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Chronic workplace theft a deterrent to investors
Ivan Israelstam
The current
international and South African climate is causing a large number of companies
to experience severe financial difficulties.
Customer orders are waning, budgets are being cut, profits are dwindling, cash
flows are tightening and it is becoming increasingly difficult to pay creditors
and staff salaries.
In addition to the international economic downturn, crime is having a seriously
detrimental effect on the finances of employers.
Theft of company stock and equipment costs employers many millions in losses
every year. Local and international companies are reluctant to risk
labour-intensive investment in a country where theft-related losses are so high
and where violent crime is out of control.
This lack of investment retards our economy. The combination of the
international economic situation and rampant crime in South Africa has resulted
in a huge number of job losses and in the failure of new jobs being created.
With so many people losing their jobs the spending power of consumers has been
drastically reduced.
This has resulted in less business for companies whose financial circumstances
have therefore worsened and could result in further job cuts. It is this type of
vicious circle that can take an economy in a mild recession through an
ever-deepening recession and into a full-blown depression.
In addition to the micro-reason that retrenchment can cause severe hardship for
the individual retrenchee, the bigger danger of retrenchments lies in the
disaster that the above-mentioned vicious circle can cause for the economy as a
whole and for each and every business individually.
While tight financial circumstances give rise to the temptation to retrench as
fast as possible, employers must appreciate the harm that they can do to their
longer-term survival by implementing retrenchments willy nilly.
This doesn't mean that retrenchments can never be contemplated. There are
circumstances where job cuts must be implemented. However, employers should not
retrench unless such job cuts are truly unavoidable.
Reasons not to retrench include:
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The retrenched employee
and his/her family is likely to suffer as a result of the retrenchment.
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Last-in-first-out is the
most common criterion for choosing the employees to be retrenched.
This can
result in the employer losing employees with valuable skills which can in turn
do harm to the quality of products and services and hinder the acquisition of
new business.
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The knock-on economic
effect of retrenchments could well result in future losses for the employer.
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Labour law does not
allow employers to retrench employees unless it cannot be avoided.
That is, the
law of retrenchment in South Africa is focused strongly on preserving employment
and makes it clear that a retrenchment is a no-fault dismissal.
The law, therefore, requires the employer to turn over every stone in an effort
to find alternatives to retrenchment.
The courts have become ever more intolerant of employers that fail to go the
extra mile to make sure that there are truly no alternatives to retrenchment
before cutting jobs.
In the case of Oosthuizen v Telkom SA Ltd (2007, 11 BLLR 1013) the employee was
retrenched after his job became redundant.
He was placed in a job pool for three months to give him a chance to find a new
post within Telkom. He applied for 22 vacant posts and was short-listed for some
of them but was unsuccessful.
The Labour Appeal Court found his retrenchment to be unfair because:
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The employer failed to
consult with the employee on ways of avoiding retrenchment and the criteria
for choosing potential retrenches;
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The employer had not
given acceptable reasons to Oosthuizen for having rejected possible
alternatives to his dismissal;
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The employer failed to
bring evidence to the court to explain why Oosthuizen had not been offered
one of the jobs for which he had been short-listed; and
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Oosthuizen had 22 years'
of service and should not, according to the court, have had to vie for the
vacant posts with employees who had shorter service.
This case,
together with the economic reasons discussed earlier, stresses the requirement
for employers to make every effort to find ways of avoiding retrenchments.
While not every type of alternative to retrenchment is viable in every case the
following are a few examples of alternatives that employers can consider:
Seeking new ways of increasing revenue, reduction of unnecessary expenses,
curtailment of wastage, agreed pay cuts, working of short time, temporary
layoffs, job sharing and freezes on recruitment.
Often, employers are too close to the problem to see the solution and panic can
result in over-hasty and unnecessary retrenchment. It is therefore important for
employers to consult reputable labour relations experts before embarking on
retrenchments.
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Ivan Israelstam is chief executive of Labour Law Management Consulting. He
can be contacted at 011 888 7944 or 082 852 2973 or
labourlaw@absamail.co.za
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Our
appreciation to Ivan and The Star newspaper for permission to publish this
article.
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