Unfair Dismissal

Issues Surrounding Unfair Dismissal in South Africa

The labour laws of the country seek to ensure fairness on the sides of both employees and employers. The interests of both parties and the circumstances of the dismissal are assessed to ensure fairness. The amount for compensation for unfair dismissal is thus based on the need to strike a balance between the commercial effects on the employer and the right to dignity of the employee. The court accordingly doesn’t award compensation to the extent that it makes it impossible for the employer to sustain business.

Although the employer’s operational costs and restructuring requirements are valid reasons for dismissing an employee by means of retrenchment, the manner in which such dismissal is done and the following of procedures regarding notice period, payment of relevant remuneration and benefits, play an integral role in whether a dismissal can be seen as unfair.

At the same time it is imperative to understand that although an employment contract is commercial in nature, it also affects the employee’s sense of dignity regarding the employee’s contribution to society. The employment contract differs from other commercial contracts in the sense that the relationship between employer and employee is ongoing. The relationship is thus not purely commercial and the employer is expected to treat the employee in such a manner that their dignity is not affected. Dismissing an employee for allowable reasons and not following correct procedures in doing so and in compensating the employee, affect the employee’s dignity.

If an employee is, for instance, dismissed because of their sexual orientation, their self-worth is affected and the dismissal unfair. Every employee according to the Labour Relations Act has the right not to be unfairly dismissed. If such occurs, a fundamental employee right is affected and the court can order the employer to re-instate the employee. However, should the circumstances surrounding the dismissal or the conditions of employment not make it a reasonable option for the employee, the court can then award compensation.

Such compensation awarded to the employee who has been unfairly dismissed is a fair amount, but according to law cannot exceed the equivalent of 12 months’ wages as calculated at the rate of earnings on the date that the employee was dismissed. The above compensation calculation applies if the dismissal was unfair based on the employer not following correct procedures in dismissing the employee or the dismissal wasn’t fair. If, however, the dismissal falls within the automatic unfair dismissal category, the compensation cannot be more than 24 months of earnings as calculated according to the earnings of the employee on the date that the employee was dismissed.

Though damages have been awarded more than the compensation as described above, the applicant must have sufficient evidence of financial losses because of the unfair dismissal and must be able to show that the losses occurred as a direct result of the unfair dismissal. The award for damages should be aimed only to place the applicant in the same financial position that the person was before the unfair dismissal took place. This is, however, a rather complicated matter and it is best that you seek legal guidance from our attorneys regarding the matter before interpreting court decisions on the issue.

Factors considered in awarding compensation include the length of service, the actions of the employer, and the way that the dismissal was conducted. Punitive penalties are awarded only in exceptional circumstances with consideration of all the factors relating to the dismissal. Such penalties can be awarded in automatically unfair dismissal cases.

We recommend that as employer or employee that you take the necessary steps to become informed about the regulations of the Labour Relations Act regarding dismissals. For professional legal guidance, you are invited to contact our team of lawyers.

Get assistance by contacting Allardyce & Partners at reception@www.allardyce.co.za or call 011 234 2125.


NB this article is for information purposes only and does not constitute legal advice. You are advised to consult with us before using/relying on this information.

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