Section 188 of the Labour Relations Act 66 of 1995 (herein referred to as the “LRA”), recognises incapacity as a potential fair reason for a dismissal provided that a fair pre-dismissal procedure was followed.


1. A dismissal that is not automatically unfair, is unfair if the employer fails to prove –

a. that the reason for the dismissal is a fair reason –

  • related to the employee’s conduct or capacity
  • based on the employer’s operational requirements; and

b. that the dismissal was affected in accordance with a fair procedure.

2. Any person considering whether or not the dismissal is a fair reason or whether or not the dismissal was affected in accordance with a fair procedure must take into account any relevant code of good practise issued in terms of this Act.


The Code of Good Practice: Dismissals, however, only makes provision for dismissals based on incapacity due to ill-health or injury. This, however, does not preclude employers from dismissing employees due to a general incapacity to perform their duties and responsibilities. Although Item 11 of the Code of Good Practice: Dismissals can be used as a guideline, employers must consider case law in determining if a dismissal arising out of a general incapacity is fair or not.


In this article, I will focus on a general incapacity which renders the employment relationship unlawful due to the employee not being in possession of a valid work permit.


Section 38(1) of the Immigration Act states that: “no person shall employ an illegal foreigner; a foreigner whose status does not authorise him or her to be employed by such a person; or a foreigner on terms, conditions or in a capacity different from those as contemplated in such foreign status”.


Section 49(3) of the same Act states that, “Anyone who knowingly employs an illegal foreigner or a foreigner in violation of this Act shall be guilty of an offence, and liable on conviction to a fine or to imprisonment not exceeding one year, provided that on such persons second conviction of such an offence shall be punishable by imprisonment not exceeding two years or a fine, and the third or subsequent convictions of such offences by imprisonment not exceeding three years without the option of a fine”.


The Employment Services Act, Act 4 of 2014 further stipulates that ‘’an employee without a valid work permit is entitled to enforce any claim that the employee may have in terms of statute or employment relationship against his or her employer or any other person who is liable in terms of the law.’’


It is clear from above that the liability to ensure that employees have the necessary legal status to be employed rests with the employer. However, in practice, the situation does arise where valid work permits lapse and the employee is unable to obtain another one.  What are the employer’s options if the situation arises where an employee does not have the necessary documentation to be legally employed? Is the employer obliged to follow the necessary steps in line with the LRA when terminating the employment relationship?


The Constitution of the Republic of South Africa, Act 5 0f 2005, states that everyone has the right to fair labour practices which has been interpreted to extend beyond just South African citizens.


In Discovery Health Limited v CCMA (2008) 29 ILJ 1480 (LC) the employer terminated the contract with a foreigner when it learned that he did not have a valid work permit. Discovery Health contended that no employment relationship had been concluded because the employment contract had contravened the Immigration Act 13 of 2002, which makes it an offence to employ a foreigner without a work permit. The employee argued that the statutory definition of an “employee” contemplates the existence of an employment relationship that transcends the contract.  The commissioner ruled that the third respondent was an employee. On review, the Court noted that the Immigration Act merely prohibits employment of foreigners who do not have a valid work permit and penalise employers from doing so. The question was whether the legislature intended to rely only on the deterrent effect of the prohibition, or whether it intended to visit contracts concluded in violation of the prohibition with nullity. Were the Immigration Act to be interpreted in the manner contended for by Discovery Health, unscrupulous employers might be willing to risk possible prosecution under the Act, employ foreigners without work permits, then at the end of the contract period refuse to pay them. If the company’s argument were to be upheld, foreigners in that situation would be without remedy. This would not be in line with the right to fair practices, to everyone, as entrenched in the Constitution. The Court accordingly held that Discovery Health and the foreign employee had concluded a valid contract. Although it was unnecessary for the Court to consider the employee’s argument that a person may be an employee even if the contract is invalid, it ruled that the statutory definition of an employee does not necessarily assume the existence of a valid contract.


This was confirmed in the unreported case of Sithole v Metal and Engineering Industries Bargaining Council and others JR18/15 where the Court ruled that the contract between an illegal immigrant and the employer is not invalid and even if it were, the illegal immigrant would still be considered an employee in terms of section 213 of the Labour Relations Act. An illegal immigrant is therefore entitled to the protection afforded by the LRA, and their dismissal cannot be subjected to unfair dismissals or unfair labour practices.


As case law has established, a foreign employee without a valid work permit is protected under the LRA. Therefore, it is important that employers follow a fair procedure in line with the LRA when terminating an employment relationship due to an employee’s failure to produce a valid work permit.


The question on what procedure to follow was answered in First National Bank v CCMA & another JR1476/2016 where the Labour Court confirmed that the employer was correct in following the  general incapacity process where the employee did not have the necessary legal requirements to comply with his duties and responsibilities.


In this case, the employee held a position which required him to comply with the Financial Advisory Intermediary Services Act (FAIS Act). FAIS prohibits any person from acting as a representative of a financial service provider unless approved by the Registrar as a “fit and proper person”. Among these conditions for obtaining this status was passing a certain regulatory examination. After 4 years and 15 attempts, the employee failed to pass the exam. The employer held an incapacity hearing which led to the dismissal due to incapacity. The commissioner at the CCMA found that the incapacity was not as a result of poor work performance or ill-health as contemplated in the LRA and that the employer should have dismissed the employee due to operational requirements.


On review, the Labour Court held that the commissioner had wrongly interpreted “incapacity” as relating to “ill-health or injury or impairment of physical or mental ability” only. In fact, incapacity is a broad concept which, apart form poor work performance, can justify dismissal in various circumstances, ranging from incompatibility to “one that results from a legal prohibition on employment.” The dismissal was held to be fair.


Employers will therefore be advised to follow the general incapacity route when it is established that an employee is not in possession of a valid work permit. It should be noted that in Ndikumdavy v Valkenberg Hospital &others [2012] 8 BLLR 795 (LC) the Labour Court held that a “reasonable suspicion” that an employee had not obtained a work permit is not enough.  An employer should, therefore give an employee a reasonable opportunity to provide proof of a valid work permit. It would also be advisable to show that the employer provided the employee with the necessary assistance where his/her work permit has lapsed to obtain another one.


If the employee is still unable to obtain a work permit, a general incapacity hearing should be held where the employer should prove that the employee is not in possession of a valid work permit and therefore unable to comply with his/her duties and responsibilities.


Article by: Aletta Eksteen

Dispute Resolution Official – Cape Town