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Dealing with poor executive performance

Article by lvan lsraelstam, Chief Executive of Labour Law Management Consulting

Confusion reigns amongst employers and employees as to what an employer can or cannot do when a senior employee fails to perform his/her duties properly. The law does allow the employer to dismiss poor performers at all levels of the organisation. However, this is only acceptable if the employer can prove factually that it has, prior to the dismissal, complied with all the substantive and procedural requirements of the law. That is, the onus at the CCMA falls entirely on the employer to bring solid proof:

  • that it followed the procedural guidelines quoted above, and also
  • that, regardless of the procedure followed, the dismissal decision itself was appropriate under the circumstances.

Poor performance by senior employees is even more crucial than that of junior staff. For example, where a senior executive fails to manage his/her division properly the whole division could be brought down and could even cause the demise of the entire enterprise. The big question revolves around how this must be done. That is, can the executive be fired without having received:

  • clarity on the required performance standards
  • counselling, and
  • a chance to improve?

The law requires that the standards of performance be set clearly at the outset and that the employee receives counselling and a chance to improve before being dismissed. In addition it is vital that there is an investigation, part of which includes the employee’s opportunity to explain the alleged poor performance.

Many arbitrators accept that a senior employee would require fewer prior warnings if any before being dismissed. While this less protective approach in respect of senior employees is fairly standard, this does not mean that the employer may ignore all the legislation when it wishes to dismiss a poor performing senior executive. Senior employees still have the right to be given a chance to bring their performance up to standard.

For example, in the case of Fortuin vs Shoprite (2004, 3 BALR 314), Fortuin, a store manager, was dismissed for poor timekeeping and stock losses. The arbitrator found that there were no good reasons to justify the dismissal and that proper procedure had not been followed. Although the employee was a manager he was still entitled to be counselled and to be given an opportunity to improve. As this had not happened the manager was awarded one year’s remuneration in compensation.

This case throws cold water on the belief that a senior executive can, in all circumstances, be dismissed for a first offence of poor performance. It also means that, unless employers jack up their understanding and implementation of the law, more and more senior employees will be taking them to the CCMA and winning huge compensation awards.

Labour Law Management Consulting is a proud member of the National Small Business Chamber (NSBC).

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