In First National Bank, A Division of First Rand Bank Ltd V CCMA and Others, the employee was employed as a FAIS representative and was required to satisfy the requirement to be “fit and proper” in terms of the FAIS Act. To this end, the employee had to complete the regulatory examination level 1 (RE1) within the stipulated timeframe. The employee failed to successfully complete the RE1 and was subsequently dismissed on grounds of incapacity.

The Labour Court held that the employee’s dismissal for continued failure to comply with the requirements for continued employment may amount to incapacity.

Subsequent to the Discovery Health Limited v CCMA & Others case, there had been confusion as to how employers should deal with an employee whose continued employment is prohibited by the FAIS Act or any other statutory provision.

Employers, employees and CCMA commissioners are frequently misguided to believe that where there is insufficient evidence to substantiate charges of misconduct, an employee must be retrenched as it is a “no fault dismissal”.

In the First National Bank case, the Commissioner found that an employee’s failure to attain a standard imposed by law in respect of his continued employment ought to have been dealt with as a dismissal for operational reasons and not as one for incapacity.

The Labour Court set aside the Commissioner’s award and referred, with approval, to the Armaments Corporation of South Africa v CCMA & Others, which held that dismissal conceives of incapacity as ill health or injury but it can take other forms, such as imprisonment and military call-ups, which incapacitate the employee from performing his obligations under the contract.

Even if it is a “no fault dismissal” the difference between operational requirements and incapacity should be drawn - where the employer determines or acknowledges the needs to restructure its business and where the employer cannot employ an employee because of a statutory provision prohibiting such employment.

In order to ensure that dismissal is fair, the employer must conduct an incapacity hearing and do all that is necessary to prevent the dismissal.