LABOUR LAW in a Nutshell April – May 2023
RETRENCHING FOR POOR PERFORMANCE: Can an employer use poor performance as the reason for retrenching employees?
No – the CCMA or Labour Court would most likely rule it was an unfair dismissal for incapacity (poor performance) disguised as a retrenchment.
An employer may be tempted to use the retrenchment procedure to dismiss a poor performer because it’s “easier” than using the performance counselling procedure before deciding to dismiss. Counselling takes more time and effort. And the employer may think it would be pointless anyway because they’ve lost all confidence in the employee’s ability to cut the mustard.
The employer may claim that the loss of business and profits was caused by the employee’s poor performance and that this justifies retrenchment for operational reasons. But this approach this is risky.
The Labour Appeal Court (1) has found that the retrenchment of employees for slacking in their duties was in fact a dismissal for poor work performance disguised as a retrenchment for operational reasons.
It made a similar finding in a case involving SAA (2). They retrenched some employees when inefficiencies were identified in one of its departments. The LAC found the retrenchments to be unfair. And it criticised SAA for using the retrenchment procedure to solve problems relating to poor performance.
It’s conceivable that “collective poor performance” by a number of employees in a particular part of the business could cause operational problems and consequent loss of business. The Labour Court made a finding to this effect in a case dating back to 2008 (3). But this case appears to be an outlier and not a finding by the LAC which carries greater authority.
TIP: An employer should resist using retrenchment as the solution to solve poor performance problems. It would be less risky for an employer to treat poor performance as incapacity and follow the performance correction process. It may take more time and effort – but better than the prospect of a finding of unfair retrenchment 2 or 3 years down the line coupled with retrospective reinstatement.
1) SA Mutual vs IBSA & others (2001, 9 BLLR 1045)
2) South African Airways vs Bogopa & others (2007, 11 BLLR 1065)
3) FAWU and others vs Ruto mills (Pty) Ltd (CLL Vol. 17 No. 6, January 2008).
Edited by Sarah Christie
PATRICK DEALE
labour lawyer & mediator
DEALE ATTORNEYS
ONLINE LEGAL SERVICES:
I’m available to discuss your legal issues online by Zoom or other video conferencing.
You’re welcome to call or email me to set up a time which suits you.
CELL: 083 375 8771
EMAIL: [email protected]
WEB: www.deale.co.za
