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Employers are encouraged by the LRA to accommodate employees with medical problems that affect their ability to perform at work. What are the parameters for employers faced with employees who become incapacitated? Can an employer demote an employee (and pay him/her less) as an alternative to dismissal for incapacity?

The LRA’s Code of Good Practice on Dismissal provides guidelines on how an employer should behave when faced with this problem. The Code states that an employer must investigate all possible alternatives short of dismissal, including the possibility of securing alternative employment, or adapting the duties or work circumstances of the employee to accommodate the employee's disability. If an employee has been injured at work, the employer’s duty to accommodate the incapacity is regarded by the courts as more onerous. The Code does not address the issue of pay.

A recent case, Eskom Employees Association on behalf of Jankowski and Rotek Engineering (Pty) Ltd, highlighted the problems that employers might encounter.

The employee in this case had been employed as an armature winder for several years before developing back problems. It became increasingly difficult for him to perform his work. He approached the pension scheme with an application to be medically boarded, but was refused. The employer then offered him a less onerous position as storeman, but with a 60% reduction in salary.

The disgruntled employee claimed he was the object of an unfair labour practice and declared a dispute with his employer (unfair conduct relating to the demotion of an employee – s186(2)(a) of the LRA).The employer’s approach was that its usual procedures for dealing with medical incapacity were followed (this was not disputed), and that thereafter the decision to place the employee was at the sole discretion of the employee’s divisional manager, a discretion that the arbitrator should not interfere with.

The bargaining council arbitrator disagreed. He found that the employee had indeed been treated unfairly. Recognising that the employee would struggle to perform his old job, he ordered that the employee stay in his new position as storeman, but that he should be paid at his old, more favourable, salary.

The winning point for the employee was that his representatives could show that other employees with similar incapacities had not suffered financial prejudice when they had been offered new job descriptions. The manager who made the decision to demote the employee (with financial prejudice) had also not been called to explain his reasoning or justify why this employee’s circumstances were different from the others'. In those circumstances, the arbitrator could only conclude that the exercise of discretion had been inconsistent, arbitrary and unfair.

The arbitrator acknowledged that employers have a prerogative to run their operations as they wish, but he also focussed on their duty to exercise discretionary powers to certain minimum standards. The labour courts and other tribunals, he ruled, had a duty to interfere with an employer's discretion if it were exercised arbitrarily or capriciously and to the employee’s detriment.

The lesson from this case is not that employers should never demote medically incapacitated employees unless they can also pay them at their old rate, but it serves as a warning to employers to apply policies and procedures consistently when faced with this situation. In the right circumstances, offering an employee with certain disabilities a lower grade job at reduced pay could still be the appropriate and fair thing to do.

It may also be useful for an employer in these circumstances to present an employee with an express choice between demotion and dismissal. In the Rotek case, the employer apparently did not present the position to the employee in quite such a harsh light. But it may be just as well to remind the employee that it is the employer’s duty to accommodate his disability as an alternative to dismissal.

There is no unlimited duty on employers to accommodate disabilities. If an employee then expressly agrees to new terms and conditions of employment as an alternative to dismissal, the employer will be in a stronger position to defend the demotion.

Written by Helena Janisch for

Labourwise is an on-line labour relations service aimed at assisting SMMEs with the implementation of effective labour relations. They can be contacted via or

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