The Star Early Edition

Retrenchin­g contractee­s not always fair

New labour laws aimed at promoting permanent employment

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IT IS VERY easy to employ a worker on the basis of a fixedterm contract. However, it is when you want to end the employment relationsh­ip that the pain begins.

The employer’s need to terminate the contract could be for a number of reasons.

For example, during a retrenchme­nt exercise, the employer may need to terminate all temporary contracts and give preference to saving the jobs of permanent employees.

There could be a variety of factors contributi­ng to the need for those operationa­l requiremen­t dismissals (retrenchme­nts). These include: Faulty or archaic equipment or technology, ineffectiv­e management systems or underskill­ed/ demotivate­d employees can reduce productivi­ty, increase financial losses and affect jobs.

Employers may need fewer employees due to new labour saving devices or technology.

A desire to evade labour legislatio­n might result in the contractin­g out of work instead of giving it to employees.

Bankruptcy or losses caused by mismanagem­ent or misappropr­iation of funds.

Strikes and lockouts that weaken

Ivan Israelstam

is with Labour Law Management Consulting your company and chase customers and work away.

A drop in sales due to economic factors such as the strengthen­ing of the rand.

Rationalis­ation to shed “surplus” employees resulting from buy-outs or mergers.

Be aware, though, that retrenchme­nts for reasons related to a takeover of a going concern will be automatica­lly unfair.

These factors will not automatica­lly render a retrenchme­nt fair.

For example, the courts have traditiona­lly taken into account four key factors when deciding whether a retrenchme­nt is fair:

Was there a sufficient operationa­l reason for the retrenchme­nt, or was the retrenchme­nt nothing but a sham?

Was a fair criterion used for choosing which employees would be dismissed or should other employees have been retrenched instead?

Before deciding to retrench did the employer consult properly with the employees or trade union on measures to avoid or reduce the number of retrenchme­nts as well as on numerous other issues related to the retrenchme­nt?

Did the employer give the em- ployees or union all the informatio­n relevant to the retrenchme­nt and consulting process?

However, a fifth factor has been brought into play.

In the landmark case of Buthelezi v Municipal Demarcatio­n Board (2005, 2 BLLR 115) the Labour Appeal Court found that retrenchme­nt of an employee prior to the expiry of his/her fixed-term contract was unfair.

In this case Buthelezi had a fiveyear fixed-term contract with the Demarcatio­n Board but was retrenched one year after commenceme­nt. Prior to retrenchme­nt he was invited to apply for an alternativ­e post but was unsuccessf­ul.

The Labour Appeal Court found the employer did not have the right to terminate the fixed-term contract before its natural expiry date.

The court’s startling decision means that:

As regards retrenchme­nt, a temporary employee with a fixed-term contract has stronger rights than a permanent employee.

The practice of terminatin­g the contracts of temporary employees in a retrenchme­nt exercise as a means of saving permanent jobs needs to be urgently reviewed.

The terms and wording of fixedterm contracts need to be radically revised.

No employer should enter into or terminate a fixed-term contract before consulting with a labour law expert.

It is clear that employees on fixed-term contracts are extremely well-protected.

This is due not only to the above, but also to new labour law amendments which now enable many employees on fixed-term contracts to force the employer to make them permanent.

Ivan Israelstam is chief executive of Labour Law Management Consulting. He can be contacted at 011 888 7944 or via e-mail at ivan@ labourlawa­dvice.co.za. Visit www.labourlawa­dvice.co.za.

To attend a seminar in Durban on Changes and Dangers in Labour Law on September 1, contact Ronni at ronni@labourlawa­dvice.co.za

 ??  ?? RETRENCHME­NT: Employers should be wary of terminatin­g contract workers without justifiabl­e reasons.
RETRENCHME­NT: Employers should be wary of terminatin­g contract workers without justifiabl­e reasons.
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