It is generally understood that the Labour Relations Act 66 of 1995 [LRA], not the South African common law, determines what a fair procedure is – see Code of Good Practice (conduct and capacity) and sections 189 and 189A (operational requirements).

What does not seem to be generally understood is that only wrongful, unlawful or illegal terminations are governed by the common law and the Basic Conditions of Employment Act 75 of 1997 [BCEA].   A party to an employment contract may terminate it summarily and without any notice if the other party breaches the contract in a material respect.   Otherwise either party may lawfully terminate the relationship on reasonable notice without any reason or prior procedure.

Only the LRA protects employees against the unfair termination of their employment.   But the LRA also provides that that it will not be unfair for employers to terminate employment if the reason is valid and related to conduct or capacity or is based on operational requirements.

The LRA does not require ‘fault’ on the part of the employee for the reason to be ‘fair’.   This is so because employees are already protected against the loss of notice pay and severance benefits under the common law and the BCEA.

It is the arbitrators and judges who seem to have added the requirement of ‘fault’, but only when dealing with an employee’s conduct.   It seems that employers must prove that the employee caused a continued employment relationship to become ‘intolerable’ because the employee destroyed the employer’s trust or confidence.

Surely the LRA (and the ILO) would have required the reason to relate to the employee’s misconduct or incapacity if ‘fault’ was a necessary element when assessing the fairness of the reason to terminate ?

What is really needed is a holistic approach by considering the combined intent of the LRA, common law and the BCEA.   Genuine operational requirements should determine the validity and fairness of the reason to terminate.   Fault should determine whether the employee forfeits the right to reasonable notice (or payment instead thereof).   When the reason for termination is related to poor performance, illness or injury ‘fault’ does not play a part.   Neither does it play a part when the reason is based on operational requirements.

It is interesting to see how ‘fault’ has been used over the years to terminate a marriage  relationship.   Recent reports suggest that New York is only now considering introducing a ‘no-fault’ divorce law.

Generally speaking until 1979 in South Africa we also had a ‘fault’ system.   A marriage could only be dissolved if there was proof of fault in the form of desertion or adultery and then the ‘guilty’ party forfeited all the benefits of the marriage.

As from 1979 South Africa adopted a ‘no-fault’ divorce law where only proof of irretrievable break-down of the marriage was needed.   A residual ‘fault’ element remains but only in relation to child custody and property settlements.

In the same year (1979) the Wiehahn Commission reported to the government and the concept of an ‘unfair labour practice’ was introduced in South Africa by an amendment to the statute dealing with employment and industrial relations.

Ironically it is submitted that this resulted in a false interpretation of the law by the industrial court that obliged employers to prove ‘fault’ on the part of employees before allowing employers to terminate employment.   If ‘fault’ was proved the employee effectively forfeited all the benefits in the form of notice pay and severance benefits – an ‘all or nothing’ approach.

The common law still treats employment like any other commercial contract and  allows employers and employees to terminate employment summarily if fault is proved (material breach of contract) but otherwise the contract may only be terminated on reasonable notice without the need to provide any reason or follow any procedure.   See the post SCA: No implied term of ‘fair dealing’ in employment contracts regarding the judgment of Wallis AJA in SA Maritime Safety Authority (SAMSA) v McKenzie (17/09) [2010] ZASCA 2.

In 1982 the ILO Convention on Termination of Employment simply required employers to follow a fair procedure and provide a valid and fair reason related to conduct or capacity or based on operational requirements.

In other words the ILO accepted the ‘no-fault’ system and did not oblige employers to prove ‘fault’ before terminating employment.   But the ILO did insist that in the absence of ‘fault’, in the form of serious misconduct, employees had a right to receive reasonable notice and severance benefits.

So in a sense the ILO Convention was doing just what our new divorce law achieved – only making fault relevant to the consequences of an irretrievable breakdown in a relationship.

What our BCEA and the common law and the ILO Convention sought to achieve, just like the new divorce law, was a balancing of interests between employees and employers.

It is contended that properly interpreted our law should only consider ‘fault’ when deciding the issues of reasonable notice and severance e benefits.

In the post LC: Municipality – Manager’s actions have serious consequences the case dealt with by Tip AJ was discussed but it was special because of the statutory regime in which they operated but it did stress the public interest in the public sector.   The fair procedures and valid and fair reason to terminate are then determined by the statutory requirements.

In the private sector the genuine operational interests of the business are paramount.   The LRA and the Code of Good Practice apply If employers have not adopted or agreed to procedures for handling discipline.

In terms of the LRA and the Code and when the reason relates to conduct or capacity the procedure need not be formal but employees must have an opportunity to respond to the written factual and other allegations (averments) presented by the employer.   Employers should use plain and understandable language when drafting the averments and avoid the use of any words such as ‘charges’ and ‘guilty’ which suggest some criminal conduct.   In the absence of any agreed procedure there is no need to have an impartial chairperson or to produce any witnesses.   Management should conduct the investigation and in the process find out from the employee what happened.

Fair reason has two essential requirements.   Once the employee has had the opportunity to respond and provide any further relevant information the employer must decide whether there is a valid reason (related to conduct or capacity).   If so decided the next question for the employer to decide is whether it is reasonable to have to tolerate an ongoing employment relationship.   In other words it will be intolerable if there is a genuine loss of trust (conduct related) or a genuine loss of confidence (poor performance).

If the relationship can still be tolerated or restored by a warning (even a final warning) it would not be a ‘fair reason’ to terminate.   As decided by the constitutional court in the Sidumo case it is the arbitrator and not the employer who decides what is valid and fair.   That decision can only be reviewed and set aside if a reasonable arbitrator could not have made that award.

If employers have any reasonable doubt about whether the decision to terminate would be regarded as valid and fair employers should apply progressive discipline and not terminate.

There are two sides to every termination: the employer’s interest in managing a proper business and the employee’s interest in job security.   From the employer’s side the law looks at the true operational requirements of the business and that is why even in a ‘no-fault’ situation related to conduct and capacity (such as injury, ill-health and poor performance) employers are allowed to terminate employment.

Fault only becomes relevant when deciding whether employees forfeit notice and severance benefits.   As mentioned the ILO Convention of 1982 obliges employers to provide employees with  reasonable notice (or payment instead thereof) and some form of severance benefit, unless the reason for such termination is related to gross or serious misconduct.

South Africa has not fully adopted the ILO Convention.   In terms of the common law and the BCEA employers are only allowed to terminate summarily (without any notice) if they can prove a material breach of contract, which is really the same as saying gross or serious misconduct.   But unlike the ILO Convention section 41 of the BCEA only obliges employers to pay severance benefits (severance pay) if the reason for termination is based solely on operational requirements.

In other words we have the unacceptable situation where employers are allowed to terminate when there is ‘no-fault’, such as illness, injury or poor performance, but those employees do not have any right to any severance benefit!