Pay after retrenchment
Companies encouraged to approach the labour department’s ‘Training Lay-off Scheme’
UNFORTUNATELY, retrenchment is an everyday happening in the world of employment. As the economy shrinks we find that many employees, regardless of their skills and their length of service, face the possibility of dismissal for operational requirements (retrenchment).
Already we note that there are almost 7 million unemployed South Africans and the computerisation (mechanisation) of our world at work is making many more jobs redundant.
Employers are obliged to carefully follow section 189 of the Labour Relations Act in order to ensure that they properly consult with the workforce before any decisions are made.
This consultation process has to be entered into as soon as the employer contemplates dismissing one or more employees for reasons based on the employers operational requirements. This consultation process must allow for the employees or their representatives to access information so as to enable them to properly engage and to find appropriate means to avoid the dismissals or to at least minimise the number of dismissals.
Other issues to discuss include timing, the mitigation of the adverse effects and the method for selecting the employees to be dismissed. Crucially, issues such as severance pay must be discussed at length.
It has been my experience over the past five years, as opposed to beforehand, that employees and their representatives want to get straight into the discussions about the severance pay and the extent of the “package”.
The law does outline, in The Basic Conditions of Employment Act, that the employee must be given the appropriate notice and at least one weeks pay per completed year of service.
However, this severance pay can be increased once the parties have entered into the consultation process. Many employers try to enhance that severance pay out so as to entice the affected employees to take the package and leave as soon as possible.
Unfortunately, many individuals, in the current economic crisis, are feeling the squeeze and have unmanageable debt.
I am hearing from many individuals during the consultation process that if they are given their notice pay in cash, plus all their outstanding leave, coupled by the enhanced severance payment, they would like to leave as soon as possible.
This exit would also allow employees to access their pension or provident funds and would on many occasions put their debt on hold once they get their letter of retrenchment. The allure of this payout is strong. Many individuals have explained to me that the pressure on them to pay their creditors is extremely high.
When employees see the extent of the package payout and the fact that it is normally deduction free they do not think about the future, but they merely want to use that money to pay off their current debt.
This state of affairs is completely understandable and unfortunately is repeated on a daily basis. At first glance, this appears to be beneficial for both the employer and the employee and both parties enter into the severance payment agreement freely and voluntarily.
However, this is certainly not the case and needs to be carefully analysed in order to avoid the heartache of the job loss. Many employees are under so much pressure that they merely want to grab the immediate solution and tell themselves that they will find a job within months.
Invariably, this is not the case, and once your immediate debt has been settled, people are left without an income and with very little hope for the future.
Our labour laws are specifically structured to ensure that keeping ones job is paramount. Obviously, circumstances may dictate that you won’t keep your job but if there is a chance of retention then the individual should rather remain employed.
The Department of Labour, through the UIF, has devised a scheme called the “Training Lay-off Scheme”.
Businesses may approach the department once they contemplate the possibility of retrenchment and request help with payments of the salaries of the targeted individuals while those individuals are being retrained to take up other positions.
This scheme is brilliant in its format but has not been taken up by the trade unions and has invariably been a failure.
One of the reasons for this failure is that employers are ignorant of its existence and the members of the trade unions are so hell-bent on receiving their packages that they cannot see their way clear to the retention of the job and the retraining.
My plea is for all the trade unions to reconsider their stance and for employers to approach the department in order to explore a possible introduction of the scheme and for the inspectorate of the department to come and explain it to the union organisers and the staff.
Employees need to understand that the actual job is a valuable asset in itself and should not be traded in as merely a deposit on your debt.