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Covid-19: Tough Topics – Retrenchments

The unfortunate accompaniment to the Covid-19 pandemic, which is affecting businesses across the board, is that of retrenchments. The longer the national lockdown continues for the more retrenchments become a reality for employers and employees alike. This is particularly true for those businesses that are unable to operate fully and, in turn, are unable to generate meaningful revenue.

The retrenchment process is fairly technical. It is very important that the process is understood and complied with from both a substantive and procedural point of view in order to reduce any liability whatsoever for unfair termination of employment. The South African labour law landscape has extensive provisions stemming from the Basic Conditions of Employment Act and the Labour Relations Act (“the LRA”). Navigating these laws is a challenging, but absolute necessity.

The Retrenchment Process

Employers, irrespective of the situation, may not avoid the retrenchment process that is set out in the LRA. Section 189 of the LRA sets out the procedure, rules and regulations to be followed when an employer considers retrenchment.

The retrenchment process includes a consultation and joint consensus seeking exercise between the parties to consider all options possible in order to avoid retrenchment or at the very least mitigate the impact the retrenchment will have on the employee.

During the consultative process, employees are given every opportunity to make representations about issues relating to matters under consultation. Such representations are usually given in writing or verbally. Given the national shutdown of businesses, verbal representations are now usually conducted via video conferencing.

No decision to retrench can be taken by the employer prior to the consultations having taken place. The following aspects are usually dealt with during the consultation process (which are raised in the ‘Retrenchment Notice’) including, but not limited to:

- reasons for initiation of the retrenchment process (these must be fair and objective);
- alternatives
- number of employees likely to be affected;
- method for selecting employees to be retrenched (this is a critical part of the process);
- time when the dismissal is likely to take place;
- severance pay;
- proposed other assistance offered to those employees likely to be retrenched;
- the possibility of future employment;
- the current number of employees employed; and
- the number of employees retrenched in the last 12 months.

It is important to note that the consultation process must take place as soon as the employer contemplates retrenchment.

Subsequent to the consultative process, the employer may issue the employee in question with a final termination notice subject to substantive and procedural fairness.

It must be noted that the Commission for Conciliation, Mediation and Arbitration (“the CCMA”) is still available to deal with unfair dismissals despite the national lockdown. It is also very important to remember that when dealing with large scale retrenchments, the CCMA itself will facilitate the process. This applies to employers who intend retrenching:

• 10 or more employees, if the employer employs 50 – 200 employees;
• 20 or more employees, if the employer employees 201 – 200 employees;
• 30 or more employees, if the employer employs 301 – 400 employees;
• 40 or more employees, if the employer employs 401 – 500 employees; and
• 50 or more employees, if the employer employs 501 or more employees.

This would also be applicable if the employer intends to dismiss the above number of employees either on one occasion or cumulatively over a 12-month period.

This again bolsters the need for employers to ensure that they are following the applicable employment laws.

We have uploaded a detailed 'Covid-19 Retrenchment Notice’ to assist employers and business owners in dealing with this difficult process. We have also uploaded the ‘Covid-19 Termination Notice’ providing the final step of the process. These are available for R395 and R195 (both inclusive of VAT), respectively. While these documents are obviously useful for employers, it is important to also comply with the full requirements of the law so far as it pertains to the retrenchment process.

Don’t forget, you can gain unlimited access to both of these documents, the Covid-19 Workplace Policy Pack, and many many more by just subscribing for a once of fee of R1,499 (inclusive of VAT) for 12 months access to our database.

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