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Date of Award: 8 August 2002

When can an employer withdraw a retrenchment letter? When can an employee be deemed to have accepted the withdrawal, and thus forfeited the right to claim severance benefits?

On 28th April 2000 Molapo issued letters of retrenchment to four employees. In terms of the letters, their dismissal would take effect from the 30th April 2000. The employer then decided to withdraw the letters. The employer conveyed this decision to two of the employees on the afternoon of the 28th April while they were still on company premises. They returned to work the same day. The third employee was not at work on the 28th and was not given her letter. A telephonic message was left for her informing her of her retrenchment and requesting that she collect the documentation. She returned to work on the 2nd May when the employer informed her of the withdrawal. The fourth employee left the company premises soon after being given her letter. She was also not contacted before the 30th April to inform her of the withdrawal. She returned on the 2nd May and by then her dismissal had taken effect. She voiced her disagreement with the decision to withdraw her letter and agreed to return to work under protest and with a reservation of her rights.

In respect of the first two employees, the Labour Appeal Court held that what was required of the employees if they wanted to reserve their rights was an unequivocal protest. An unarticulated mental reservation was not effective. They returned to work but did not inform the employer that they were returning under protest. In these circumstances, the court held that while it is correct that an employer is not entitled to withdraw a dismissal unilaterally once that decision has been conveyed to the employee, the employer can do so with the consent of the employee. Consent may be given either expressly or by implication. The legal position here was that because the dismissal had been withdrawn with the consent or acquiescence of the two employees before the 30th April, they had not been dismissed. Because they were not dismissed, they were therefore not entitled to severance pay or any benefits payable on dismissal.

In respect of the third employee, the court held that although she had in fact been dismissed, the dismissal in effect only lasted two days and she was therefore not entitled to severance pay.

In respect of the fourth employee the court observed that the employer had a right to reject the conditions that she placed upon her return to work, and could insist that she return to work without any reservation of rights. It could have done this if it felt that it could not afford the uncertainty that this would create in the employment relationship. The employer raised no objection to the conditions, however, and allowed her to continue her employment on that basis. The court held further that the fact that this employee was dismissed and that her dismissal did take effect did not necessarily mean that she was entitled to severance pay. She had reserved her rights pending the exhaustion of the litigation process and once that process was completed, she would have to make up her mind about that offer within a reasonable time. She would not be entitled to severance pay if she rejected the offer of reinstatement or if she unreasonably refused an alternative offer of employment by the employer. It was thus held that although she was dismissed with effect from 30th April, she was not entitled to severance pay.

Finally, it should be noted that the procedure undertaken by the employer in regard to this retrenchment in no way conformed to the provisions of section 189 of the Labour Relations Act in regard to dismissals based on operational requirements. The proper process of consultation was entirely bypassed and the manner in which the retrenchment was conducted would not have withstood the scrutiny of the Labour Court had this been the subject matter of the dispute.

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Gary Watkins

Gary Watkins

Managing Director


C: +27 (0)82 416 7712

T: +27 (0)10 035 4185 (Office)

F: +27 (0)86 689 7862

Website: www.workinfo.com
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