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While many employees remain apprehensive about possible retrenchment, employers and employees should remain committed to alternatives and engaging in a joint problem-solving exercise to avoid possible retrenchments.
With the fuel price at an all-time high, several South African businesses are reeling from yet another blow to their bottom lines. Many of them are considering alternatives to improve their financial performance, while others are contemplating more drastic measures such as reducing the number of people in their employ.
Strata-G has observed an increased number of businesses contemplating possible retrenchments in order to keep operations afloat.
Retrenchment is among the various measures companies are talking about. This is worrying, especially because government is desperately trying to find ways to create more jobs.
Employers and employees have a responsibility to explore viable alternatives to possible retrenchments and should not consider it as the first resort.
In fact, there are stringent legal requirements underpinning retrenchment and employers are required to follow due process as set out in the Labour Relations Act 66 of 1995, as amended, before proceeding to effect dismissals based on the operational requirements of the business.
The Labour Relations Act stipulates that employers should embark on a meaningful joint consensus seeking – or consultation – process with employees and their representatives, be it a trade union, workplace forum or other relevant party, before retrenching staff.
The main objective of this process is to try and reach consensus on measures to avoid retrenchment. These could include:
• Short time – instead of employing people on a full-time basis and at a full salary, employers could reduce the number hours per day or days per week, only remunerating employees for the number of hours or days they work;
• Salary reductions, for example, all employees take a 10% cut on their salaries;
• Reduce overtime;
• Other costs saving initiatives such as engaging with suppliers to get better deals.
Employees should not to see this process as an attempt by the employer to simply get rid of them, but rather as an opportunity to engage with the employer and come up with viable alternatives to possible retrenchment.
Rather than adopting a defensive attitude, employees would do better to keep an open mind and engage in good faith. Employer’s themselves should not engage in the process with their minds already made up.
If retrenchments are unavoidable, then all the consulting parties need to try and reach consensus on various aspects such as measures to minimise the number of dismissals; to mitigate the adverse effects of the dismissals; to agree on the method for selecting the employees to be dismissed as well as the severance pay for dismissed employees.
The way employees are selected for retrenchment is particularly important.
No one has done anything wrong. The situation is due to circumstances that are not necessarily within the control of the employer. Therefore, the selection process needs to be fair and objective with clearly defined and agreed-upon selection criteria.
It is important that employers do not treat the process as a tick-box exercise. They should not rush into retrenchment and they must ensure regulatory compliance.
If they don’t comply, the consequences could be devastating. If companies are unable to show that the retrenchments were affected for a fair reason and in accordance with a fair procedure, employees will have recourse to approach the labour courts. Not only could this result in having to pay compensation, but staff morale could suffer, which could lead to a loss of talent and critical skills, as well as a reduction in productivity.
Depending on the number of employees employed in the organisation and the number of employees likely to be affected, employers can enlist the services of the Commission for Conciliation, Mediation and Arbitration (CCMA) to assist with the consultation process. The services of the CCMA are often enlisted in cases of so-called mass retrenchments.
Some organisations offer employee wellness programmes that seek to help retrenched staff members deal with the adverse effects that retrenchment might have on them.
Importantly, employees are often given advice on how to deal with their finances as their retrenchment packages won’t last forever and they may need to negotiate with creditors until they find another job.
There is, unfortunately, a time when retrenchment is the only option for companies to avoid having to close doors.
While retrenchments are understandably upsetting and disruptive, they are sometimes the only viable route to go.
• Advocate Tertius Wessels is legal director of Strata-G Labour Solutions
