Why elaborate termination procedures will cost you
6 years ago
Wolfgang, the Company’s new MD, is not happy with Fred, the Head of Sales and Marketing. According to Wolfgang, in the five months he has been in Kenya, he has noticed that Fred is incompetent – he is never clued up on what’s happening in his department or in the industry; he has no leadership skills and he does not seem to understand the business.
When the company loses one of its key accounts, thanks to Fred’s lackadaisical attitude, Wolfgang directs Peris, the HR Manager, to get rid of Fred immediately – despite her protestations that there is a procedure that must be followed prior to effecting terminations on grounds of poor performance. Left with no choice, Peris pens the termination letter which is quickly approved by Wolfgang and then delivered to Fred.
Wolfgang refuses to even read the demand letter sent by Fred’s lawyers demanding, among other things, twelve months’ compensation as damages for the unlawful dismissal.
The court case…
Fred proceeds to sue the company and part of the evidence that is produced is – the company’s Employee Handbook; the Performance Improvement Procedures and the Termination Procedures.
The Employee Handbook provides for biannual performance appraisals; the results of which determine whether or not an employee should be placed on performance improvement.
Fred had been with the company for close to ten years, during which time, he had risen through the ranks. Much as it was known that he used his juniors to do all the work for him and that he was incompetent, none of his supervisors had the guts to tell him the truth during the performance appraisals. Consequently, he always had a ‘good’ or ‘very good’ rating and obviously he was never put on performance improvement.
The performance improvement process gives a non-performing employee one whole year to improve before termination proceedings can be commenced. It also requires that employees be taken through counselling and training for purposes of performance improvement.
The company’s termination procedure is quite elaborate. An employee of Fred’s calibre can only be terminated by the Board after a one year performance improvement process, a recommendation by his supervisor, investigations by an independent committee and a disciplinary hearing…alas! Talk about job security.
In deciding whether or not an employee has been unlawfully terminated, the court considers whether the reason for the termination is valid and whether the employment was terminated in accordance with fair procedure. The burden is on the employer to prove both points.
In this case, it will be nigh impossible for the company to prove that Fred had performance issues in light of the ratings he received during the performance appraisals.
As regards the procedure for termination, the Employment Act, 2007 requires that the employee is given an explanation of the reasons why the employer is considering termination and then a disciplinary hearing at which the employee may make representations on the allegations against him.
In this case, the company’s procedures go over and above the provisions of the Employment Act by providing that an employee of Fred’s calibre can only be terminated by the Board after a one year performance improvement process, a recommendation by his supervisor, investigations by an independent committee and a disciplinary hearing. In such a case, the company is not only required to comply with the provisions of the Act but also the provisions of the contractual documents.
This is an open and shut case; judgment will most likely be entered in favour of Fred against the company.
Firstly, much as performance improvement is necessary, it is doubtful that there can be any justification for a one year performance improvement process. A three to six month time frame with regular reviews should suffice.
- Secondly, organizations should be careful not to have termination procedures that are too elaborate because, in most cases, there is a slip in compliance with all the processes. The simpler the process, the better for the organization.
- Thirdly, performance appraisals must be truthful; it may not be easy to give an honest negative appraisal to an employee, but an untruthful appraisal will be costly to the supervisor and the company in the long run.
Performance issues should be picked up and dealt with expeditiously. If a supervisor and an appraisee do not agree on the results of the appraisal, there should be an escalation procedure so that the process is completed.
- Fourthly, if it is obvious that the Company is in the ‘red’ then settle the case amicably to avoid lengthy court battles and high legal fees.
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