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Retrenchments

 

Ivan Israelstam

 
 

When an employer considers retrenching employees, full consultations must first take place about this intention before making any decision to retrench, according to the Labour Relations Act.  When employees belong to a trade union, the employer is required to consult with that union on several issues, the most important of which is ways of avoiding job losses.


Should the employer choose not to engage in proper pre-retrenchment consultations, and the employees are forcibly retrenched, this would normally result in a finding of unfair dismissal.  But where the employer has made every effort to consult, it can't be blamed for failure to do so.


There are several reasons that retrenchment consultations may fail to take place or may fail to comply with the requirements of the act. These include:

  • The employer was unaware of the legal obligation to consult with the employees/union.


Some employers are aware of the requirement to consult, but are not aware of the role of the union or the extent of the consultation requirements. It can also happen that the employer is not aware of the fact that the employees have joined a union.


It is unlikely that any of these reasons will be an acceptable excuse for the employer's failure to consult. This is because employers are required to find out about what they do not know.

  • The employer may have urgent reasons for needing to retrench, such as:

1. Dire financial circumstances threatening the immediate survival of the business.

2. A pressing need to get rid of employees pending a hastily arranged takeover by another entity. The prospective buyer may have set a tight deadline for the date of the takeover, and may have made it a condition of the deal that workforce numbers be reduced before the conclusion of the sale.

3. The employer may have no money to pay salaries during a consultation exercise (which may be protracted, especially when the employer has more than 50 employees). The employer may therefore need to curtail retrenchment consultations.


Again, none of these reasons will be accepted by the courts as an excuse for failure to consult fully and properly.

  • When the employer has exhausted every means to locate and contact the union without success, it may consider the possibility of consultation with the employees/ shop stewards directly.



The question arises as to whether the employer should, after being forced to give up on a recalcitrant trade union, consult directly with the employees.  In the case of Numsa v Ascoreg (CLL Vol 12, July 2008) the Labour Court found that the employer could consult directly with the employees when the union refused to consult.


However, the employer will need proof of the union's refusal, as consultation with employees instead of their union is forbidden under normal circumstances.

  • The trade union may be purposely delaying the consultation process.


If a court finds that the union unreasonably delayed the consultation process by making unreasonable demands or failing to participate in consultations, the courts may well refuse to find against the employer, despite the implementation of retrenchments without proper consultations.


In the case of Simelane and others v Letamo Estate (CLL Vol 17, July 2008) the Labour Court found that the trade union has a duty to co-operate and participate in the consultation process.  However, the law clearly gives the employer the onus of ensuring, as far as it possibly can, that proper consultations take place.


Therefore, despite difficulties in getting the union to co-operate, the employer must do everything in its power to do so. It is only where the employer has proved that the union has been unreasonably unco-operative, despite the employer's best efforts, that the courts may excuse the employer for retrenching without consulting the union.


The employer's duty to consult before retrenching lies at the heart of the employer's duty to ensure procedural fairness.  Despite the many different obstacles to the achievement of proper consultations, the employer is likely to find that failure to consult (or to consult properly) is extremely costly from a legal point of view.  On the other hand, where the retrenchments are delayed due to hold-ups in consultations, this could be as costly from a salary bill point of view.


Employers are therefore advised to obtain advice from a reputable labour law expert on:

  • Ivan Israelstam is chief executive of Labour Law Management Consulting. He can be contacted on 011-888-7944 or e-mail
  • Our appreciation to Ivan and The Star newspaper for permission to publish this article.

Ivan Israelstam

 

Where there has been even only one employee retrenched, the Labour Relations Act (LRA) allows the CCMA and bargaining councils to arbitrate the retrenchment dispute where conciliation has failed to resolve it.

This has made it easier for employees to oppose retrenchments. That is, due to the quicker and simpler processes at the CCMA because compared to the Labour Court, employees are less likely to be put off by the intimidating prospect of taking their ex-employers to task for unfair retrenchments.

Despite the strict and clear retrenchment legislation, employers are still having to pay large sums of money to employees who have been retrenched incorrectly.

Three areas where employers infringe the law on retrenchment are:

  • Failing to follow the very detailed and rigidly enforced procedure for retrenchment.

For example, many employers do not, during the lead up to the retrenchment decision, carry out genuine and comprehensive consultations aimed at trying to save the jobs of the targeted employees.

  • Making the decision to retrench for the wrong reason. For example, it is illegal to retrench any employee for any reason related to a takeover of a business (or part thereof) as a going concern.

And "business" can mean any organisation whether it is a company, sole trader, welfare organisation, NGO, government department or other employer.

  • Using legally unacceptable criteria for deciding on which employees to retrench.

That is, targeting an employee for subjective reasons is unfair. For example, deciding to retrench Mr A because he is old, sick, injured, outspoken, strong-willed or performing badly would be considered unfair.

An exception is where the employer can show that the work performance of all employees has been:

  • Precisely, accurately and fairly measured;
  • Recorded in writing; and
  • Used fairly in deciding on which employees should be retrenched.

That is, the employer must implement proper performance appraisal exercises; arrive at accurate measurements of performance of all employees whose jobs might become redundant and be able to show that the appraisal ratings were arrived at objectively rather than resulting merely from the manager's feelings towards the employee or unreasoned opinion of the employee's work performance

In addition, the employer must have made it clear at the outset of the retrenchment procedure that work performance was going to be the criteria for selecting retrenchees.

In the case of Mokoena v Power Man (2005, 10 BALR 1047) the employee, an electrician, was retrenched after the division he worked in was closed down.

However, the employer failed to prove that there was a need to close down the division and retrench the employee.

The employer also failed to follow procedures for retrenchment. In addition, the employer was unable to explain why it had employed new electricians shortly before the employee's retrenchment and why the new employees had not been retrenched instead of Mokoena.

Thus, in this case, the employer managed to infringe all three fairness criteria of procedure, fair reason and fair criteria for retrenchment.

The arbitrator ordered the employer to pay the employee eight months' salary in compensation.

In the case of Esterhuizen v Aluminium Granulated Products cc (2009, 10 BALR 981) the employer claimed that the arbitrator did not have jurisdiction to hear the matter because the employee was not the only one to be retrenched.

However, the arbitrator dismissed this claim because no evidence had been led in this regard. In this case the employer was found to have failed to follow a fair retrenchment procedure and had also unfairly found the employee guilty of misconduct.

The arbitrator therefore found the retrenchment and the misconduct dismissal were unfair and ordered the employer to pay the employee R255 150 in compensation.

This case highlights the facts that employers should bring evidence at arbitration to prove all their claims, should not mix up misconduct issues with retrenchments and must follow proper procedures before dismissing employees.

New case decisions continue to refine and make subtle changes to labour legislation. This means that employers and employees cannot become complacent.

Employees risk losing their jobs and employers run the very serious risk of having to reinstate employees and/or to pay huge amounts in compensation in addition to retrenchment packages.

  • Ivan Israelstam is chief executive of Labour Law Management Consulting. He can be contacted on 011 888 7944, 082 852 2973 or
  • Our appreciation to Ivan and The Star Newspaper for permission to publish this article…



 
Judging by the enquiries received, there are very few employers who are aware of correct retrenchment procedures, and if they are then they largely ignore the statutory requirements. This I deduce from the large number of enquiries I receive from employees  who are facing retrenchment and I shudder when they tell me what procedure the employer is following.

 
 

Myth : Management have the right to retrench for any operational requirement and there is nothing the employee can do about it.


 

Truth : Rubbish !! No right is absolute, and retrenchments may only be resorted to as a last resort for genuine reasons based on the genuine technological, structural or economic requirements of the employer.

Retrenchments may not be used as a disguise to effect dismissals based on misconduct or incapacity, although it is a fact that this practice is quite widespread.  



This conclusion I reach based on the number of enquiries I receive from employers who inform me that they have perhaps a hundred or more employees but "we need to retrench one employee" Nobody "needs to retrench one employee " and it is blatantly obvious that the employer is disguising a dismissal as a retrenchment. This is a despicable and disgusting practice – not to mention that it is totally unfair procedurally and substantively.

 
 

Myth : Management must first decide who is to be retrenched, and decide on date of termination for those selected. The only remaining requirement is then for management to inform employees accordingly.


 

Truth : As soon as management "contemplate" retrenchment, consultations with the employees likely to be affected must begin. Put differently, as soon as management decide "we may have to retrench" then consultations must begin. The Act (section 189 LRA) states that these consultations must be with the trade Union if there is one, or failing that the Workplace Forum if there is one or failing that with the employees "likely to be affected."
 

This not a choice that the employer must make : The Act states "the employer MUST consult" and therefore there is no option – the employer MUST do it. What is more, the requirements of section 189 apply even if only one employee is being retrenched.

 
 

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The Protection of Personal Information


By Jan du Toit, Senior Consultant, SA Labour Guide

 

After more than seven years in the making, President Ramaphosa announced last year an effective date of 1 July 2020 for the Protection of Personal Information Act (POPI), Act 4 of 2013. “Responsible Parties” only have approximately 5 months left until 30 June 2021 to become compliant in full.

 

The duration of a typical POPI compliance project will differ from one business to another depending on the nature and size of the business, as well as the Personal Information processed by a Responsible Party. Business owners are therefore advised to, without delay, embark on a compliance project to meet the deadline.

 

Even though the Protection of Personal Information Act is welcomed by most, it has been long overdue and will require business owners (“Responsible Parties” in terms of the Act) to process Personal Information according to 8 processing conditions as set out in the Act.

 

The purpose of the Protection of Personal Information Act is in essence found in the title of the Act; to protect the Personal Information of “Data Subjects”. It gives effect to ones right to privacy as enshrined in the Constitution but also provides balance in terms of the right to privacy weighed up against the right to access to information.

 

The Act regulates the manner in which Personal Information must be processed and provides protection and recourse to those whose rights are infringed. Further to this, the Act makes provision for the establishment of an Information Regulator. Advocate, Pansy Tlakula has already been appointed as the Information Regulator a couple of years ago and has done a great deal of work in establishing her office.

 

Before I get into more detail about the eight processing conditions, it is important to note that the Act is “definitions driven”. It is therefore of utmost importance to first highlight some of the definitions found in the Act for readers to better understand the eight processing conditions.

 

The first definition is that of “Personal Information”. Personal Information is widely defined in the Act and includes, but is not limited to, information relating to an identifiable living natural person or a juristic person (“Data Subjects”), such as:

  • Race, gender, sex, pregnancy, marital status, nationality, ethnic or social origin, colour, sexual orientation, age, physical or mental health, well-being, disability, religion, conscience, believe, culture, language, birth

  • History - education, medical, financial, criminal, employment

  • Identifiers – number, symbols, e-mail address, physical address, telephone numbers, location, online ID or other assignment to a person such as a unique identifier (in example a student or patient number)

  • Biometric information – physical or psychological behavioural characterization, blood type, fingerprints, DNA analysis, retinal scanning, voice recognition

  • Personal opinion views or preferences

  • Correspondence implicitly or explicitly of a private and confidential nature

  • Views or opinions of another individual\

  • The name of the person with other information or the name alone

 

The second definition of importance is that of “processing”. The processing of Personal Information includes but is not limited to any operation/activity or any set of operations, whether automated or not, concerning Personal Information. It includes:

  • Collection / receipt / recording / organizing / collation / storage / updating / modification / retrieval / alteration of Personal Information

  • Dissemination by means of transmission distribution or making available to others.

  • Merging / linking / restricting / degradation / erasure / destruction of Personal Information.

 

A Responsible Party can either be a public body, private body or any other person or persons, domiciled in South Africa and that determines the purpose and means for processing of Personal Information.

 

Throughout the entire lifecycle of Personal Information in any business, eight processing conditions must be adhered to. The eight processing conditions are summarized below:

 

Condition 1 – Accountability. The Responsible Party must always ensure that the conditions set out in Chapter 3 of the Act and all the associated measures are complied with.

 

Condition 2 – Personal Information must be collected and processed lawfully in a reasonable manner that does not infringe the privacy of a Data Subject. The Personal Information may only be processed if it is adequate, relevant, and not excessive.
Personal Information may only be processed if the Data Subject consented thereto. Alternatively, where it is necessary to do so for the conclusion or performance of a contract, an obligation in terms of law, to protect the legitimate interest of the Data Subject, or to pursue a legitimate interest of the Responsible Party.

 

A further requirement is that the Personal Information must be collected directly from the Data Subject.

 

Condition 3 requires that Personal Information must be collected for a specific explicitly defined and lawful purpose related to a function or activity of the Responsible Party. Such Personal Information may not be retained any longer than necessary for achieving the purposes for which the information was collected and/or subsequently processed.

 

Condition 4 prohibits the further processing of Personal Information unless such processing is compatible with the initial purpose of collecting the information.

 

Condition 5 requires that Responsible Parties must take reasonable, practicable steps to ensure that Personal Information is complete, accurate, and not misleading. Such Personal Information must also be kept up to date, taking into consideration the purpose of the Personal Information.

 

The nature and purpose of the Personal Information will dictate as to how often such Personal Information must be updated.

 

Condition 6 addresses some of the rights of Data Subjects, such as the right to be informed by the Responsible Party before information is collected. The purpose of collecting and from where Personal Information will be collected must be disclosed to the Data Subject.

 

A Data Subject is entitled to the details of the Responsible Party and to be made aware of the consequences of not making Personal Information available to the Responsible Party.

 

Should it be required that Personal Information be collected and processed in terms of legislation, the Data Subject must be made aware accordingly.

 

As per Section 72 of the Act, the Data Subject must be advised if Personal Information will be transferred across the borders of South Africa. Under such circumstances the Data Subject is entitled to first be made aware of legislation in other countries that provides adequate protection of the Personal Information. In the absence of legislation, whether there are any binding corporate rules in place, alternatively a written agreement that offers adequate protection for the Data Subject, concluded between the Responsible Party and he third party.

 

Condition 7 requires that Responsible Parties must secure the integrity and confidentiality of Personal Information by taking appropriate reasonable, technical and organisational measures, to prevent loss or unlawful access of Personal Information under the control of a Responsible Party.

 

In this regard the Responsible Party is required to identify all reasonable and foreseeable internal and external risks, and to establish and maintain appropriate safeguards. Compliance with such safeguards must be regularly audited and measures updated if so required.

 

Condition 8 deals with the rights of Data Subjects and participation. In terms of condition 8, Data Subjects have the right to establish whether Personal Information is held by a Responsible Party and to have it corrected or destroyed if it is inaccurate, irrelevant, excessive, out of date, incomplete, misleading, or have been obtained unlawfully.

 

Responsible Parties are also further required to introduce Data Subject rights and participation in their PAIA (Promotion of Access to Information Act) manuals.

 

Responsible Parties are also not permitted to send direct marketing material to Data Subjects without their written consent as per from 4 four of the regulations of the Act.

 

Other important considerations in terms of the Act are that a Responsible Party may be issued with an administrative fine of up to R10 million for its non-compliance with the Act. Additionally, Data Subjects have the right to sue Responsible Parties and under specific circumstances, the Information Officer of the Responsible Party may be imprisoned.

 

Each Responsible Party must register an Information Officer (the head of the organization or a person acting in such capacity) with the Information Regulator. The Information Officer may appoint deputies to assist with ensuring compliance within the business.

 

From the above, it is evident that a POPIA compliance project is not something that should be undertaken without a solid understanding of the Act.

 

Our subscribers, a.k.a. “Responsible Parties”, are invited to attend our online POPIA presentations to better understand the Act and to ensure compliance. In-house training can also be arranged on request.

 

The author of this article is also available to assist employers with compliance projects in the form of awareness sessions, gap analysis, policy development / implementation and staff awareness.

 

For further information pertaining to training, readers are invited to visit www.labourguide.co.za or to contact Jan du Toit at .

 

 

 

 

 

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