Does an employee forfeit Severance pay in the event of refusing a reasonable offer of alternative employment?

In terms of Section 41(2) of the Basic Conditions Act, an employer must pay an employee who is dismissed for reasons based on the employer’s operation requirements severance pay equal to at least one week’s remuneration for each completed year of continuous service with that employer. Section 41(4) of the Basic Conditions of Employment Act provides that an employee, who unreasonably refuses to accept the employer’s offer as an alternative to being retrenched is not entitled to severance pay.

 

In Lemley v Commission for Conciliation, Mediation and Arbitration and Others (2020) 7 BLLR 676 (LAC), a retrenchment process was implemented which affected the employee. As an alternative to being retrenched, the employee was offered a position in East London instead. The employee did not accept this offer. It is noteworthy that the employee did not provide any reasons as to why he could not accept this offer. This same offer was revised two times however, the employee still rejected the offer. The employee was subsequently retrenched and did not receive a severance package. The employee referred a dispute to the CCMA where it was held that the employee refused a reasonable alternative offer of employment and that he was not entitled to severance pay. The CCMA award was taken on review to the Labour Court who confirmed the Commissioner’s decision and dismissed his application for review.

 

Still unhappy with this, the employee appealed the Labour Court’s decision to the Labour Appeal Court. The employee argued that he was entitled to severance pay and that he did not unreasonably refuse the alternative position.  The employee argued that due to his age and personal circumstances, it would have been impossible for him to relocate. The employee was 57 years of age at the time. The employer argued that the alternative offer of employment was reasonable, that the employee did not communicate the reasons as to why he did not want to accept the offer and that the employee was the only one who did not accept the alternative offer of employment.

 

The Labour Appeal Court held that the employee’s age and years of service did not alter the fact that he unreasonably refused the offer of alternative employment made to him. The Labour Appeal Court, therefore, confirmed that the Labour Court correctly dismissed the application for review. The employee was, therefore, not entitled to severance pay.

 

Article by: Ruaan Heunis

Dispute Resolution Official – East London