Employment Contract Termination

The end of an employment contract can result in various emotions. Let us navigate the reasons why employee contracts can be terminated.

1. Resignation
A resignation is the only termination that is initiated by the employee. The Basic Conditions of Employment Act requires that the employee places their resignation in writing provided that the employee is not illiterate. As an employment contract is a legal and binding document, always ensure that resignation is given to the employer in writing. Once you have a written resignation, respond immediately acknowledging the resignation in writing confirming acceptance of the resignation. This ensures that there are no uncertainties regarding whether the employee can retract the resignation or make claims of unfair dismissal.

2. Retirement
 It is imperative that all employment contracts contain a retirement clause indicating a retirement age. This must be aligned with your pension fund retirement dates. Once the employee’s retirement age is reached, ensure they retire. If you wish to retain their services, you may place them on a fixed-term contract. Bear in mind that fixed-term contracts cannot be extended indefinitely and that you would need to make succession plans for this position.

3. Fixed-term contracts
 Fixed-term contracts can be used for a specific reason for the operational requirements of a company. Fixed-term contracts may be used to temporarily replace a sick employee, for a fixed project, a training or articles of clerkship contract or to use the services of a retired employee.

4. Dismissal for Misconduct
This dismissal is due to an employee’s behaviour, either intentional or negligent. This occurs when an employee has broken a rule or has committed a serious offence where the trust between employer and employee has broken down and cannot be repaired. Where an employee has committed a dismissible offence, the employer is obliged to hold a disciplinary enquiry and afford the employee the opportunity to be heard.

5. Dismissal for Incapacity
Dismissal for incapacity occurs when an employee is incapable of fulfilling the requirements of his job and employment contract either due to poor work performance or ill health. These are no-fault dismissals on the part of the employee.

In the case of poor work performance where the employee shows an inability to reach the required standard of work, the employee must be aware of the standards required of him or her and be given a reasonable period to achieve such standards. The employer must mentor, train and coach the employee to reach the required standard of performance.  If the situation persists, the employer may hold an incapacity hearing where the employer should first look for alternative positions or solutions for the employee. If none can be found the employer can dismiss the employee. Employers often delay addressing cases of poor work performance, hoping the problem will resolve itself. This can lead to severe frustration, at which point they may consider retrenchment as a solution. However, a word of caution: deal with poor work performance promptly and follow the correct procedures to ensure a fair dismissal.

In terms of incapacity due to ill health where the employee is too ill to fulfil their contractual obligations, the employer must assess the employee’s health through valid medical evidence to determine the extent of the employee’s illness and whether there are reasonable accommodations that can be made in the workplace for the employee. The onus to seek alternatives by the employer is far greater if an employee has been incapacitated by an injury on duty.  Where no suitable alternatives are found the employer may hold an incapacity enquiry and dismiss the employee.

6. Retrenchment
 Dismissal for operational requirements, otherwise known as retrenchments, is another form of a no-fault dismissal on the part of an employee. The reasons to consider retrenchments are economic, structural or technological reasons. The process to follow is strictly set out by Section 189 of the Labour Relations Act. The employer must invite employees to participate in consultations regarding the retrenchment. The process of consultation is a joint consensus-seeking process to look for alternatives to retrenchments, delay retrenchments, mitigate the negative effects of retrenchments and discuss additional details of the retrenchments e.g. selection criteria, severance pay and the proposed date of retrenchment.

For further information, please contact the Master Builders KwaZulu-Natal Recruitment Agency on 031 831 3201 or recruitment@masterbuilders.co.za

Anisha Nadoo

HR Manager

Reference

Digita (2021) 6 Ways to legally to terminate employment contracts. https://www.infinityhrconsulting.co.za/2020/09/18/6-ways-to-legally-to-terminate-employment-contracts/.