Work permits, foreign employees and legal incapacity
The law is clear that an employer may not employ a foreigner without a valid work visa. Section 38 of the Immigration Act 13 of 2002, as amended (“the Immigration Act”) precludes the employment of foreigners who do not have a valid work permit, whilst section 49(3) makes it an offence to knowingly employ a foreigner in violation of the Immigration Act.
Notwithstanding these statutory prescriptions, certain unscrupulous employers still find occasion to flout the Immigration Act and employ foreigners in the absence of a valid work permit, often for reasons of convenience. In other instances, the employer is relatively blameless, such as where the work permit of an employee who has been in its employ for a period of time expires, leaving the employer in a quandary. The law has developed to include protections for such employees. The Labour Court has found, in the well-known case of Discovery Health Limited v CCMA & Others  7 BLLR 633 (LC), that foreign employees enjoy the same protections afforded by the Labour Relations Act 66 of 1995, as amended (“the LRA”), regardless of their legal status.
In other words, an employer is not entitled to simply jettison its obligation to ensure that both substantive and procedural fairness is observed when dismissing an employee who does not have a work permit. Employers are however often unsure as to how the issue should be addressed when they discover that they employ a foreigner who is employed in contravention of the Immigration Act.
Section 188 of the LRA places obligations on the employer to ensure that the dismissal is for a fair reason (substantive fairness) and is in accordance with a fair procedure (procedural fairness). The classification of the ground for the dismissal and the consequent procedure followed by the employer has a direct bearing on the fairness of the termination. An employer who applies the incorrect ground and consequently follows the incorrect procedure falls foul of the LRA resulting in an unfair dismissal and the risk of having to reinstate the employee and/or pay compensation (although in a case involving a foreign employee without a work permit reinstatement would most likely not be an appropriate remedy). In addition, a dismissal for operational requirements necessitates the payment of a severance package which has adverse financial implications for an employer. It is therefore important for the employer to ensure that it correctly contextualises the reason for the termination and that it follows the correct process.
There has been uncertainty about the appropriate ground for the termination of employment in circumstances where a foreigner’s work permit expires whilst in the employ of the employer. In particular, a debate has arisen about whether the dismissal is for reasons of incapacity or for operational requirements.
To determine the cause of the termination it is important to consider the factual cause of the dismissal. As a general rule, dismissals for operational requirements are related to the economic, structural, technological or similar needs of the business. These factors are external to the employee. Incapacity, on the other hand, is understood as the inability of the employee to perform either as a result of a lack of the required skill, knowledge, ability to do the job or as a result of illness or injury. These are factors which are internal to the employee. This distinction has however evolved in recent years and the distinction is not always clear to maintain.
In SACWU & Others, v Afrox Ltd (1999) 20 ILJ 718 (LAC) the Labour Appeal Court (“LAC”) relied on the concept of causation in determining the true reason for the dismissal. This case was concerned with establishing whether the employees had been dismissed for striking or for the operational requirements of the employer. The principles applied by the LAC are helpful:-
“ The enquiry into the reason for the dismissal is an objective one … The issue (the reason for the dismissal) is essentially one of causation…. The first step is to determine the factual causation: was participation [in] … the protected strike a sine qua non for the dismissal… put another way, would the dismissal have occurred if there was no … strike. If the answer is yes, then the dismissal was not automatically unfair. If the answer is no, that does not immediately render the dismissal automatically unfair, the next issue is one of legal causation …. Whether such participation or conduct was the “main”, or “dominant” or “proximate” or “most likely” cause of the dismissal.
In Samancor Tubatse Ferrochrome v MEIBC & Others  8 BLLR 824 (LAC), an employee who was unable to perform due to being incarcerated was dismissed for “operational incapacity”. The LAC held that the concept of incapacity is broader than ill-health or poor performance and would include external legal circumstances which are beyond the employee’s control and which prevent the employee from being able to perform.
This reasoning was followed in Armaments Corporation of South Africa (SOC) Ltd v CCMA & Others (2016) 37 ILJ (LC), where the Labour Court confirmed that dismissals for incapacity can take other forms, such as imprisonment and military call-ups, which incapacitate the employee from performing his obligations in terms of his contract of employment.
This broader understanding of the concept of incapacity was again confirmed in First National Bank — A Division of First Rand Bank Ltd v Commission for Conciliation, Mediation & Arbitration & others (2017) 38 ILJ 2545 (LC). This case concerned the dismissal of an employee who failed, on numerous occasions, to obtain qualifications required in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 (“FAIS”). It was a term of the employee’s contract of employment that he should be qualified in terms of the statutory requirements of FAIS. The employer convened an incapacity process and dismissed the employee on the grounds of incapacity. The employee challenged the fairness of his dismissal by arguing that the employer had selected the wrong ground for dismissal and to the extent that the employer wished to dismiss him, it should have done so for operational requirements.
The Labour Court in FNB confirmed that the LRA recognises forms of incapacity broader than poor performance or ill-health and injury. After considering both the Samancor and Armscor judgments, the Labour Court confirmed that where an act of Parliament prohibits a certain type of employment, the continued employment is not possible on the grounds of incapacity, and not operational requirements.
The operation of the Immigration Act is no different. The Immigration Act precludes the employment of a foreigner who does not have a valid work permit. If an employee’s work permit expires, the employer is unable to satisfy the legal obligations demanded of it by the Immigration Act. In these circumstances, it may be appropriate for the employer to terminate the employment relationship by relying on the ground of legal incapacity.