The Mercury

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.

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