In the world of business, it's easy to get caught up in the products or services you offer, but there's a fundamental truth that every successful business owner must grasp; the heart of any business lies in its people. The Innovator Trust has always advocated for backing the jockey, which means focusing on the business functions and the entrepreneur leading the business.
Similarly, your employees within the business are the driving force behind your company's success, and how you manage them can make or break you as an SMME. Following on our Conversations to Innovate Employee Relations Training webinar held earlier this month, here are some insights on the power of effective people management that every business owner should know.
The Importance of People Management
As an SMME owner, it is essential to recognise the significance of effective people management. It isn't just a nice-to-have, it's a critical element for the advancement of your business. Understanding the impact of this fundamental concept will set the stage for building a strong and successful team.
Labour and Employee Relations
Managing the relationship between the employee and the employer is crucial for a harmonious workplace. The nuances of employee contracts can often be tedious but are a critical component within a small business. Knowing what your contracts should include and the different types of contracts that exist provides for a well-structured contractual relationship between employee and employer. A well-drafted contract sets clear expectations and promotes a positive working environment.
Types of Contracts
There are several types of employment contracts that define the terms and conditions of employment between an employer and an employee. The type of contract used may depend on various factors, including the nature of the work, the duration of the employment, and South African labour laws. The most common types of employment contracts include:
- Permanent Contracts: This is the most common type of employment contract. It has no specified end date and typically continues until either the employer or the employee gives notice to terminate the contract.
- Fixed-Term Contract: This contract has a specific start and end date, often used for temporary or project-based work. Employment ends automatically after the fixed term unless both parties agree to extend it. Employees on fixed-term contracts are entitled to the same benefits and protections as permanent employees.
- Casual/Temporary Contract: Casual or temporary contracts are typically used for short-term or irregular work arrangements. Employees are usually paid on an hourly or daily basis.
- Part-Time Contracts: Part-time employees work fewer hours than full-time employees but have a regular, ongoing employment relationship. They are entitled to certain benefits and protections, typically on a pro-rata basis.
- Agency Contracts: These contracts are common in the temp staffing industry. Employees are formally employed by a staffing agency and assigned to various client companies temporarily.
- Freelance or Independent Contractor Agreement: Independent contractors work on a self-employed basis, providing services to clients or companies. They have greater control over their work and are responsible for their taxes and benefits.
- Internship or Traineeship Agreement: Internship contracts are designed for students or recent graduates to gain practical work experience. As an SMME, you may make use of interns early on in your business. Internship agreements often include specific learning objectives and may be paid or unpaid.
- Apprenticeship Agreement: These contracts are used for training apprentices in specific trades or professions. They combine on-the-job training with classroom instruction and are often regulated by specific apprenticeship programs.
Types of Leave
There are several types of leave that employees may be entitled to, depending on their employment contracts, the specific industry, and the Labour Relations Act. Some of the most common types of leave in South Africa include:
- Annual Leave: This is also known as paid leave or vacation leave. Employees are entitled to a specific number of paid leave days based on their length of service. The basic annual leave entitlement is one day for every 17 days worked or 15 working days per year.
- Sick Leave: Employees are entitled to paid sick leave when they are ill or injured. The number of sick leave days an employee is entitled to can vary depending on the length of their service and specific company policies.
- Maternity Leave: Female employees are entitled to maternity leave when they are pregnant. The Labour Relations Act provides for at least four consecutive months of maternity leave. Employees can also take parental leave, adoption leave, or commission parental leave, depending on the circumstances.
- Paternity Leave: Male employees are entitled to at least 10 consecutive days of paternity leave when their partner gives birth.
- Family Responsibility Leave: This type of leave is for employees who need to attend to certain family-related responsibilities, such as the birth of a child or the illness of a child or close family member. It is limited to three days per year.
- Special Leave: Special leave may be granted for specific personal reasons not covered by other leave types. The duration and conditions of special leave may vary by company policy.
- Bereavement Leave: Employees may be entitled to paid leave when they experience the death of a close family member or loved one. The duration can vary, and it is typically specified in company policies.
- Public Holidays: There are several public holidays in South Africa. Employees are entitled to a day off with full pay on these holidays. If an employee is required to work on a public holiday, they may be entitled to extra pay or a day off instead.
- Unpaid Leave: In the case of extended travel, personal reasons, or other exceptional circumstances, employees may be allowed to take unpaid leave.
The Disciplinary Code
Consistency is key in employee relations. The disciplinary code provides a set guideline for procedures for disciplinary action. It provides clarity about unacceptable employee behaviour and must be applied consistently. As an SMME, communicating and applying a disciplinary code consistently within your organisation can help maintain a fair and productive work environment while protecting your business from potential disputes.
Managing disputes with employees should be handled carefully and in compliance with South African labour laws to ensure fairness and resolution. Here are some steps that should be followed for effective dispute management.
- Open Communication: Encourage open and respectful communication between the employee and their immediate supervisor. Many disputes can be resolved through dialogue and understanding.
- Grievance Procedures: If an employee raises a grievance, ensure that your company has a clear grievance procedure in place. Follow this procedure to address the employee's concerns promptly.
- Mediation: Mediation involves a neutral third party who helps facilitate a resolution between the employee and the employer. In South Africa, the Commission for Conciliation, Mediation, and Arbitration (CCMA) offers mediation services for workplace disputes. Regulatory bodies like the CCMA have their own set of procedures that must be followed as required by law. As an SMME owner, it is important to be familiar with these processes and well-prepared to engage.
- Arbitration: If mediation fails, arbitration can be an option. The CCMA provides arbitration services for unresolved disputes. An arbitrator will make a binding decision to resolve the issue.
- Labour Court: In cases where arbitration fails or in certain legal disputes, the matter can be taken to the Labour Court, a specialised court in South Africa that handles employment-related disputes.
Termination Doesn't Have to be Hostile
Terminating an employee's contract is often challenging, but it doesn't have to be hostile. The concept of fairness in employment relationships is critical in ensuring that terminations are conducted respectfully and professionally. Terminations must be both substantively and procedurally fair. Substantive fairness relates to the validity of the reason for termination, while procedural fairness pertains to the process followed. Treating departing employees with dignity reflects positively on your business.
There is a substantial set of requirements that need to be adhered to when dismissing an employee or terminating a contract. Knowing the rules and regulations can protect your business from potential legal issues.
- Reason for Termination: Establish a valid reason for terminating the employment contract. Valid reasons may include misconduct, incapacity, operational requirements, or the expiration of a fixed-term contract. Issuing a written termination letter specifying the reasons for the termination, the notice period and the date of termination is a key part of the process.
- Notice Period: Determine the notice period required, as specified in the employment contract or by law. The notice period can vary depending on the circumstances and the employment contract.
- Allow for a Consultation Process: Depending on the reason for termination, consult with the employee, and provide them with an opportunity to respond and state their case. This is especially important in cases of misconduct or incapacity.
- Retrenchments: If the termination is due to a retrenchment, the business must follow the appropriate consultation and procedural requirements as set out in the South African Labour Relations Act and the Basic Conditions of Employment Act.
- Severance Pay: Be aware of the obligation to pay severance pay if the employee is entitled to it. The amount is usually based on the employee's years of service.
- Documenting the Process: It is important to maintain thorough and accurate records of the termination process, including any meetings, discussions, and written communication. This is both for sound business practice purposes and also becomes necessary in protecting both employer and employee.
Leaving and Post-termination
- Returns: It is good practice to ensure that the employee leaving, returns all company property, such as keys, equipment, and documents. Furthermore, conducting a termination meeting with the employee privately and respectfully, explaining the reasons for termination, and addressing any questions or concerns can go a long way in allowing for an amicable parting and showing empathy as an employee.
- Reference Letter: As an SMME, you may have a keen understanding of what it is like to be on the lookout for new business, chasing client leads and the nerves around the first pitch. Similarly, an employee leaving may not have another job in line, so providing the employee with a reference letter outlining their employment history, roles, and responsibilities goes a long way in ensuring they make a good impression with their next employer.
Your employees are the backbone of your small business, and how you manage them can shape your business's growth and success. In the world of business, understanding the power of effective people management and employee relations is a game-changer. By mastering effective employee relations, you not only create a positive work environment but also ensure the longevity and prosperity of your organisation. Your greatest asset as an SMME is your people. Treat them well, and your business will thrive.