Considering alternatives: Poor Performance Dismissals

Over the years of being involved in labour law, I came to understand that there exist three types or classes of employers as far as the dismissal of employees are concerned, with consideration of procedural and substantive fairness.

One employer has no regard for procedural compliance with the Code of Good Practice and often has substantial reasons for dismissing an employee on less convincing or arbitrary grounds. The second class of employer view fairness as an integral part of their organizational culture and ensure procedural and substantive fairness. The third class of employer understands the importance of being procedurally compliant but view fair procedures in the Code of Good Practice merely as a check list and a means to a pre-empted conclusion, leaving the employee with no real chance of influencing the result.

It is imperative that decision-makers keep in mind that dismissals are generally left as a last resort after taking into consideration the totality of the circumstances of both parties. It so often happens that a decision-maker, typically a chairperson of a disciplinary enquiry or a Commissioner at the CCMA or Bargaining Council, do not exercise their powers properly, in over emphasizing the interest of one party without having a balanced approach to competing interests between an employer and employee.

In Schedule 8 (9) of the Code of Good Practise “Guidelines in cases of dismissal for poor work performance” the Code states that any person determining whether a dismissal for poor work performance is unfair should consider, inter alia –

(b) (iii) dismissal was an appropriate sanction for not meeting the required performance standard.

 It often happens that employers and decision-makers are not mindful of considering alternatives to dismissals as often employers adopt a “tick box” approach to dismissal, i.e., poor performance counselling was conducted, training was given, time was given to achieve the required performance standard, disciplinary enquiry was held, tick-tick-tick, therefor the last step in the process is the employee should be dismissed. What about considering alternatives to a dismissal and conducting such an enquiry in good faith?

In Chesteron vs Rudolph (2008), the Labour Court dealt with just such a case whereby the employer followed all the correct “steps” in dismissing an employee for poor work performance, but was regarded as unfair by the CCMA Commissioner who was of the view that the employer should have implemented alternatives to dismissal. It was this arbitration award that was the subject of a review at the Labour Court.

The employee, Mr Rudolph Posthumus, was employed by Chesteron Industries (Pty) Ltd as a Selling Device Specialist. The employee was dismissed as a result of his poor work performance. Mr. Posthumus was subjected to a disciplinary hearing pursuant to both performance counselling and a series of warnings.

As a Sales Specialist, the employee had a break-even monthly target of R45 000. The performance of the employee over a three-year period was as follows: A.) In 2003 the employee’s monthly sales were in an amount of R30 000. He was down on his target by R15 000, B.) In 2004 the monthly average sales were R12 500, down on his target by R32 500, C.) In 2005 the employee’s average saes were R15 000, down by R30 000.

The employer, over the period of three years, re-trained the employee, had a manager accompany him to assist him with his duties, subjected him to performance counselling and a series of written warnings, however, his performance still did not improve. The employer dismissed the employee after subjecting him to a disciplinary enquiry. The employee referred a dispute to the CCMA, challenging the fairness of the dismissal.

In his arbitration award, the Commissioner found that the employee’s poor performance was serious enough to justify a dismissal and that his performance targets was indeed reasonable as all the other salespeople easily reached the same targets without any difficulty. However, the Commissioner also found:

“It does not make sense to say that although an employee’s poor performance is serious enough to justify a dismissal, the employer is not allowed to unilaterally alter the conditions of employment in order to accommodate an employee.”

 And

 “In an economic climate such as ours where a large percentage of the population is unemployed, employer should be encouraged to keep an employee (sic) in their employment by accommodating the employee in changing the remuneration structure of an employee, rather than dismissing him.”

 The Commissioner concluded that the dismissal of the employee was unfair, and that the employer should rather have restructured the salary of the employee to that of 20% fixed commission.

It is of interest to note that in the opinion of the Commissioner, the employer did not apply its mind to alternatives to dismissal and that even though the employer cannot be faulted for following the correct process of a dismissal relating to the performance of the employee, dismissal was not an appropriate sanction as the employer could have restructured the salary of the employee to a commission only basis. This would have motivated the employee to focus on improving his sales, without putting a financial burden on the employer.

The Labour Court argued that the employer has a duty to show that the employee was incompetent and need to show this by adducing evidence that show poor performance on the part of the employee. To this extent the employer must show that its assessment of the performance of the employee was objective and reasonable.

The Court stated:

“The positive result into whether the employee was aware of the performance standard and was given a fair opportunity to meet the required standard would lead to a further enquiry as to whether the dismissal was a fair sanction in the circumstances of a given case. Consideration of alternatives to dismissal would be a factor to take into account in assessing the appropriateness of the dismissal.”

The Court, however, went on to conclude that in casu, the Commissioner’s conclusion was not reasonable and failed to meet the standard set out in Sidumo (reasonable test). The Court found:

“On the commissioner’s own finding the applicant had done everything to accommodate the employee and afforded him over period of three years the opportunity to improve and meet the required standard. The applicant considered the alternative to dismissal being restructuring the salary of the employee to be based on a fixed commission. Having considered this the applicant took the view that the fixed commission arrangement would still not address the problem. The employer arrived at this conclusion having had regard to the warnings counselling and other measures that had been put in place to assist the employee.”

 The employer indeed did consider restructuring the employee’s salary, but was of the view that restructuring his salary would not address the underlying problem as they have done everything they could over a period of three years to assist the employee to reach his targets. The Court concluded that the Commissioner failed in the exercise of his powers to appreciate that he needed to take into account the totality of circumstances of the case before him, including the reason why the employer dismissed the employee. The Commissioner focused on the fairness of the dismissal only to the extent that it affected the employee and thereby arrived at a decision which a reasonable decision-maker could not have reached.

The Court reviewed the award and set it aside, ruling that the dismissal of the employee was fair.

What we learn from this case is that a dismissal is not a result of a mechanical process, but whereby a decision-maker will consider the totality of circumstances before him, considering alternatives to dismissal in good faith and the dismissal of an employee being an appropriate sanction in the circumstances. 

It is advisable for employers to ask for the assistance of a professional Labour Relations Specialist when facing employment law difficulties. Tobie Nel is the Managing Director for Effectus Harmony (Pty) Ltd and has over 15 years’ experience in Labour Law. You can contact him, by phone: 0824479512, by email: tobie@effectusharmony.

visit: www.effectusharmony.co.za