RETRENCHMENTS IN THE WORKPLACE: ARE YOU IN THE ‘FIRING LINE’?  

The term “retrenchment” is one that is thrown around all too often in South Africa’s current economic climate, and its very use strikes fear into the hearts of employee and trade unions alike, but what exactly are your rights when the bell tolls and the looming spectre of unemployment comes knocking? 

RETRENCHMENTS AND OUR LAW 

Technically speaking, our law does not provide for the “retrenchment” of employees in the workplace. However, the term tends to get used more often as it is less of a mouthful than “dismissals for operational reasons.” This type of dismissal is provided for in terms of section 189/189A of the Labour Relations Act, No. 66 of 1994 (“the act”). Dismissals for operational reasons are regarded as a “no-fault” form of dismissal, meaning that the purpose is not related to any conduct of the employees in question. Instead, the dismissal(s) are where the prevailing economic, technological or structural conditions require employers to let go of employees to ensure their continued survival. 

PROCESSES AND PROCEDURES: 

Section 189 of the act provides that when dismissals for operational reasons are contemplated, the employer must embark on a consultative, joint consensus seeking process with all parties affected by the intended dismissals, which includes the employees themselves, their workplace forum, registered trade union or elected representatives, or any person elected in terms of a collective agreement. 

As part of this joint consensus seeking process, the employer must give notice to any and all interest/affected parties, wherein the employer must disclose all information which is relevant to the retrenchment process, including but not limited to:

• The reasons for the proposed dismissals; 
• The alternatives considered by the employer before proposing the dismissals;  
• The number of employees likely to be affected; 
• The proposed method for selecting which employees are to be dismissed; 
• The time when the dismissals are likely to take place; 
• The severance pay proposed;
  
• The assistance that the employer proposes to offer to affected employees;  

As part and parcel of this process, employees or other interested parties will generally put forward their own proposals to the employers as to how best to minimize dismissals and their impact, change the timing of the dismissals, and even avoid dismissals altogether. It is important that the employer gives due consideration to any suggestions made. These proposals may include the following: 

• Increasing or decreasing shifts and length of shifts 
• Decreasing the number of contractors, casual labour, and outsourced workers; 
• Upskilling employees to allow them to move into different positions; 
• Cessation of overtime or Sunday work; 
• Reduction of wages; 
• Moratoriums on hiring new employees; 
• Offering early retirement packages; 

WHAT IF THE CONSULTATION PROCESS IS UNSUCCESSFUL?

If the proper process and procedures are followed, and it is still ultimately determined that it is not viable for the employees in question to be retained, then ultimately, the proposed dismissals will need to proceed. However, the employer will still be obliged to pay the employees for any outstanding leave days not utilised, any notice pay that is owing to the employee, and amounts due to the employee in respect of their bonuses, and pension and provident fund contributions as the case may be. 

Additionally, and perhaps most significantly, the employer is obliged to pay the affected employee any severance pay that is owed to them. In terms of the Basic Conditions of Employment Act, No. 75 of 1997, severance pay, at a minimum, will amount to one week’s pay for each continuous year of employment. 

WHAT ARE MY RIGHTS OF RECOURSE:  

As with all labour law, the process and procedures followed must be both substantively, and procedurally fair for the decisions to be binding, and if any employee has suspicions that the process or outcome was unfair in way, they will be able to have any such decision reviewed. 

The affected employee will have thirty (30) days from the date of retrenchment to refer the matter to either the relevant bargaining council or the Commission for Conciliation, Mediation, and Arbitration (“CCMA”) to resolve the dispute. If neither the bargaining council nor CCMA is able to resolve the dispute to the satisfaction of the affected employees, they will still be able to refer the dispute to the Labour Court, which has the power to make a final determination on the matter. 

CONCLUSION:  

Whilst the ever-looming threat of retrenchment and unemployment rightfully worries all employees in South Africa, the reality is that our labour laws are designed with the protection of employees in mind, and there are a number of boxes that employers need to tick, and they cannot simply retrench their employees at the drop of a hat, and even then, an employer’s decisions can be subjected to judicial scrutiny. In addition, our labour laws also aim to soften the blow on those affected by retrenchments by ensuring that employees are adequately compensated and have the means to sustain themselves whilst seeking alternative employment.