Financial Data
Updated 21 Feb 2020


In the firing line

When firing staff make sure you follow the correct procedure – or it could cost you more than just a few sleepless nights.


01 April 2012  Share  0 comments  Print


All the answers to your unique business lifestage questions

Often, the actual decision to let someone go feels like the hardest part of the process. You might feel your judgment is flawed if someone who you interviewed and hired has turned out to be unsuitable for the position.

Even when the decision is out of your hands (for example if you need to trim your overheads in tough times), firing a person can leave you upset and embarrassed.

Whatever the reason, you must approach the process systematically and practically. If you are too emotional it will only inflame the situation and upset the staff member/s.

If you are too blunt and ignore the correct procedure, you will probably find yourself up against the CCMA without a paddle (often you'll be taken there anyway, but you should always be well prepared and in the right).

Any employer will tell you that it's very difficult to fire an employee nowadays, so you MUST go through the correct processes to legally remove them. Check that there aren't any specifics in your contract that differ from the general legal requirements before you go ahead and fire someone.

Following the correct legal processes

Improper conduct:

It does not matter if you find someone stealing from under your nose, drunk on the job, or just totally incompetent, you must give them a series of written warnings before you give them notice in writing. The exception may be extreme offences, such as physical violence, selling or giving away company secrets, taking bribes, or similar. Bear in mind that the Basic Conditions of Employment Act favours the employee, because an employer generally holds the power.

Operational changes:

Before you let people go you must explore the possibility of reducing hours, cutting overtime and/or retraining staff. If not, you need to carefully consider who you let go based on their skills and years of service.

Remember, you cannot give notice to employees who are on leave (whether sick, maternity or holiday leave), as this would be considered wrongful dismissal.

Also keep in mind the minimum notice periods:

  • 6 months' service: 1 week's notice required
  • 6-12 months' service: 2 weeks' notice required
  • 12 months or more: 4 weeks' notice required

What you CAN'T fire people for:

  • Religion
  • Race
  • National origin
  • Age
  • Gender
  • Health (note that you can only fire someone due to ill health if the medical prognosis predicts them being unwell to the extent that they won't be able to do their job properly.)

The cost of firing an employee

The process of firing someone and hiring a replacement can be incredibly costly, especially if the current employee has vital or specialised skills.

Not many companies have systems in place to track these costs, but some sources put the real cost of firing and rehiring between 30-50% of the annual salary of entry-level employees, 100-150% of mid-level employees, and 200-400% for specialised, high-level employees.

Many of the costs are "hidden", but do not be fooled - they are there:

  • Exit costs
  • Recruiting
  • Interviewing
  • Training
  • Lost productivity
  • Customer dissatisfaction
  • Reduced or lost business
  • Administrative costs
  • Lost expertise and company knowledge

Is firing your best option?

If your reasons for giving someone the chop are purely performance or attitude based, it might be more cost effective to learn how to manage the person to get more from them instead.

They might be bored and need extra responsibilities or challenges; they might have personal problems and would respond well to some time off work; they might be lazy and need more micro managing and structure; or they might be negative and need more involvement or training to encourage them to see where the company is going.

Take time to get to understand the person behind the personality before you make any important decisions.

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