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What to consider when you discipline a company director

by , 15 October 2013
Executive employees can be more difficult to deal with than ordinary employees. For instance, you can't discipline an executive who's also a director the same way you'd discipline a junior employee. To ensure you're on the right side of labour law, be sure to consider the following when you discipline an executive who is also a director in your company.

An executive is an employee that conducts her duties and responsibilities at the highest level of your business, for example, your company directors and executive committee members.

If you're disciplining an executive who's also a director of your business, keep the following in mind:

You must bear in mind that the executive is both an employee and a director. And that means you have to deal with these two aspects differently.

For starters, the employment relationship is governed by the executive's contract of employment, your internal policies and procedures as well as the provisions of the Labour Relations Act and the Basic Conditions of Employment Act.

On the other hand, the position of director is governed by the King Report on Corporate Governance, the business' Memorandum and Articles of Association and the Companies Act.

This means, 'if you choose to suspend an executive pending the outcome of a disciplinary hearing, you can only suspend her as an employee. BUT, you can't suspend her as a director as this will prevent her from conducting his statutory fiduciary duties, says the Labour Law for Managers Loose Leaf Service.

You must explain this to your director in her notice of suspension!

And, if you proceed with a disciplinary hearing and you reach a decision to dismiss, this doesn't necessarily mean the executive will no longer be a director in your company.

She'll continue to be a director, unless you've spelt this out in her contract of employment.

It's that simple. Knowing what to consider when you discipline an executive who is also a director in your company will help ensure you stay on the right side of labour law.



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