Have you considered alternatives to retrenchment?

HAVE YOU CONSIDERED ALTERNATIVES TO RETRENCHMENT?

“The socio-political impact of retrenchments has been most damaging, and concern has been expressed that realistic and viable options to retrenchment are often overlooked as companies hasten to improve the bottom line by simply cutting back on staff compliment.”

[Andrew Levy et al, ‘Alternatives to Retrenchment: How to Reduce Labour Overhead without Retrenching Employees”, Technisem, Andrew Levy & Associates (1992)].

“All parties concerned should seek to avert or minimize as far as possible termination of employment for reasons of an economic, technological, structural or similar nature without prejudice to the efficient operation of the undertaking, establishment or service, and to mitigate the adverse effects of any termination of employment for these reasons . . .’ (ILO Recommendation 166).”

[Martin Brassey et al “Steps to Avoid or Minimize Retrenchment – The New Labour Law” (1987) Juta, 287].

INTRODUCTORY REMARKS:

In an article published in Business Day Live by Natasha Marrian & Skonathi Mantshantsha entitled, ‘Zuma acknowledges economy is sick’, August 31, 2015 the President of the RSA, President Jacob Zuma appealed to “business and labour to prioritise saving jobs over profit margins and wage hikes”.

The mining industry, unions and the government signed a broad plan on Monday to stem a wave of job losses.

Three weeks of emergency talks aimed at stemming job losses in the mining sector had resulted in a series of joint programmes including a commitment from government to establish a fund that would financially assist in retraining retrenched mineworkers, Mineral Resources Minister Ngoako Ramatlhodi said on Monday.

The parties on Monday formally signed off on 10 joint interventions, ranging from joint promotional initiatives to promote South African minerals, to agreements to enhance productivity and an agreement that when mines were intended to be mothballed or sold saving jobs would be prioritised, Mr Ramatlhodi said at a briefing in Pretoria.

There was no moratorium on retrenchments nor did parties believe all the jobs could be saved, Mr Ramatlhodi said, hence government’s commitment to financially assist in retraining. About 19,000 jobs were currently at risk of being lost in the sector, Mr Ramatlhodi said.

Weak commodity prices, low economic growth, continued demands from labour for above-inflation wage increases and the announcement by companies that they would shed tens of thousands of jobs in coming months had prompted emergency talks between the parties earlier on (August 5, 2015).

It is evident that from reported articles and statistics that SA is in the midst of what some opposition political parties labelled a ‘Job Crises’ or rather that unemployment levels have reached a critical stage.

In a posting in LegalBrief Workplace August 26, 2015 referral has been made to an article by Wiseman Khuzwayo “Retrenchments: CCMA springs into action” Business Report (August 19, 2015) wherein it is reported that the Commission for Conciliation, Mediation & Arbitration (CCMA)  responded to the ‘jobs crises’  by establishing a job insecurity crisis committee and task team to ensure that there was sufficient capacity to implement an action plan designed in order to alleviate the imminent terminations due to operational requirements ‘retrenchment’.

The director of the CCMA Nerine Kahn is quoted as having said: “This action plan is part of the CCMA’s job security strategy, which is underpinned by three principles: leave no stone unturned in the quest to find alternatives to retrenchment; where retrenchments are unavoidable, do not allow any worker to walk into the sunset without access to support mechanisms; and where business enterprises are in distress, in partnership, facilitate lifeboat rescue to prevent business closures.” [Emphasis added].

The recent increase in mass retrenchments referrals had given rise to the CCMA embarking on the recorded urgent action plan to support businesses in distress, with 23 231 jobs at stake in the first quarter.

The number is from large-scale referrals received so far. It equals 40 percent of the referrals received last year being in a single quarter.

It said a comprehensive assessment of the national job insecurity situation would be conducted with a focus on identifying high risk sectors.

Social partners would be engaged, focusing on establishing the technical aspects of businesses in distress and job insecurity, the CCMA said.

This included joint collaboration regarding early warning and intervention systems, preventing business closure and job loss, post retrenchment support, facilitation of sector sustainability initiatives and assisting businesses in distress to access enterprise support, promotion of sectoral employability and employment security, training and awareness raising.

PURPOSE OF THE ARTICLE:

Against the above background this article has been written with the emphasis on the duty or legal obligations to consider alternatives to avoid termination of service on the ground of operational requirements, or as it is commonly referred to as ‘retrenchment’.

Referral will be made to possible alternatives to retrenchment that should be considered prior to terminating service.

At the outset it should not be recorded that postings on the LinkedIn network should preferably be brief and not created; nor should it be perceived by the reader as if a comprehensive or an authoritative work of reference on the subject matter. The objective is to edify, within the confines of the medium and to generate interest and possible debate on the subject matter.

This article would differ in substance and nature if compared with previous articles by the writer insofar as it would not be legalistic in nature. Although reference will be made to the law where deemed necessary the focus would be on the submission of practical and possible workable alternatives to termination on the ground of operational requirements or as it is commonly known ‘retrenchment’.

It follows from the above newspaper articles that potential for termination based on operational requirements, [economic reasons] is a matter of great concern in SA. Although one is alive to the unenviable financial position that SA employers face, writer is of the considered opinion that the during the consultation process that should precede retrenchment, some employers do not commence with the consultation process as soon as a reduction of the work force is contemplated.

It ever so often emerges at the arbitration of a retrenchment dispute at the CCMA or as is recorded in many reported judgements by the Courts that upon realisation of economic distress the employer respond forthwith by for example a resolution by its board of directors, or CEO to retrench a predetermined number of employees as a measure “to improve the bottom line by simply cutting back on staff compliment”. [See: quotation by Andrew Levy above].

What follows thereafter is an attempt at compliance by the employer with statutory obligations, to wit to engage the parties in consultation by means of a meaningful joint consensus-seeking process with the purpose to reach consensus [agreement] on various issues as stipulated in section 189(2) & (3) of the Labour Relations Act, 66 of 1995 (as amended) (the LRA).

The ‘consultation process’ that some employers follow is one in name only and not remotely as stipulated in the LRA as referred to supra.

In short: the decision to retrench has already been made and is for all intents and purposes a fait accompli. The consultation process that follows is cosmetic in substance and nature. The process followed constitutes subterfuge. Any proposed alternatives by the union or legal representatives to avoid retrenchment would de facto not be considered in good faith. The process therefore is meaningless and merely a ‘going through the motions’ exercise in order to minimise the risk of litigation based on unfair retrenchment.

There is no real or bona fide willingness and positive participation by the employer and at times the employees in a joint consensus-seeking process; and with the purpose to attempt to reach consensus [agreement].

Writer has on many occasions dealt with disputes where the employer did not bother to engage the employees in consultation and simply issued contractual notice of termination without any compliance whatsoever with statutory obligations. The picture hereunder depicts and succinctly captures the sate of non-compliance by some employers.

However, ever so often the trade union acting on behalf of members leave no stone unturned to prolong or the consultation process by various means some of which will be referred to in this article.

In the authoritative publication by J Grogan 'Workplace Law' (2009) Juta, 10ed at 275, the learned author observes that Section 189 requires that all consultation parties [should] attempt to reach consensus on the various matters specified. [Section 189(1) to (3) of the LRA. Consultation is not simply one-sided; an employer cannot be expected to consult with a union that unreasonably evades consultation or seeks to delay it. [Emphasis added].

Therefore, it is submitted that there is in law a reciprocal duty on the employee party to participate in the consultation process 'in good faith'. [My interpretation]. Also see: SASBO – Finance Union v ABSA Bank Ltd [2011] 12 BLLR 1232 (LC). [Courtesy - LexisNexis BLLR].

In SASBO – Finance Union v ABSA Bank Ltd supra, after consulting for several months, the employer decided to close down one of its divisions. Affected employees were issued with reassignment or relocation letters. The union launched an urgent application in terms of section 189A(13) of the LRA. The union contended that the respondent had simply handed letters to the employees concerned without completing the consultation process, and had effectively presented them with a fait accompli without the restructuring plan and its commercial rationale having been adequately discussed.

The Court held that the union negotiator must have been aware of the details of the new business plan for at least two months before the letters were issued. It was also common cause that the union had been provided with detailed information at subsequent meetings. The union had failed to disclose the meeting which had started the consultation process, during which the respondent had provided a detailed plan of the proposed restructuring and the envisaged consultation process.

Although this was not a case in which restructuring was a “life or death” measure to rescue the employer’s business, the union had not given any compelling reason for why consultation should have continued beyond the point where the employer finally took the decision to issue the reassignment and relocation letters.

The Court noted further that the process had not yet led to a decision to retrench any of the affected employees. The Court held that the employer would be irredeemably prejudiced if the process were to be reversed or extended at this stage.

The union would have adequate remedies if the employer breached its undertaking to apply the relocation and reassignment criteria fairly. Rather than having been unfairly terminated, the process was ongoing. The union had, accordingly, failed to make out a case for the relief sought.

The application was dismissed.

WHAT IS CONSULTATION & WHEN SHOULD IT COMMENCE?

Section 189 (1) requires that consultation must take place when the “employer contemplates dismissal”. The word “contemplate” indicates that the employer must consult at the stage when a final decision to dismiss had not yet been reached, but the possibility of dismissal has only been foreseen. At most, therefore, the employer must have an intention to retrench at the stage when consultation commences.

Item 3 of the Code of Good Practice on dismissals based on operational requirements (Appendix 2) states that “the consultation process must commence as soon as a reduction of the work force, through retrenchments or redundancies, is contemplated by the employer.”

This requirement ensures that the employees are afforded the opportunity to influence the employer in its final decision to dismiss or not. The actual timing of consultation will depend on the circumstances of each case. When considering this question, the interests of both the employer and the employees should be taken into consideration and balanced.

If an employer has already decided to proceed with the dismissal for operational requirements, it may mean that the consultation process is not worth its name or cosmetic – if employees or a trade union are confronted with an already-made, fait accompli decision, they have no opportunity to influence the final decision. In such cases the operational requirements dismissal may be procedurally flawed before it has even begun.

Therefore, in order for a fair dismissal on the ground of operational requirements a condictio sine qua non would be the willingness and positive participation by the employer and the employees in a joint consensus-seeking process; and with the purpose to attempt to reach consensus [agreement].

It can be deduced that in order to satisfy the test stipulated by the legislature in Section 189 and pronounced upon by the Courts, the parties’ conduct during the consultation process would in all probability be analyzed, assessed and measured by tribunals using as a yardstick the concept of ‘good faith’.

The question that may follow is, 'What is 'good faith'?'

Within the process of collective bargaining and within the legislative framework of the ‘old’ LRA, 1956 the pronouncements made by the Courts were informative, 'the very stuff of collective bargaining is the duty to bargain in good faith’. 

[See: National Union of Mineworkers v East Rand Gold and Uranium Co Ltd (1991) 12 ILJ 1221 (A) at 1237; Standard Bank of Bophuthatswana Ltd v Reynolds NO & Others 1995 (3) SA 74G].

In short: the Courts held that a fundamental tenet of 'bargaining in good faith' was that parties were required to approach the negotiations with an open mind and a genuine desire to reach agreement.

This purpose was encapsulated in the expression ‘good faith bargaining’. Practices which undermined the bargaining process were deemed to be unfair namely:

• unreasonable preconditions for bargaining;
• premature unilateral action;
• illegitimate pressure tactics;
• denial of union access;
• sham bargaining, inadequate substantiation of proposals and dilatory tactics;
• by-passing a recognised union and negotiating directly with employees when the union was not acting in bad faith; and
• unilaterally implementation of proposals.

It is submitted that the same or similar interpretation of the underlying principles of 'bargaining in good faith' supra would be applied by the Courts and Commissioners of the CCMA in determining compliance with the legislative requirement as stipulated in Section 189(2) of the LRA, 'engaging in a meaningful joint consensus-seeking process [in order to] attempt to reach consensus'.

Item 5 of the Code of Good Practice on dismissals based on operational requirements – deals with the substance of the consultation process and stipulates as is set out hereunder:

“(5) The period over which consultation should extend is not defined in this Act [the LRA]. The circumstances surrounding the consultation process are relevant to a determination of a reasonable period. Proper consultation will include:

(a) the opportunity to meet and report back to employees;

(b) the opportunity to meet with the employer; and

(c) the request, receipt and consideration of information.

(6) The more urgent the need by the business to respond to the factors giving rise to any contemplated termination of employment, the more truncated the consultation process might be. Urgency may not, however, be induced by the failure to commence the consultation process as soon as a reduction of the workforce was likely. On the other hand the parties who are entitled to be consulted must meet, as soon, and as frequently as, may be reasonably practicable during the consultation process.”

ALTERNATIVES TO RETRENCHMENT

INTRODUCTORY REMARKS:

Employers seldom give consideration to the question, “What are the hidden costs if terminations are effected on the ground of retrenchment?”

They are significant, and often overlooked, which is why retrenchment exercises ought to be a measure of last resort, and not a first response. [See: Andrew Levy supra].

Cost factors could be divided to direct and indirect costs, of which some are procedural in nature. 

As to indirect costs the time spent by senior management in lengthy consultation processes should be projected and quantified. Upon commencement with consultation, much of the pace or duration thereof may be determined by the employee side, the issues and the questions they raise. If a union is involved, the usual difficulties of delay and dates for meetings become an issue. The more the employer attempts to expedite the finalisation of consultation, the greater the weight of evidence against the employer that the employer failed to consult properly; alternatively in good faith.

Over and above the time management spend in consultation, there would be preparatory meetings, strategic planning and often the need to seek legal advice. Senior management members are involved and as a consequence they cannot focus on other core duties and obligations. The ‘involved process’ deflects senior management from their other duties; as a consequence the costs are perpetually increasing. 

Other problems that may arise include –

• Negatively affecting the company’s Employment Equity plans, goals and demographic profile.
• Disturbing established work teams and thus resulting in productivity losses.
• Losing skilled staff that is difficult to replace in the event of an upturn.
• Affecting the representative status of a union[s] at the workplace and the possibility of ‘de-recognition’ as well as an increase in labour conflict potential due to inter union rivalry may follow.

As to direct costs the first is the payment of severance pay which often have to funded from current cash flow, notice provisions, accumulated leave pay due and payable, possible contractual payments such as pro-rata bonuses, long-service payments. Employers seldom made provision for these contingent liabilities.

Employers also often do not take into account that although the statutory minimum severance pay in terms of section 41(2) of the Basic Conditions of Employment Act, 75 of 1997 (as amended) (BCEA), to wit ‘severance pay equal to at least one week’s remuneration for each completed year of continuous service with that employer…’ constitutes a minimum amount. Trade unions often wish to negotiate a much more favourable severance package than the ‘bare minimum’ as prescribed in the BCEA!

Further lengthy negotiations may follow not confined only on the quantum of the severance package. All sorts of ancillary issues may be tabled for example a contractual obligation to re-hire retrenched staff in the event of vacancies arising in the post-retrenchment period.  

Therefore, the costs albeit direct or indirect should be analysed and assessed prior to issuing a notice to the employee parties as stipulated in terms of the provisions of section 198 of the LRA.  

WHAT ARE VIABLE ALTERNATIVES TO A RETRENCMENT?

Some that may be considered have been listed below:

• Moratorium on appointments;
• Cessation of overtime;
• Lay-offs;
• Short time;
• Plant shutdowns;
• Early retirements;
• Voluntary separation;
• General cost cutting actions;
• Negotiated ‘wage freeze’ as an alternative to retrenchment;
• Moratorium on wage/salary increases or ‘wage sacrifice’ for a defined period.

It follows that some of the proposed alternatives may be a matter of operational impossibility depending on the nature of the employers business; however, some may upon scrutinisation be a viable option especially after a proper cost-benefit analysis (CBA) has been done.

WHAT IS A COST-BENEFIT ANALYSIS? (CBA)

Employers may find it of considerable value to conduct a cost benefit analysis (CBA) prior to embarking on a retrenchment exercise. A CBA involves comparing the total expected direct and indirect cost/risk of retrenching employees against the commercial viability and practicality of implementing alternative measures to termination of employment, in order to establish whether the benefits of implementation of said alternative measures outweigh the direct and indirect costs/risks of retrenchment, and by how much.

Following hereunder writer deemed it appropriate to discuss some of the alternatives and to provide the reader with hopefully useful information as to the meaning of the various measures and legalities as well as potential difficulties in the implementation of the alternative under discussion.

LAY-OFFS

A lay-off can be defined or rather explained as the temporary suspension of a contract of employment because of an employer deciding to reduce his or her operations as a result of a shortage of orders, a temporary decline in the market, or other factors over which the employees have no control. Employees are re-employed when the demand for labour improves and they do not lose their seniority or other benefits, except remuneration, for the period during which they were laid off.

The contract of employment is therefore not terminated but is rather suspended. Employees receive no payment for the period and nor do their benefits such as pension or medical aid usually continue to accrue. However they do have the reassurance that either after a specific time or when matters improve, they will be able to take up their jobs again.

It follows that lay-offs cannot be unilaterally implemented by employers. The implementation of this measure should form the subject matter of agreement, except if there is provision for lay-off contained in a collective agreement struck at bargaining council or a plant-level agreement.  

However, not all employers are aware of the legal consequences that may follow pursuant to the unilateral implementation of what the employer deemed to be a lay-off and a fair one for that matter.In an arbitration that served before writer the background an material facts were as follows: pursuant to the normal closure of business during the 2012 festive season Applicant, in accordance with contractual obligation tendered service on 14 January 2013.

Upon arrival at Respondent’s premises Applicant; as well as all employees in the employ of the Respondent were served with a letter/notice. The contents of the letter/notice were to the effect that Respondent would only commence with business on 01 March 2013, ostensibly for reasons based on “unforeseen financial and unresolved issues” (sic). Following thereon, Applicant made various attempts to contact the wife of Respondent’s only director, Mrs. N who was responsible for Respondent’s financial administration.

For the purpose of this article it was deemed appropriate to quote the contents of the letter/notice dated 14 January 2013 which was handed to the Applicant; as well as to all the Respondent’s employees:

“To all employees of SM (Pty) Ltd: Due to unforeseen financial circumstances and unresolved issues the company will not re-open on the 14 of January 2013 but only on 1 March 2013.

The company also in unambiguous terms wants to make it clear that this letter will by no means be seen as a dismissal letter (sic).

Regards

Management”

Following thereon, Applicant eventually managed to make contact with N and made enquiry as regards the status of the employment relationship whereupon N replied “I can do nothing”, or words to that effect.

On or about 12 February 2013 Applicant received an sms-message from the Respondent in which she was requested to furnish Respondent with address particulars which Respondent intended to use to forward form UI19 in terms of the provisions of the Unemployment Insurance Act 63 of 2001. [Normally used in SA by employees in order to claim unemployment benefits upon termination].

Legal considerations:

According to the authoritative publication by Grogan J: Dismissal (2010) JUTA 383, to avoid retrenchment, employees may be willing to agree to take unpaid leave or accept “lay-offs”. In such cases, the consent of employees or representatives must be obtained, unless the conditions of employment provide for such eventualities. In the matter before me the Applicant did not agree to a “lay-off”.

Therefore, by simply informing the Applicant of the “lay-off”; Respondent acted unilaterally and without consent of the Applicant. Notwithstanding the wording of the letter referred to above, that it should not be perceived as constituting a dismissal letter; in law the Respondent unilaterally amended terms and conditions of employment which amounted to a repudiation of the contract and in turn entitled the Applicant to accept and thereby cancel, or to hold the Respondent to the contract.

Suffice it to mention that it was found that by serving Form UI19 the Respondent without lawful grounds indicated to the Applicant a deliberate and unequivocal intention no longer to be bound by the contract. Therefore, Respondent was said to “repudiate” the contract.

In the light of the aforegoing it was found that the Applicant’s contract was terminated in terms of the provisions of Section 186(a) of the LRA. The Applicant was entitled to relief in terms of the provisions of Section 41(2) of the Basic Conditions of Employment Act – “Severance Pay”.

In another interesting and rather technical matter that served before Senior CCMA Commissioner GS Jansen van Vuuren, Galane / Green Stone Civils CC [2015] 1 BALR 60 (CCMA) the following events unfolded that led to a dispute referral to the CCMA.

After being placed on short time and then told to stay at home until further notice, the Applicant referred a dispute to the CCMA, claiming that he had been dismissed but not stating the reason for his alleged dismissal. The Respondent contended that the applicant lacked jurisdiction to entertain the matter because the applicant had not been dismissed, but rather had been instructed to remain at home until the respondent obtained building contracts.

The Applicant agreed that he had not been dismissed.

The Commissioner noted that the debate over whether section 191(5) of the LRA is “employee driven” in the sense that dismissed employees may choose between the Labour Court and statutory arbitration has now been settled by the Labour Appeal Court, which has held that jurisdiction is determined by the actual reason for the dismissal. Although the matter had been referred for arbitration, it was the arbitrator’s duty to establish jurisdiction.

Short time is not mentioned in the LRA, but is a method used to avoid retrenchment. This case was not about the interpretation of a collective agreement. However, the applicant was a permanent employee who had been left without income indefinitely.

This did not amount to short time, but was for all practical purposes a dismissal. The Commissioner held that refusing the applicant relief would in these circumstances license unscrupulous employers to evade their obligations to employees. While not specifically catering for situations in which the applicant found himself, the statutory definition of “unfair labour practice” was wide enough to embrace situations such as the present, if the applicant’s entitlement to his wages constituted a “benefit”.

There was no reason why the term “benefit” should not cover remuneration. The arbitrator, accordingly, found that the dispute concerned an alleged unfair labour practice, and that the matter was to be arbitrated as such.

The Commissioner ruled accordingly.

Of interest is that the arbitrator found that, “It is debatable whether the respondent’s action in casu could really be equated to or described as “short time”. The applicant’s working hours (and remuneration) had not merely been reduced as a temporary measure. It had, in fact, been cancelled indefinitely. Short time cannot be tantamount to “no time”.

So the long and the short of a lay-off scheme is that it should be negotiated with the employees as an alternative to retrenchment. Short time is a completely different concept than lay-off.

What Is A Rolling Lay-off? [See: Andrew Levy supra, 16].

A rolling lay-off is the name given to an arrangement whereby one twelfth of the labour force takes a month unpaid leave at a time; in other words, in any one particular month one twelfth of the labour force on unpaid leave which over the year allows for significant saving in labour costs but also spreads the cost of the saving equally amongst the employees.

It is possible that rolling lay-offs could be used not only on a monthly basis but say daily or weekly, so that the period of rotation and the period of absence is shorter and therefore has less of a cash flow implication insofar as the employees’ wages are concerned.

There are a number of examples of such arrangements being used in the textile industry but otherwise it has not been a very common practice in South Africa.   

‘SHORT TIME’ / REDUCTION OF WORKING HOURS:

Short time or rather the reduction of working hours means that ordinary hours of work that have been temporarily reduced to avoid retrenchments, pending a return to full time work. It normally results from a slackness of trade, shortages of raw materials, breakdown of plant or machinery, the vagaries of the weather or other unforeseen circumstances.

In the authoritative publication by, Professor John Grogan ’Dismissal’ 2nd ed (2014) 453, ‘Short-time’, or a reduction of normal working hours, is a recognized and generally accepted practice in the industrial sector. Short-time is usually regulated in bargaining council agreements, which define the circumstances in which it can be implemented, the periods for which it can be worked, and the manner in which wages are calculated for the period concerned, The implementation of short-time wages are calculated for the period concerned. The implementation of short-time is an acceptable alternative to retrenchment even if there is no agreement to that effect.

MORATORIUM ON HIRING NEW EMPLOYEES:

According to Grogan supra 452, a moratorium on recruitment, coupled with the reduction of the number of existing employees by natural attrition (through death, retirement, disability, resignation or dismissal) is probably the least painful method of avoiding large-scale retrenchment. This alternative is obviously slow, and the employer has no control over the levels of employees who are lost in the process.

ELIMINATION OF OVERTIME:

The elimination or reduction of overtime is an obvious alternative to reducing the number of employees. The viability of this alternative depends on the nature of the business; it does not follow that an employer that regularly resorts to overtime work has no need to retrench – paying fewer workers to perform overtime may be less costly than retaining a large number of workers and abolishing overtime. [See: Grogan, supra 452].

VOLUNTARY RETRENCMENT:

Employees who wish to be ‘retrenched’ voluntarily may be permitted to leave with severance to leave with severance benefits. This alternative may require the employer to offer inducements to employees, such as relatively high severance pay. Such offers are normally made however, if compulsory retrenchment is seen as a possibility, the employer should consult the unions before offering voluntary retrenchment, as the terms on which voluntary retrenchment is offered may affect its success.

In order to avoid the depletion of personnel with special skills or experience employers usually reserve the right to accept or reject applications for voluntary retrenchment. Employers should ensure that they do not reject applications for voluntary retrenchment on an indefensible or discriminatory basis. [See: Grogan supra 452].

EARLY RETIREMENT:

Employees who have attained, or who will have attained normal retirement age at the date of the proposed retrenchment may be retired in terms of the rules of the employer’s retirement fund. If employees have already reached compulsory retirement age, they can be forced to take retirement. Those who are still younger than that age cannot be compelled to do so, as this could amount to a dismissal based on age discrimination. [See: Grogan supra 453].

TEMPORARY PLANT SHUT DOWNS:

Consideration could be given to the temporary closing of a plant as a result of economic and financial difficulties. Also termed as down time, to wit periods of inactivity, especially of a machine or plant while equipment is being repaired, set up or adjusted.  

The above constitutes some alternatives to be considered before embarking on retrenchment.

Andrew Levy supra poses the question, “What strategies can save costs without actually terminating employees?”

Part of the process of consultation, is to see whether or not ways can be found to save jobs. In this regard, it is important to realize that employees must have the opportunity to put their suggestions forward, and that if the employer refuse them, then it is obliged to provide a reasoned response. This goes to the heart or raison d’être of the consultation process, or what consultation is all about.

The corollary is also important, and this is that if the employer has no good reason to refuse the employee’s suggestion, if commercially viable then a obligating follows to accept it – for the only reason for refusal then can be simply that it is the employees’ (or worse, the union’s idea!).

There is case law that an employer who refused the employees’ offer of each of them taking wage cut, (in order to save the shop steward’s job), acted unfairly. Interestingly enough, it does not seem as if the employer can cut wages to save jobs, but the employees can suggest it.

The LRA requires that ‘proper’ or ‘meaningful consensus seeking’ consultation take place, and hence this will; be the focus of attention when alternatives are examined. Included in this, is the need to examine ways in which the numbers of jobs affected might be reduced, or the timing might be affected.  

Other than the measures listed above, the employer might consider:

• A hiring freeze
• Job sharing arrangements
• Granting unpaid leave
• No Sunday work
• Transfer of employees to other departments
• Transfer to other units in the organization
• Retraining of individuals
• Spreading retrenchments over time, in the hope that natural attrition will help resolve the problem.

  CONCLUDING REMARKS:

Employers can rest assured that unions may focus the attack on visible signs of opulence or income disparity, and suggest that the management car scheme should be changed, executive bonuses be withheld and the like. Ever so often, this is simply a way of getting under management’s skin; so to speak however, a rejection of such proposal out of hand will be done at the employer’s peril.

It was deemed appropriate to amplify the words of CCMA Director Nerine Kahn as having said: “This action plan is part of the CCMA’s job security strategy, which is underpinned by three principles: leave no stone unturned in the quest to find alternatives to retrenchment; where retrenchments are unavoidable, do not allow any worker to walk into the sunset without access to support mechanisms; and where business enterprises are in distress, in partnership, facilitate lifeboat rescue to prevent business closures.” [Emphasis added].

Johann Scheepers

September 26, 2015

Copyright:

Copyright reserved by the writer hereof. No part of this article/ guide may be reproduced, without prior written permission by the author.

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

The commentary expressed herein is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.