What workers need to know
OWINGto the prolonged period of recession and then slow economic growth, retrenchment is a possibility facing every South African employee.
Hundreds of thousands of employees in South Africa have recently lost their jobs as a consequence of the poor economic environment.
It is important that every individual knows their rights and iswell prepared to deal with retrenchment if it happens.
There are some things everyone needs to know about retrenchment. Dunstan Farrell, director at Farrell Inc Attorneys specialising in employment law, highlights the imperatives:
Your employer cannot simply retrench you. Any retrenchment or dismissal based on operational requirements needs to be based on sound commercial rationale.
Operational requirements means for any economic, technical or structural reasons. Your employer needs to establish that there are sound commercial reasons for terminating employees’ contracts of employment.
When an employer contemplates terminating employees’ contracts for employment for operational reasons, employees or their trade unions must be provided with certain information in writing and the employees and the trade unions are required to be consulted in an attempt to reach consensus on various issues before an employer can give employees notice of termination of their contracts of employment.
Sections 189 and 189A of the Labour Relations Act set out the procedures that an employer is required to follow before terminating employees’ contracts for operational reasons.
Employers are required to attempt to avoid dismissals, to minimise the number of dismissals, change the timing of the dismissals and mitigate the adverse affect of the dismissals.
The employer is required to consult with the affected employees or the trade unions on the method of selecting employees to be dismissed and the severance pay to be paid to dismissed employees.
A retrenchment cannot simply be presented to employees as a fait accompli and the consultation process cannot simply be a charade.
In terms of the Basic Conditions of Employment Act, an employer is required to pay an employee a minimum severance package equivalent to one week’s pay per year of service.
An employer is also required to pay notice pay in terms of the individual’s contract of employment or in terms of the provisions of the Basic Conditions of Employment Act should the contract of employment not provide for a notice period.
Employees are also entitled to be paid out all accrued leave which is calculated on the basis of the employees’ remuneration at that time being the total cost to company.
The employee is also entitled to all pension fund and provident fund benefits.
Employees are also entitled to all relevant information to make the consultation process meaningful.
In the event of an employee disputing the fairness of a retrenchment the dispute will initially be conciliated in the Commission for Conciliation, Mediation and Arbitration (CCMA).
Should the CCMA be unable to resolve the dispute at conciliation, the dispute will be arbitrated by the CCMA in the event of a single individual employee having been consulted before the dismissal.
In the event of two or more employees having been consulted on the retrenchment, the dispute will be adjudicated by the Labour Court.
An employer can also apply to the SA Revenue Services for a tax directive to have some or all of the severance package paid “taxfree” to the employee.
It is recommended that employees who face retrenchment seek advice through their trade unions or employment law specialists when receiving a notice of contemplation of a retrenchment or when a retrenchment is presented to them as a fait accompli.
In circumstances where an employer offers an employee reasonable alternative employment, the employer is not obliged to pay a severance package.