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Managing incapacity is one of the more difficult tasks confronting an employer. The employee may be genuinely ill, injured, or disabled and therefore not blameworthy, while the employer must still maintain productivity, manage costs, and protect other employees from carrying an indefinite additional workload. While the law does not require endless patience, it does require a careful, evidence-based attempt to preserve employment before dismissal is considered.

The central consideration goes far beyond simply whether the employee is sick or has exhausted their sick leave. An incapacity finding hinges on whether the employee remains capable of performing the essential functions of the job (either in the ordinary manner or with reasonable accommodation), and whether the employer can fairly be expected to continue the employment relationship.

Legally, incapacity is a potentially fair reason for dismissal under the Labour Relations Act, but the employer must establish both a fair reason and a fair process. The current Code of Good Practice: Dismissal retains the requirement that employers investigate the extent of the incapacity and consider alternatives short of dismissal.

The Balancing Exercise in Hendricks

The enduring test comes from Hendricks v Mercantile and General Reinsurance Co of SA Ltd (1992) 15 ILJ 304 (LAC). The Labour Appeal Court held that the substantive fairness of an incapacity dismissal depends on whether the employer can fairly be expected to continue the employment relationship, having regard to the interests of both parties and the equities of the case.

Relevant considerations include the nature and cause of the incapacity, the prospects of recovery or improvement, the likelihood of recurrence, the duration of the employee’s absence, the effect of the absence on the employer’s operations, the impact on colleagues, and the employee’s work record and length of service. The test was subsequently endorsed in AECI Explosives Ltd (Zomerveld) v Mambalu and applied in cases involving genuine and persistent illness-related absence.

The significance of Hendricks is that it rejects two extremes. An employer may not dismiss merely because an employee’s incapacity has become inconvenient, but neither must it retain an employee indefinitely when the employee cannot render the service for which they are employed. Fairness lies in balancing the employee’s vulnerability and employment history against the employer’s legitimate operational needs.

Establishing the Facts

The employer’s first obligation is to establish reliable facts. This ordinarily requires appropriate medical information about the employee’s functional limitations, prognosis, likely duration of absence, and prospects of returning to work. A diagnosis alone is not enough though. The enquiry must focus on what the employee can and cannot do, whether the limitations are temporary or permanent, and whether adjustments would enable the employee to perform the essential requirements of the position.

The employee must be meaningfully involved in this process and given an opportunity to make representations, propose accommodations, and respond to the information under consideration. An incapacity process should be consultative and problem-solving in nature, rather than a disciplinary hearing in disguise. Where necessary, input from an occupational health practitioner or another suitably qualified expert should be obtained. Courts have criticised employers that relied mainly on the duration of an absence without objectively establishing the extent of the incapacity or meaningfully exploring alternatives.

Exploring Reasonable Accommodation

For temporary incapacity, possible measures may include extended unpaid leave, a phased return to work, reduced hours, temporary light duties, remote or hybrid work where appropriate, the temporary redistribution of non-essential tasks, or the appointment of a temporary replacement. The Code requires the employer to consider the nature of the job, the anticipated period of absence, the seriousness of the condition, and the possibility of securing a temporary replacement.

Where the incapacity is permanent, the employer should consider adapting the employee’s duties or working circumstances and determining whether suitable alternative employment is available. Accommodation may include modified equipment, an adjusted workstation, flexible scheduling, restructuring peripheral duties, or transferring the employee into a vacant position for which they are qualified. The employer is not generally required to create an artificial position, remove the essential functions of the job, or displace another employee, but it must genuinely investigate existing and reasonably foreseeable alternatives.

The obligation is more onerous where the incapacity resulted from a workplace injury or occupational illness. In such circumstances, a brief or superficial search for alternatives is unlikely to be sufficient. The current Code expressly requires particular consideration for employees incapacitated through work-related injury or illness.

Unjustifiable Hardship

The duty to accommodate is qualified by the concept of unjustifiable hardship. Accommodation need not be implemented if it would cause significant or considerable difficulty or expense, taking into account its effectiveness and the extent to which it would seriously disrupt the employer’s operations.

However, unjustifiable hardship is not established by a general claim that an accommodation would be inconvenient, expensive, or administratively difficult. The employer should be able to provide evidence of the actual cost, operational disruption, safety implications, effect on productivity, and burden placed on other employees. The employer should also have considered whether a less costly or disruptive version of the proposed accommodation was available.

What constitutes hardship depends on context. A temporary reduction in hours may be manageable for a large organisation with several employees performing similar functions, but unsustainable for a small operation in which the employee occupies a critical, specialised role. The Code recognises that the size and circumstances of a business are relevant and that small employers cannot always be expected to undertake processes or measures that are not practical or feasible.

Accommodation also does not require the employer to tolerate indefinite uncertainty. If the medical prognosis remains unclear, the employee has already been absent for a substantial period, repeated extensions have produced no meaningful improvement, temporary arrangements are no longer operationally sustainable, and no reliable return date can be given, the employer may eventually conclude that it cannot reasonably wait any longer.

When Dismissal Becomes Defensible

Dismissal may be fair when the employer can demonstrate that the incapacity materially prevents the employee from performing the essential functions of the job; that the position cannot reasonably be adapted; that no suitable alternative employment is available; and that further accommodation or delay would impose unjustifiable hardship.

The employer should also be able to show the operational consequences of continued incapacity. These may include the cost of temporary replacements or overtime, declining service levels, missed deadlines, safety risks, the inability to fill a critical position permanently, or an unreasonable burden on colleagues. Consistent with Hendricks, the longer and more disruptive the absence, and the poorer the prospects of recovery, the stronger the employer’s justification for bringing the relationship to an end. Conversely, long service, a good employment record, a favorable prognosis, and relatively manageable accommodation will weigh against dismissal.

There is no fixed period after which the employer may automatically dismiss. The decisive issue is whether continued employment remains reasonably sustainable after a genuine investigation, meaningful consultation, and a proper assessment of alternatives. The safest conclusion is not that the employer has ‘done enough’ in the abstract, but that every reasonable and effective measure has been considered, and that anything further would no longer preserve workable employment without imposing unjustifiable hardship. At that point, dismissal may be a regrettable but fair outcome.