By Talita Laubscher and Monique Jefferson
In Palace Engineering (Pty) Ltd v Ngcobo and Others [2014] 6 BLLR 557 (LAC), the Labour Appeal Court (LAC) considered the fairness of a dismissal of a senior manager for poor work performance. In this case, the employee was employed as the chief operations officer in terms of a three-year contract. The employee was subject to a six-month probation period and his employment contract stated that his appointment could be reviewed after two months if he failed to perform to the employer’s required standards. He was also required to meet a performance target of R 100 million per year for sourcing new infrastructure work. Prior to the commencement of his employment, he was required to submit a business plan documenting how he endeavoured to achieve the performance target. He did not submit this plan and was informed that he should not report for duty. The employee challenged this decision by the employer and after some correspondence between the employer and the employee’s attorneys it was agreed that the employee would commence employment and would be required to reach the performance target.
The employee’s performance was carefully monitored and after three performance evaluations and the employee having failed to meet his monthly targets, an inquiry into his performance was convened. The chairperson of the inquiry recommended that a new target be set which was only a percentage of the initial target and that he be granted additional time to improve and reach the new target. The employer did not follow the chairperson’s recommendation in its entirety but agreed to reduce the employee’s performance target and to extend the period in order to enable him to meet this revised target. The employee continued to fail to meet the target and was accordingly dismissed.
The employee referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). At the CCMA the employee did not dispute the reasonableness of the target of R 100 million per annum and agreed that it was achievable. He, however, argued that he had been unable to source new business because he lacked the necessary tools of the trade and resources to generate business. However, under cross examination, he conceded that the lack of tools accounted only for 10% of his performance challenges. This said, the employee had drawn up a business plan after he had already become aware of the tools of the trade and resources at the company and personally set his target as R 1 million per month; and yet had failed to achieve this.
The arbitrator found that the employee’s performance had been impacted on by the lack of tools of the trade and personnel. She also found that the employee’s performance had been dependent on a number of external factors such as available contracts, capacity to apply for contracts and the significant time taken for tenders to be awarded. Thus, the dismissal was found to be substantively and procedurally unfair and compensation equal to six months’ remuneration was ordered.
On review, the Labour Court considered the employer’s argument that it was not required to provide the employee with the same degree of supervision, guidance and training that is required for lower skilled employees as the employee occupied a senior position. It also considered the fact that the employee was on probation at the time. In this regard, the court held that a fair process still needed to be followed with probationary employees, notwithstanding that employers have a degree of latitude when it comes to the reason for the dismissal on the basis of poor work performance. The Labour Court found that the dismissal was substantively unfair, but that the employer had followed a fair process with the employee. In the circumstances, the compensation awarded was reduced to three months’ remuneration.
The employer took the matter on appeal to the LAC and argued that the employee’s seniority and the fact that he did not even reach the targets he had set for himself were not properly considered. The employer further argued that when an employee is on probation, the reasons for the dismissal may be less compelling.
Molemela AJA of the LAC held that the evidence supported the arbitrator’s finding that the employer’s business was dependent on a number of factors and that the employee’s performance was impacted on by a shortage of tools of the trade and support staff, as well as a shifting of the goal posts by the employer. The court held that the employee was not given proper support and his efforts were negatively impacted by poor administration. As regards the seniority of the employee, the court found that although senior employees are expected to know the standards that are expected of them and conform to those standards, this does not mean that an employer is relieved of the duty of providing proper resources to assist the employee in meeting the required standards. It was also pointed out that the employer failed to follow the recommendations of the chairperson of the inquiry. In this regard, the performance target was not reduced to the extent recommended by the chairperson and the employee was granted a shorter period in which to improve his performance.
The court pointed out that even when employees are on probation, the employer is required to offer guidance and discuss apparent shortcomings with them. Furthermore, the employee’s employment contract set out twelve key performance areas and yet the employee was evaluated only on one performance area, that is the performance of a set target. It was also found that the employer did not seriously consider the employee’s representations during the inquiry into his poor performance. The court found that although a probationary employee may be dismissed for ‘less compelling reasons’, this does not mean that the employer does not need a fair reason for the dismissal. The onus is still on the employer to prove that the dismissal was substantively fair and the court concluded that the employer had failed to do so. The employee’s dismissal was accordingly found to be substantively unfair and the appeal was dismissed.
Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.
Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg.
This article was first published in De Rebus in 2014 (Sept) DR 48.
