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RETRENCHING FOR THE WRONG REASONS
Poor work performance is often difficult to pin down. It requires time and effort for an employer to identify where exactly the problem lies. And how does one tell an employee that he or she is not doing the job properly. Retrenching the employee might seem like an easy way out, but can this be done legally and fairly?
Our law acknowledges that the employer has a right to dismiss an employee, provided it is done for a fair reason and in accordance with fair procedure. The reasons for dismissal are limited to reasons relating to the employee’s conduct, capacity or the employer’s operational requirements (retrenchment). Employers are, generally speaking, familiar with disciplinary procedures and find it easier to terminate services for misconduct rather than for incapacity. Yet when the issue involves performance or ill health (i.e. incapacity) one finds that many employers, big and small, are at a loss about how to manage the problem. Several urban myths have also developed about dismissal for these reasons, e.g. that one cannot terminate for reasons of ill health, that it is virtually impossible to dismiss for poor performance, or that it takes an extraordinary amount of time before one may do so. These concerns often cause employers to try to short-circuit the counselling process required for incapacity dismissals by camouflaging the reason for dismissal as one relating to its operational requirements.
The following is a typical scenario. The employer realises there is a need to restructure his or her business or a part thereof. An opportunity then presents itself to get rid of some non-achievers. If the employees concerned have the shortest service or the least skills of all affected staff, the purpose could be achieved. However, what does the employer do if the employees do not qualify for retrenchment on these grounds? It is at such times that the results of poor management of non-achievers become glaringly obvious..
The point of departure is that an employer cannot use poor performance as the sole or even the primary criterion for retrenchment as this will be regarded as an abuse of the retrenchment process. It might also result in the dismissal being found to be substantively unfair and could result in reinstatement.
Performance can, however, be used as an additional, but secondary criterion for selecting employees for retrenchment, as part of a “basket” of objective criteria (including, e.g. length of service, skills or compliance with an employment equity plan). In such a case, however, the employer must provide proof of the employee’s under-performance and should already have commenced with a counselling process to address the under-performance. In addition to that, the employer should have been consistent in applying performance standards.
Equally risky is the strategy often used to ask employees to apply for “new” positions and then to turn down the applications of those perceived to be non--achievers. The most superficial grounds are sometimes presented for doing this, e.g. because the employee does not “do his or her best”, or does not fit into the corporate environment. An employee cannot lawfully be expected to re-apply for a position that is substantially the same as the position he or she currently occupies. In terms of our common law this constitutes a repudiation of the contract of employment and may lead to a constructive dismissal situation if the employee declines to re-apply and then resigns.
Whether or not the position is substantially similar is always a factual question. (It is a good idea to agree on a benchmark with employees or their trade union, e.g. that a position will be considered new if, for example, more than 30% of its content changes.) If the new position is substantially different the employer is in principle at liberty to invite applications and to select new incumbents. Past performance could be used together with other objective criteria (e.g. skills or proven potential) but, again, in such instances there should be proof of the under-performance, a record of counselling and consistent application of performance criteria. If these are absent, employers should steer clear of using under-performance as the key criterion. If the new position is not substantially different, the employer will either have to enter into an agreement with the relevant employee to terminate the contract (at a price, of course) or will have to appoint him or her and thereafter properly manage the employee’s performance.
The lesson to be learnt from this is simply that employers should manage employees who do not perform from the moment the under-performance becomes apparent and use an incapacity hearing to terminate the services of those who do not respond sufficiently to counselling. This need not be a long, drawn-out process, provided employees know what is expected, are given the necessary training (unless they have it already) and their supervisors thereafter quickly and consistently counsel them if they do not achieve what is expected. Counselling should be a problem-solving process and include an action plan and clear warnings that a failure to perform is likely to result in dismissal. It goes without saying that record keeping is essential.
Provided these things are done and done consistently, employers do not have to contrive all sorts of schemes to get rid of non- achievers.
Written for Labourwise by Prof. Barney Jordaan of Jordaan Stander (Pty) Ltd
Labourwise is an on-line labour relations service aimed at SMMEs to assist entrepreneurs to implement effective labour relations in small businesses. We can be contacted via www.labourwise.co.za or info@labourwise.co.za