INCAPACITY VERSUS POOR PERFORMANCE

As an employer, few situations are more challenging than addressing an employee who simply isn't delivering results. But before you initiate any action, ask yourself this critical question: Is your employee unable to perform, or unwilling?

The distinction matters - legally, procedurally, and practically. Misdiagnosing the issue can lead to unfair dismissal claims, CCMA referrals, and unnecessary legal costs. Yet many employers conflate these two very different scenarios, applying the wrong process at the wrong time.

Incapacity Due to Ill-Health or Injury

Definition:

Incapacity due to ill-health or injury arises when an employee is unable to perform their duties effectively because of a medical condition—whether temporary or permanent. The issue lies in the employee’s ability to work, not their willingness.

Key Focus: Employee cannot perform due to health reasons.

Procedure/Steps for Employer:

1. Identify the problem – Confirm the employee’s inability to perform due to health or injury (supported by medical evidence).

2. Consultation – Meet with the employee to discuss the nature and extent of the illness, prognosis, and possible recovery time.

3. Obtain medical information – Request medical reports or refer the employee to a doctor (with consent).

4. Consider alternatives – Explore options such as reduced duties, alternative work, flexible hours, or reasonable accommodation.

5. Assess fairness – Consider the nature of the job, the duration of absence, and the impact on the business.

6. Decision – If no reasonable accommodation is possible and incapacity is long-term or permanent, the employer may terminate on grounds of incapacity.

7. Provide notice and reasons – Communicate the outcome formally in writing.

Poor Work Performance

Definition:

Poor performance occurs when an employee fails to meet the required standard of performance for their position, despite being capable and healthy. The issue lies in competence, skill, or attitude, not health.

Key Focus: Employee can perform but fails to meet standards.

Procedure/Steps for Employer:

1. Identify performance issues – Clearly define and record where the employee is underperforming.

2. Set clear standards – Ensure the employee understands expected performance standards and has been trained properly.

3. Counsel and guide – Meet with the employee to discuss shortcomings and agree on a performance improvement plan (PIP).

4. Provide training and support – Offer assistance, mentoring, or coaching where needed.

5. Monitor progress – Give reasonable time for improvement and provide feedback.

6. Final evaluation – If performance does not improve, hold a formal hearing.

7. Decision – Employer may issue a final warning or terminate for poor performance if fair process was followed.

Key Differences Summary

Aspect	Incapacity (Ill-Health)	Poor Performance
Cause	Medical condition or injury	Lack of skill, effort, or competence
Control	Beyond employee’s control	Within employee’s control
Objective	Determine if employee can be accommodated	Determine if employee can improve
Process	Medical assessment and consultation	Performance counselling and evaluation
Outcome	Possible dismissal due to incapacity	Possible dismissal for poor performance

General legal principles that guide all processes

1. Fairness (substantive + procedural): Any dismissal (for incapacity or poor performance) must be substantively fair (valid reason and proportionate) and procedurally fair (employee given chance to state case, representation where appropriate, full investigation and a fair hearing). The Code of Good Practice is the primary procedural guide.

2. Onus on employer: An employer must show they acted reasonably — set standards, kept records, provided support/training/accommodation, got independent medical evidence where necessary, and explored alternatives to dismissal.

3. Confidentiality & medical records: Treat medical information as confidential and follow OHS / medical-record guidelines. Consult occupational health practitioners where appropriate.

Practical tips & common pitfalls (what employers get wrong)

• Relying only on absence statistics without medical evidence or offering accommodation.

• Skipping the medical assessment or independent medical opinion when prognosis/ limitations are unclear.

• Failing to give meaningful training/support before concluding poor performance merits dismissal.

• Unilaterally imposing a lay-off without an agreement — employees may treat it as constructive dismissal.

• Poor record-keeping — without documentation courts/CCMA will find it hard to accept an employer acted reasonably.