Can You Be Fired or Retrenched for Being Under Debt Review?

Let us correct a common claim first

You will read on a lot of South African websites that the National Credit Act protects you from being dismissed for going under debt review. That is not right, and repeating it does people harm because it sends them into a dispute with the wrong argument.

The NCA regulates credit providers, debt counsellors and credit bureaux. Section 66 constrains a credit provider that reacts against a consumer for asserting rights under the Act. It does not bind your employer, and there is no provision in the Act that addresses dismissal.

The protection is real. It just comes from labour law, not credit law.

Where the protection actually comes from

Under the Labour Relations Act 66 of 1995, a dismissal is unfair unless it is for a fair reason related to your conduct, your capacity, or the employer's operational requirements, and effected in accordance with a fair procedure.

Being under debt review is none of those three things. It is not misconduct. It is not incapacity to do your job. It is not an operational requirement of the business. A dismissal on that ground alone would therefore be substantively unfair, and you can refer an unfair dismissal dispute to the CCMA.

That is the argument. It is a strong one. It is just an LRA argument, not an NCA one.

Retrenchment is a different question, and the honest answer is less comforting

Debt review gives you no immunity from a genuine retrenchment. If an employer is restructuring for real operational reasons, being under debt review does not take you out of the pool.

What would be unfair is selecting you for retrenchment because you are under debt review. Selection criteria in a retrenchment must be fair and objectively applied, and financial difficulty in your personal life is not a fair criterion.

The practical distinction: 'we are cutting six posts and yours is one of them' can be lawful. 'We are cutting your post because you are under debt review' is not.

The real exceptions, which do exist

Blanket reassurance would be dishonest. There are roles where financial standing is genuinely part of the job requirement:

• Roles carrying a bona fide requirement of financial trustworthiness, including parts of the financial services sector and positions involving the handling of cash or client funds, where credit vetting is a genuine job requirement rather than a pretext.
• Positions where your employment contract expressly requires you to disclose your financial status or changes to it. Read your contract.
• Roles requiring a specific licence, clearance or fit-and-proper assessment where financial standing is one of the assessed criteria.

Whether such a requirement is genuine, and whether debt review actually disqualifies you from the specific role, is decided on the facts of that role - not by a blanket rule in either direction. If you are in one of these categories, get advice specific to your contract and your sector before assuming anything.

Does your employer even find out?

There is no general legal duty to volunteer your debt review status to an employer. Debt review payments are made by you to a Payment Distribution Agency, not deducted by your employer.

In practice, disclosure happens in two ways: your contract requires it, or an emoluments attachment order is served on your employer, which is a court-ordered deduction from your salary and is visible to payroll. An emoluments attachment order is an enforcement step - and avoiding exactly that kind of enforcement is what the section 88(3) protection is for while your review is running properly.

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