Dismissal: Operational Requirements | Mlr Attorneys

Dismissal based on Operational Requirements

The third instalment in our series of articles relating to fair dismissals in the workplace, was meant to be the second part of “Dismissal for Incapacity or Poor Work Performance”. However, as a result of the COVID-19 pandemic, which will inevitably have a lasting and far-reaching impact, not only on our country’s health system and population, but also on business and employment,we deem it appropriate to deal with the last ground for fair dismissal at this stage:

Operational Requirements

Section 213 of the Labour Relations Act, 66 of 1995 (“the Act”) defines "operational requirements" as “requirements based on the economic, technological, structural or similar needs of an employer”.

As a general rule, economic reasons are those that relate to the financial management of the employer (this can be an individual or a company). It is important to bear in mind that it is not the cause (currently the COVID-19 pandemic) that will determine whether dismissal for operational requirements will find applicability, but rather its effects and/or impact. In the case of the COVID-19 pandemic, at this stage, the impact is more immediate on the hospitality and tourism industry but will inevitably affect almost every industry in South Africa.

The financial impact of closing down businesses for three weeks (the initial current lockdown period), will be the determining factor in establishing whether the economic needs of the employer have changed to such a degree they justify dismissal (in the form of retrenchment or redundancy).

Dismissal for operational requirements is a no-fault dismissal. In other words, it is not the employee who terminates the employment, nor is the employment terminated due to any action by the employee. Since retrenchment is a "no fault" dismissal, the Act places particular obligations on an employer, to ensure that all possible alternatives, other than dismissal, are explored and that the employees are dismissed fairly.

Section 189 of the Act contains the roadmap for the employer that will ensure he/she adheres to the requirements pertaining to fair dismissal based on operational requirements.

Criteria for selecting employees for dismissal based on operational requirements must never infringe any fundamental right afforded by the Act as it will render such dismissal automatically unfair. Selection criteria that are generally considered fair include length of service, skills and qualifications. Generally, the test for fair and objective criteria will be satisfied using the "last in first out" (LIFO) principle.

Employees dismissed for operational requirements are entitled to one week’s remuneration for every year employed by the employer. This is referred to as “severance pay”. If an employee unreasonably refuses an alternative position of employment, that was offered to the employee by the employer, he/she forfeits his/her severance pay.

Once an employee has been fairly dismissed, he/she is entitled to UIF.

Please remember that, at time of publishing this article, the full impact of the COVID-19 pandemic is not yet known. Employers are urged to keep retrenchments as an absolute last resort and to contact an attorney before any action is taken, to ensure that, on top of a difficult financial time ahead, businesses are not further punished by a wave of unfair dismissal claims and CCMA awards against employers who acted too quickly when it came to dismissing an employee for operational requirements.

Should you find yourself in a situation where you are affected in any such a way, as described hereinabove, kindly contact Marius le Roux on 0763399189 or marius@mlrattorneys.co.za or Dawie Maartens on 0796969059 or dawie@mlrattorneys.co.za and we will gladly assist you.

This article does not constitute legal advice, as all cases are different. It is therefore important to seek the advice of an attorney, with specific reference to your matter. Please contact MLR Attorneys for comprehensive advice.