Telkom faces flak over use of race to cut workforce

Row over proposal to trim costs by R1-billion

TELKOM’s plan to get rid of white managers and specialised staff through retrenchment is illegal, according to labour lawyers.

Documents seen by Business Times show that “race” has been listed as a selection criterion for retrenchments and/or moving into different job positions as part of the company’s restructuring plans.

This is mainly because Telkom thinks its management structure still has a disproportionate number of white staff, many of whom were hired before democracy in 1994.

In the past year, Telkom’s new CEO, Sipho Maseko, has implemented a “turnaround plan” to woo back investors after a tumultous decade of value destruction.

The plan involves slashing Telkom’s workforce of 19 000 to save R1-billion a year and trimming back staff costs from 30% of revenue to 25% in the next five years.

Job cuts are needed partly because Telkom business has shrunk, with revenue slipping to R32-billion from R35-billion in the three years to 2013.

Executives will have to do without bottled water, newspapers in the morning and expensive lunches.

But the job cuts have sparked a new race row.

In a press statement headlined “Telkom states the facts”, the company rejected allegations that race was being considered as the “only” criterion for placements of employees.

But the internal documents obtained by this newspaper show that race will be a key factor in deciding who stays and who goes.

A retrenchment notice sent to staff — officially called a section 189 letter — lists “employment equity” as one of the criteria. This is underscored by another confidential “leadership consultation” document, which says demographics, race and gender will be used to decide who stays.

Law firm Bowman Gilfillan said any company that included

It contravenes the Employment Equity Act and the Labour Relations Act

discriminatory grounds such as race, gender and sexual orientation as selection criteria for retrenchment could faces charges of unfair dismissals.

Michael Bagraim, a labour lawyer with his own practice, said Telkom would not only be breaking the law but going against the spirit of the law.

“It contravenes the Employment Equity Act and the Labour Relations Act. I hope the courts give them a good hiding.”

Telkom is hoping to save R1billion in costs, but any unfair dismissal would backfire because it would then be ordered to pay two years in salaries or even reinstate staff.

Trade union Solidarity, which represents the bulk of Telkom’s white employees, has already filed papers with the Labour Court. Solidarity’s Johan Kruger said Telkom would have to retrench more than 5 000 white employees to achieve the race targets of its employment equity plan.

According to a “gap analysis” in Telkom’s equity plan, the management structure of the company consisted of 853 people, of whom 455 were black, 191 white, 117 Indian and 90 coloured, in 2011. This indicated that, at 22% of management, there were too many white people at top levels.

Telkom has already started retrenching in management.

More than 2 600 affected staff are being encouraged to “reapply” for positions that will be made available. It is here that race will be considered when rehiring staff.

The retrenchment exercise is meant to be completed by March 2015, but this is not the end of the story.

A second round of retrenchments, marked “phase 2”, is due to start in March 2016.

Telkom plans to pay severance packages of 1.5 weeks’ pay for every year an employee worked for Telkom for the first 10 years of service. From the 11th year of service, the employee will get a further one week’s pay for every year worked.

But what has irked staff is that if they have worked for Telkom for a decade, they would be paid out less than a third of a year’s pay.

Telkom has set up support and career counsellors and a 24hour emergency line to assist those who will lose their jobs.