CORRECT CATEGORIZATION OF A DISMISSAL ‘THREE STRIKES YOU’RE OUT!’

“Dismissal is divided into three categories: dismissals for misconduct, for incapacity and based on operational requirements. This division, which conforms with the ILO Termination of Employment Convention 158 of 1982 and Recommendation 166 0f 1982, is a happy one. It covers the field, encompassing all culpable and non-culpable conduct on the employee’s part and every legitimate ground on which the employer might wish to rely…The categorisation is of more than just conceptual interest. It creates the frame work for the balance of each Chapter, for each category is made the subject of separate and specific regulation. On the categorisation, moreover, hang important issues of jurisdictional competence: dismissal for misconduct and incapacity, for instance, end up in arbitration cases [or the Labour Court of South Africa] as well as dismissals for operational requirements. Characterising the dispute properly is important, therefore…but it is by no means easy, for the categories overlap.”

 

[Martin Brassey SC “Commentary on the Labour Relations Act” 1999, Juta, at A8-67]

 

INTRODUCTION

Acknowledgement for the drafting of this article should go to a trusted friend and respected colleague, Mr Gary Watkins, CEO of the Company Workinfo.com, an organisation which business focus is widespread, from training, publishing, consulting…and almost all topics and activities imaginable within the scope of Labour Law, Employment Relations etcetera. [See www.workinfo.org ].

 

After a lengthy period of no contact, I ‘bumped into’ Gary at a well known South African statutory dispute resolution body. The normal greetings and pleasantries followed where after he admonished “you have not written any articles for a long time.”

 

Momentarily taken aback and suffice it to concede that I ‘mumbled some lame excuse’ for the [6 months] inactivity in a manner that a man of his intellect could not regard as justifiable or of any credibility. The flyer ‘writer’s block’ only surfaced later…too late.

 

Therefore and after due reflection the decision to ‘put pen to paper.’

 

Also to be specifically acknowledged for the realisation of this attempt is an article published in the authoritative publication by the renowned author, Dr John Grogan ‘Employment Law Journal - What's in a name? Dismissal for incapacity or operational requirements LexisNexis, 2018, vol. 24 (part 2).  

 

The article with the above subject matter follows hereunder.

 

OPENING OBSERVATIONS

 

The excerpt or rather a direct quotation from the authoritative publication by Brassey SC referred to above is of importance especially as regards the importance of the correct categorisation of a matter by the employer prior to it embarking on the decision to terminate service of an employee.

 

Everyone has a right to fair labour practices. This principle is enshrined in section 23 of the Constitution of the Republic of South Africa, 1996 and entrenched in the Labour Relations Act 66 of 1995 (hereinafter referred to as “the LRA”).

 

Section 185 of the LRA provides that every employee has the right not to be unfairly dismissed and section 188(1) provides that a dismissal that is not automatically unfair, is unfair if the employer fails to prove

 

(a)           i) that the reason for dismissal is a fair reason

 

  1. ii) related to the employee’s conduct or capacity; or

 

           iii) based on the employer’s operational requirements; and

 

(b) that the dismissal was effected in accordance with a fair procedure.”

 

[The employer consequently carries the onus to prove that a dismissal is fair from a substantive as well as a procedural point of view].

 

A ‘fair procedure’ is a prerequisite prior to a decision to dismiss or terminate service albeit for conduct [misconduct], capacity [incapacity due to ‘poor work performance’ or ‘ill health or injury’] or operational requirements [commonly referred to as ‘retrenchment’].

 

The procedure or process to be followed prior to dismissal depends on the correct categorisation of the reason for the said dismissal.

 

As regards substantive fairness ‘misconduct’ the employer has to prove that the employee contravened a rule or standard regulating conduct in, or of relevance to the workplace, its validity, the employee’s awareness of the rule or standard, consistency in application of rule or standard and whether dismissal was an appropriate sanction for contravention of the rule or standard.

 

As regards substantive fairness ‘incapacity – poor work performance’ a different process is prescribed, namely awareness of required performance standard, a fair opportunity to meet the required performance standard and that dismissal for not meeting the required was the appropriate sanction.

 

As regards procedural and substantive fairness ‘operational requirements’ s189 of the LRA is prescriptive in that it requires a complex process, to wit an obligation on the employer and the employee to engage in a consultation process termed as ‘a meaningful joint consensus-seeking process’ and ‘attempt to reach consensus’ on various listed issues to avoid termination or ameliorate the effects of termination on the grounds of operational requirements ‘retrenchments.’

 

THE CORRECT CATEGORIZATION OF THE CONTEMPLATED TERMINATION

According to Brassey the above mentioned categories overlap and the correct process chosen to be followed is by no means easy due to overlapping.

 

For example, if an employee causes his employers loss, his conduct is culpable and is thus a species of misconduct. If his negligence is the result of incompetence, however, the dismissal might better be categorised as one for incapacity.

 

Ultimately, too, it is for operational reasons since negligent staff undermines the efficiency and productive functioning of the enterprise.

 

According to Grogan and by reference to a recent judgment First National Bank, a Division of First Rand Bank Ltd v Commission for Conciliation, Mediation and Arbitration and others [2017] 11 BLLR (LC), pursuant to review proceedings of the award, the Commissioner, by focusing exclusively on the “categorisation” of the dismissal missed the essential point, namely whether the dismissal was for a fair reason and in accordance with a fair procedure, as required by s188 (1) of the LRA.

 

In FNB the court noted that the Commissioner had relied primarily for his finding that the employee’s dismissal was for incapacity on two textbooks, in each of which it was suggested that "incapacity" should be distinguished from a lack of qualifications to perform a job, the functions of a job the employee was capable of performing and, more generally, that circumstances other than those connected with an employee's physical or mental health should be treated as "other forms of dismissal" i.e. other than as incapacity.

 

As the FNB court pointed out, these views had been overtaken by the judgments of the Labour Appeal Court and the Supreme Court of Appeal in the dispute between Samancor Chrome Ltd and NUM over how to classify the protracted incarceration of an employee in police custody (Samancor Tubatse Ferrochrome v MEIBC & others [2010] 8 BLLR 824 (LAC) and NUM & another v Samancor Ltd (Tubatse Ferrochrome) & others [2011] 11 BLLR 1041 (SCA)).

 

The LAC found in Samancor that the employee should have been treated as one of incapacity because that state extends beyond cases of ill health or injury, and includes any condition that prevents an employee him from performing his work.

 

However, the court held that the employee's incapacity was such as to justify dismissal, but ruled the dismissal procedurally unfair because the post-dismissal hearing was no more than an ex-post facto rubber stamp of the earlier dismissal.

 

The LAC's judgment in Samancor was overturned by the SCA on the ground that the LAC had not applied the reasonableness test, but the higher court observed in passing that the view that incapacity is a term broad enough to include imprisonment "seems correct".

 

A further question that impinges on categorisation of a matter has been addressed by a prolific writer and a person that needs no introduction, Mr Andrew Levy, CEO Andrew Levy & Associates and widely considered to be a doyenne of South African labour Relations.

 

In a handout submitted to delegates who attended a training programme [coined a Technisem] presented by Andrew Levy & Associates “Handling Employee Dismissal for Misconduct or Poor Work Performance”.

 

A question posed was “Must I handle poor work performance through my disciplinary code?” [At the time of presentation of the training I served as a Senior Consultant at the firm and was one of the presenters]. 

 

Levy amplifies the quotation by Brassey cited supra, however, elaborates on the question as well as proffering an answer thereto. It has been deemed appropriate to quote verbatim the said answer by Levy below;

 

“As far as we see it, poor performance does not relate to culpability and not behaviour which is misconduct.”

 

However, the question is a vexed one and regularly calls for consideration as to the correct categorisation of the matter.

 

The writer can recall perusing an article on the same subject matter by Mr Justice Edwin Cameron, Judge of the South African Constitutional Court, published in ‘Employment Law Journal’ referred to supra where the Honourable Judge posed the question “Is it a ‘will not or cannot situation?’”  

 

Suffice it to place on record that I have been diligently searched, for years in order to obtain a copy of the article by Judge Cameron, without success.

 

As far as memory allows Judge Cameron dissected the hypothetical questions, to wit ‘cannot?’ or ‘will not?’ and made observations as to the positive law relevant at the time.

 

It was concluded that in order to make the correct selection as to categorisation, a preliminary investigation should be done.

 

The purpose of the investigation would inter alia be to establish the substance and nature of the matter in order to make a sound and justifiable election as to the two questions:

 

  1. i) Will not; or

 

  1. ii) Cannot?

 

Following an investigation and in the event of the existence of prima facie ground for a conclusion of ‘Will not’,  then it follows that due to possible culpability or blameworthiness a disciplinary route should be followed with the purpose to correct the unacceptable behaviour.

 

However, if it is concluded by the Employer that the matter shows to a ‘Cannot’ scenario, the appropriate process to be followed would be ‘performance counselling.’

 

Following years of presiding over labour arbitrations I have noticed that some employers include poor work performance in the disciplinary code as an offence.

 

This employer’s should as a matter of priority visit the Code of Good Practice: Dismissal, as scheduled to the LRA. The Code specifically distinguishes between: Guidelines in cases of dismissal for misconduct’ [see item 7] and ‘Guidelines in cases of dismissal for poor work performance.’ [See item 9.]

 

Upon perusal of the cited items supra, it is clear that different considerations [process and substance] apply for ‘Guidelines in cases of dismissal for misconduct’ and ‘Guidelines in cases of dismissal for poor work performance.’

 

IMPOSSIBILITY OF PERFORMANCE?

 

According to Grogan common to all cases is that the employees could not perform their work, even if they wanted to. This is what is known in the common law as "impossibility of performance", which is in turn divided into "subjective" and "objective" impossibility.

 

Subjective impossibility occurs where only the contracting party cannot perform, but others could.

 

Objective impossibility applies where nobody could perform, either because performance is physically impossible or because it is legally impossible.

 

Samancor is an example of subjective impossibility because the employee could be replaced. Armscor is an example of objective impossibility because a clearance certificate is a prerequisite for rendering service to that company.

 

In FNB, the court referred to another problematic case that of incompatibility. The court accepted, as further gist for the argument that incapacity is not limited to inability to perform through illness or injury that cases of incompatibility should also be dealt with as forms of incapacity.

 

Grogan poses the question if incompatibility should be dealt with as incapacity? Surely much depends on the facts of each case.

 

An employee may be thoroughly to blame for bizarre behaviour to which management or colleagues take offence. Or an employee may be deemed "unsuitable" because of personality traits or physical attributes he or she can't do anything about.

 

OPERATIONAL REQUIREMENTS?

 

Samancor can be squeezed into the category of misconduct. Armscor could possibly be characterised as incapacity, however elastic that term be. If incompatibility becomes as extreme as to render work impossible, and the employee concerned cannot do anything about it, a perfect example of the subjective impossibility of performance exists.

 

In FNB court disagreed that the notion of "operational requirements" could be extended to encompass incapacity. The Judge pointed out, correctly, that if that were allowed, all dismissals, including those for misconduct, poor work performance and incapacity, could be seen as "operational" because no employer can afford to retain employees who can't be trusted or who are unable to work.

 

On that view, a line must be drawn somewhere between the reasons for dismissal accepted by the LRA. The LRA draws a distinction between the three "permissible" reasons for dismissal in section 188(1)(a).

 

As was recorded above the LRA provides that a dismissal that is unfair, if the employer fails to prove that "the reason for the dismissal is a fair reason related to the employee's conduct or capacity or is based on the employer's operational requirements" and that the dismissal "was effected in accordance with a fair procedure".

 

Only the term "operational requirements" is defined broadly as "requirements based on the economic, technical, structural or similar needs of an employer" (section 213).

 

The Code of Good Practice: Dismissal, which is incorporated into the Act (see section 188(2)), differentiates between dismissals for three reasons, misconduct, and poor performance, and "incapacity: ill health or injury". But the code doesn't define these terms either.

 

THE ANSWER TO CATEGORISATION?

 

According to Grogan and by reference to FNB court referred in this regard to SABC v CCMA & others [2006] 6 BLLR 587 (LC), in which an arbitrator incorrectly held that an employee was dismissed for incapacity rather than misconduct. The court observed in that case:

 

"The notional line between the various circumstances that could give rise to a fair dismissal (misconduct, performance, incapacity and operational requirements) is not always easy to draw. The same conduct may give rise to more than one appropriate categorisation.  Employers may often, not unreasonably, err in their attempts to categorise the circumstances giving rise to a potential dismissal.

 

The failure to correctly categorise should not, however, detract from the appropriate inquiry in each case, namely, to assess, first whether there was a substantively fair reason for the dismissal and second, whether an appropriate and fair procedure was followed by the employer."

 

In the above-quoted dictum by Grogan, the Court correctly identified the true relevance of the categorisation of the reasons for dismissal in the LRA. This relates to the second leg of the inquiry in most unfair dismissal cases whether the employer followed a fair procedure.

 

Save for some elements in the requirements of dismissals for operational requirements set in section 189 of the LRA and the Code of Good Practice: Dismissal that may have a bearing on "substantive" fairness, the legislation leaves that call largely to the discretion of arbitrators and judges. They must decide, in the end, whether the dismissal was "appropriate".

 

Johann Scheepers.

 

July 14, 2018.

 

[Updated: July 16, 2018]

 

The views and opinions expressed by the writer hereof are not necessarily that of the Commission for Conciliation, Mediation, and Arbitration or any other professional body or entity that the writer may be associated with. It constitutes that of the writer in his personal capacity

Copyright:

 

Copyright reserved by the writer hereof. No part of this article/ guide may be reproduced, without prior written permission of the author.

 

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

 

The commentary expressed herein is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

        

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