Whether or not an employer is required to provide reasons before terminating an employee's contract of employment upon notice has been ambiguous for some time. Courts have had different approaches to this issue, compounding the confusion, to the detriment of employers and employment law practitioners. We have addressed this confusion on a previous occasion, read more here.
The question has finally been settled by the
The case
In the case of
The Bank paid her three months' salary in lieu of notice and terminated the employment contract. The former employee contended that she was not afforded a fair hearing and that no reason was given before the termination.
The Industrial Court ruled in her favour. On appeal, the
The Court rejected an argument premised on Article 4 of the
Analysis
Of particular importance in this decision is the clarification provided on the terms "dismissal" and "termination." These terms are used interchangeably in the Employment Act and consequently in judgments, contributing to confusion on whether reasons are required only for the dismissal of an employee or also for termination upon notice.
Dismissal is associated with misconduct or poor performance, which necessitates a formal hearing, implying that there is always a reason to trigger the process. Termination, on the other hand, is where the employment relationship is ended without fault on the part of the employee.
The differences in burden and procedural intricacies between dismissal and termination are quite apparent. While the dismissal process demands extensive steps including investigations (usually preceded by a suspension), a notice of invitation to a disciplinary hearing, giving the employee time to prepare a defence, disciplinary hearing and eventually issuance of a dismissal letter, termination is notably simpler. A mere issuance of the requisite notice or payment in lieu suffices. Dismissals are also prone to contest in court as the employer bears the burden to substantiate the reasons for dismissal and demonstrate adherence to due process.
Given the above considerations, there is a possibility that the existing legal position could be abused as many employers may opt for the considerably simpler termination process, even in cases warranting dismissal. There could be an inclination towards termination, due to its reduced risk and liability, which could disadvantage employees significantly. There is no incentive for an employer to undergo an extensive dismissal process if they can simply end the contract with notice.
While seemingly straightforward, termination on notice can pose fairness concerns for employees. It is self-evident that no employer simply terminates an employee without cause. Behind every termination, there lies an underlying reason or set of circumstances that prompt such a decision. When termination on notice is utilised without affording the employee the opportunity to know or challenge the underlying reason, it may result in unfairness and deprive the employee of the right to due process.
Moreover, there is still uncertainty created by the statutory entitlement to a certificate of service upon termination, which introduces the possibility of an employee requesting disclosure and/or clarification on the reasons for termination.
The court's refusal to apply Article 4 of the Termination of
The absence of a requirement for reasons in termination is also retrogressive, especially when juxtaposed with provisions from other jurisdictions such as
Being a
Conclusion
With the latest decision, employers in
It remains to be seen whether lawmakers will heed the court's call to incorporate Article 4 of the Convention into our laws, a move that could further bolster employee protection and promote fairness in the workplace.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Phillip Karugaba
ENS
Foreshore
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