The importance of the proper drafting of a termination letter

The recent decision of the Supreme Court in Lateral Holdings Ltd v Murdamootoo [2021 SCJ 19] is an important reminder to employers that the reason stated in a letter of termination must be carefully drafted and may not be subsequently recharacterised.

The case concerned an employee who was charged with an act of misconduct and convened to answer that charge before a disciplinary committee. After hearing the employee’s explanations, the committee gave him the benefit of the doubt and found that the misconduct was not proved. The employer nevertheless decided to terminate the employee’s employment, stating in the letter of termination that in view of the gravity of the circumstances, it could not tolerate the employee’s behaviour and attitude at work and consequently had no alternative than to terminate the employee’s services for breach of trust and confidence at work. 

Before the Industrial Court, the employer contended that the termination was justified on the ground of the employee’s misconduct. The Court found that the letter of termination stated that the reason for the termination was a “breach of trust and confidence”, which could in no way be “equated to misconduct”. On appeal, the Supreme Court accepted the Industrial Court’s finding and took a dim view of the employer’s attempt to justify the termination on the ground of misconduct. The Supreme Court stressed on the legislative requirement for the employer to state the reason for dismissal in the notice of termination. It found that it was not open to the employer to argue in court that the reason for termination was something other than what was stated in the letter of termination.

The Supreme Court also accepted that an employer is not bound by the findings of a disciplinary committee and that the object of the disciplinary committee is to give the employee an opportunity to answer the charge preferred against him and give his version of facts before the employer decides with regard to termination. Hence, notwithstanding the opinion of the disciplinary committee, the employer could have dismissed the employee on the ground of misconduct. It would than have been for the Industrial Court to determine, on the basis of evidence adduced before it, whether the termination was justified in the light of material that was or ought reasonably to have been available to the employer at the time of termination. However, in the case under reference, the fact of the matter was that the employer chose not to terminate the employee on the ground of misconduct, but rather for breach of trust as stated in the letter of termination. The Court found that it was not open to the employer to seek to justify the termination by invoking in court a ground that was different from that expressly specified in the letter of termination.