Handling Under performance at Work: A Guide to Fair Dismissals and Legal Compliance

Managing employee under performance is a delicate yet crucial aspect of business operations. While productivity is essential, fairness and legal compliance are equally important to prevent unfair dismissal claims. South Africa’s Labour Relations Act (LRA) and Basic Conditions of Employment Act (BCEA) outline a structured approach to handling under performance while safeguarding both employer and employee rights.  

What is Under performance?   

Under performance occurs when an employee fails to meet the expected performance standards for their role. In South African labour law, this is classified as incapacity rather than misconduct or retrenchment (operational requirements). However, dismissing an employee for under performance requires substantive and procedural fairness to avoid disputes at the CCMA or Labour Court.  

Establishing Fair and Clear Performance Expectations   

Before taking action against an underperforming employee, clear and realistic performance standards must be in place. These standards should be:  

✅ Relevant to the employee’s role and responsibilities  

✅ Measurable to track progress objectively  

✅ Communicated to the employee in writing (job descriptions, performance reviews, or training manuals)  

✅ Fair and achievable, considering factors such as workload, available resources, and external challenges  

If performance expectations are unclear or constantly changing, a dismissal may be deemed unfair.  

Following a Fair and Supportive Process   

South African labour law requires a structured and transparent process when managing under-performance. This process must include:  

1. Identifying and Addressing Performance Issues Early  

📌 Employers must promptly raise concerns with the employee, clearly explaining
      areas needing improvement.  

2. Providing Support and Training  

📌 Employers should offer training, mentoring, or additional resources to help the  
      employee improve.  
📌 Employees must be given a reasonable period to correct their performance, based on the complexity of their role.  

3. Holding a Formal Performance Review Meeting  

📌 If improvement does not occur, the employer must hold a formal review meeting 
      where the employee:  

• Receives a written notice outlining performance concerns  

• Has the chance to present their side of the story.

• May be assisted by a trade union representative or fellow employee  

4. Issuing warnings  

📌 If the employee does not improve his or her performance, the employer is still obligated to issue warnings, including a final written warning, before considering dismissal.
📌 The final written warning must clearly state that failure to improve could lead to termination.  

5. Ensuring a Fair Dismissal Process  

📌 If no improvement occurs, a formal incapacity hearing must be held before
      dismissal. The employee must:  

• Receive written notification of the hearing.  

• Be given the chance to state their case effectively.

• Receive a final decision in writing  

A dismissal will only be fair if the employer can prove:  

✔ Reasonable efforts were made to help the employee improve  
✔ The employee was given enough time to improve  
✔ The dismissal process followed all legal steps  

The Difference Between Under performance & Retrenchment   

Under performance and retrenchment should never be confused.  

🚫 Retrenchment is due to business operational requirements, such as restructuring or
       financial difficulties.  
🚫 Retrenchment cannot be used as a way to dismiss an underperforming employee.  
🚫 Misclassifying under performance as retrenchment can result in unfair dismissal claims.  

Risks of Non-Compliance   

Failing to comply with the LRA and BCEA can lead to:  

⚠ Unfair dismissal claims at the CCMA  

⚠ Compensation orders or forced reinstatement of the dismissed employee  

⚠ Financial penalties and legal disputes  

By ensuring fairness, transparency, and compliance, employers protect their business while fostering a positive workplace culture.  

Need Expert Guidance?   

Effectively managing under performance doesn’t have to be complicated. Our team of labour law experts can help you navigate complex workplace issues, ensure compliance with the LRA, and minimise legal risks.  

Contact us today for expert advice and support in managing employee performance challenges the right way! Become a labour member and enjoy peace of mind knowing we’ve got you covered!