The Covid-19 pandemic is a “force majeure”. Dictionary.com describes “force majeure” as unforeseeable circumstances that prevent someone from fulfilling a contract.
Generally, employment contracts do not contain clauses that regulate circumstances should such a rare occurrence happen. In the event that such an occurrence presents itself, employer and employee usually revert to the common law concept of supervening impossibility of performance to justify the withholding of payment and tendering of services. The employment relationship is reciprocal, namely that the employer is obliged to remunerate an employee who renders services. However, there is no obligation on the employer to provide work to the employee enabling him/her to render services in order to be remunerated. In short, this concept is referred to as “no work, no pay”, and may apply under certain circumstances.
The Covid-19 pandemic has damaged the world’s economy, and more specifically, South Africa’s already struggling economy, significantly. During the second week of September 2020, Statistics SA revealed that South Africa’s Gross Domestic Product has dropped by more than 50%. All sectors dropped in the second quarter, except for the agricultural sector.
These hardships have made it extremely difficult for employees to tender their services and in turn, are severely affecting the productivity of employers’ businesses. Many employers able to operate are now faced with situations where employee(s) are not meeting sales targets and/or production goals. The question then arises as to what recourse the employer may follow to remedy said situation. One option would be for the employer to institute incapacity procedure based on poor work performance against these employees who are not capable of performing at the required standard.
During the incapacity process, employers will have to evaluate the situation and determine whether this incapacity takes on the form of temporary incapacity, as a result of the restrictions on economic activity imposed by the lockdown, or the form of permanent incapacity.
Should it be determined that the incapacity is permanent, the employment contract may be terminated after adhering to the rules of dismissal related to incapacity or operational requirements, depending on the circumstances.
Very likely, the inability of and/or restriction on employees to perform during lockdown is a temporary state of affairs and will improve as the effects of the pandemic subside. In such instances, the underperformance of the employees should be treated as a temporary incapacity of the employees’ ability to perform. Consequently, the employer’s and employees’ obligations and rights are suspended for the period during which said incapacity lasts. However, as explained above, the employer is still obliged to pay the employees if they are able to tender their services as they have a right to remuneration should they be able to, legally, tender their services to the employer. It is understandable that an employer would want to avoid paying employees if he/she is not able to make use of the employees tendered services.
This is where the consideration of alternatives to the dismissal due to incapacity comes into play. The employer should embark on finding ways to accommodate the employee during this state of temporary incapacity. Alternatives could include unpaid leave, short time, or temporary lay-off in order to achieve the effect of no-work, no-pay.
Retrenchments and even the closure of businesses may be the result of the lockdown restrictions, however, it would be advisable for employers not rush into either one of these two, but to rather view the situation as a temporary incapacity of its employees, hold out and review same at a later stage, reserving dismissal for incapacity and/or retrenchments as a last resort.
Consideration of alternatives would provide employees with the hope of retaining their jobs, and in the meantime, they would have access to UIF benefits. In the event of dismissal and/or retrenchments, the court or CCMA will, in any event, explore the alternatives considered by the employer and given the temporary nature of the Covid-19 pandemic and its restrictions, the court or CCMA might not condone dismissals and/or retrenchments should they find that reasonable alternatives were available.
Article by: Carine van Blerk
Dispute Resolution Official – Cape Town