All questions

Discontinuing employment

i Dismissal

Employees in South Africa may not be dismissed without cause as dismissals are required to be for a fair reason and effected pursuant to a fair procedure.

There are no requirements to notify government authorities of dismissals. In some instances, an employer must consult a trade union about pending dismissals, for example where the employee is a trade union representative or where union members are to be made redundant.

The grounds upon which an employer can fairly dismiss an employee are misconduct, incapacity (which can be in the form of medical incapacity or poor performance) and the operational requirements of the employer (i.e., redundancy, which is dealt with below in more detail). Dismissal may be summary where this is warranted (e.g., in cases of serious misconduct) but otherwise the employee must be given notice (the BCEA stipulates minimum notice periods of one week for employees with less than six months' service, two weeks for employees with service between six months and one year, and four weeks for employees with service over one year). Employers may pay their employees in lieu of notice.

An employee whose employment is fairly terminated for misconduct or poor performance is not entitled to any separation or severance pay. For the severance pay requirements in cases of redundancy, see subsection ii, below. It is possible for employers to conclude separation or settlement agreements with departing employees.

The employer is obliged to notify the Department of Home Affairs upon discontinuation of the employment of a work visa holder.

ii Redundancies

An employee may be dismissed for a reason relating to the employer's 'operational requirements', namely, requirements based on the employer's economic, technological, structural or similar needs. A dismissal based on operational requirements must be both procedurally and substantively fair, as is the case with any other dismissal in South Africa.

The process that must be followed when considering dismissals for operational reasons is set forth in Section 189 and 189A of the LRA. The basic Section 189 provisions apply to all retrenchments and Section 189A imposes additional procedural requirements, where large businesses conduct large-scale retrenchments. An employer is a large employer if it employs 50 or more employees.

Section 189 requires consultation with the employees who may be affected or their representatives (e.g., trade union, workplace forum) on the proposed retrenchments. There is no requirement to notify a works council or the government.

The employer must commence the consultation process as soon as it contemplates retrenchments. The employer must consult on ways to avoid retrenchment, to minimise the number of retrenchments, to change the timing of retrenchments, to mitigate the hardships caused to employees who are retrenched, to select the employees to be retrenched, and on severance pay. Consultation must commence with the employer issuing a written notice inviting the other party to consult and disclosing relevant information to enable the other consulting party to engage in the consultation process. Facilitation is an additional process available to the parties to a large-scale retrenchment on request. Facilitation occurs alongside the normal consultation process and is essentially consultation with the assistance of a commissioner appointed by the CCMA. The facilitator's job is to help the parties with their discussions and their attempts to reach agreement on as many issues as possible in relation to the proposed retrenchment.

If the employer falls under a bargaining council, it is advisable to check whether or not the bargaining council agreement has any special provisions relating to retrenchment with which it must comply.

No social plan is required but as part of its duty to avoid retrenchment wherever possible the employer must explore alternatives to retrenchment. Where the employer has alternative work that an affected employee can do (even if some training is required), the employer should accommodate the affected employee. The employer must also consult about the method of selecting employees to be retrenched and in the absence of agreed criteria must adopt fair and objective criteria. There is no category of employee protected by law from retrenchment where genuine operational requirements exist.

There are statutory rights to severance pay for retrenched employees. An employer must pay an employee dismissed for operational requirements severance pay equal to at least one week's remuneration for each completed year of continued service with that employer. Where the employer and employee have agreed, in advance or otherwise, to a higher amount of severance pay, the rights under the agreement are unaffected by the lower statutory minimum. Employees who unreasonably refuse offers of alternative employment with the retrenching employer, or any other employer, are not entitled to severance pay.

The employer must consult about the possibility of rehiring retrenched employees if business picks up or if it is later considering hiring people for the sort of work that the retrenched employee performed. Usually the parties agree on how long the rehiring arrangement will apply and make it subject to the employees remaining contactable.

Employers may conclude settlement agreements with retrenched employees that entail a release of claims from the former employee.