The stages in management of employee performance: a labour law perspective

Advocate M H Marcus discusses the need to apply a performance management process before considering dismissal for misconduct or incapacity

By Advocate M H Marcus B Comm. LLB, Higher Dip. Company Law (Wits), Post grad. Dip. Industrial Relations (Natal).





A        Introduction: identifying the need for the application of a performance management process


B        Probationary Period

C        Dismissal for incapacity after expiry of the probationary period



A         Introduction: identifying the need for the application of a performance management process


a)  3 categories of dismissals are recognized by the Labour Relations Act 1995(“LRA”): dismissals for misconduct, incapacity and operational requirements.


Ø       Failures or shortfalls in employee performance could arise from misconduct orincapacity.


Ø       Important distinctions exist in the manner in which these 2 types are addressed, where misconduct is applicable, by the application of disciplinary action and in case of incapacity, by performance management processes.


Ø       The distinction between misconduct and incapacity lies mainly in the “fault” element (in the form of intention or negligence) which characterizes misconduct. If the failure to perform is attributable to misconduct, disciplinary action would be appropriate. If not or when uncertain, (that is, where incapacity applies), the employer should have resort to performance management procedures.


b)  Management of employee performance: 3 key principles dictate:


Ø       The principle of mutual respect by the parties to an employment relationship


Treating the other party with mutual respect is stated in the introduction to theCode of Good Practice for Dismissals, Schedule 8 to the Labour Relations Act 1995, to be a key principle underlying the Code.


Ø       “Formal procedures do not have to be invoked every time a rule is broken or a standard not met. Informal advice and correction is the best and most effective way for an employer to deal with minor violations of work discipline” [Code; para.3 (3)].


Ø       Dismissal for unsatisfactory performance or incapacity to perform is the step of last resort in the management of employee performance. The objective in performance management is not to dismiss but to correct the defective performance [para.3 (2)].


The guiding principle in the Code is that “an employee should not be dismissed for unsatisfactory performance unless the employer has:

  • given the employee appropriate evaluation, instruction, training, guidance or counselling and,
  • after a reasonable period of time for improvement, the employee continues to perform unsatisfactorily” [para 8 (2)].


B  Probationary Period



The principles cited above would in general apply also to performance management during the probationary period, although with some distinctions of considerable significance to employers in the management of employee performance:


a)                 The first of these is that the employer is given a good deal more latitude by the Code in assessing whether the employee has failed to meet the required performance standard during probation (the substantive element of a dismissal for poor work performance), than thereafter, when the arbitrator must decide whether dismissal was an appropriate sanction. Where the dismissal takes place during or on expiry of probation, the Code now directs the arbitrator of such a dismissal dispute “to accept reasons for dismissal that may be less compelling than would be the case in dismissals effected after completion of the probationary period” [para.8 (1) (j)], an innovation added to the Code with the August 2002 amendments to the LRA.


This amendment is in line with my award in the Grace Hotel arbitration some years back, where I pointed out that the flaws inherent in the recruitment and selection process, which is far from being a perfect or scientific one, would naturally lead to errors in recruitment of staff which are to an extent ameliorated by the Code’s recognition of a probationary period, the legitimate purpose of which is stated to be “to give the employer an opportunity to evaluate the employee’s performance before confirming the appointment ” [para.8 (1) (b)].


It is also easier in the nature of things to make out a credible case for the dismissal of a probationary employee for unsatisfactory performance than it would be in the case of a long standing employee whose performance has been accepted by the employer for some years.


b)                 The second distinction operating in favour of effecting such dismissal prior to expiry of the probationary period is that labour law principles as reflected in paragraph 8 (3) of the Code expect of an employer to investigate alternatives prior to dismissing employees for unsatisfactory work performance, such as the possibility of slotting the incompetent employee, if willing, into a less demanding post, which would not be expected of an employer when dismissing a probationary employee for failing to meet the required performance standards.


If opted for by the employer as I recommend it should be, a probationary period of reasonable duration to achieve its purpose should be written into the contract of employment or appointment letter.


Performance management during probation – Evaluation of employee’s performance


Paragraph 8 (1) (e) of the Code requires that the employee’s performance during probation be assessed and evaluated. I would prefer to let the initial assessment wait a month or so to enable the employee to familiarize himself and find his feet before the first assessment, but there are no hard and fast rules in such matters. What is vital in justifying a dismissal on completion of probation is that where the assessment proves negative, the respects in which the employee is failing to meet the standards be clearly spelled out to him and he be given an opportunity and assistance, if necessary, to get himself up to speed, to assess which a follow-up meeting should be scheduled.


Should the employee still prove incapable of performing to the required standards, the next stage will be an enquiry to be held before expiry of the probationary period which could take either or both of two forms. Where it is assessed that the chances of further improvement are slim or unrealistic, the purpose of the enquiry would be merely to consider the termination of the probationer `s employment for failing to meet the required standards. Where it is believed there exists a realistic prospect of improvement in performance, the enquiry would be to consider the possibility of extending the probationary period as an alternative to dismissal, premised on the possibility of the employee still being able to prove himself up to the job. Further alternatively the enquiry could address both possibilities. The employee would be entitled to internal representation and to make representations against his dismissal.


Other points of interest regarding probation:


Ø       Unfair conduct relating to probation or training has been added to the existing categories of unfair labour practice by the August 2002 amendments to the LRA.


Ø       Another innovation introduced in August 2002 amendments, the “con-arb” process combining the conciliation and arbitration of arbitrable disputes into one process, is compulsory for unfair labour practice and unfair dismissal disputes pertaining to probation ( in case of other such disputes not pertaining to probation, either party can decline the “ con-arb ” process by lodging a written objection ).


C    Dismissal for incapacity after expiry of the probationary period



I mentioned that the LRA accepts the employee`s incapacity to perform the job as a valid ground for dismissal, subject to compliance with the guiding principle in para 8 (2) of the Code cited earlier.


Subject to such compliance, the employee may be dismissed for incapacity after a hearing, if shown to be incapable of performing the work for which he was employed to the standards required. It is not reasonable to expect of an employer to retain the services of an employee who proves incapable of performing the job for which he or she was hired and is paid. However, in that dismissal for incapacity is not disciplinary in nature (see above) and is premised on the employee`s incapability of performing the job for which he or she was hired, principles of logic and equity dictate that the employer attempts to find alternatives to dismissal by, for instance, offering the employee an alternative less demanding post in which s/he is capable of performing if a suitable alternative post is available, even if this would mean a demotion from her incumbent post. Obviously this would require that the employee accepts the lesser post offered her. Para 8 (3) of the Code requires the employer, before dismissing, to “consider other ways, short of dismissal, to remedy the matter”, which is one of the differences from the treatment of probationary dismissals earlier highlighted.

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