Without loopholes, dismissals are thorny

Ivan Israelstam

The main purpose of our labour legislation is to protect employees rather than to deal with unemployment or to support employers. For example, the Labour Relations Act (LRA) and the Basic Conditions of Employment Act (BCEA) both list seven factors that render a worker an employee covered by labour law rather than an independent contractor (someone who works for himself or herself).

However, the statutes do not assist employers in understanding what these criteria actually mean. For example, one factor that renders a worker an employee as opposed to an independent contractor is that "the person forms part of the organisation". However, this concept isn't defined and it's left to employers to decide what it means. This could cause an employer to terminate the contract of a consultant without following labour law procedure.

Then, at the CCMA, the consultant might be deemed to be an employee; and the employer will be penalised for having failed to follow the LRA's procedures. It is often due to the vagaries of the law that employers lose dismissal cases on the grounds of failing to follow procedure at the CCMA or in labour court. The inability to make sense of the law of fair disciplinary procedure can be costly.

According to sections 193 and 194 of the LRA the awards and orders that can be made against the employer for unfair dismissal are:

• The LRA requires the CCMA or labour court to reinstate the employee. This means the employer must give the employee his or her job back and to pay the employee remuneration and benefits calculated from the date of the dismissal.
• The CCMA or labour court can order re-employment instead of reinstatement. This means that, while the employer must give the employee his or her job back, this will not be with back pay.
• Even if the employer does not have to take the employee back at all it may still have to pay compensation up to a maximum of 12 months' remuneration.
• If the dismissal is deemed to be automatically unfair the maximum compensation that may be awarded is 24 months' remuneration.
• This is payable in addition to all other payments due to the employee.

More and more lawyers and consultants are advising employers to offer reinstatement to dismissed employees where the employee disputes the dismissal procedure. Legal experts are advising employers to reinstate employees before the matter gets as far as court or arbitration to avoid these heavy penalties being imposed. For some time this tactic has been effective. The employer, after realising it has made a mistake in the dismissal procedure, takes the employee back, or declares the dismissal null and void.

Then the employer fires the employee again, but this time uses the correct procedure. However, it is not always a safe option to hope to correct the error using the reinstatement tactic. This is because it is difficult to prove that the consultations held during the second retrenchment exercise were conducted in good faith. In many cases the employer cannot take the employee back because there is no place for them.

Or the employer does not want the employee back because the employee is an under-performer, breaks rules or is disliked by management. Therefore, in an attempt to circumvent the laws protecting employees, employers hire workers on fixed-term contracts. Then, if the employee is seen as unsuitable, the employer allows the contract to lapse at its expiry date and says goodbye to the employee.

However, this is a dangerous tactic because labour law has closed this loophole. In the case of King Sabata Dalindyebo Municipality v CCMA and Others the employer made a habit of regularly renewing fixed term contracts. But then it allowed the last contracts to lapse even though there was still available work for the terminated employees. The labour court found that the employees had a reasonable expectation of having their contracts renewed again and forced the employer to renew the contracts.

Ivan Israelstam is chief executive of Labour Law Management Consulting. Contact him on 011-888-7944 or via e-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it '; document.write( '' ); document.write( addy_text7253 ); document.write( '<\/a>' ); //--> This e-mail address is being protected from spambots. You need JavaScript enabled to view it