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South African courts recognise a distinct form of incapacity that arises where an employee is legally unable to work, for example because a statutory licence or status is missing. Examples of this include a foreign national without a valid work visa, a financial‑services representative who is debarred or not “fit and proper”, an employee who loses a mandatory security clearance, or a worker who is denied lawful access to a site.

The thread through these cases is no‑fault impossibility where continued employment would contravene law, or an external legal bar prevents performance.

Dismissal may be fair though if the employer follows an incapacity‑style process and explores reasonable alternatives.

Where “Legal Incapacity” fits in the LRA Framework

Section 188 of the Labour Relations Act (LRA) requires both a fair reason and a fair procedure for every dismissal. While the old Code of Good Practice: Dismissal (Schedule 8) expressly addressed incapacity for poor performance and ill‑health/injury, case law makes it clear that incapacity is not confined to those two categories. It also covers situations where an external legal prohibition or supervening impossibility prevents the employee from lawfully doing their job. Part F of the new Code of Good Practice: Dismissal released in 2025, has specifically acknowledged other forms of incapacity, making it easier for employers to address these situations fairly.

The Labour Appeal Court (LAC) confirmed this broader approach in Samancor Tubatse Ferrochrome v MEIBC, holding that incapacity “may take other forms”, and that imprisonment (and, by analogy, other legal prohibitions) can incapacitate an employee from performing contractual obligations. Fairness turns on facts such as the reason, extent, and likely duration of the incapacity, and whether alternatives exist.

Two additional principles frame legal‑incapacity cases:

• Unlawful work ≠ no labour rights: In Discovery Health v CCMA, the Labour Court held that a foreign national working without a permit is still an “employee” for LRA purposes and may challenge a dismissal i.e. the illegality does not strip labour protections. The same constitutional approach informed Kylie v CCMA (sex‑work context), where the LAC held that “everyone” has the right to fair labour practices even if the underlying work is unlawful.
• Procedure and proportionality still matter: In Solidarity v Armscor (LAC), the Court treated the loss or refusal of a statutory security clearance as incapacity, but set aside a dismissal where the permanence of the incapacity was unclear and the employer moved too quickly.

Typical Legal‑Incapacity Scenarios

We can draw on case law to ascertain how best to handle certain common situations such as the following three.

Foreign nationals without valid work authorisation

The Immigration Act prohibits employing an “illegal foreigner” or someone without status authorising the employment; breach is an offence which exposes employers to consequences such as fines or imprisonment. Yet the Employment Services Act explicitly preserves the right of a person employed without a valid work permit to enforce statutory and contractual labour claims. Practically, you cannot keep employing someone unlawfully, but you must treat termination through the lens of fairness under the LRA.

In Nyakudya v O.R. Tambo District Municipality, a dismissal was set aside as unlawful where the employer relied on an expired visa but failed to follow proper procedure in terminating employment. Reinstatement was not ordered as the illegality remained, but the case underscores that immigration breaches do not negate labour‑law process. Employers must manage the situation as legal incapacity: Verify the employee’s status, urgently engage the employee on possible regularisation, consider interim suspension from work to allow the employee to make necessary arrangements, and document attempts to find lawful alternatives. If authorisation cannot be obtained within a reasonable, evidence‑based period, a dismissal for incapacity will usually be appropriate.

Loss or refusal of security clearances, licences, or statutory registrations

Where a law or regulatory regime makes a clearance or licence a condition of doing the job, the withdrawal or refusal often results in legal incapacity.

In Solidarity v Armscor, a dismissal for inability to work without a required security clearance was confirmed as incapacity. However, where reasons for the refusal were unknown and a review of the decision was pending, dismissal was substantively unfair because permanence was not yet proven.

In Swissport SA v Seanego, after Airports Company South Africa revoked airport access permits, employees could not lawfully enter a National Key Point to work. The Labour Court accepted supervening impossibility as a form of incapacity, provided that the employer considered alternatives and followed a fair process.

These outcomes align with commentary and earlier authority recognising that a legal prohibition on employment is a species of incapacity rather than misconduct or retrenchment.

FAIS “fit and proper”, regulatory exams, and debarments

In the financial‑services sector, an employee may lawfully work only if fit and proper under the Financial Advisory and Intermediary Services (FAIS) Act – which includes passing regulatory exams and maintaining honest conduct.

In FNB v CCMA/Woni, the Labour Court held that failure to obtain the required regulatory exam (despite adequate support and time granted) justified incapacity dismissal, not retrenchment – drawing on Samancor and Armscor to confirm that incapacity includes failure to meet legally imposed prerequisites.

In Associated Portfolio Solutions v Basson, the Court ruled that debarment decisions under FAIS can rest on facts established in a disciplinary inquiry. The statutory duty to debar aims to protect the public and does not require a second full factual hearing, but one must give notice and an opportunity to be heard before debarment. While not an employment case, it shows how FAIS makes someone legally unable to render services, often triggering an incapacity process at the employment level.

These cases required employers to treat an inability to meet FAIS requirements as legal incapacity. Employers are expected to provide support such as study leave and adequate training, allow for reasonable timelines, and consult before dismissal. If the employee’s failure to obtain the qualification is due to cheating, the matter would constitute misconduct – don’t mis‑plead the case.

Process: How to run a Fair Legal‑Incapacity Enquiry

Even where the reason for termination is determined by law, the process must still meet LRA standards. Courts will scrutinise whether you:

1. Investigated and consulted: Put the issue, evidence, and risk to the employee; allow representation and written or oral input; and consider any appeal or review prospects if a regulator’s decision is under challenge.
2. Explored reasonable alternatives: Consider temporary redeployment to lawful work not needing the licence or status; assist with regularisation (e.g. visa renewal) or adjusted duties/hours while an outcome is awaited; or provide a temporary suspension on agreed terms. If the incapacity appears temporary or uncertain, moving directly to dismissal without serious exploration is risky.
3. Considered duration and operational impact: Use objective information to decide how long you can reasonably wait. Samancor accepted that holding a key post open during an indefinite incarceration was not reasonable. Similarly, indefinite uncertainty about a clearance or work authorisation will usually justify ending the relationship once alternatives are exhausted.
4. Kept the categorisation straight: Do not confuse incapacity with misconduct or retrenchment. If the employee caused the legal bar through dishonesty, charge with misconduct; if the issue is an external legal bar without fault, use incapacity; if you are restructuring operations, follow a Section 189 retrenchment process. Mis‑categorising the case is a common reason why awards are overturned.
5. Documented everything: A thorough paper trail – requests for documents, regulator correspondence, renewal attempts, and minutes – will be decisive at the CCMA or Labour Court.

Bottom line

 “Legal incapacity” is not a loophole to dispense with fairness; it is a principled route to end employment when the law itself makes continued work impossible. If you consult meaningfully, seek lawful alternatives, and document why continued employment would breach the law or remain impossible for an indefinite period, South African tribunals and courts will generally uphold the decision – even where the employee is blameless. Missteps in process or timing, however, routinely turn otherwise valid legal‑incapacity cases into expensive, reputationally damaging disputes.