# Regulatory Compliance Category > Labour Relations and Legislation Forum >  Dismissal on a whim - why not?

## Dave A

This question was triggered by a post in the Metals Industry strike - my take thread.

I'll get to the post concerned in a moment, but first let me make an argument based on the same argument used by organised labour to support the right to strike (apparently balanced out by the employer's right to lock out, which come to think of it, the unions are not particularly respectful of right now  :Stick Out Tongue:  ).

*Argument 1.*
The employee can resign on a whim. Doesn't even have to give reasons. Why can't the employer dismiss an employee in similar manner?

*Argument 2.*
I've highlighted the particularly relevant parts of the post.



> We absolutely need simpler, less onerous rules - particularly with respect to our labour laws. But that does not mean that all regulations are bad. And when it comes to dismissal situations, I don't think that our laws are particularly complex:
> 
> *1. Don't fire someone unless you have a fair reason (e.g. poor performance, incapacity, misconduct, operational requirements).*
> 2. Before you fire someone, explore alternatives to dismissal and give the affected employee an opportunity to respond to your reason for firing them.
> 
> You don't need to be a labour law "guru" to get to grips with this. I've sat down with clients and explained it to them in half an hour or less. I've written plain English business guides that require less than an hour to read and apply.
> 
> Part of the problem is that many small business owners don't want to learn, or assume that it is a lot more complex than it really is. They want the freedom to do as they please. And in some respects, they do deserve more freedom. But dismissal is not one of those situations. *You can't have business owners (irrespective of the size of their company) firing people on a whim.* It would lead to exactly the sort of exploitation that labour brokering has been used for (not, of course, to suggest that all labour brokers or their clients are exploitative).


OK then. How about when the employer and employee have a really bad relationship?
Like adversarial just for the sake of being adversarial because one doesn't like the other for whatever reason?

The employee can pick their moment to leave the relationship, but the employer can't?
Have you tried firing an employee for having a bad attitude?
Get ready to fork out at the CCMA if you do (or pay a hefty fee to a labour lawyer to deal with it).


Or how about when the employee is *really miserable* in their job, but can't muster up the initiative to move on?

I've had a few of these over the years, and they just suck the energy out of any room they enter and fill it with negativity.
I've counselled them.
I've tried motivating them.
I've offered options for them to improve their lot in life, which they just don't take.
They clock in.
They do the minimum asked of them.
They don't impress clients, or even lose you clients (as in they just go away and never return).
The only thing they cling onto stronger than their misery, is the cause of it - their job.

The absolute best thing I can do for them, my business, myself and the future of the rest of my staff is fire the misery's sorry ass and force them to move on.

But I'm not allowed to because that would be an unfair practice.

So come on - why not be able to fire the employee on a whim?
There's going to be a reason why that whim occurred in the first place, and as long as it's connected to the employee, I can't see a problem right now.
Enlightenment welcomed.

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## IanF

This is not meant to be flippant but companies don't vote employees do.

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## Greig Whitton

Really great question, Dave! Here's my two cents:




> The employee can resign on a whim. Doesn't even have to give reasons. Why can't the employer dismiss an employee in similar manner?


To clarify, employees can't just resign on a whim since they are legally bound by their employment contract (which is why most employment contracts will require employees to provide notice before leaving). In practice, of course, these provisions often go ignored and are rarely worth enforcing. But as desA will be the first to tell you, I have a pedantic nature  :Stick Out Tongue:  

On a more important note, job creation (and protection) on a national level is in all of our best interests. If employers could dismiss employees on a whim, we would see even more job losses during challenging economic periods than we already do which would send our economy into an irreversible downward spiral. Our current labour laws staunch some of that hemorrhaging by requiring employers to demonstrate good cause and consider reasonable alternatives to dismissal.

Finally, while I can empathise with the challenge of replacing employees who resign on a whim, I personally believe that it is an easier (though certainly not easy) challenge for employers to deal with than the challenge that employees would face of finding a new job (and supporting their family) when fired on a whim. In other words, most employees will have more to lose from being fired on a whim than what most employers have to lose when employees resign on a whim (again, I'm not saying that replacing an employee who resigns on a whim is an easy challenge to solve - I'm just saying that, in most cases, it will probably be easier than finding a new job and supporting your family when you get fired on a whim).




> OK then. How about when the employer and employee have a really bad relationship?
> Like adversarial just for the sake of being adversarial because one doesn't like the other for whatever reason?
> 
> The employee can pick their moment to leave the relationship, but the employer can't?





> The absolute best thing I can do for them, my business, myself and the future of the rest of my staff is fire the misery's sorry ass and force them to move on.
> 
> But I'm not allowed to because that would be an unfair practice.


I disagree, Dave. You absolutely can fire someone for having a bad attitude if that bad attitude affects their performance at work (e.g. treating customers badly or failing to meet productivity targets) and/or if it manifests as misconduct (e.g. insubordination). Obviously you can't dismiss them summarily (unless their misconduct is particularly severe), but you would absolutely be within your rights to issue a formal warning, final written warning, etc. before dismissing them.

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Dave A (03-Aug-14)

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## Dave A

> To clarify, employees can't just resign on a whim since they are legally bound by their employment contract (which is why most employment contracts will require employees to provide notice before leaving).


To be clear, I'm not suggesting the dismissal should be instant - it would have to be with notice (most likely with notice being paid out without the employee having to work the notice period).

It's the issue of where the line is drawn on fair cause that I'm trying to tackle here.




> I disagree, Dave. You absolutely can fire someone for having a bad attitude if that bad attitude affects their performance at work (e.g. treating customers badly or failing to meet productivity targets) and/or if it manifests as misconduct (e.g. insubordination).


May I take it you haven't been exposed to the particular category of malfeasance I'm alluding to.

They won't treat customers badly. They'll just be surly as they go about their task. (Can you fire a person for not being cheerful around customers).

There'll be no clear insubordination - just a shuffling compliance with direct, unambiguous instructions. And not an ounce more. (Can you fire a person for consistently being unenthusiastic).

You'll do a satisfaction call to the client after service, ask if they're satisfied, and you'll get "they did the job, but I can't say I'm impressed". (Can you fire a person because they consistently fail to impress clients).

You'll get other members of staff coming up to you saying "I don't know why you keep that person around", and it starts affecting perfectly good staff members' performance. (Can you fire a person because they are dragging everyone else down).

It's the bad egg that makes a good team become dysfunctional.

And putting it bluntly, I don't think the individual's job security "entitlement" should trump the fact that this individual is affecting the job security of other staff due to clients that will (make no mistake) start wondering off elsewhere, let alone not-yet-employees who might stand to gain if the company actually did well enough to create raving fans and start expanding.

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BusFact (04-Aug-14)

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## Greig Whitton

> They won't treat customers badly. They'll just be surly as they go about their task. (Can you fire a person for not being cheerful around customers).
> 
> There'll be no clear insubordination - just a shuffling compliance with direct, unambiguous instructions. And not an ounce more. (Can you fire a person for consistently being unenthusiastic).
> 
> You'll do a satisfaction call to the client after service, ask if they're satisfied, and you'll get "they did the job, but I can't say I'm impressed". (Can you fire a person because they consistently fail to impress clients).
> 
> You'll get other members of staff coming up to you saying "I don't know why you keep that person around", and it starts affecting perfectly good staff members' performance. (Can you fire a person because they are dragging everyone else down).


In every instance, it all depends on whether the employee's attitude clearly affects their performance and/or conduct at work. The key to demonstrating that clear connection is proper contracting and performance management.

For example, if you hire someone to impress your clients and their contract clearly specifies the performance standards that they need to meet (e.g. maintain an 80% customer satisfaction rating as measured by periodic customer satisfaction surveys), then you absolutely have grounds for instituting disciplinary proceedings if they fail to meet those standards. And if they consistently fail to meet those standards despite being provided with reasonable opportunities to improve, then you have grounds for dismissing them due to poor performance.

Clearly it is harder to define when someone's bad attitude equates to poor performance or misconduct compared to more obvious behavioural offences. However, it it is not unreasonable for the employer to bear this responsibility otherwise we would be back to dismissal on a whim (i.e. "I no longer like you, so you're fired!")

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## BusFact

This is a topic I am quite passionate about. I am almost entirely for everything Dave said. I couldn't have put it better myself.

Then along comes Greig, who provides a sound counter argument.




> To clarify, employees can't just resign on a whim since they are legally bound by their employment contract (which is why most employment contracts will require employees to provide notice before leaving). In practice, of course, these provisions often go ignored and are rarely worth enforcing.


But they can still resign on a whim. The fact that it only becomes effective a month later is not material. They can still choose to do so without giving or having any reason.




> On a more important note, job creation (and protection) on a national level is in all of our best interests. If employers could dismiss employees on a whim, we would see even more job losses during challenging economic periods than we already do which would send our economy into an irreversible downward spiral. Our current labour laws staunch some of that hemorrhaging by requiring employers to demonstrate good cause and consider reasonable alternatives to dismissal


This is a point I have never considered before, and I think its a valid one. However I am under the impression that retrenchment is easier to carry out than firing, but none the less there is a process and a cost involved, so it does play a role in protecting the down side.

The flip side of the coin of which I speak from experience, is that I am so scared of employing someone (essentially entering into a 40 year contract .... ok I'm being a bit over dramatic) that I would rather run overtime and turn away business than employ new staff unless I am very confident that its not a temporary spurt. I'm sure you'd probably argue that my fear is unfounded. Its there though, and the process requires a lot of time and effort.

Then I fully agree with you that an employee getting fired is a far more stressful situation than an employer losing an employee and that is probably the crux of the reason behind the legislation being there in the first place.




> I disagree, Dave. You absolutely can fire someone for having a bad attitude if that bad attitude affects their performance at work (e.g. treating customers badly or failing to meet productivity targets) and/or if it manifests as misconduct (e.g. insubordination). Obviously you can't dismiss them summarily (unless their misconduct is particularly severe), but you would absolutely be within your rights to issue a formal warning, final written warning, etc. before dismissing them.


Perhaps Greig, but it is extremely time consuming and unproductive. Even if you do absolutely everything perfectly, you may still have to spend time at the CCMA. Yes you win the case, but the wasted time, effort and cost? Then what about the guy who does an average job just to ensure he gets paid. It is not possible to replace him with someone with the potential to be brilliant at the job. So the employer gets stuck with mediocrity.

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## Greig Whitton

> The flip side of the coin of which I speak from experience, is that I am so scared of employing someone (essentially entering into a 40 year contract .... ok I'm being a bit over dramatic) that I would rather run overtime and turn away business than employ new staff unless I am very confident that its not a temporary spurt. I'm sure you'd probably argue that my fear is unfounded. Its there though, and the process requires a lot of time and effort.


I very much empathise with this entirely reasonable fear. However, you could hire people on fixed term contracts during your peak season - clearly specifying that their employment is limited to a finite period of time or specific project - so that you aren't saddled with permanent employees if the spurt isn't sustained.




> Even if you do absolutely everything perfectly, you may still have to spend time at the CCMA. Yes you win the case, but the wasted time, effort and cost?


I 100% agree. However, allowing employers to dismiss on a whim without consequence would simply shift the problem to the other extreme. What we need is a quicker, easier system for resolving unfair labour practice disputes.




> Then what about the guy who does an average job just to ensure he gets paid. It is not possible to replace him with someone with the potential to be brilliant at the job. So the employer gets stuck with mediocrity.


Without wanting to sound flippant, don't hire mediocre employees if you want brilliant ones. Not sure whether someone will turn out to be brilliant or average? This is where proper performance contracting is critical. Specify the standards that you require your employees to satisfy, how those standards will be measured, and (most importantly) how those standards will evolve over time (e.g. 70% customer satisfaction for the first 6 months; 80% customer satisfaction for the next 12 months; 90% customer satisfaction thereafter).

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## BusFact

I get why the legislation is in place. It was too easy for an employer to totally exploit an employee, and they did. The job market is too one sided, with so few vacancies.

However, the Government wants to create employment, but makes it really difficult and daunting to employ someone legally. The moment you become an employer, its almost the same as becoming a parent.

- You become responsible for tax collection (PAYE).
- You become responsible for employee unpaid debts (Garnishee orders).
- You become responsible for arranging your employee's health care and retirement plan (not always, but often).
- You have to finance your employee's responsibilities - maternity leave, paternity leave, sick leave, normal leave, family responsibility leave.
- You get to jump hoops with SARS and have to register as an employer (EMP), don't forget UIF and COID. Lets not forget the twice yearly EMP501 which often appears on this forum.
- You have to educate yourself on unproductive tasks, such as government returns, the ccma, the firing process. Don't forget tax as those payrolls can become a complex can of worms in no time at all.

Its terrifying. Any readers who were thinking of employing someone for the first time still keen?

That said, what is this employer/employee relationship anyway. Is it not a watered down version of slavery? Very watered down yes, but still related. Why is this relationship still considered the norm. Partnerships surely sound more equitable and fair. Supplier/customer, much more dignified.

Why do school leavers look for jobs? Why don't they rather self employ?

The answer is probably because it aint so easy.

I realise this is a complex problem, but I have a wishful thinking vision, which admittedly has a few short comings in the real world. Wouldn't it be wonderful if there was no such things as employers or employees. Instead everyone is self employed and provides a product or service. They could provide manual labour as their service, rather than be an employee, they are treated like any other supplier to the company. The company no longer has staff. Instead the employ a book keeping service, or a packing service, or a delivery service. The employer loses the dedicated service, but loses the additional responsibility too.

The role of government becomes ensuring that literate students exit their schools who are fully capable of starting their own business (heck, make it a matric requirement to have a business started). They should know how to look for opportunities, market it, do the accounts, etc. They should also be skilled in two trades such as car mechanic, wood work, steel work, plumbing, building, etc which gives them something to offer as a service if nothing else works out for them.

People still group together in companies, to group skills where necessary. But you no longer look for a job, you look for customers.

Pie in the sky and probably full of holes, but I can dream.

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roryf (04-Aug-14)

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## Blurock

That's a good dream BusFact, and a Government that actually knows what they are doing...

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## BusFact

> I very much empathise with this entirely reasonable fear. However, you could hire people on fixed term contracts during your peak season - clearly specifying that their employment is limited to a finite period of time or specific project - so that you aren't saddled with permanent employees if the spurt isn't sustained.


That would work for annual cycle businesses, but I was referring more about when the economy picks up or when we suddenly get a few extra customers. Its not a predictable cycle. Sometimes it last a month or two, sometimes a year or two. So the time period isn't always known, nor is it a specific project. If its a year long upswing and I employ them on a 6 month contract, I would most likely forget the term ending, or otherwise extend the contract ... which I believe causes problems about them now being considered permanent.





> I 100% agree. However, allowing employers to dismiss on a whim without consequence would simply shift the problem to the other extreme. What we need is a quicker, easier system for resolving unfair labour practice disputes.


Can't fault you there.




> Without wanting to sound flippant, don't hire mediocre employees if you want brilliant ones. Not sure whether someone will turn out to be brilliant or average? This is where proper performance contracting is critical. Specify the standards that you require your employees to satisfy, how those standards will be measured, and (most importantly) how those standards will evolve over time (e.g. 70% customer satisfaction for the first 6 months; 80% customer satisfaction for the next 12 months; 90% customer satisfaction thereafter).


Ah, but remember, I'm a little guy making widgets. Its not something I did on purpose. Recruitment is a bit of a lottery for me. The guy looked brilliant in the interview, promised the world. I was wrong, now its a painful process to rectify.  I realise that it is possible to fire someone. Have the initial contract and expectations properly done in detail, monitor performance, provide feed back, provide support and direction, present them with their shortcomings, provide warnings and assistance .... and eventually get rid of them, followed by the probable ccma hearing. It just shouldn't be such a long and expensive process.

Its scary.

Also, some jobs are very difficult to monitor. Receptionist, internal sales or accounts clerk for example.

There are other examples too: The employee was the best available at the time, now someone better has entered the market. Or a simple personality clash, making work unpleasant.

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## Justloadit

Far toooo much personal time required in HR environment, and in my business I can not afford all this unproductive time.

There are many cases in which employees are stealing and sabotaging your business, however the burden of proof is in the employers hands, and let me tell you it takes years to catch them. 

Theoretically it sounds very simple, however when turning it into to practice, it is extremely difficult to implement.
Small companies just do not have the resources to monitor the employees performance, and how many customers do you know who even take the time to fill in these sheets?
Lets take an example this employee of this company came to my personal home to do a job, now I am requested to fill in a performance sheet in front of him, do you think I am going to be truthful? On the one hand he knows the inside of my house now, and with e crime wave the way it is I am now concerned that this person has intricate details of my personal space, and if he gets fired because of my performance rating, what's stopping him from a revenge attack?

Sorry but the performance clause is not so easy to implement.

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BusFact (04-Aug-14)

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## Greig Whitton

> That would work for annual cycle businesses, but I was referring more about when the economy picks up or when we suddenly get a few extra customers. Its not a predictable cycle. Sometimes it last a month or two, sometimes a year or two. So the time period isn't always known, nor is it a specific project.


The lack of predictability is precisely what makes fixed term contracting such a viable option. Few things in business (or life) can be forecast with 100% accuracy. If you want to grow your business, then you have to take some risks. However, when it comes to employment, you aren't without recourse. If you take the risk of retaining fixed term employees because business is going strong, only for the tide to turn, then you can always retrench due to operational requirements.




> Ah, but remember, I'm a little guy making widgets. Its not something I did on purpose. Recruitment is a bit of a lottery for me. The guy looked brilliant in the interview, promised the world. I was wrong, now its a painful process to rectify.


This. This right here is the real crux of the problem. Most of us don't come from business backgrounds, so we learn the hard way through trial and error. But that doesn't mean that our employees (or customers, or suppliers, or other stakeholders) should take the fall for our mistakes.

There are many resources and support that South African entrepreneurs can use to develop their business skills proactively. But most of them have no interest in doing so. They excel at building widgets, so they stick to what they are familiar with. When they discover that being awesome at building widgets isn't good enough when running a business, they blame the system for their pain. If it isn't labour regulations it's taxation, or the Consumer Protection Act, or Broad-Based Black Economic Empowerment, or something else.

Again, I'm not saying that our regulatory frameworks are perfect - far from it! A lot of the non-negotiable issues that require regulation could be handled in a far quicker, easier, and simpler fashion (especially for SMEs). But I'd bet everything I own that no matter how simplified our regulation might be, most guys would continue to run their business reactively and blame the system instead of being proactive, planning ahead, and developing the skills that they will need in the future. 




> I realise that it is possible to fire someone. Have the initial contract and expectations properly done in detail, monitor performance, provide feed back, provide support and direction, present them with their shortcomings, provide warnings and assistance .... and eventually get rid of them, followed by the probable ccma hearing. It just shouldn't be such a long and expensive process.


I absolutely agree with you. The process should be simpler, quicker, easier, and less expensive. But, per my point above, I believe that most guys would still blame the system regardless of whether it was streamlined or not because they would be spending all of their time making widgets instead of using some of it to learn how to build a better business.

I'm sure many business owners would love it if they could fire employees on a whim (which is what this thread was originally about). But then where do we draw the line? Can they choose whether to pay their taxes on a whim? Can they cancel commercial contracts on a whim? Can they waive liability to their customers on a whim?

The rules that we have can (and should) be a lot simpler, but that doesn't change the fact that we need some rules.

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## Greig Whitton

> Sorry but the performance clause is not so easy to implement.


I agree with you, but what's the alternative? Firing employees on a whim because you made a mistake and hired the wrong person, or because you just don't like their face any more?




> There are many cases in which employees are stealing and sabotaging your business, however the burden of proof is in the employers hands, and let me tell you it takes years to catch them.


Again, what's the alternative? Firing someone without consequence because you _suspect_ that they might be stealing? Guilt before proven innocent?

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## BusFact

> I agree with you, but what's the alternative? Firing employees on a whim because you made a mistake and hired the wrong person, or because you just don't like their face any more? ....Again, what's the alternative? Firing someone without consequence because you _suspect_ that they might be stealing? Guilt before proven innocent?


This may sound harsh, but yes this is the alternative I feel should be in place. If the company I  that currently supplies me stationery, falls under any of the above categories, I would start buying from someone else. Why should my book keeping service provider, sales provider or packaging service be any different? The flip side of course is that I would not be able to expect their dedicated service, and the unit cost of their time would most likely be slightly higher, because they have to take care of themselves, rather than the employer.




> I'm sure many business owners would love it if they could fire employees on a whim (which is what this thread was originally about). But then where do we draw the line? Can they choose whether to pay their taxes on a whim? Can they cancel commercial contracts on a whim? Can they waive liability to their customers on a whim?


I'm not suggesting one is able to break a contract on a whim. I'm saying that the employment contract should not unilaterally enforce an indefinite term. An employment contract should be an overdraft facility, not a 30 year home loan  - to use a banking analogy. Taxes are their own animal  :Smile:  Its the "contract" part of commercial contracts I have an issue with. Long term high value commercial contracts are written up and defended by teams of legal reps. Most SME's work on an order to order basis. The contract part normally concerns product spec, pricing, delivery terms and product failure. There is seldom a requirement that you must continue placing business with them.




> This. This right here is the real crux of the problem. Most of us don't come from business backgrounds, so we learn the hard way through trial and error. But that doesn't mean that our employees (or customers, or suppliers, or other stakeholders) should take the fall for our mistakes.
> 
>  There are many resources and support that South African entrepreneurs can use to develop their business skills proactively. But most of them have no interest in doing so. They excel at building widgets, so they stick to what they are familiar with. When they discover that being awesome at building widgets isn't good enough when running a business, they blame the system for their pain.


Dead right Greig, can't fault you at all. However why should this all be necessary? If we want to create business (a general term I'm using instead of jobs), surely we want the expert widget maker, making widgets and not wasting his time taking HR legal courses. And if we make hiring mistakes, surely an employee shouldn't benefit from that mistake either - at expense to customers, suppliers and stakeholders?




> When they discover that being awesome at building widgets isn't good enough when running a business, they blame the system for their pain. If it isn't labour regulations it's taxation, or the Consumer Protection Act, or Broad-Based Black Economic Empowerment, or something else.


Once again I agree with you. We can be a bunch of whiners. When we fail we are going to blame someone other than ourselves and the Government is often an easy target. But don't you think that being awesome at building widgets should be good enough to have a successful business? Is all the admin and HR really necessary?

Almost everything you've said is sound and makes sense in our current environment. I just don't think that this environment is conducive to encouraging efficient business and could me made much simpler.

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## Greig Whitton

> If the company I  that currently supplies me stationery, falls under any of the above categories, I would start buying from someone else. Why should my book keeping service provider, sales provider or packaging service be any different?


Terminating a supplier contract (e.g. for failure to meet documented deliverables) isn't that different from dismissing someone for consistently failing to satisfy their contracted performance standards. Yes, your employee might take you to the CCMA but, by the same token, your supplier might take you to court for alleged breach of contract.

The obvious counter-argument is that you don't have to draw up a formal contract for your suppliers and that you can switch to different providers on a whim. However, this isn't entirely true. Even if you don't have a formal documented contract, there will still be a legally binding verbal agreement that can be enforced. Your supplier may decide that enforcing that agreement isn't worth the trouble, but that's probably because they have other clients and market opportunities to focus on. An employee, by contrast, will probably lose *everything* when they are fired. Yes, they can apply for a job somewhere else, but that will take time. In the meantime, they still have bills to pay, families to support, etc.




> I'm not suggesting one is able to break a contract on a whim. I'm saying that the employment contract should not unilaterally enforce an indefinite term. An employment contract should be an overdraft facility, not a 30 year home loan  - to use a banking analogy.


Great analogy, and I agree with you. I believe that employers should be entitled to employ people on longer fixed terms (e.g. 5 years) without the risk of permanent employment thereafter.




> However why should this all be necessary? If we want to create business (a general term I'm using instead of jobs), surely we want the expert widget maker, making widgets and not wasting his time taking HR legal courses.


Because businesses don't operate in isolation from the rest of society. They intersect with customers (and their families), employees (and their families), other businesses, etc. The need for (some) regulatory oversight is obvious and small businesses can't be excluded because the cumulative impact of thousands of SMEs doing as they please is no less risky than a large listed company doing as it pleases. 




> And if we make hiring mistakes, surely an employee shouldn't benefit from that mistake either - at expense to customers, suppliers and stakeholders?


The employee's benefit is accidental. However, dismissing the employee to correct the mistake imposes a loss (to the employee) that is both immediate and predictable.




> But don't you think that being awesome at building widgets should be good enough to have a successful business? Is all the admin and HR really necessary?


I think that being awesome at building widgets is good enough if you want to be a widget builder. But building a business that can build awesome widgets is not the same thing as building the widgets yourself. You can't enjoy the opportunities of business ownership without embracing the responsibilities and risks that accompany those opportunities. Business owners who are averse to those responsibilities and risks should stick to building widgets instead of businesses.

Deep down, I think that many small business owners don't actually want to be business owners. What they really want is a well paying job with long term job security where they can just focus on doing what they love doing. They believe that they can have that by starting their own business because they don't bother doing their research and learning what running a business actually involves.




> Almost everything you've said is sound and makes sense in our current environment. I just don't think that this environment is conducive to encouraging efficient business and could me made much simpler.


I agree with you 100%. We absolutely need a simpler business administrative environment. But such a change would only reward the guys who are seriously committed to building a business - it won't stop the whiners from whining or the blamers from blaming government for not making things even easier.

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## Dave A

I just love this interchange. It's like talking to government on issues like this.




> Almost everything you've said is sound and makes sense in our current environment. I just don't think that this environment is conducive to encouraging efficient business and could me made much simpler.





> I agree with you 100%. We absolutely need a simpler business administrative environment. *But such a change would only reward the guys who are seriously committed to building a business* - it won't stop the whiners from whining or the blamers from blaming government for not making things even easier.


The problem with the answer is it is deflection.
The question was about improving the business environment, which would in turn improve the economy, result in more jobs, etc. 
The point is conceded, but it's suggested it can't be implemented because it's still not going to stop the whiners.

Hey - let the whiners whine. As you say, they're going to whine anyway whether you do nothing or something.
The mission is to grow the economy to reduce unemployment, make higher wages more affordable for business etc., not to stop the whiners whining.

We have to face up to the challenge before us - the regulatory environment is not conducive to the growth we desperately need. This isn't theory - the proof is in the pudding we're eating right now.

And if a big part of the solution is to reduce the emphasis on job protection, the sooner we swallow that pill, the sooner we're going to turn the tide.

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## Greig Whitton

> The mission is to grow the economy to reduce unemployment, make higher wages more affordable for business etc., not to stop the whiners whining.
> 
> We have to face up to the challenge before us - the regulatory environment is not conducive to the growth we desperately need. This isn't theory - the proof is in the pudding we're eating right now.
> 
> And if a big part of the solution is to reduce the emphasis on job protection, the sooner we swallow that pill, the sooner we're going to turn the tide.


Dave, you initiated this thread with the express purpose of soliciting reasons for why employers should not be allowed to dismiss on a whim and I have done my best to present sensible reasons.

If you want to turn this thread into a debate about whether allowing employers to dismiss on a whim will lead to more job creation then there are two questions to consider:

#1: Will allowing employers to dismiss on a whim lead to more jobs and economic growth?

The intuitive answer is "of course". But actual research is less clear. Consider, for example, this presentation at the Annual Labour Law Conference held in Johannesburg last year.

#2: If allowing employers to dismiss on a whim does lead to more jobs and economic growth, where do you draw the line with respect to other business regulations like contract law, health and safety, consumer protection, etc.?

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## BusFact

> The obvious counter-argument is that you don't have to draw up a formal contract for your suppliers and that you can switch to different providers on a whim. However, this isn't entirely true. Even if you don't have a formal documented contract, there will still be a legally binding verbal agreement that can be enforced. Your supplier may decide that enforcing that agreement isn't worth the trouble, but that's probably because they have other clients and market opportunities to focus on. An employee, by contrast, will probably lose *everything* when they are fired. Yes, they can apply for a job somewhere else, but that will take time. In the meantime, they still have bills to pay, families to support, etc.


Not sure what verbal agreement you are referring to here. If my plastic supplier delivers a few orders late and causes me problems with my customers. I look for another supplier. No hearings, no processes, no contracts. My orders for the next month simply get emailed to another company.

You are right the employee can be put in a serious predicament. That is a reality and pretty much why the legislation exists. Though what about the potential employee who would have replaced the fired employee, done a better job, earned the company more money so they paid more taxes and gave their suppliers more business? He too has bills to pay and a family support, but instead cannot because the vacancy remains filled.

If the intention is to protect jobs on the wider scale to prevent economic crashes, why not simply say you can fire on a whim as long as the position is filled within a month?

Protecting weaker employees does not seem like sound policy. You know survival of the fittest and all that ...




> Deep down, I think that many small business owners don't actually want to be business owners. What they really want is a well paying job with long term job security where they can just focus on doing what they love doing. They believe that they can have that by starting their own business because they don't bother doing their research and learning what running a business actually involves.


I'm sure most people would love that sort of job  :Smile:  The problem again, and we seem to agree on this, is that owning a business should not require extensive research and learning. It does in this real world, but why should it be that way?

All your comments are good advice and reasonable for how things are. I'm pushing for change on how things could be better, because the current situation does not make sense to me.

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## BusFact

> #1: Will allowing employers to dismiss on a whim lead to more jobs and economic growth?


 I don't know either way for sure. In any event I think the focus should not be on jobs. It should be on creating businesses. But I'm back in my fairy tale land again.




> #2: If allowing employers to dismiss on a whim does lead to more jobs and economic growth, where do you draw the line with respect to other business regulations like contract law, health and safety, consumer protection, etc.?


You've brought this up before and I'm not really following the argument.  A contract should still be enforceable by law. I'm saying an employment contract should have no term clause in it, nor should it imply one. The contract is never broken, it is simply brought to a close by one of the parties, just like the employee can do now. You should still be able to insert a term clause in if both parties want one, and then it must be enforced.

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## Dave A

> Dave, you initiated this thread with the express purpose of soliciting reasons for why employers should not be allowed to dismiss on a whim and I have done my best to present sensible reasons.


Actually, my purpose was to initiate a debate where pro's and con's could be raised. (Actually, it's my objective for having anything posted on TFSA - both "for" and "against" comments are welcomed - preferably with reasons / motivation).

Sorry if the question part of the title misleads. (I'm not sure if I'd just said "why" or "why we should allow it" would have improved things any).

And make no mistake, I appreciate your points and input - perhaps even more so because they don't correlate neatly with mine. If we didn't have and allowed for different points of view here, what's the point of having a forum. The very point is to be able to compare different views, and when appropriate adjust our own thoughts accordingly.

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## Dave A

> #1: Will allowing employers to dismiss on a whim lead to more jobs and economic growth?
> 
> The intuitive answer is "of course". But actual research is less clear. Consider, for example, this presentation at the Annual Labour Law Conference held in Johannesburg last year.


You can also read this Unions vs. the Right to Work.

Although the USA is not particularly regarded as a country with progressive labour legislation, the state-by-state nature of the country does produce some interesting diversity when it comes to labour legislation - and a study where the same article had this to say on the matter:




> There is evidence that right-to-work lawsor, more broadly, the pro-business policies offered by right-to-work statesmatter for economic growth. In research published in 2000, economist Thomas Holmes of the University of Minnesota compared counties close to the border between states with and without right-to-work laws (thereby holding constant an array of factors related to geography and climate). He found that the cumulative growth of employment in manufacturing (the traditional area of union strength prior to the rise of public-employee unions) in the right-to-work states was 26 percentage points greater than that in the non-right-to-work states.


That's a pretty significant difference when you're trying to reduce unemployment.

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## Greig Whitton

Thanks for the reference, Dave.

It's clear that there are conflicting studies regarding the impact of employment regulation on economic growth, particularly when comparing developed and developing countries. My gut feel is that regulatory reform is not enough and that it could actually backfire if done in isolation.

Why?

Because simplifying labour laws wouldn't provide a direct incentive to employ - it would simply ease the direct disincentive to employ. I feel that what we really need is a combination of the two: more incentives to employ (e.g. company and/or shareholder tax breaks for exceeding a minimum employee:turnover ratio), and fewer disincentives (e.g. allowing employers to dismiss for any reason so long as it is not automatically unfair as set out in the Labour Relations Act).

My concern with the reform-only approach is that it might lead to massive job losses in the current economic environment (i.e. companies that are struggling would immediately use the opportunity to dismiss employees with greater ease as a convenient cost cutting solution).

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## Justloadit

> My concern with the reform-only approach is that it might lead to massive job losses in the current economic environment (i.e. companies that are struggling would immediately use the opportunity to dismiss employees with greater ease as a convenient cost cutting solution).


and continuing to maintain employment would maintain the economic situation, or will it lead to the retrenchment and final closure of the struggling enterprise.

I ask this as it was precisely what I had to do in 2001. Closed down and had the complete workforce unemployed, and was out of pocket with capital to create a new business, to be able to re-employ the majority of the good employees, where if I had the opportunity to get rid of some of the troubling employees the business probably would have survived, and be running today, and employing the majority of the staff, and maintaining the support business who supplied the raw materials in the manufacturing process.

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## Dave A

I'm inclined to think the only chance of seeing any relaxation on the labour front is as part of an integrated package anyway - and I'm sure we both agree the whole issue of stimulating economic growth needs a holistic approach. So no argument with you on not doing this in isolation  :Smile: 

Just a thought to consider on this point of yours -



> My concern with the reform-only approach is that it might lead to massive job losses in the current economic environment (i.e. companies that are struggling would immediately use the opportunity to dismiss employees with greater ease as a convenient cost cutting solution).


Quite possibly. Even likely, but that would put those businesses on a path to recovery and future growth a lot faster than just hobbling them...

When it comes to bounce-back, I like to compare the '97 crash vs the 2008/9 crash and the way it affected the property market here in SA. When you look at price and volume trends through and after in each, it provides some interesting insights.

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## Greig Whitton

> Quite possibly. Even likely, but that would put those businesses on a path to recovery and future growth a lot faster than just hobbling them...


I agree. But the problem we face today is that employment and job creation have become so much more politicised. If the ANC gives employers the freedom to hire and fire as they please, the trade unions would be up in arms about it. I'm sure many of us would love it if the ANC gave the unions the middle finger, but that would leave the door gaping wide open for the EFF and other radicals. Would the long term political risks offset the short term economic gains?

I'm not saying that we don't need reform, and I'm definitely not saying that political posturing is an acceptable excuse for holding back on reforms. I just don't think this is a challenge that can be solved in isolation of a bigger socio-political picture.

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## Dave A

...hence it needs to be part of a package.

And it seems we've gone a long way to identifying one part of that package that definitely needs to be included.

Or am I being a bit hasty in saying that  :Wink:

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## Greig Whitton

> And it seems we've gone a long way to identifying one part of that package that definitely needs to be included.
> 
> Or am I being a bit hasty in saying that


I'm still not sold on "dismissal on a whim", but I'll happily buy the rest of the package  :Wink:  The real challenge, I feel, is getting trade union buy in.

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## wynn

In a previous life when I worked for bosses I never had the idea of job security, there was always the threat of dismissal for a number of reasons but you would have received notice or pay in lieu of notice and that was as much security as there was, only once did I work for a firm that went 'BANG' and I received zip, nothing, nada and I am sure that DaveA means that if you dismiss a worker for whatever reason there will be at least the minimum compensation.

That is what we should strive for, the right to dismiss an employee, for whatever reason, with the minimum legal compensation.

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Chrisjan B (06-Aug-14)

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## Justloadit

It may sound that I am a bastard, but I want to state that "they made me like this!".

Greig, I am not sure if you if you had the pleasure of having many employees under your supervision, I had 65 at one stage, and I have promised myself that I do not want to be in this position again.  
I used to be Mr nice guy, and got screwed every time by employees.

You are making the employees problem to be my problem. 
In business as a manufacturer there is no guarantee that you are going to get orders from customers, especially in this volatile market and with competition from the East.

If I now employ someone, I must guarantee that they will be looked after for the rest of their natural life :Confused: 
I want to employ a person, I do not want to be compulsory responsible for that person and his whole family including the cat and dog.
There is already sufficient incentives for employees, some 12 or 13 public holidays per year, 21 days of leave per year for employees with more than 5 years service, compulsory 13th cheque in my industry, and approximately 10 days sick leave per year, which does get used by all employees. Effectively as an employer I am paying an extra 43 days per year with no production for these days. Also do not forget that I participate in 50% of provident fund, and contribute 50% to the sick fund, and have to contribute towards the bargaining council fund.

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Dave A (09-Aug-14), roryf (06-Aug-14)

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## Greig Whitton

> That is what we should strive for, the right to dismiss an employee, for whatever reason, with the minimum legal compensation.


Something like this was originally included in the amendments to the Labour Relations Act (I've got some details on my blog if you are interested). Unfortunately, it never made it through to the final draft for obvious reasons (*cough* unions *cough*).




> If I now employ someone, I must guarantee that they will be looked after for the rest of their natural life.


Nope, just for as long as:

* It is operationally feasible to employ them;
* They perform according to the standards that they were employed for;
* Their conduct is acceptable; and/or
* The specific project or period that you employed them for is in effect.




> There is already sufficient incentives for employees


Which is why we need more incentives for employers.

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## Citizen X

> This question was triggered by a post in the Metals Industry strike - my take thread.
> 
> I'll get to the post concerned in a moment, but first let me make an argument based on the same argument used by organised labour to support the right to strike (apparently balanced out by the employer's right to lock out, which come to think of it, the unions are not particularly respectful of right now  ).
> 
> *Argument 1.*
> The employee can resign on a whim. Doesn't even have to give reasons. Why can't the employer dismiss an employee in similar manner?
> 
> *Argument 2.*
> I've highlighted the particularly relevant parts of the post.
> ...


 To lend perspective: The employee/employer relationship is governed both by common law and legislation. When an employee resigns on a whim, the only recourse an employer has is the common law route which is to sue for damages for breach of contract. This is a costly and time consuming route. Legislation regulates the circumstances under which an employee may be dismissed.
The concept of forum shopping is also connected to this. Many wonder why there is a labour court and yet many employees go to the high court. The reason is the very common law employment relationship.

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