5 Steps You Must Take When You Need to Fire an Employee

Having to fire an employee is not easy, but whenever the need arises, you must ensure that you are on the right side of the law and follow the correct steps. When business owners overlook the process, they expose their businesses to legal and reputational risk.

Whether you’re letting someone go for underperformance, misconduct, or restructuring purposes, how you handle a dismissal can say a lot about your business culture and leadership style. In this guide, we’ll walk you through the critical steps to take when terminating an employee, while protecting your business and remaining compliant with South African labour laws.

What Does the Law Say About Employee Dismissal?

In South Africa, dismissals are tightly regulated under the Labour Relations Act (LRA) and Basic Conditions of Employment Act (BCEA). These laws protect both employers and employees and are designed to ensure that dismissals are handled in a fair, transparent, and legal manner.

There are three main categories that serve as grounds for lawful dismissal:

• Misconduct: This could include theft, absenteeism, or insubordination.
• Incapacity: Poor work performance.
• Operational requirements: This refers to retrenchments due to business restructuring or financial challenges.

Whatever the reason, the dismissal must be:

• Substantively fair where there must be a valid reason, and
• Procedurally fair where a fair process must be followed.

Failure to meet these requirements can result in claims at the Commission for Conciliation, Mediation and Arbitration (CCMA), and in some cases, your business could be liable for up to 12 months’ compensation.

Step 1: Identify the Core Issue

The first step is to clarify the reason why the dismissal is being considered. As a business owner, the last thing you want is to act based on emotion, stress, or an isolated incident without having a proper case. Using emotional intelligence can help your business grow, especially in cases that affect the law.

You can identify the core issue by doing the following:

• Find out how the employee is problematic. Is this a performance issue or a behaviour problem?
• Evaluate whether the employee has been given a fair opportunity to improve.
• Assess whether you have the documentation to support your concerns.

Use this stage to separate personal bias from business facts. Avoid vague reasons like “not a good fit” as the law doesn’t support generalisations.

Step 2: Follow Progressive Discipline

South African labour law encourages a progressive discipline approach. This means giving the employee a chance to improve and ensuring you’re educating them on where their behaviour has gone wrong and how to improve it going forward. Employers must follow this step before resorting to dismissal, especially in cases of poor performance or minor misconduct.

This typically includes:

• Verbal warning.
• Written warning.
• Final written warning, followed by dismissal if the employee doesn’t improve.

Keep written records of all warnings issued. If the issue persists, the record will show that you acted in good faith and gave the employee time to rectify their behaviour or performance.

Step 3: Conduct a Fair Disciplinary Hearing

When you’re dealing with a case of serious misconduct (e.g. theft, fraud, or violence), you must hold a formal disciplinary hearing.

The hearing must do the following:

• Inform the employee of the allegations in writing.
• Give them the opportunity to defend themselves.
• Permit them to bring a representative, which can be a lawyer, colleague or union representative.
• Allow the accused employee to appeal the final decision.
• Give them the right to present their own evidence and witnesses.

Even if the outcome is clear, the hearing is your opportunity to show that the process was procedurally fair. If you do not have a valid reason for dismissing an employee and do not follow procedure, your company can be liable for unfair dismissal.

Step 4: Communicate the Outcome Clearly

After the hearing, if the decision is upheld to fire the employee, you must provide a written outcome letter. This letter should include:

• The reason for dismissal.
• The process that was followed.
• The effective date of termination.
• Any entitlements (e.g. notice pay, leave payout).

Employers must maintain a professional and respectful attitude. The goal is to part ways in a manner that protects your business and maintains your reputation.

Step 5: Ensure All Final Payments and Documentation Are in Order

By law, you must pay the employee all money owed to them upon termination. This may include:

• Outstanding leave days.
• Pro-rata bonuses (if applicable).
• Notice pay (unless dismissed for gross misconduct).
• Severance pay (in the case of retrenchments).

For more information on everything HR, read SME South Africa’s Guide to Human Resources in the Workplace.