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Unfair Dismissal Law: A Summary

Dealing with dismissals in the workplace can be tricky even for the most experienced HR professional. This is a useful summary of our law on unfair dismissals, write Eva Mudely and Karen Fulton.

by Eva Mudely and Karen Fulton

A must read for every HR professional

Karen Fulton is a partner and Eva Mudely a senior associate of Bowman Gilfillan. Their client base consists mostly of multinational clients, and they do a lot of work in the banking, pharmaceutical and retail industries. Both Karen and Eva have a special interest in racial and gender discrimination issues, sexual harassment cases, the employment consequences of commercial transactions and retrenchment law.

The law relating to unfair dismissal is set out in the Labour Relations Act 1995 (“the LRA”) which affords employees significant protection from dismissals. In our law, a dismissal must be both substantively and procedurally fair. This means that the employer must have a fair reason to dismiss the employee and must follow a fair procedure in giving effect to the dismissal.

Broadly speaking, four reasons are recognised as fair reasons for dismissal, namely:

• misconduct on the part of the employee;
• incapacity due to poor work performance;
• incapacity due to ill-health or injury; and
• the operational requirements of the employer.

The procedural fairness requirements differ depending on the reason for the dismissal.  Under South African law an employee’s contract of employment cannot be terminated simply by the giving of notice, and our law does not recognise “dismissal-at-will”.

Reinstatement is the primary remedy for unfair dismissal. Compensation may, however, be awarded in appropriate circumstances. In most cases, the amount of compensation that may be awarded is limited to a maximum of 12 months’ remuneration. However, in the case of an automatically unfair dismissal (such as for example where the reason for a dismissal is unfair discrimination), compensation up to a maximum of 24 months’ remuneration may be awarded.

In the event of a dismissal being found to be substantively unfair, reinstatement will be the primary remedy. However, in the case of a dismissal that is procedurally unfair only, a reinstatement order will be avoided and an employee will be entitled to compensation up to a maximum of 12 months’ remuneration.

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