Dealing with employee misconduct and negotiated exits

27 Nov 2017

In South Africa, dismissing an employee can be fraught with potential pitfalls. In the eyes of employers at least, a more attractive option could be to negotiate a mutual separation. That too, can come with challenges that employers should be aware of.

Dismissing employees is highly regulated in South Africa and must be both procedurally and substantively fair, in line with the Labour Relations Act of 1995 (LRA). An employer may only fairly terminate an employment relationship for one of the following reasons and after a proper process has been followed: misconduct on the part of the employee, incapacity due to poor work performance, ill-health or injury, or the operational requirements of the employer. This applies to all employees, whether junior or senior, including executives.

The procedural requirements differ depending on the reason for the termination, however. When termination is because of alleged misconduct, employers are obliged to follow the following highly defined processes to the letter.

What the law says about dealing with misconduct

In misconduct cases, where the employee’s job is in jeopardy, the law requires the employer to provide the employees with an “opportunity to be heard” before making a decision to terminate the employment relationship. This means informing the employee of the allegations of misconduct being levelled and giving the person an opportunity to respond. The employee should be allowed a reasonable time to prepare his or her response and have access to the assistance of a trade union representative or fellow employee.

Ideally, the employer should have its own disciplinary code to guide this process, but there are various ways of approaching it. One is to have an informal meeting with the employee and another is to hold a more formal disciplinary hearing. This is the most common route taken by employers.

Another route, often followed with executives, is to conduct this process by way of correspondence. The employer would usually write to the employee, setting out the allegations of misconduct and providing any supporting documents it wishes to rely on. These documents would usually be included in the employer’s ‘bundle’ in a disciplinary hearing. The employer would also invite the employee to plead his/ her case on this prior to making a decision.

Opting for a less disruptive avenue

Employers often do not want to go through the inconvenience of a disciplinary process with their employees, especially executives, because it is disruptive to their businesses. Instead, many employers prefer negotiating a deal with the employee. One of the advantages of this approach is that it can be more reassuring when communicating with customers and staff. Of course, the employee would obviously have to be amenable to a negotiated exit.

Another major advantage of a mutual separation is this: provided the agreement contains a full and final settlement clause in which the employee waives any and all claims that he or she has or may be entitled to against the employer, the employer is protected from the employee taking any action in respect of the termination of employment. For the employee, it allows for a graceful exit in a situation that would otherwise most likely result in his or her name being tarnished.

Caution is still called for

With all the advantages that mutual separation agreements bring, this option is becoming more and more convenient for employers. Even so, employers should be cautious when negotiating such agreements. If the employee is not amenable to this and the employer later terminates the employment relationship, the employee may refer an alleged unfair dismissal claim against the employer. The employee’s argument would be that the employer had already made up its mind to terminate the person’s services before following proper procedure.

If the employer wants to conclude a separation agreement with an employee, a two-pronged approach is recommended. On the one hand, the employer would commence proceedings as required by our LRA for misconduct (either by issuing a notice to attend a disciplinary hearing, or writing a letter setting out the allegations). On the other hand, the employer would separately commence separation discussions with the employee. Usually, someone who is removed from the disciplinary process, such as an HR manager or another senior employee, would have this discussion with the employee.

Using this parallel approach, there is a lawful ground of termination to fall back on in the event that a deal cannot be struck. It also improves the bargaining position of the employer in the negotiations.

See also: Mutual separation agreements: Caveat subscriptor

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)