How to Dismiss an Employee Fairly in South Africa

Employment dismissals are one of the most legally sensitive actions a South African employer can take. The Labour Relations Act requires that every dismissal be both substantively and procedurally fair. A failure on either ground can result in reinstatement or compensation. Under section 194 of the Act, compensation for an ordinary unfair dismissal is capped at 12 months’ remuneration. Where the dismissal is automatically unfair — for example dismissal for pregnancy, trade union activity, protected disclosure, or on a discriminatory ground — the cap rises to 24 months’ remuneration.

Substantive fairness: the reason for dismissal

Substantive fairness asks whether there is a valid reason for the dismissal. The three recognised categories are:

1. Misconduct

The employer must show that the employee committed misconduct serious enough to justify dismissal. Not all misconduct warrants dismissal — the sanction must be proportionate to the offence. A first-time minor transgression will rarely justify dismissal; repeated or serious misconduct (dishonesty, insubordination, violence) generally will.

2. Incapacity

Incapacity covers poor performance and ill health. For poor performance, the employer must show the employee was aware of the performance standard, failed to meet it despite being given a reasonable opportunity to improve, and that dismissal is an appropriate sanction.

3. Operational requirements (retrenchment)

Retrenchment requires a genuine operational requirement — economic, technological, or structural. The selection criteria must be fair and objective. The enhanced section 189A process applies only where both conditions are met: the employer employs more than 50 employees, and the number of employees it contemplates dismissing meets a sliding scale — 10 (employer of up to 200 staff), 20 (201–300), 30 (301–400), 40 (401–500), or 50 (more than 500). Retrenchments in the preceding 12 months count towards that number. An employer with more than 50 staff retrenching a handful of people follows the ordinary section 189 process, not 189A.

Procedural fairness: the process

Even where the reason is valid, a flawed procedure will render the dismissal unfair. For misconduct dismissals, the standard procedure requires:

• A written notice to the employee specifying the allegations
• A reasonable opportunity to prepare a response
• A disciplinary hearing before an impartial chairperson
• The right to be represented by a fellow employee or union representative
• A written outcome communicated to the employee

CCMA referrals

An employee who believes their dismissal was unfair has 30 days from the date of dismissal to refer the dispute to the CCMA. Employers who do not respond properly risk a default award.

HvS Attorneys advises employers on disciplinary procedures, represents employers and employees at the CCMA, and drafts employment contracts and disciplinary codes. Speak to us before you take action.

Legal Authority

• Labour Relations Act 66 of 1995 — s 185 (right not to be unfairly dismissed); s 188 (substantive and procedural fairness); s 189 (dismissal for operational requirements); s 189A (large-scale retrenchment thresholds); s 194 (limits on compensation — 12 months ordinary, 24 months automatically unfair)
• Schedule 8 to the Labour Relations Act — Code of Good Practice: Dismissal

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