When your services are no longer required

Last December, a media house laid off more than 20 staff in a move that caused talkability on social media. In a statement, the employer noted that the employees were let go as a result of ‘restructuring and realignment’ at the company. The incident above, is an example of why, sometimes companies have to let employees go.

But even when the reason for termination is justifiable, how should it be done?  A fair termination is one that follows procedure, is ethical and justifiable by the employer. In a fair termination, the employees must be given notice. Procedures for termination vary depending on the reason. Below, we look at the different forms of termination under the Employment Act.

End of a fixed term contract

Fixed-term employment is a contract in which an employer hires an employee for a specific period of time, say two years.  Upon the end of the two-year period, the contract will automatically be terminated. In such a case, the employer, according to Ruth Kulabako, the labour officer at KCCA, is not required to give notice to the employee. 

“An employee has no right to complain that they were not notified since it was clear from the time of signing the contract that it would be for a period of two years. Renewal of a fixed term contract is at the discretion of the employer,” Kulabako says.

At the attainment of retirement age

On clocking retirement age, an employee should automatically be terminated. In public service, retirement age is 60 years, while for high court judges, it is 65 years. In the private sector, retirement age varies from company to company.

“Once an employee reaches retirement age, their contract is automatically terminated, regardless of whether an employee can still perform or not. The employee is not entitled to a notice in this case, because the retirement age is stated in the contract,” Kulabako explains.  

Restructuring and redundancy

An employee is regarded redundant when his or her services are no longer required by an employee. This may be due to economic or technological reasons, which result in shortage or reduction of work that is beyond the employer’s control. Where a company is no longer making enough profit to support a big labourforce, a company may downsize its manpower. Introduction of new technology may also render some workers redundant. For instance, because of technology, work that was being done by three people can be done by one person.  In the past, sugar plantations required workers to clear the land, plant and harvest. However, today there are machines that can clear land, plant and even harvest. In order to achieve efficiency, a company will scrap or merge departments. 

However, before terminating redundant employees, the employer, according to Rhoda Irakiza, the human resource partner at Brighter Monday, must give employees a notice. 

It is also important to explain to them why the company has taken that decision, it does not harm to even take them through a counselling session, to prepare them psychologically.  The employer, according to Irakiza, should also prepare terminal benefits for the affected employees.

“The employees must be repatriated in accordance with Section 39 of the Employment Act. Accrued leave days should be paid as well,” Irakiza says.

Termination on poor performance

This occurs when the employee is not delivering on agreed performance targets. Prior to termination on grounds of poor performance, Irakiza notes that an employee should be put on a Performance Improvement Plan (PIP). The employee is usually given targets they should reach within that period. The targets, under the PIP, must be specific so that they are measurable.

For example, if it is in sales, the employee may be required to achieve sales of upto Shs5m per month. In addition, the supervisor of the employee should provide the necessary mentoring.

Dismissal

According to the Employment Act, dismissal from employment refers to the dismissal of an employee by the employer when the said employee has committed verifiable misconduct.

On the other hand, termination of employment refers to the dismissal of an employee from an employment for justifiable reasons other than misconduct, such as, expiry of contract or attainment of retirement age.

Every employer who intends to dismiss an employee must follow a legal procedure.

The allegations against the employee, should be clearly stated.  The accused employee also has a right to defend themselves. Section 66 of the Employment Act, makes it mandatory for the employer to afford an employee a hearing, which includes giving an employee reasonable amount of time to prepare their defence. An employee also has a right to representation during the hearing.

“When an employee is dismissed they are not entitled to any benefits, the employer will only pay them what they have worked for,” Irakiza notes.       

Incapacity/death

Termination can also occur as a result of death or incapacity.

In the event that an employee falls sick or gets an accident and they are pronounced unfit to work, the employer may terminate an employee on medical grounds.

If the incapacity is work related, the employer is legally required to compensate the affected employee under the workers’ compensation.

Period of notice

• Where the separation between an employee and employer is not due to dismissal, an employee is entitled to termination notice which varies depending on the period of service. Under the Employment Act, an employer is required to give an employee notice of at least two weeks, where the service is for a period of more than six months but less than one year; at least one month, where the service is for a period of more than one year, but less than five years; at least two months, where the service is five years, but less than 10 years; and at least three months where the service is 10 years or more.