Misconduct vs. Incapacity

Jan du Toit

Schedule 8 of the Labour Relations Act makes provision for employers to dismiss employees under certain circumstances. According to this schedule employers may address and dismiss employees for conduct, capacity or operational requirements. In other words dismiss for either misconduct, incapacity or a retrenchment as a result of the operational requirements of the employer.

Schedule 8 further states that a dismissal must be for a fair reason after following a fair procedure, a concept that many employers fail to completely understand. Although all three the mentioned reasons for ending the employment relationship will have the same end result, different procedures must be followed prior to dismissing the employee. A dismissed employee may challenge his / her dismissal arguing that it was either substantively unfair, procedurally unfair or both.

What this means is that even though there may have been very good reasons to dismiss the employee (substantive fairness), the employer failed to follow a fair procedure prior to dismissing the employee (procedural unfairness), something for which compensation may be awarded to the dismissed employee.

So how does one ensure that a fair procedure is followed? In order to answer this question one must first be able to differentiate between misconduct, incapacity and the operational requirements of the employer. Operational requirement dismissals are also known as retrenchments and section of 189 of the Labour Relations Act serves as guideline for ensuring that employees are engaged in a joint consensus seeking process prior to taking a final decision to dismiss. We will not go into detail on how to fairly retrench employees in this article; instead we are going to focus on two most common concerns for employers namely misconduct and incapacity.

Misconduct can be best described as the employee’s failure to adhere to the rules and policies of the employer during working hours and sometimes even after hours. Such behaviour is normally deliberate and not as a result of circumstances beyond the control of the employee. Some common forms of misconduct are:

Theft, fraud, assault, dishonesty, negligence, insubordination, absence without permission from work, arriving late for work, refusing to work, swearing at colleagues, etc.

In order to discipline and possibly dismiss an employee for misconduct the employer will have to be able to prove that the employee contravened a rule or standard regulating conduct in, or of relevance to, the workplace; and

• that the rule was a valid or reasonable rule or standard;
• the employee was aware, or could reasonably be expected to have been aware, of the rule or standard;
• the rule or standard has been consistently applied by the employer.

Schedule 8 further recommends that employees are not dismissed for the first act of misconduct unless serious enough to warrant a dismissal. It would therefore not be fair to dismiss an employee for arriving late for work the first time that this happens; it could however be fair to dismiss the employee for the first offence of theft.

So how do we deal with misconduct in circumstances where a dismissal is not appropriate? The answer lies in the disciplinary code of the employer, a list of offences and appropriate measures that may be taken by the employer. A disciplinary code should be progressive in nature and not punitive, meaning that measures for less serious transgressions are aimed at correcting the behaviour of the employee and not to punish. Such measures could include informal counselling, verbal warnings, written warnings, final written warnings and accumulative final written warnings for “serial” offenders.

It must be remembered that disciplinary action taken against an employee must be fair, even if it only entails the issuance of a written warning. It is recommended that accused employees are given the opportunity to be assisted by a fellow employee or a trade union representative (a.k.a. the shop steward) and most importantly; the employee must be given an opportunity to defend him / herself against the allegations. Although you may not accept the reasons given by the employee for not being guilty, you must first consider them and then proceed to issue the warning if you are not convinced that progressive discipline would be unfair under the circumstances.

Incapacity on the other hand relates to the performance of the employee. In other words the employee has failed to reach the agreed quantity or quality (or both) over an agreed period. A good example would be a Sales Representative that fails to achieve the agreed monthly sales targets. The performance of the employee is lacking and that is normally as a result of circumstances beyond the control of the employee. Dismissals for incapacity (poor performance) are also described as no fault dismissals; dismissals for misconduct on the other hand are normally as a result of the deliberate actions of the employee.

• The employee that performs up to standard but takes extended smoke breaks and that is absent from work without permission is dealt with in terms of the disciplinary code of the employer.
• The employee that is never absent and that does not take extended smoke breaks but fails to perform, is dealt with in terms of the employers incapacity procedures.

In White and Medpro Pharmaceutica (Pty) Ltd (2000) 9 CCMA 7.16.2 the applicant was dismissed for poor performance. She was employed as a Sales Representative to sell pharmaceutical products marketed by the Respondent.

During the period May 1998 up to January 1999 she constantly failed to achieve the agreed performance standards. During the mentioned period the employee was supposed to sell pharmaceutical products to the value of R 427 999 but she only managed to sell R 190 799 which was a mere 44% of her target. It is clear that the employee failed to achieve the agreed targets and she was accordingly invited to attend an incapacity enquiry. From this point on the employer made almost all the mistakes that employers can make when it comes to addressing the performance of an employee.

• Although the notification was to attend an incapacity enquiry, the word “disciplinary” surfaced a couple of times in the notification.
• The wording of the notification bordered on allegations of misconduct and hinted that the employee was culpable in her poor performance.
• The employee was suspended pending the hearing, a clear indication that the employer dealt with the poor performance of the employee as a form of misconduct.
• The notice to attend the enquiry was given to her on a Friday afternoon at close of business and the hearing took place the next Monday. The employee therefore did not have access to other employees over the weekend in order to ask for their assistance.
• The hearing was held in a restaurant where her chair was significantly lower than that of the initiator and she was seated in a walkway. In addition to this there were patrons and waiters listening in on the hearing.
• The employer could not prove that the targets agreed upon were reasonable and attainable. Although the employer indicated that other sales representatives managed to achieve the targets, it failed to prove this to Commissioner Grogan.
• The employee was never asked why she failed to achieve the targets and as such could not be considered before deciding to dismiss the employee.
• The employer never during the inquiry explored the possibility of alternatives short of a dismissal.
• The cherry on top of all the above mentioned was that the employer summarily dismissed her without notice. Incapacity dismissals are no-fault dismissals and notice periods must be honoured.

The dismissal of the employee was both substantively and procedurally unfair and the employee was awarded R108 000 compensation.

This case is a good example of what could happen if the procedures in dealing with misconduct, incapacity or even operational requirement are not in line with Schedule 8 of the Labour Relations Act. Besides the valuable lesson learnt that one should not hold hearings in restaurants, employers are advised to carefully consider all the factors present in order to be able to distinguish between misconduct and poor performance. Different procedures are applicable for poor performance compared to misconduct.

In my next article I will explain step by step how employers should deal with poor performance.

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