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The distinction between performance and conduct

The distinction between performance and conduct

Extract from the Workinfo.com Course – Basic HR for Line Managers

The Labour Relations Act recognises three grounds upon which a contract of employment may be terminated

  • The conduct (usually the misconduct) of an employee;
  • The inability or incapacity of an employee to do the job;
  • The operational requirements of the employer.

The Act further requires that an employer must have

  • a fair reason to dismiss and must generally follow
  • a fair procedure prior to dismissal. 

The Act sets different procedural requirements for the different grounds for dismissal.  It is nevertheless important to point out that the grounds for dismissal are not absolute and may not be easy to classify.  Thus, an employee who is absent from work for a prolonged period of time may be dismissed on the grounds of misconduct if the absence is wilful or contrary to instructions.  Where the absence is due to illness, dismissal may be justified on the basis of the incapacity of the employee because of the operational requirements of the business, in that the needs of the business requires that the job be done by a person who is not absent from work on a regular basis.  Indeed, it can be argued that the ultimate ground for justifying all dismissals is the operational requirements of the business.  The reason why an employee is dismissed for misconduct or the operational requirements of the business is not so much that the employee has contravened the disciplinary rule or cannot do the job, but rather that it is contrary to the interests of the employer, that the employment relationship continue.


The most common ground on which employers seek to justify dismissal is that of the alleged misconduct of the employee.  In this instance the employee is disciplined for conduct contravening a disciplinary rule imposed by the employer or for committing a material breach of the contract.  Numerous decisions exist where it has been found that employees were fairly dismissed, for a wide range of reasons such as insolence, insubordination, theft and other forms of dishonesty, assault, intimidation, threatening behaviour, intoxication and breaches of the duty to act in good faith.  In determining whether a dismissal was fair, the courts and the arbitrators have considered a wide variety of factors as relevant, for example, the nature of the employer's conduct, the type of job performed, the consistency of the employer's actions, the nature of the employer's business, the employee's length of service and his disciplinary record, the provisions of the employer's disciplinary code, the reasonableness of the code and common law principles relating to the contract of employment.

Underlying most of the decisions is an acceptance of certain important principles which imbue the jurisprudence developed by the Industrial Court and the Labour Court.  There is an acceptance of the principle that the employer must act consistently in the application of discipline.  It is also accepted that the employee must have knowledge of the disciplinary rules and sanctions applicable in the workplace, and that these rules must be reasonable or fair, and that a fair procedure must be followed prior to dismissal.  The principles, framed in the form of questions are the following:

  • Was a rule regulating conduct in the workplace, or of relevance to the workplace, contravened?
  • Is the rule or reasonable or valid rule?
  • Did the employee know of a rule or could he reasonably be expected to know of it?
  • Is or was the rule consistently applied by the employer?
  • Was dismissal the appropriate sanction for the contravention of the rule?


Incapacity, or as it is sometimes termed, incapability, assumes one of two forms. 

The first is where the employee is incapable of doing the job for which he was employed because of some lack of skill, knowledge, ability, or efficiency which is necessary to meet the standards required by the employer.  Dismissals in these circumstances are referred to as dismissals for poor work performance.  The second form is assumed where the employee is incapable of doing the job on account of illness or injury. 

Incapacity is distinguished from misconduct by the requirement that, in the latter case, some notion of culpability on the part of the employee be established.  Incapacity dismissals involve behaviour or conduct which is not intentional or which is not negligent.  In this sense they are 'no fault' dismissals.

Similarly, dismissals for incapacity can be distinguished from dismissals for operational requirements.  While both are 'no fault' dismissals and it is entirely logical that the operational requirements of the business are prejudiced by the continued employment of incompetent or seriously ill employees, the notion of incapacity is not one which is related to any need on the part of the employer to restructure the business or to reorganise work or the patterns of work in response to fluctuating market conditions.  Dismissal for operational requirements are effected by reason of some external factor relating to the operation of the employer's undertaking which results in the loss of employment, rather than any inherent inability on the part of the employee to do the job.

Operational Requirements

Dismissal due to the operational requirements of the employer is more explicitly linked to the needs of the business.  The relationship between the employer and employee has been described as one which is 'mercantile to the core'.  The employer's right to promote its own interest in a competitive market is a value both accepted and encouraged by the free enterprise system.  The law regulating dismissal extends recognition to that value by regarding a dismissal on account of the operational requirements of the business as legitimate.  Clearly, the most common example of a fair dismissal for this reason is that where an employee has been dismissed because she or he has become redundant as a result of factors such as a reorganisation or restructuring of the business, or a downturn of the economic cycle.  The courts have accepted that the retrenchment of workers on this ground will be fair.  They have stated on numerous occasions, provided that the economic or policy decisions underlying or leading to redundancy or retrenchment are taken on bona fide grounds, and is not a result of victimisation, such as an attempt to victimise union members, it will not judge the merits of the economic or policy decision.  While the meaning of 'operational requirements' remains somewhat imprecise, it may be argued that it broadly incorporates reasons for termination of employment for economic, technological, structural or similar reasons.

Technological reasons refer to the introduction of new technology which affects work relationships by either making existing jobs redundant or by requiring employees to adapt to the new technology, even where this may necessitate a change in their terms and conditions of employment.  Structural reasons, similarly, will incorporate a termination of employment in circumstances where posts become redundant consequent on the restructuring of the enterprise. 

'Economic reasons' would appear to mean reasons relating to the financial well-being of the enterprise.  While reasons of this nature may, and often will no doubt be limited to technological or structural changes to the business which have as there consequence the redundancy of the employees, this is not always the case.  Demands may be placed on the business which require changes to the terms and conditions of employment of the employees in order to ensure the continued viability of the business, or its increased profitability.  Employees may be unable or unwilling to meet these demands.  What arises is the inevitable conflict between the consensual nature of the contract of employment and the demands placed on employers, in a competitive environment, to ensure maximum efficiency. 

Other reasons of substantial form which might justify termination on the basis of the employer's operational requirements might include dismissals at the behest of third parties, dismissals for incompatibility and dismissals occasioned by a breakdown in trust under the head of operational requirements.

 There is often confusion between poor work performance and misconduct. This confusion is usually due to the fact that the end result of an employee performing below standard and an employee contravening disciplinary rules and standards may well be the same - the employee loses his job! It is imperative that the two are separated because they belong to different categories, relate to different issues and require different handling.

1. Work Performance (Incapacity)

Work performance is about how the employee fulfils his or her job requirements. The level of performance is determined by an employee's knowledge, skills, behaviours, qualifications, abilities. An employee who under performs as a result of his/her lack of knowledge, skills, behaviours, abilities, qualifications etc cannot be said to be "guilty" of non performance. Any termination arising from non performance is always a no-fault dismissal, unlike a situation where the employee does not perform because he/she intentionally does not perform or does so negligently. Such situations would be treated as misconduct.

2. Ill-health (Incapacity)

Incapacity arising from ill-health or disablement, mental or physical illnesses.

3. Misconduct

Conduct is about how the  employee behaves or conducts himself at work or in relation to the rules of the Company and primarily relates to the employee's value system (honesty, integrity, subordination, self control etc).

Misconduct arises out of an employee's failure to abide by or adhere to the standards of conduct expected of him by his Manager. Misconduct usually implies some form of culpability (guilt) on the part of the employee which may be either due to the employee's negligence (culpa) or intent (dolus).

Selected Case Law

Distinction between Conduct and Capacity

Strict classification of disciplinary offences not a rigid rule

The classification by the LRA of dismissals into those related to the employee’s conduct, those relating to the employee’s “capacity”, and those relating to the employer’s operational requirements is sometimes a recipe for confusion. If employers classify the reason for the dismissal incorrectly, they are bound to follow the wrong procedure, and will most probably end up having to compensate the dismissed employee even if there was good reason for the dismissal.

In SA Broadcasting Corporation v CCMA & others (Labour Court case no. JR466/03, dated 30 December 2005, unreported) the judge acknowledged that the “notional line” between the various circumstances that may give rise to a fair dismissal is not always easy to draw. The same conduct may sometimes fall into different categories.

The judge’s solution to cases of this sort was eminently practical: forget about form and to ask whether there was a fair reason for the dismissal and whether it was in accordance with a fair procedure.

The different procedures suggested in the Code of Good Practice: Dismissal for cases of misconduct, poor work performance or incapacity are not cast in stone. Procedures are merely suggested according to the obvious differences between situations in which employees can be blamed for their lapses and those in which they are not at fault. In cases of genuine incapacity, there is no point in asking an employee to “state his or her case”. But where employees straddle the line between misconduct and poor work performance, all that matters is that they are given an opportunity to do so.


The CCMA set out in Stephen Christopher Jardine v Tongaat Hulett Sugar LTD (KN12659-01) summarized some of these factors, notably those factors to be taken into account to establish dismissal for incompatibility. In so doing, this award provides some guidance on factors to be considered when determining incompatibility.

What, then must an employer do to establish that a dismissal is justified on the basis of incompatibility? The following guidance is given from cases and other authorities:

(1) The starting point is that an employer is entitled to insist on reasonably harmonious interpersonal relationships within its business (Erasmus v BB Bread Ltd (1987) 8 ILJ 537 (IC) 544C). Just as the employer has an obligation not to destroy or damage the relationship of confidence and trust, so too there is an implied term that the employee must not act in a way which results in disharmony and a breakdown in the relationship (Council of Scientific & Industrial Research v Fijen [1996] 6 BLLR 685 (AD) 691).

(2) Incompatibility has been defined as 'the inability on the part of an employee to work in harmony either within the "corporate culture" of the business or with fellow employees'. (Le Roux and van Niekerk in The South African Law of Unfair Dismissal (1994) 285-6)

(3) The essence of incompatibility has been seen to be an irremediable breakdown in the working relationship caused through personality differences, an inability to work together in harmony, friction between employees, a discordance in approaches and so on (Lubke v Protective Packaging (Pty) Ltd (1994) 15 ILJ 422 (IC)).

(4) Incompatibility can be a nebulous concept and the effect of incompatibility often cannot be explained and articulated in clear and objective terms (Subrumuny and Amalgamated Beverages Ltd (2000) 21 ILJ 2780 (Arb) 2789G-H).

(5) Assessing compatibility of managerial interaction necessarily involves the exercise of a subjective judgment. For this reason there must at least be some other evidence besides the opinion of the employer to establish incompatibility. However the formulation of compatibility must, for business and economic reasons, be left to the employer to decide. "It is not for a Court to second guess these decisions to decide upon the appropriate cause of action de nova. Nevertheless an Adjudicator should at least ensure that the employer's standards are attainable. Provided the employer acts in good faith and has reasonable and supportable grounds for concluding that the employment relationship cannot be continued, interference is unwarranted. In determining whether a dismissal is unfair one must be guided by the principal that reasonable people may differ as to what is appropriate under the circumstances". (Subrumuny and Amalgamated Beverages Ltd (2000) 21 ILJ 2780 (Arb) 2789G- 2790A)

(6) The golden rule is that prior to reaching a decision to dismiss, an employer must make some "sensible, practical and genuine efforts to effect an improvement in interpersonal relations when dealing with a manager whose work is otherwise perfectly satisfactory" (Lubke v Protective Packaging (Pty) Ltd (1994) 15 ILJ 422 (IC) 429D-E; Hapwood v Spanjaard Ltd [1996] 2 BLLR 187 (IC) 196-7). The offending employee has to be advised what conduct allegedly causes disharmony, who is upset by the conduct, and what remedial action is suggested to remove the cause of the disharmony. A reasonable period must be allowed for the employee to make amends.

(7) Odd or eccentric behaviour of an employee, even if he or she happens to be a manager or a senior executive, cannot, per se, give rise to a ground for dismissal. Mild or harmless eccentricity should of course be distinguished from extreme forms of unacceptable behaviour. Dismissal may be appropriate only where the employee's eccentric behaviour is of such a gross nature that it causes consternation and disruption in the work-place, and then only after he or she has been properly counselled or warned (Joslin v Olivetti Systems & Networks Africa (Pty) Ltd (1993) 14 ILJ 227 (IC) 230 F-J).

(8) In order to justify dismissal, incompatibility must be entirely or substantially attributable to the employee. (McDuling and MIF (1998) 7. CCMA 8.3.1; Visagie & Andere v Prestige Skoonmaakdienste (EDMS) Beperk (1995) 16 ILJ 421).

(9) The incompatibility that causes the breakdown in a working relationship must be irremediable (Wright v St Mary's Hospital (1992) 13 ILJ 987 (IC) 1004A). Dismissal is regarded as a last resort (Hapwood v Spanjaard Ltd [1996] 2 BLLR 187 (IC) 198C-D).


  • Code of Good Practice: Dismissal

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Gary Watkins

Gary Watkins

Managing Director


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T: +27 (0)10 035 4185 (Office)

F: +27 (0)86 689 7862

Website: www.workinfo.com
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