Nikita Pillay – Dismissing employees due to incapacity


Incapacity in labour law is the nonblameworthy breach of performance standards. This means that the employee is unable to cope with the work due to ill-health, a lack of performance in terms of intentional or negligent underperformance, or incapacity due to operational reasons.

Incapacity – Medical Boarding Due to Ill-Health
Medical boarding is the inability of an employee to work according to the requirements of his/her job as a result of ill-health or injury. This is also known as ‘no fault dismissals’ as the employee is not to blame for such a dismissal.

When employees are no longer able to carry out their employment obligations due to the above, and alternative work arrangements are not feasible, they may be eligible for medical boarding.

An employer intending to dismiss an employee due to incapacity must do so in accordance with Item 10 and 11 of Schedule 8 to the Labour Relations Act, No 66 of 1995 (LRA), failing which, the fairness of such dismissal falls to be challenged.

Employer duties prior to dismissal Employers must:
• Investigate the extent and cause of injury/incapacity/illness (nature and cause)
• Establish the length of the employee’s absence from work – it is inappropriate to dismiss an employee that is only temporarily incapacitated (likelihood of recovery/seriousness of injury/illness)
• Provide the employee with the necessary assistance to perform his/her duties
• If possible, accommodate the employee in a suitable position – an employee’s status and remuneration may alter (alternative employment).
• Must be fair reason and procedure followed for dismissal

If after investigation and assessment, as set out above, the employee is still unable to carry out his/her work obligations and an alternative position is not feasible, the employer may give reasonable notice to the employee and have him/her medically boarded.

An employer may only follow the dismissal route as a last resort once all reasonable alternatives have been considered and proven to be unsuccessful.

An employer must ensure that there is a fair reason for the dismissal and that a fair procedure has been followed in implementing the dismissal, otherwise the dismissal may result in being substantially unfair.

1) Incapacity Hearing – Ill Health
The above means that before the employer takes the decision to dismiss an employee due to incapacity, such employer must undertake an incapacity enquiry aimed at assessing whether the employee is capable of performing their duties, be it in the position they occupied before the enquiry or in any suitable alternative position.

A conclusion as to the employee’s capability or otherwise can only be reached once a proper assessment of the employee’s condition has been made.

In considering whether or not to dismiss an employee due to ill-health, the employer must take note that a thorough assessment of the employee’s impairment must be conducted, and all alternatives must be exhausted.

2) Incapacity – Due to Poor Performance
There is no doubt that managing an employee’s performance can be one of the most challenging parts of any manager’s role. Often by the time that the organisation’s formal performance management process commences, difficult and unproductive behaviours are already entrenched and the relationship between manager and employee has deteriorated. Productivity is low and patience is in short supply.

What are the reasons for Poor Performance?
There are many reasons why an employee may perform poorly. Some of the common reasons
• Employee doesn’t know what is expected because goals and/or standards or workplace policies and consequences are not clear (or have not been set)
• Interpersonal differences
• There is a mismatch between an employee’s capabilities and the job they are required to undertake, or the employee does not have the knowledge or skills to do the job expected of them.

Employee does not know whether they are doing a good job because there is no counselling or feedback on their performance.

Was it the employee’s fault that the performance standard was not met?
Dismissal will probably be adjudged to be unfair if the reason for the poor performance was that:
• Employer had failed to provide the employee with materials
• Required training had not been given
• Employer’s product was not in demand or
• Other reason beyond the employee’s control.

3) Incapacity Hearing – Poor Performance
If an employee’s performance does not improve to an acceptable standard, termination of their employment may be an option. Employers cannot dismiss their employees in circumstances that are ‘harsh, unjust or unreasonable’.

However, it is important to be fair to employees particularly when it comes to termination of employment. They should be given reasons for dismissal and an opportunity to respond to those reasons.

Employers should not dismiss poor performers without having attended to the above requirements and without having followed proper procedure. Where the employer is unsure as to whether it is within its rights to dismiss a poor performer, advice from a reputable labour law expert should be obtained.

4) Incapacity – Operational Reasons
Section 213 of the LRA defines operational requirements as follows: ‘“Operational Requirements” means requirements based on the economic, technological, structural or similar needs of an employer.’ The rationale behind operational requirements typically involves measures adopted by the employer to cut costs, improve profit, to restructure its business, or alter the way employees work to meet an operational imperative.

Dismissals for operational requirements have been categorised as ‘no fault’ dismissals. In other words, it is not the employee who is responsible for the termination of employment. Because retrenchment is a ‘no fault’ dismissal and because of its human cost, the Act places particular obligations on an employer, most of which are directed toward ensuring that all possible alternatives to dismissal are explored and that the employees to be dismissed are treated fairly.

The obligations placed on an employer are both procedural and substantive.

The purpose of consultation is to permit the parties, in the form of a joint problem-solving exercise, to strive for consensus if that is possible. The matters on which consultation is necessary are listed in s189(2). This section requires the parties to attempt to reach consensus on, amongst other things, appropriate measures to avoid dismissals. For this to be effective, the consultation process must commence as soon as a reduction of the workforce, through retrenchments or redundancies, is contemplated by the employer so that alternatives can be explored.

The more urgent the need by the business to respond to the factors giving rise to any contemplated termination of employment, the more shortened the consultation process might be. Urgency may not, however, be induced by the failure to commence the consultation process as soon as a reduction of the workforce was likely. On the other hand, the parties who are entitled to be consulted must meet, as soon and as frequently as may be practicable during the consultation process.

Selection criteria that are generally accepted to be fair include length of service, skills and qualifications. Generally, the test for fair and objective criteria will be satisfied using the “last in first out” (LIFO) principle. There may be instances where the LIFO principle or other criteria needs to be adapted.

If an employee either accepted or unreasonably refused to accept an offer of alternative employment, the employees statutory right to severance pay is forfeited. Reasonableness is determined by a consideration of the reasonableness of the offer of alternative employment and the reasonableness of the employee’s refusal. In the first case, objective factors such as remuneration, status and job security are relevant. In the second case, the employee’s personal circumstances play a greater role.

UIF – Department of Labour
Employees can apply for benefits at their nearest Department of Labour if they are an employed contributor to the Unemployment Insurance Fund (UIF) and have been terminated based on Incapacity for any of these reasons.
T: +37 (0)31 767 0625