance is not up to standard, the probationary employee should be given an opportunity to improve to the requisite standard.
In sub items to the word "should" is used, so the duty on the employer is less onerous than if the employee had already been confirmed in a permanent position. Item 8- makes it clear that there is a difference between a dismissal during probation and after probation.
The amended Item 8 emphasizes that an employee is protected against an unfair dismissal even while serving a probation. The justification for these amendments is to make the dismissal of probationary employees easier in order to encourage job creation and to relieve employers of the onerous procedures they had to comply with before this item was amended.

Poor-work-performance dismissals after probation

After the probationary period has expired, most employees will have tenure or permanent status. The procedures that an employer must follow to justify a dismissal for poor work performance after probation are to be found in Item 8-, which provides that, after probation, an employee should not be dismissed for unsatisfactory performance unless the employer has
The procedure leading to dismissal should include an investigation to establish the reasons for the unsatisfactory performance. The employer should consider other ways, short of dismissal, to remedy the matter.
In the process, the employee should have the right to be heard and to be assisted by a trade union representative or a fellow employee.
Incapacity dismissals are made difficult, then, by the fact that there is considerable overlap between substantive and procedural fairness. They are not always clearly distinguishable.

Setting standards and assessment

An employer is entitled to set the standards that it requires the employee to meet. The employer has the prerogative to decide whether or not those standards have been met.
In A-B v SA Brewaries, an employee engaged as a planning and administrative manager was charged with poor work performance on six occasions and demoted to the position of project controller. The arbitrator held that an employer is entitled to set the standards that it requires the employee to meet. Generally speaking, the court should not intervene unless the standards so set are "grossly unreasonable."
The commissioner held that the employee had been given a fair opportunity to meet the standards set by the employer and that the demotion was not procedurally unfair. The employer’s performance appraisal and review process had identified the problem areas. The employee had been given an opportunity to improve before the demotion.
The commissioner stressed that, in most cases, senior managers have a duty to appraise their own performance and to rectify poor performance themselves.

Senior managers

The status of the employee may play a role in the performance standards that the employee is expected to reach, and the extent to which the employee will be given an opportunity to improve his performance. The size of the organisation will also be a factor to consider when deciding the degree of the employer’s responsibility towards employees whose performance is sub-standard.
Senior managers may indeed have a duty to assess their own performance standards. The courts have long accepted that senior employees are not always entitled to an opportunity to improve. They have been held to have the ability and duty to monitor their own work performance.

Failure to meet the standards required by regulatory body

A dismissal for incapacity may be justified if the employee does not have the requisite qualifications or has not been accredited by a professional or statutory body.

Assessment and evaluation by employer

The courts have stressed the need for a proper evaluation and assessment of an employee before any action is taken. There must be careful assessment and consultation, and an opportunity to improve.
The Commission for Constellation, Meditation and Aggregation has accepted that less strict standards should be applied to small businesses tasked with evaluating an employee for poor work performance.

Consultation process

It is emphasised that it is through fair process that fair decisions are generally reached. If the dismissal was procedurally unfair, the courts have often been reluctant to reinstate the employee, choosing rather to award the employee compensation.

Dismissal as last resort

No employee may be dismissed for poor work performance without first being made aware of the standards required and then being given an opportunity to improve. The employer is expected to make a reasonable accommodation for an employee and offer the employee alternative employment in some circumstances.

Incompatibility

There was great debate regarding whether or not an employee’s incompatibility constituted incapacity or a ground for an operational-requirements dismissal.
Considering the way the LRA is now structured, this distinction has become vital. Different pre-dismissal procedures must be followed by the employer; disputes about an allegedly unfair dismissal would follow different procedures.
Commission for Conciliation, Mediation and Arbitration commissioners now generally take the view that incompatibility constitutes incapacity and not operational requirements, but the debate continues.
There must still be a fair reason and fair procedure for such a dismissal. The employer is obliged to assist an employee who is causing disruptions in workplace relationship before dismissing him. If the employee is a genuine "misfit," appropriate warnings and counselling would be required.
It may happen that a call is made for the dismissal of an employee by a third party or co-workers. If this happens, the demand made must be "good and sufficient," and must be backed by a real and serious threat: for example, that the employees making the demand will go on strike if the employee in question is not dismissed. The employer must investigate alternatives and consult the employee in question.
The requirement that there must be no possible alternative is particularly true when racial or ethnic tension is the cause of the incompatibility. The test in such cases is that of necessity.

Ill health or injury

The second type of incapacity dealt with in the Code is ill health or injury. It is addressed in Item 10 and Item 11.
The assessments referred to in Item 11 must be done in order to determine whether a dismissal would be appropriate in the circumstances. Item 11 of the Code provides that any person determining whether a dismissal arising from ill health or injury is unfair should consider
Once again the dismissal must be both substantively and procedurally fair.
Substantive and procedural fairness
Various aspects of substantive and procedural fairness are illustrated in Item 10.
Incapacity on the grounds of ill health or injury may be temporary or permanent. If an employee is temporarily unable to work in these circumstances, the employer should investigate the extent of the incapacity or injury. If the employee is likely to be absent for a time that is unreasonably long in the circumstances, the employer should investigate all the possible alternatives short of dismissal.
When alternatives are considered, relevant factors might include
In cases of permanent incapacity, the employer should ascertain the possibility of securing alternative employment or adapting the duties or work circumstances of the employee to accommodate the employee’s disability.
In the process of the investigation referred to above, the employee should be allowed the opportunity to state a case in response, and to be assisted by a trade union representative or fellow employee.
The degree of incapacity is relevant to the fairness of any dismissal. The cause of the incapacity may also be relevant. In the case of certain kinds of incapacity, like alcoholism or drug abuse, counselling and rehabilitation may be appropriate steps for the employer to consider.
Particular consideration should be given to employees who are injured at work or who are incapacitated by work-related illness. The courts have indicated that the duty on the employer to accommodate the incapacity of the employee is more onerous in these circumstances.
Item 10 highlights the nature, degree and extent of the incapacity, and the steps the employer should take to accommodate the employee. Whether the incapacity is temporary or permanent is also an important consideration.
Item 10 sets out the guidelines specifically for procedural fairness. There has been debate as to whether this process entails a formal hearing. As long as the employee is given a fair opportunity to indicate why he should not be dismissed, however, this feature has been complied with.
The degree of incapacity also plays a role.
The employer’s duty to accommodate is emphasized, with particular reference to employees incapacitated due to a work-related injury or illness.
A related issue if that of habitual absenteeism, where an employee is often absent from work due to illness or injury. It appears that the approach of the court will vary according to the degree and nature of the absenteeism. Frequent and lengthy absences due to ill health may justify termination at a point where the employer can no longer be expected to tolerate such absences.
Disability
In many cases, the terms "incapacity" and "disability" are used interchangeably. Incapacity may be due to an accident causing a loss of limb or the slow onset of an illness like cancer or HIV/AIDS, or a person may have been born with a physical or mental impairment that others perceive as a disability.
The real issue in equity or anti-discrimination legislation is to protect the rights of disabled people, particularly in the area of employment, as employers may perceive a ‘disabled person’ to be unsuitable for the workplace.
Although the Constitution and LRA both have general equity provisions for people with disabilities, there is no statutory definition in these Acts. The EEA, however, defines people with disabilities as people who have a long-term or recurring physical or mental impairment which substantially limits their prospects of entry into, or advancement in, employment.
The Americans with Disabilities Act of 1990 defines a disabled person as "one who has a physical or mental impairment that substantially limits a major life activity, a person who has a past record of such an impairment, or a person who is regarded by other people as having such an impairment."
"Reasonable accommodation" means any modification or adjustment to a job or to the working environment that will enable a person from a designated group to have access to or participate or advance in employment.
A dismissal based on disability may thus be automatically unfair, giving the employer no defense and the judge no discretion—except that the dismissal may be fair if the reason is based on an inherent requirement of the job.
The employer will also bear the onus of proving that the dismissal for disability was based on the inherent requirements of the job and that the dismissal is both substantively and procedurally fair.

Dismissal for operational requirements

Context

An employer may find itself facing financial ruin. Under pressure, the employer may be forced into considering reducing its wage bill by restructuring the organisation, which may mean dismissing some employees. In this scenario, the word "retrenchment" is often used.
Section 188 of the LRA recognizes that an employer also has operational requirements and needs, and that, in certain cases, these may also be a fair and valid reason for dismissal.
According to section 213 of the LRA, "operational requirements" are requirements based on the economic, technological, structural or similar needs of an employer.
There are four categories of operational requirements. From these categories it is clear that the reason for the dismissal does not relate to the employee; it is due to the needs of the employer, and therefore reason for the dismissal is the employer's.
An employer’s economic needs, for example, include those needs and requirements relating to the economic well-being of the enterprise. One of the most common economic reasons for dismissal is financial difficulties.
"Technological needs" refers to the introduction of new technology, such as more advanced machinery, mechanization or computerization, leading to the redundancy of employees.
Structural needs as a reason for dismissal describes posts becoming redundant following a restructuring of the enterprise. This often follows a merger or amalgamation.

Employer’s similar needs

This is a very broad category and must be determined with reference to the circumstances of the case. There is no clear and absolute dividing line between an employer’s "economic" needs and "similar" needs, as there are often considerable overlaps.

Changes to employee’s terms and conditions of employment

A business may have to be restructured or amalgamated with another enterprise, or its mode of operation may have to be altered in order to ensure its survival or to make it more competitive.
These changes may lead to an employee's becoming redundant, but changes of this nature may also lead to the employee's being offered a new position, with changes to the terms and conditions of employment.
If the employee unreasonably refuses to accept the changes to the terms and conditions of employment, the employee may be dismissed for operational requirements.
In WL Ochse Webb & Pretorius v Vermeulen, the employee was a tomato salesman for WL Ochse and was paid a basic salary and commission. He earned more than the other employees, as the sale of tomatoes attracted a higher commission than the sale of the vegetables sold by the other employees. This caused dissatisfaction among the other workers, which the employer tried to address by proposing a new remuneration system. The salesman was given three alternatives:
  1. He could accept the new system.
  2. He could present an alternative system.
  3. He could resign.
He proposed that the old system be retained. When this proposal was rejected by the employer, he resigned.
The court held that the employer had not acted unfairly, as a successful business requires contented employees. Unhappiness can lead to several problems, such as labour unrest and a drop in productivity. A commercial rationale for the changes was thus established by the employer.
Dismissal to compel an employee to accept changes to terms and conditions of employment is branded as automatically unfair by section 187 of the LRA. The primary motive for dismissal must be a commercial rationale or operational reason in order for the dismissal to be fair.
The fundamental difference between an operational requirement dismissal and an automatically unfair dismissal is the employer’s reason for the dismissal. If an employer dismisses employees because the terms and conditions of employment must be altered for the business to continue being viable, the employees may be fairly dismissed, as they no longer serve the employer’s operational requirements.
In Fry's Metals v National Union of Metalworkers, the court discussed the difference between an operational-requirement dismissal and an automatically unfair dismissal:
A change in the terms and conditions of employment need not always be the result of changes regarding the business. The circumstances or attitude of the employee could change. This could have such serious economic repercussions for the employer that the latter deems it vital to change the employee’s conditions of employment.
The nature of a business may be such that special demands are made on the employees. It may be essential for the economic success of the business, for example, that the employees are able and willing to work overtime. The employee’s inability or refusal to do so could jeopardise the well-being of the business; therefore a dismissal would be fair.

Incompatibility and related reasons

The courts have accepted than an employee whose actions negatively affect the operation of a business may be dismissed. This may occur where certain actions of the employee create disharmony among his co-workers, as when, for example, he antagonises co-workers by continually making racist or sexist remarks.
In Erasmus v BB Bread, employees called for the dismissal of a manager because of his problematic attitude towards them, and his having made derogatory remarks, particularly aimed at black employees. The Industrial Court held that his dismissal was for a valid and fair reason, as the employer is entitled to insist on reasonably harmonious interpersonal relationships between employees. If sound relationships appear to be impossible, the employer may be entitled to remove the employee from the scene.
In East Rand Proprietary Mines v UPUSA, the issue was the fairness of the dismissal of a number of Zulu-speaking workers after violent clashes between them and workers belonging to other ethnic groups. Although the court found that the dismissal had been unfair in the circumstances, it did acknowledge that a dismissal which had its roots in an arbitrary ground, such as ethnic origin, could be fair if the employer could prove that dismissal was the only option left to ensure the safety of the targeted employees and the continued well-being of the business. The court held that an employer may dismiss employees because it cannot guarantee their safety in light of the ethnic hostilities, but the employer must be able to show that it truly had no other alternative.

Breakdown in the trust relationship

The relationship between the employer and employee is one of trust. It entails the confidence that the employee is adhering to the common-law duty to act in good faith towards and in the best interests of the business.
If the facts show that this duty is breached, the employee is guilty of misconduct and, if sufficiently serious, may be dismissed.
If the employer is unable to prove such a breach on a balance of probabilities, the employee may not be dismissed for misconduct, but may be dismissed for operational reasons, as such mistrust is counter-productive to the operation of the business.
In Food & Allied Workers Union v Amalgamated Beverage Industries, the Industrial Court accepted that the dismissal of a number of employees on suspicion of assault had an operational rationale to it.

Substantive issues

Real reasons and increases in profits
Before the introduction of section 189A of the LRA in 2002, there was no statutory definition of substantive fairness in the case of an operational-requirements dismissal. The question is a factual one; the employer must prove:
  1. that the proffered reason is based on the operational requirements of the business, so that the employer will have to prove that the reason for dismissal falls within the statutory definition of "operational requirements;" and
  2. that the operational reason actually existed, and was the real reason for the dismissal. The reason may not be a mere cover-up for another reason.
A dismissal for operational reasons need not be restricted to the cutting of costs and expenditure. Profit, or an increase in profit, or gaining some advantage such as a more efficient enterprise, may also be acceptable reasons for dismissal.
If the employer can show that a good profit is to be made in accordance with a sound economic rationale, and it follows a fair process to retrench an employee, the dismissal is fair.
Large-scale Dismissals
Section 189A of the LRA distinguishes between the size of employers and also the size of dismissals when regulating substantive and procedural fairness of dismissal.
Section 189A distinguishes between a small employer and a big employer.
In terms of s189A a large-scale dismissal would entail the employer's dismissing
In terms of s189A, a dismissal by a big employer of fewer than the prescribed minimum listed above still constitutes a large-scale dismissal if the number of employees to be dismissed, together with the number of employees that have been dismissed for operational reasons in the twelve months previously, exceeds the number specified above.
This is a so-called "rolling twelve-month period" and must always be calculated backwards, starting from the date on which the employer gives notice in terms of section 189 of the latest proposed dismissal for operational reasons.
The purpose of the twelve-month rolling period is to ensure that employers do not manipulate the number of employees to be dismissed so that the dismissal always falls outside the ambit of section 189A.
Section 189A of the LRA provides that, in any dispute referred to the Labour Court concerning the dismissal of the number of employees in terms of subsection, the court must find that the employee was dismissed for a fair reason if
This requirement entails that the reason for dismissal must be for "operational requirements," as defined in section 213. It must also be the real reason for the dismissal.
"Operationally justifiable on rational grounds"
"Rational" grounds are grounds that are founded upon "reason" or "logic." The rationality test is an objective one, measuring the acceptability of the reasons for dismissal against that which would generally be considered acceptable. It is not a subjective test focussed only on what the particular employer considered to be justifiable under the circumstances.
"Proper consideration of alternatives"
One of the requirements for a procedurally fair dismissal is consultations on measures to avoid dismissals. This inclusion makes this procedural requirement also a requirement for substantive fairness, and goes further by requiring "proper" consideration.
"Proper" consideration entails more than merely considering alternatives. The employer must apply its mind and give defensible reasons for dismissing such alternatives, and show that dismissal was a last resort.
"Selection criteria were fair and objective"
One of the requirements for a procedurally fair operational requirements dismissal is that the parties must attempt to reach consensus about the method to be used to select employees for dismissal. Where the parties are unable to agree, the criteria used must be "fair and objective." This procedural requirement is also, therefore, a requirement for substantive fairness.

Courts' changing views

In the past, the courts took the view that the function of the court is not to second-guess the employer’s decision. It is not up to the court to ask whether it was the "best" decision under those circumstances; it needed only to consider whether it was a rational, commercial or operational decision.
Now the courts take a closer view of the employer’s business decisions.
In BMD Knitting Mills v SA Clothing & Textile Workers Union, the court departed from its deferential approach and focused on the fairness of the reason to both parties:
The starting point is whether there is a commercial rationale for the decision. But rather than take such justification at face value, a court is entitled to examine whether the particular decision has been taken in a manner which is also fair to the affected party, namely the employees to be retrenched. To this extent the court is entitled to enquire as whether a reasonable basis exists on which the decision, including the proposed manner, to dismiss for operational requirements is predicated. Viewed accordingly, the test becomes less deferential and the court is entitled to examine the content of the reasons given by the employer, albeit that the enquiry is not directed to whether the reason offered is the one which would have been chosen by the court. Fairness, not correctness is the mandated test.

In Chemical Workers Industrial Union v Algorax, the court considered itself to be entitled to scrutinize the employer’s business reasoning and decision-making in considerable detail. The reasoning given is that the court should not hesitate to deal with an issue which requires no special expertise, skills or knowledge that it does not have, but simply requires common sense or logic.
The most important implication of this approach is that the employer will need to convince the court not only that it has considered alternatives, but that it has chosen the option that makes the best business sense.

Procedural aspects

There is no clear dividing line between substantive and procedural fairness in dismissals for operational reasons; the issues overlap considerably.
Consultation process
The consultation process is at the heart of procedural fairness in the case of dismissal for operational requirements.
Section 189 of the LRA provides that, when an employer contemplates dismissing one or more employees for reasons based on the employer’s operational requirements, the employer must consult
In United National Breweries v Khanyeza, the court held that, where a union is recognized as a consulting party in a collective agreement, it is entitled to consult on behalf of all employees, even those falling outside the bargaining unit for which the union is recognised.
Note that consultation must take place when the employer "contemplates dismissal"—when the possibility of dismissal is foreseen, but the final decision to dismiss has not been reached. At most, therefore, the employer must have an intention to retrench.
Item 3 of the Code further entrenches the idea that consultation must take place when dismissal is "contemplated."
This ensures that the employees are afforded the opportunity to influence the employer in its final decision to dismiss or not to dismiss.
Section 189 does not prescribe the period over which consultation should extend, but Item 5 of the Code states that the circumstances of each case are relevant to the determination of a reasonable period.
Item 6 further states that the more urgent the need of the employer to respond to the factors giving rise to contemplated dismissals, the shorter the consultation process will be.
Consultation entails that the parties must engage in a meaningful joint consensus-seeking process and attempt to reach consensus. This means that the parties must embark on a joint problem-solving exercise, striving for consensus.
For the process to be meaningful, the employer must consult in good faith and not simply "go through the motions." This means the employer cannot have made up his mind to dismiss prior to consultation, and must be prepared to keep an open mind with regard to the representations made.
The employees must engage properly, make representations and ensure that their representations are well founded and substantiated, and not merely prolong consultations.
Should the parties fail to reach consensus, the final decision remains that of the employer.
In NEHAWU v University of Pretoria, the Labour Appeal court held that, after restructuring had been exhaustively discussed by a steering committee, on which all stakeholders were represented, the university was not required to consult again on all those issues after formally giving notice in terms of section 189 of the LRA.
Consultation topics
Section 189 of the LRA provides that the employer and the other consulting parties must engage in a meaningful joint process, attempting to reach consensus on
There must be proper consideration of alternatives. The employer must apply its mind to the proposals and, if applicable, give defendable reasons for dismissing these alternatives and coming to the conclusion that dismissal was the only solution.
Possible alternatives include the following:
The parties may consider spreading the dismissals out over a period of time to allow a natural attrition of numbers through retirements or resignations.
Measures to minimize the number of dismissals
Once dismissals have been agreed as the only solution, the number of dismissals must be kept to a minimum. This may mean
While the employer may prefer the dismissals to be immediate, the union may prefer them to be spread over a period of time, or that they take place at a later stage.
Measures to mitigate the adverse effects of the dismissals
The employer may, for example, assist the employee in finding alternative work by giving the employee time without loss of pay to search for alternative work.
The employer may also make an office available in which to complete job applications and arrange interviews.
The employer may provide a reference for the employee.
In Sikhosana v Sasol Synthetic Fuels, the court noted that the LRA contemplates a hierarchy of consulting parties, each if applicable excluding its successors. The courts apply section 189 strictly. It was held that, although appropriate measures to mitigate the adverse effects of the dismissals should be taken, employers are not required actively to seek alternative work for retrenched employees.
The employer may also undertake to give priority to the dismissed employee should a vacancy arise.
Criteria for dismissal and severance pay
Consensus must also be reached on the criteria used to select which employees will be dismissed and the amount of severance pay the employee is entitled to.
Written Disclosure of Information
The employer must disclose all relevant information in writing. Verbal assurances, explanations and information by the employer will not suffice; the other party may demand that the employer put everything down in writing or provide documentation such as financial reports.
According to section 189 of the LRA, all "relevant information" must be disclosed. This may include, inter alia,
Relevance is a question of fact and entails all information that will allow effective consultation.
The onus is on the employer to prove that any information that it has refused to disclose is not relevant for the purposes for which it is sought.
Privileged information, information that may cause harm if disclosed and private personal information relating to an employee is not required to be disclosed, even if it is relevant.
Representations and consideration of representations
Section 189 of the LRA provides that the employer must allow the other party an opportunity to make representations on any matter on which the parties are consulting. Representations on issues regarding the reasons for dismissal, alternatives to dismissal, measures to minimise the number of dismissals, the timetable for dismissal, assistance offered, severance pay, etc., are therefore allowed.
Representations about the disclosure of information and about "any other matter relating to the proposed dismissals" are also allowed: for example, the socio-economic effect that a mass dismissal would have on the local community.
The employer must engage with those representations and consider and respond to them.
Selection criteria
Employees must be selected for dismissal in terms of selection criteria that have either been agreed upon or that are fair and objective.
This means that the criterion should not be arbitrary; it must be relevant, in that it relates to the conduct of the employee, such as length of service, ability, capacity and the needs of the business.
The following criteria are commonly used:
This is the "last in, first out" or LIFO principle. Long-serving employees are retained at the expense of those with shorter service in similar or less-skilled categories of work. This method minimises the use of subjective judgment to decide who shall be retrenched. This is why it is favoured by most unions.
The Code also acknowledges LIFO as a fair and objective criterion, but provides that it should not operate so as to undermine an agreed affirmative-action programme.
Exceptions may also include the retention of employees based on criteria which are fundamental to the successful operation of the business.
Conduct
This criterion will be fair and objective if it is based on objectively determined conduct, like attendance records and previous warnings, and if the employee was at all times made aware that the employer found such conduct unacceptable.
Efficiency, ability, skills, capacity, experience, attitude to work and productivity
These criteria are generally favored by employers. They are regarded as objective, provided they do not depend solely upon the opinion of the person making the selection, but can be objectively tested.
Furthermore, they may only be used if the employee knew that the employer considered them important.
Attendance
This criterion will only be allowed if it can be proved that the employee always knew that the employer regarded absences from work seriously.
Bumping
If retrenchment is to affect only one department in an enterprise, the practice is sometimes to retrench on the LIDO basis and to drain off remaining employees in that department into other departments.
Retirement
Employees who have reached the minimum retirement age may be identified as the first population for retrenchment. After these employees have been retrenched, LIFO is used. This criterion is often applied in jobs which require a level of fitness and strength.
Volunteers
Parties may agree that the employer will first ask for volunteers before embarking on any selection process.
Severance Pay
Section 41 of the Commission for Conciliation, Mediation and Arbitration creates a statutory duty for the employer to pay severance to workers who are dismissed for operational reasons.
Severance pay is an amount for each completed year of continuous service.
Section 84 of the Commission for Conciliation, Mediation and Arbitration suggests that, for the purposes of determining the length of the employee’s employment, previous employment with the employer must be taken into account if the break between the periods is less than one year.
The duty to pay severance is not absolute. If an employee unreasonably refuses an alternative position, he loses the right to severance pay.
The question of whether or not the refusal is reasonable is one of fact. Item 11 of the Code states that reasonableness is determined by a consideration of the reasonableness of the offer of alternative employment and the reasonableness of the employee’s refusal. Objective facts such as remuneration, status and job security are relevant.
If the offered position amounts to a demotion, the refusal will not be unreasonable.

Large-scale dismissal by big employer

Section 189A introduces additional requirements for a procedurally fair dismissal in the case of a large-scale dismissal.
Firstly section 189A affords either party the right to ask the Commission for Conciliation, Mediation and Arbitration to appoint a facilitator to assist the parties during the consultations; secondly, section 189A introduces a moratorium of sixty days, during which the employer may not dismiss.
Facilitation option
Only the Commission for Conciliation, Mediation and Arbitration may be approached to appoint a facilitator.
The employer must make this request when it gives notice in terms of section 189 to the employee party that it is contemplating a large-scale dismissal.
The employee party representing the majority of the employees may also ask for a facilitator. The employee party must notify the Commission for Conciliation, Mediation and Arbitration within fifteen days of the employer's notice of contemplated dismissal.
If neither party asks for a facilitator within the above timeframes, they may agree to ask for one to be appointed during the consultation process.
If a facilitator is appointed, the facilitation must be conducted in terms of the regulations made by the Minister of Labour for the conduct of such facilitation.
These regulations relate to the time period and variation of such time periods for facilitation, the powers and duties of facilitators, the circumstances in which the Commission for Conciliation, Mediation and Arbitration may charge a fee for appointing the facilitator, and the amount of the fee.
An employer may not dismiss before sixty days have elapsed from the date on which notice in terms of s189A is given.
Non-facilitation option
If none of the parties request a facilitator, section 189A stipulates that a minimum period of thirty days, from when notice in terms of section 189A was given, must have lapsed before a dispute may be referred to the CCMA or other council.

Resolution of disputes

Disputes regarding the procedural and substantive fairness of dismissals by a small employer, and small-scale dismissal by a big employer, are referred to the Labour Court.
In large-scale dismissals, disputes about procedural fairness must be referred to the Labour Court within thirty days after notice of dismissal has been given to employees.
In large-scale dismissals, where there are disputes about substantive fairness, there are two choices:
  1. strike action, in which case 48 hours' notice must be given; and
  2. the Labour Court, to which the employee party may elect to refer the dispute.
In the case of dismissal for operational reasons of a single employee, the employee may refer a dispute about substantive or procedural fairness either to arbitration or to the Labour Court.

Dismissal of strikers

In terms of section 67, employees engaged in a protected strike may be dismissed if
A unique problem in labour law is the fate of employees when a business is sold or closes. This problem has a close practical connection to dismissals for operational reasons, as many businesses are sold because they are unhealthy and require restructuring.

Common law

In terms of the common law, the position of the employees was that no employee could be forced to continue his contract of employment with the new employer; conversely, the new employer had no obligation to continue to employ the employee.
Transfer of a business could therefore mean the termination of existing employment contracts.

LRA

Original s 197
When the LRA came into operation, section 197 endeavored to address job security in cases of the transfer of a business in the normal run of things and as a result of insolvency. The section was much criticised for its creation of uncertainty and for failing to define certain concepts. The section did not expressly state that employees have the right to have their contracts of employment transferred; the courts had to read that into the section. It also did not address the exact rights of the employees in such a situation.
New s 197
The rewritten section 197 attempts to address the situation in a more calculated and extensive way. The most important difference is that ordinary transfers are dealt with separately from insolvency transfers.
Section 197 applies only in cases of a transfer of a business.
Section 197 defines a "business" as the "whole or a part of a business, trade, undertaking or service."
"Transfer" is defined as a "transfer of a business as a going concern."
The right of employees to have their contracts transferred is dependent, therefore, on the business's transfer meeting the exact wording of section 197.
"Transfer"
The meaning of this word is wider than a mere "sale." In Schutte & Others v Powerplus Performance, the court held as follows:
A business or part of a business, may be transferred in circumstances other than a sale. These may arise in the case of merger, takeover or as part of a broader process of restructuring within a company or group of companies. Transfer can take place by virtue of an exchange of assets or a donation iven the range of circumstances under which a transfer can take place, the need for an agreed price or valuation may not arise. Consideration may take some other form. The outsourcing in this matter was part of a broader process of restructuring and must be seen against the backdrop of the acquisition of 50% stake in the .
"As a Going Concern"
Once it is established that there was a transfer, the important question is whether that transfer was of the "whole or a part of any business, trade, undertaking or service as a going concern."
A distinction is often made between three ways of transferring a business:
  1. a sale of shares;
  2. a sale of assets; and
  3. a sale of the business itself.
In respect of a sale of shares, it has been held that a distinction should be made between a transfer of a business as a going concern and a transfer of possession and control of a business: the result of a sale of shares. A sale of shares is excluded from the ambit of section 197.
In respect of a sale of assets, the court in Kgethe v LMK Manufacturing held that an agreement to sell a portion of the assets of a business is not a transfer as a going concern. Although this judgment was overturned on appeal, it was on the basis that the court was not entitled to make a finding as to the true of the agreement. Therefore the previous decision is still tenuous authority for the proposition that a sale of assets does not constitute a transfer as a going concern.
In Schutte v Powerplus Performance, however, the court held that, irrespective of the form the agreement takes, the court will look to the substance of the agreement to determine whether or not it is transferred "as a going concern."
The following factors may be taken into account in finding that there has been a transfer of a business as contemplated in section 197. This list is not exhaustive:
In National Education Health & Allied Workers Union v University of Cape Town, the court held as follows:
In deciding whether a business has been transferred as a going concern, regard must be had to the substance and not the form of the transaction. A number of factors will be relevant to , such as the transfer or otherwise of assets both tangible and intangible, whether or not workers are taken over by the new employer, whether customers are transferred and whether or not the same business is being carried on by the new employer. What must be stressed is that this list is not exhaustive and that none of them is decisive individually. They must all be considered in the overall assessment and therefore should not be considered in isolation.