by Ivan Israelstam
If you ever land up at the CCMA, you’ll see retrenchment laws well summarised on their wall notices. Unfortunately, employers only get to see these summaries when it’s too late, they’ve possibly unfairly dismissed an employee and the legal process has begun. In this article, find out what’s the truth when it comes to retrenchment laws.
You don’t need your employees’ “permission” to retrench
It’s in your interest to negotiate the criteria for choosing those employees earmarked for retrenchment because, if the employees agree, then the agreed criteria are legal.
What’s the difference between ‘consultation’ and ‘negotiation’?
‘Negotiation’ means that the parties must reach agreement before any idea can become a decision or is implemented. This isn’t required in retrenchment law although the trade unions are pressing hard for this to be legislated.
The law of consultation provides that, as long as the employer can prove it disclosed relevant information and tried – in good faith – to reach consensus, it doesn’t have to reach actual agreement with the employees or representatives.
The halls of the CCMA and Labour Court echo endlessly with the groans of many thousands of employers (and some ex-employers) who:
- Refused to believe labour law requires fair or agreed retrenchment criteria, and
- Failed to acquire the knowledge and expertise necessary to reconcile business pressures with legal requirements.
Countless cases have been decided at the CCMA and Labour Court where employers have either had to:
- Reinstate employees who’ve been retrenched, and/or
- Pay huge amounts in compensation.
This is often a disaster for the employer because the biggest reason for retrenchments is financial weakness and these awards against employers can place an unbearable burden on the already-strained finances of the employer.
A case in point is that of Toyota SA reported in the Business Report of 30 November 1999. Here, the employer was required to reinstate 280 employees and to pay them a total of R15.2 million because Toyota had failed to disclose sufficient information to the employees which was necessary for effective consultation.
Is it legal to force employees to apply for their own jobs?
In Clive Naiker vs Q Data Consulting (2002, 23 ILJ 730), the Labour Court found that, in certain cases when (for example) you’re restructuring your company, it’s acceptable to require employees to reapply for their own jobs.
This approach appears to have been acceptable in this case because:
- In this particular industry, it’s necessary for employees to have the most up-to-date skills.
- The above-mentioned requirement is similar to the legally acceptable criterion of ‘necessary skills’: the employer is entitled to select employees for retrenchment who don’t have the skills which are necessary for the job.
Be very careful when you use the necessary skills requirement
While the courts will often tolerate the employer retaining the employees with the most appropriate skills, this doesn’t mean that you can misuse the reapplication condition to get rid of poor performers.
If you choose necessary skills, you’ll have to show the court that:
- This was the criterion condition actually applied in every case.
- The employees not given the available posts truly didn’t have the skills required.
- Potential retrenches were given the opportunity to be considered for other posts – even if these were lower-paid positions.
In Wolfaardt & another vs IDC of SA (Pty) Ltd (2002, 11 BLLR 1127):
- The employer failed to give the two employees a chance to apply for alternative posts before retrenching them.
- The Labour Court found this to be procedurally and substantively unfair, and awarded a total of R600 000 in compensation.
- The employer was, in addition, required to pay the employees’ legal costs.
This article first appeared on HR Pulse.