A recent arbitration decision of the Commission for Conciliation, Mediation and Arbitration provides important guidance for employers who engage foreign nationals without valid work authorisation. The case of Sibanda and Others v Roots Butchery ((2025) 46 ILJ 2969 (CCMA)) considered whether the termination of several employees was substantively fair where those employees did not hold valid work permits permitting them to work in South Africa.
The arbitration centred on whether an employer may lawfully dismiss employees who are unable to continue working due to their immigration status. Because the applicants did not dispute the procedure followed by the employer when terminating their employment, the commissioner confined the inquiry to the substantive justification for the dismissals. The arbitration therefore did not examine whether the employer should have treated the matter as misconduct or incapacity from a procedural perspective.
In labour law, situations where employees are legally unable to perform their duties often fall within the realm of incapacity rather than misconduct. The absence of a valid work visa or permit generally creates a legal barrier preventing the employee from continuing to work lawfully, and employers are usually expected to address the issue through an incapacity process.
The dispute arose after several Zimbabwean nationals were employed as general workers at a retail meat business operating under the name Roots Butchery. The employees held asylum documentation but did not possess valid work permits allowing them to be employed in South Africa.
The situation came to light following a coordinated inspection conducted at the employer’s premises. The inspection involved the South African Police Service, the Johannesburg Metropolitan Police Department, officials from the Department of Home Affairs and inspectors from the Department of Employment and Labour. During this inspection, a number of employees and managers were arrested due to immigration related compliance concerns. The individuals concerned later paid fines and were left with criminal records.
Following the inspection, the employer engaged with the affected employees and provided them with a period of approximately one month within which to obtain valid work permits. Evidence presented during the arbitration indicated that the employees had been aware since at least 2022 that their asylum documentation did not grant indefinite permission to remain employed in the country. Despite this, they had not taken steps to secure appropriate work authorisation.
When the one month period expired, the employees had still not obtained valid permits. They explained that administrative challenges and long queues at immigration offices had prevented them from lodging the necessary applications.
The employer then initiated disciplinary proceedings. The employees were charged on the basis that they were unable to continue rendering services lawfully because they did not possess the documentation required to work in South Africa. Following the disciplinary inquiry, the employer terminated their employment.
The legal framework governing dismissals in South Africa is contained in the Labour Relations Act 66 of 1995, which requires that dismissals must be both procedurally and substantively fair. At the same time, the employment of foreign nationals is regulated by the Immigration Act 13 of 2002, which prohibits employers from employing individuals who do not have valid authorisation to work in the country.
During the arbitration proceedings, the employees contended that the termination of their employment was unfair. They argued that they had not been afforded sufficient time to obtain the required documentation and that the employer should instead have retrenched them. According to the employees, retrenchment would have entitled them to severance pay.
The commissioner rejected this argument. In considering the dispute, the commissioner referred to the concept sometimes described as “illegal incapacity”. Although this phrase does not appear in the Labour Relations Act, it has been used in labour law discussions to describe situations where an employee becomes incapable of performing their work because the law prohibits them from doing so.
The commissioner found that the employees fell squarely within this category. Without valid work permits, they could not lawfully be employed in South Africa. As a result, the employer could not continue their employment without violating immigration legislation.
The argument that the employees should have been retrenched was also dismissed. Retrenchment arises where an employer dismisses employees for operational requirements relating to the business itself, such as restructuring or financial constraints. In this case, the inability of the employees to continue working did not arise from business needs but from their own lack of legal authorisation to work.
The commissioner concluded that continuing to employ the applicants would have exposed the employer to legal consequences under immigration legislation. In these circumstances, the employer was not only permitted to terminate the employment relationship but was effectively required to do so in order to comply with the law.
The dismissals were therefore found to be substantively fair.
The decision offers several practical insights for employers. First, when foreign national employees lose the legal right to work in South Africa, the issue will ordinarily be addressed as a form of incapacity because the employee is legally unable to perform their duties. This position flows from the prohibition contained in the Immigration Act against employing individuals without valid work authorisation.
Secondly, retrenchment will generally not be appropriate in such circumstances because the termination does not arise from the employer’s operational requirements but from the employee’s inability to work lawfully.
However, there may be circumstances where dismissal for misconduct could still arise. For example, where an employee knowingly provides fraudulent documents or deliberately misrepresents their immigration status, the employer may be justified in pursuing disciplinary action based on misconduct.
The case also underscores the importance of immigration compliance in the workplace. Employers should verify the legal status of foreign national employees before employment commences and should continue to monitor the validity of work permits throughout the employment relationship.
As a matter of best practice, employers should retain copies of all authorisations permitting foreign nationals to work in South Africa. They should also act promptly if an employee’s right to work expires or is withdrawn, as continuing to employ an individual without proper authorisation may expose both the employer and the employee to criminal liability under immigration legislation.
