There is little doubt that after the lockdown, not everything will be business as usual, and employers must be prepared for the pending challenges. An employer may be faced with redundant workers as a result of the decrease in production or because of less or little demand for services or products.
Employers must be proactive in order for their businesses to survive. We recommend that the following options should be considered in circumstances where employers do not have sufficient work for some of their employees after the lockdown:
The first option that the employer should consider is to enter into an agreement with his employees for a reduction in salary. It is required that there must be a consultation and agreement between the employer and employees when considering this option. The employer must consult and agree with the employees to a salary cut. In Plaatjies vs RK Agencies (2005, 1 BALR 77), the employer offered the employee an alternative post at a lower salary due to the fact that the employer had lost a significant contract. While the arbitrator accepted this as a valid reason for the demotion, it was still unfair because the employer had failed to consult with the employee before making the offer.
Short-time entails a system of working on reduced weekly hours, usually for a temporary period. It applies when employees are required to work and be paid for fewer than their regular hours per day or days per week. Some Bargaining Council Agreements make provision for a short-time and/or temporary lay-off, and some employment contracts have built-in provisions in this regard. If the employer would like to implement short-time to mitigate its losses during the COVID-19 pandemic, it is advisable for the employer to consult and agree with the employees and/or the union representative to enter into this agreement. In Independent Commercial Hospitality and Allied Workers Union and others vs Commission for Conciliation, Mediation and Arbitration and others (2015) 24 LC, the court confirmed that employers may not reduce ordinary working hours unilaterally.
Employers may temporarily send the employees home in circumstances where the employer does not have enough work for the employee, and the employer is unable to pay the employees due to the financial circumstances of the business. In the normal course of events, this option should be implemented only if there is consensus between the employer and employee. However, there is no consensus required for the period of the lockdown.
If no agreement is reached with the above options, employers may have to follow the retrenchment process as a last resort.
After considering and attempting to apply the above options in order to stay an employer’s business and same does not succeed, the employer will have an option to retrench employees. Retrenchment is regulated by section 189 of the Labour Relations Act 66 of 1995 (as amended), where an employer may retrench based on operational requirements.
“Operational requirements” are defined as requirements based on the economic, technological, structural, or similar needs of the employer. It is advisable to get legal assistance when an employer wants to retrench employees because it requires extreme caution. In summary, retrenchment in terms of section 189 of the LRA is as follows:
- The employer must consult with the employees who are likely to be affected by the retrenchment, or their workplace forum, registered trade union or elected representatives, or any person elected in terms of a collective agreement (“consulting employees”).
- The employer must issue a written notice inviting the consulting employees to consult and disclosing all the necessary information for such consultation.
- The employer and consulting employees must engage in a consensus-seeking process on certain matters contained in the notice.
- The employer must allow the consulting employees to make representations about the matters contained in the notice and other matters relating to the proposed retrenchment.
- The employer must respond to the consulting employees’ representations. If the employer disagrees with the consulting employees, it must state the reasons for opposing them.
- The employer must select the employees to be dismissed based on a selection criterion agreed with the consulting employees or selection criteria that is fair and objective.
- After the consultation process has been exhausted, the employer may make its decision to retrench, and then issue a notice of retrenchment to the affected employees.
It is evident from the retrenchment procedure set out above that employees should be retrenched as a last resort, and the employer should do everything in their power to avoid retrenchment, this will include offering as an alternative the options discussed above. Our courts will closely scrutinise any decision taken by an employer to retrench employees.
The retrenchment process requires a consultation and joint consensus-seeking exercise between the employer and the employee to consider all options to avoid retrenchment or, at the very least, mitigate the impact the retrenchment will have on the employee.
Article by: Tshepang Makheta
Dispute Resolution Offiicial – Pretoria