The current situation is undoubtedly one of the most economically challenging in the history of South Africa. As a result of the compulsory lockdown, many businesses have had to close their doors. Some of these small entities will not be able to survive the detrimental impact. For many, this may be the final financial nail in the coffin. The purpose of this article is to address the possibility of embarking on a retrenchment procedure during the lockdown. It is our recommendation, however, that such a process commences after the lockdown period and that alternatives measures, short of dismissal, are exhausted prior to commencing on a retrenchment process, for example, claiming from the TERS, UIF and other initiatives designed to assist employers at this time.
This article revisits retrenchments in the context of the current economic situation in South Africa and emphasises the duty for parties involved in a retrenchment to consult with each other.
Section 189 of the Labour Relations Act, creates a statutory framework regulating the retrenchment procedure in the form of meaningful consultations between the parties. It cannot be assumed that under the current COVID-19 circumstances, the prescribed procedure can be disposed of or circumvented.
In Terms of S189(1), the employer has a duty to consult with the following party:
(a) any person whom the employer is required to consult in terms of a collective agreement;
(b ) if there is no collective agreement that requires consultation –
(i) a workplace forum, if the employees likely to be affected by the proposed dismissals are employed in a workplace in respect of which there is a workplace forum; and
(ii) any registered trade union whose members are likely to be affected by the proposed dismissals;
(c) if there is no workplace forum in the workplace in which the employees likely to be affected by the proposed dismissals are employed, any registered trade union whose members are likely to be affected by the proposed dismissals; or
(d) if there is no such trade union, the employees likely to be affected by the proposed dismissals or their representatives nominated for that purpose.
During the COVID-19 lockdown, employers may anticipate the necessity to retrench certain staff and waiting until the lockdown is lifted to commence the process may prove costly. Although it is recommended that all parties engaging in a consensus-seeking consultation be in the same room at the same time and consult face to face, it is not a legal requirement. With modern technology and various social media platforms available, it is quite conceivable that parties can engage through non-conventional methods.
Employers may ask what will happen where one party frustrates the process and whether this implies that the process can no longer continue. The courts have confirmed that parties who intentionally frustrate a retrenchment process cannot claim, at a later stage, that a fair procedure was not followed. However, the requirement to embark on a meaningful process has not been relaxed as a result of the lockdown.
Employers should, however, remain sensitive to the fact that there may not be a duty on the employee to consult with the employer if the employee is on unpaid leave and this challenge would need to be overcome prior to commencing with the retrenchment process. A recommendation would be to pay the employee for the hours that he-she was participating in the consultation process.
At present, there is no legislative framework guiding parties as to how a non-face-to-face consultation should be done, but it is highly recommended that the assistance of a labour law practitioner should be sought and that the process should be a bona fide consensus-seeking one. The employer also has an obligation to explore all possible alternatives to retrenching prior to making a decision to retrench. Should a decision to retrench nevertheless be taken, the employee must be advised of the decision in writing, and relevant paid notice periods will apply.
The parties can also agree that should the business recover at a later time, then the retrenched employees will be afforded right of first refusal and could re-apply for their positions.
Consultation is a crucial requirement where the employer decides to dismiss for operational requirements. It should never be dispensed with, even though it may be difficult to consult personally, the importance of emails and social media should not be overlooked as helpful communication tools.
Herewith a practical guideline on how this process can be embarked on by utilising technology
The first step that needs to be taken is that the employee must be issued with a notice of anticipated retrenchment, disclosure of information and invitation to consult. The invitation to attend (in terms of section 189 (3) must be sent in writing and must indicate the date, time and place (or platform) where the meeting(s) will take place. The notice to attend may be sent by way of email as this would automatically ensure that record of service can be produced at a later stage. Proper backups should also be made for safekeeping thereof. Invitations to consult must contain the following information:
- Reasons for the proposed dismissals.
- Alternatives the employer had considered before proposing the dismissals, and the reason for rejecting each of the alternatives.
- Number of employees likely to be affected and the job categories in which they are employed.
- Proposed method for selecting employees to be dismissed.
- Date on or the period during which the dismissals are likely to take effect.
- The severance pay proposed to those dismissed.
- Assistance the employer proposes to offer employees likely to be dismissed.
- Elaboration on the possibility or non-possibility of future re-employment of the employees who are dismissed.
- Number of persons employed by the employer.
- Number of employees that the employer has dismissed based on its operational requirements in the preceding 12 months.
After notice sufficient notice has been issued to attend the consultation meeting, this joint consensus-seeking process can take place by making use of IT platforms such as Zoom, Skype or Microsoft Teams. The LRA does not specify how many meetings should be conducted, as the circumstances of each business will differ. At the very least parties must attempt to reach consensus on, inter alia, the following issues:
- Appropriate measures to avoid the dismissals (adjusted working hours, voluntary retrenchment, early retirement, elimination of temporary labour);
- Selection Criteria;
- Severance Pay All affected parties must participate in this process, and it should be emphasised that should a party not make use of these platforms, they waive their right to participate. The employer should also render assistance where necessary. Furthermore, it is also advisable to conduct these meetings on a platform where interactions can be recorded, as this may be crucial to produce at a later stage as evidence in arbitration proceedings.
Once the consultation process has taken place, the employer may apply the selection criteria and may issue the notice of retrenchment to the employees. This can also be done by way of email and must indicate the final payment due to the employee, which will consist of notice pay, statutory payments due, outstanding leave balance and severance pay amounting to one week for every completed year’s service. The employer may also issue the employee’s certificate of service, UI19 and IRP 5 in this manner.
It is a legal requirement that the notice of dismissal be issued in writing.