Awards and penalties

The Labour Relations Act (LRA) gives the Commission for Conciliation, Mediation and Arbitration (CCMA) the power to take action against employers who commit an unfair labour practice or dismiss an employee unfairly.  Once the applicant has referred a dispute to the CCMA, it will be set down for conciliation and a commissioner will be appointed to adjudicate the dispute. If conciliation fails, the matter will be set down for arbitration. Once the arbitration hearing has been concluded, the commissioner will issue awards within 14 days.

Awards and penalties that an employer can face may include the following:

• Reinstatement:

  The employer must take the employee back with retrospective effect to the date of dismissal. In such circumstances, the employer would have to give the employee back pay from the date of dismissal up until the reinstatement award was made.

• Re-employment:
  The employer is required to take the employee back with effect from the date of the award. In some cases, it may be an earlier date.

• Compensation:
  The CCMA can award up to 12 months’ compensation to a successful employee. One month’s compensation will be equal to that specific employee’s monthly remuneration.  If the compensation amount awarded to the employee has not been paid on or before the prescribed date, the employee can exercise his/her right to enforce the award. This means that the employee will proceed to certify the award in terms of section 143 of the LRA and it may be enforced as if it were an order of the Labour Court in respect of which a writ has been issued. The employee can now instruct a sheriff to attach the moveable goods of the employer.

What can go wrong, ending with awards and penalties?

What does the commissioner consider when calculating compensation?

• What is just and equitable in the circumstances.
• Was the dismissal substantively fair.
• Was the dismissal procedurally fair.
• What are the merits of each case together with its own unique circumstances, the relationship of the parties and their attitude after the dismissal.

Regulate: Employment contract

The employment contract can be of immense value to the employer if used effectively. Making a mind shift regarding employment contracts from an “administrative burden” to “risk mitigating tool” can save employers a lot of time and money in the long run.

One of the biggest mistakes employers make is not to implement written employment contracts, or to settle for a generic employment contract that offers minimal protection when there is a dispute in the workplace.  A written employment contract creates clarity by confirming the terms and conditions of employment agreed upon and protects the employer in terms of the employment relationship going forward.  Take note that labour legislation applies to all employers and employees, irrespective of how the employment relationship is recorded (via an oral or written agreement), or the term thereof.

Instead of a generic employment contract, employers should rather opt for a purpose-built option that addresses an employer’s specific needs.  A purpose-built employment contract should tick the following boxes:

• Comply with all applicable labour legislation relevant to the specific industry.
• Include proactive clauses to protect the business and mitigate risk by addressing possible future disputes between the employer and employee.  These clauses include:
  • Reference to policies, procedures and a disciplinary code that describes rules and procedures the employer and employees must adhere to.  The disciplinary code serves as a guideline for employers of what the appropriate sanction is for certain offences.  The disciplinary code also ensures that all employees are aware of the rules in the workplace as well as the consequences should these rules be broken.
  • Time periods – probation period, retirement age, short time, lunch breaks, etc.
  • Consent – medical testing, alcohol and drug testing
  • Consent – deductions for damages, training, etc.
• Add annexures to the contract to further protect the business going forward.  Typical annexures include:
  • Declaration of duties – what is expected from the employee with regards to duties and the employer’s fixed operational standard.
  • Restraint of trade and confidentiality agreement – this is crucial where specialised business activities take place to protect confidential information, unique methods and procedures, patents, etc. and prevent this sensitive information ending up with the competition.

Regulate: Discipline in the workplace

Discipline in the workplace is aimed at adjusting and improving behaviour through corrective action, consultations and warnings, rather than punishing or dismissing an employee.  Every workplace must have a relevant disciplinary code. The disciplinary code is essential in ensuring that there are clear rules in the workplace, with appropriate sanctions, that employees can follow. When these rules are violated, the employer can apply progressive discipline. In cases of serious misconduct employers can directly proceed with a disciplinary hearing.  It is vital to always follow the correct procedure, as in failing to do so can lead to a CCMA-case with dire consequences and a huge financial impact.

By addressing labour risk proactively, the employer can greatly contribute towards the business’s sustainability and profitability and ensure a working environment with reduced conflict, friction and misunderstanding, which in turn creates a structured environment receptive to growth.

Review monthly:

• Communication and regular consultation
  Effective communication is critical to the success of any business. It contributes to creating an environment with clear rules and expectations, and proactively addresses misunderstandings, unhappiness and friction in the workplace. A positive work environment is one of the factors that cultivates productivity, which directly impacts the business’s profitability and sustainability. It is important that there is a platform through which both the employer and employees can engage in discussions, give input, provide feedback, raise unhappiness, etc. Communication on a regular basis is important to promote harmony in the workplace.

• Attendance register
  Labour legislation requires the employer to maintain an attendance register on a daily basis in respect of each employee. During an inspection by the Department of Employment and Labour, this register is checked by the inspector. Make sure it is kept up to date with respect to all hours worked.

Review annually:

• Employment contracts
  The employment contract is the basis of the relationship between the employer and the employee and confirms in writing the terms and conditions of employment agreed upon. It is extremely important that the employer implements the right type of employment contract (permanent or fixed term) and ensures that its content complies with applicable labour legislation.

• Disciplinary code, policies and procedures
  Every workplace is unique and there is often a need for specific rules to give order and structure to the workplace. Review these rules, including policies and procedures, from time to time to ensure they are still relevant. It is important that the workplace’s disciplinary code is up to date in terms of violations and sanctions. Progressive discipline must also be applied continuously. If any changes are made, it is essential to notify the employee.

Employers need to keep their finger on the pulse. Labour law is a specialist field and expert advice is essential to limit risk. Labour relations is an emotional environment and an impartial third party can add great value, especially with the enforcing of discipline or with processes such as poor work performance, restructuring, retrenchment, trade union negotiations etc. LWO membership offers employers 24/7 expert advice.

The dos of a probation period:

• Clearly communicate the employee’s probationary status;
• Define the duration of the probation explicitly;
• Establish reasonable benchmarks for performance;
• Precisely outline and explain the performance standards demanded of the employee;
• Regularly assess and monitor the employee’s performance against the predetermined standards;
• Provide the employee with feedback regarding performance inadequacies;
• Extend the opportunity to the employee to furnish additional information and offer their perspective on the situation;
• Offer assistance, guidance, counselling, and training whenever necessary;
• Follow the appropriate disciplinary or poor work performance procedures based on the prevailing circumstances.

The don’ts of a probation period:

Even during a period of probation, an employer is never entitled to summarily terminate an employee’s employment, especially if the employee’s performance deviates from the anticipated standard. Such actions could potentially lead to allegations of unfair dismissal against the employer at the Commission for Conciliation, Mediation and Arbitration (CCMA).

Labour regulations furnish explicit guidelines outlining how employers should navigate poor work performance cases. In the event that an employee remains incapable of reaching the mandated standard despite being provided with assistance and training, they are deemed “incapable,” permitting the employer to initiate disciplinary proceedings. It is imperative to recognise that an employer is absolutely prohibited from dismissing an employee without adhering to the required procedure. Every instance of dismissal must unfailingly uphold both procedural and substantive fairness.

What about performance?

• This confirms the tasks/duties that the employer employs the employee to perform.
• It links a fixed standard regarding quantity and quality to the above tasks/duties.
• It forms the basis of regular performance appraisals when looking at increases and/or performance bonuses.
• The job description is a critically important document when addressing poor work performance.

What about UIF and COIDA?

UIA applies to all employers and employees (excluding employees working less than 24 hours a month for an employer).  An employer does not have any discretion whether or not to register for unemployment insurance and to pay over the monthly contributions (1% deducted from the employee’s salary for the employee’s contribution and 1% of the employee’s salary for the employer’s contribution).

COIDA applies to all employers and casual and full-time employees who, as a result of a workplace accident or work-related disease are injured, disabled, killed or become ill.  An employer carrying on business in South Africa, must register with the Compensation Commissioner, and pay the annual assessment fee.

Moonlighting is defined in the workplace as working a second job without informing your main employer, and employees earn extra money outside of working hours. A possible concern is that moonlighting may cause a decrease in productivity in the workplace. Data from the Momentum/ Unisa Household Index shows that an estimated 14% of households obtain an additional income from a second job. But does the employer have any right to object to an employee holding down a second job while being employed?