On 25 August 2021, Kwa-Zulu Natal firefighters battled to contain a fire in a chemical factory in Durban, whereby massive damage had been reported. This factory, which manufactures resin, remains closed, and police continue to investigate the cause of the fire. From March 2020, till current, many South African employers have experienced and continue to experience economic blows of mass destruction on their businesses. From the onset of stringent lockdown levels, large scale illness, and deaths of employees from Covid-19, the effects of the weeklong riots in Gauteng and Kwa-Zulu Natal, employers are struggling to keep their doors open. Throughout each of these events, many employers in all industries have felt and continue to feel the economic effects and require guidance on what options are available to them in terms of the continuation or possible closure of their businesses. This article will touch on many scenarios employers may find themselves in, as a direct impact of economic decline caused by unforeseen interruptions of either Covid-19, civil unrest or the like.

Scenario 1 – The workplace remained open and operational, and employee’s absence’d or misconducted themselves.

  • Unauthorised absence

Many employees fail to report for duty for various reasons. In some cases, employees state that they have Covid-19 symptoms and need to isolate. During the riots, some employees stated that they were fearful or unable to obtain transport to come to work. In these instances, employers must ensure that each case is determined on a case-by-case basis. Factors such as the location where the employee resides, the route the employee takes to travel to work, the possible risk and exposure of contracting Covid-19 must all be considered in light of the employee’s rationale for not reporting for duty. Should the workplace itself have been believed to be “unsafe” either for Covid-19 contamination, riots or any other serious related issue, it would then be unreasonable for an employer to have expected his/her employee to come to work. What is, however, of fundamental importance is that employees have a duty to notify their employers of their absence, the reasons thereof as well as their expected date of return. In any of the scenarios as listed above, should the employee have failed to notify the employer of their absence, the employee may be disciplined for failing to notify the employer for the absence and notification thereof.

  • Off duty misconduct – Breach of Covid-19 regulations, looting and arrest

In general, an employee’s conduct outside the workplace is of no significance to the employment relationship.  In some instances, however, if an employee is directly or indirectly involved in breaching lockdown regulations, looting, civil unrest or the like, the employer must ascertain the severity of the employees’ conduct on the employer’s business and employment relationship and may be entitled to discipline or even in some instances, dismiss the employee.

In the matter of Hoechst (Pty) Ltd v Chemical Workers Industrial Union and Another (1993) 14 ILJ 1449 (LAC), the Court held that the fact that misconduct occurs away from the workplace and outside of working hours does not necessarily prevent an employer from disciplining an employee. As long as there is a link or nexus between the conduct, the employee’s duties and the employer’s business, an employer will be entitled to take disciplinary action against the employee. The following important factors should be considered by employers before considering taking disciplinary action against employees for off duty misconduct.

  • The brand of the company – Was the employee driving a work branded vehicle or wearing his/her work uniform while performing an unlawful act. If so, can the employee in question be linked to the company?
  • The publicity of the employee – Was the employee easily identifiable as being employed by the company due to the position held, for example, the spokesperson, senior management or an employee regularly used for advertising and promoting the business, particularly on social media platforms?
  • The function of the employee – Was the employee in a position of trust relating to the employer’s stock, assets, or security within a business?  Or was the employee in a position of promoting and safeguarding health and safety regulations, yet outside of work, seems to breach them? If so, his or her off duty conduct, therefore, has a direct bearing on the trust relationship.

In EDCON Limited v Cantamessa and Others (JR30/17) (2019) ZALCJHB 273, an employee, while off duty on annual leave during December 2015, published a statement on her private Facebook page, which was re-tweeted and seen to be derogatory and racist. Her off duty conduct was considered by the company as very serious and detrimental to the company’s image. Edcon suspended the employee and held a disciplinary hearing, which resulted in the dismissal of the employee on the grounds that she was a senior employee who had created a risk of reputational damage to Edcon as her employer. At the CCMA, her dismissal was found to be substantively unfair, and as a result, the employee was awarded 12 months’ compensation. On review at the Labour Court, the Court held that the employee exposed Edcon to the risk of reputational damage. The fact that no actual damage was proved by Edcon was not a valid defence. In considering the sanction and the decision to dismiss the employee, the Court considered the following in determining whether the dismissal was an appropriate sanction. The Court based its finding on Saaiman and Another v De Beers Consolidated Mines (Finsch Mine) (1995) ILJ 1551 (IC) and concluded that the employer had the right to take such action where there was prima facie evidence that the employee’s action had, at the least, a potential to impact on the employer/employee relationship.

In light of the above, employers must consult their company disciplinary codes and company policies and procedures where employees have misconducted themselves either by way of absence, civil unrest or breach of Covid-19 regulations.
Scenario 2 – The workplace has to be closed temporarily.

In this instance, many employers instructed employees who could work remotely and who have been doing so under the various lockdown levels to continue to do so. If employees were unable to work from home, some employers made alternative venues available for employees to work from. Unfortunately, not all employees could work remotely and therefore, employers who are able to do so can consider allowing employees to take portions of annual leave and offer a reduced salary or wages for employees who were unable to work. As a last resort, employers may apply the principle of no work, no pay based on the supervening impossibility of performance as confirmed by our Courts. In Macsteel Service Centres SA (Pty) Ltd v National Union of Metal Workers of South Africa and others (2020) JOL 47372 (LC), the Court held that:
The reality in law is that the employees who rendered no service, albeit to no fault of their own or due to circumstances outside their employer’s control, like the global Covid-19 pandemic and national state of disaster, are not entitled to remuneration, and the Applicant could have implemented the principle of ‘no work no pay’.”

It is important for employers to continue to monitor and stay abreast with the amendments and announcements from the Department of Labour, as similar TERS benefits and the requirements and eligibility of same are announced from time to time.

Scenario 3 – The workplace has closed permanently.

Sections 8(1) and 8(2)(h) of the Occupational Health and Safety Act places a duty on employers to provide and maintain, as far as reasonably possible, a safe working environment for employees. In many cases, buildings, shops, factories, or warehouses are still closed due to structural damage from civil unrest. In other cases, some buildings get closed for a day or two after Covid-19 contamination. Either way, employers cannot continue to operate with their doors being closed, and as a result, many employers have limited options available in terms of the continuity of the employment relationship. The employer may consider the following options below, in this scenario.

  • Short Time

Employers can enter into an agreement regarding shorter working hours and less pay, in circumstances whereby employees are still able to perform work on a reduced scale, possibly from a different location. In Independent Commercial Hospitality and Allied Workers Union and Others v CCMA and Others (2015) 24 (LC), it was held that a change in the employee’s terms and conditions of employment, such as short time, may not be done unilaterally. All employees must consent to such changes and agree in writing before such a change can be implemented. Should the employees fail to give their consent to implement short time, the employer may have a valid ground to consider embarking on the retrenchment process.

  • Temporary lay-off

Employers and employees should consult and conclude a temporary lay-off agreement for a period of time in a scenario whereby the company is financially struggling and cannot operate at all, pending the re-construction or fumigation of the workplace. A lay-off agreement may stipulate that the lay-off period will continue for a specified time, while the employer is unable to pay its employees and while employees are unable to return to the workplace. This option is available to employers and will result in no work no pay. However, employees may still be entitled to claim TERS benefits, dependant on the eligibility from the Department of Labour.

  • 189 Retrenchment

In many unfortunate cases, employers no longer have the appetite or cash flow to rebuild or continue operating their businesses, and as a result, their companies cease to operate. In these circumstances, the employer must still consult with the employees and propose termination options. Section 189 of the Labour Relations Act should be consulted in terms of the retrenchment process. Important for employers to note, however, in SACU and Another v Telkom SA SOC Ltd (2020) ZALCJHB 56 (LC), the Labour Court considered at what point during a retrenchment process an employer can offer its employees voluntary severance packages (hereafter “VSP’s”) as an alternative to dismissal. The Court held that employers may offer VSP’s even before initiating a S189 (3) process. In light of the above, employees may consult employees and offer VSP’s before embarking on a formal retrenchment process.

No matter which of the three scenarios employers and employees find themselves in, what is of utmost importance is for the parties to meaningfully always engage and consult with one another to try and save as many jobs as possible. Should you require further assistance and advice, please contact your nearest CEO office for assistance.

Article by: Tammy Barnard
Dispute Resolution Official – Pretoria