Managing the termination of employment

Termination of an employment relationship involves more than simply determining what an employee’s last day at work will be. Employers must ensure that the termination complies with the relevant labour laws applicable to their industry, particularly the requirements relating to statutory notice, outstanding remuneration, leave entitlements and certificates of service. At the same time, employers should consider any obligations incurred when entering into the employment contract. Depending on the circumstances that led to the termination, additional aspects relating to substantive and procedural fairness may also need to be considered.

Key minimum requirements provided for in the Basic Conditions of Employment Act 75 of 1997 (BCEA) when dealing with the termination of employment include:

Notice periods

A notice period is the period between the date on which an employee or employer gives notice that the employment relationship will come to an end and the employee’s actual final day of employment. Section 37 of the BCEA prescribes minimum notice periods for terminating an employment contract. An employee who has been employed for six months or less is generally entitled to at least one week’s notice. Where employment has continued for more than six months but not more than one year, the minimum notice period is two weeks. After one year of employment, the minimum notice period is four weeks. Interestingly, different notice periods apply to employees in certain industries, including farm and domestic workers.

Notice must generally be given in writing, except where it is given by an illiterate employee. Employers should also remember that a contractual notice period may be longer than the statutory minimum, provided that it does not impose a longer period on the employee than on the employer er.

Instead of requiring an employee to work through the notice period, an employer may, subject to the BCEA, make payment in lieu of notice. This involves paying the remuneration the employee would have received had they worked during the relevant notice period.

Final payments and outstanding leave

When employment ends, employers must settle all amounts due to the employee. Section 40 of the BCEA specifically provides for the payment of certain outstanding paid time off and annual leave. This includes remuneration for annual leave that was due but not taken, as well as any applicable annual leave entitlement accrued during an incomplete leave cycle, subject to the statutory requirements.

Annual leave should therefore be reviewed as part of the termination process rather than being left to a later administrative exercise. The BCEA generally provides for a minimum of 21 consecutive days’ annual leave per annual leave cycle and payment in lieu of annual leave is permitted only upon termination of employment. Employers should also note that annual leave may not ordinarily be taken during a notice period.

Employers should further identify any other contractual or statutory remuneration that may be due, such as outstanding salary, severance pay in the case of retrenchment, or any other applicable payments. A final payslip should clearly reflect all amounts paid and any lawful deductions made.

Certificates of service

Section 42 of the BCEA provides for the issuing of a certificate of service upon termination of employment. The certificate must contain certain prescribed information, including the employee’s full name, the employer’s name and address, details of any Bargaining Council or Sectoral Determination applicable to the employer’s business, the commencement and termination dates of employment, the employee’s job title or a brief description of the work performed and the employee’s remuneration at the time of termination. The reason for termination may only be included if requested by the employee.

Many employers are unaware that the BCEA includes several prescribed forms that can serve as useful templates. For a certificate of service, employers may refer to Form BCEA-5. While the form itself is not mandatory, it contains all the required information in a practical, easy to use and print format.

BCEA compliance is not the same as a fair dismissal

Finally, compliance with the BCEA’s termination provisions does not necessarily render a dismissal lawful or fair. Section 37 expressly preserves an employee’s right to challenge the lawfulness or fairness of a dismissal under the Labour Relations Act 66 of 1995 (LRA).

For example, paying notice pay and outstanding leave does not, in itself, resolve whether the employer had a fair reason for dismissing the employee or followed a fair procedure. Dismissals based on misconduct, incapacity, or operational requirements each involve distinct legal requirements with which employers must comply, principally under the LRA.

For employers, the key lesson is that termination should be treated as both a payroll and a labour law process. It is always advisable to obtain appropriate advice when dealing with these matters, as a properly managed employee exit should address not only the issues discussed above but also a range of other considerations to ensure that any dismissal complies with the applicable requirements of the LRA.

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