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What is a Fair Reason to Retrench?

By Ivan Israelstam

                                                                                              

The number of retrenchments occurring in South Africa has been alarmingly high over the past five years and shows no sign of reducing. The law requires that:

 

  • The employer follows a fair procedure aimed at an attempt to find alternatives to retrenchment. This involves good faith consultations with the employees concerned or with their representatives.
  • Fair or agreed criteria are used to decide which employees should be targeted for retrenchment.
  • There an acceptable reason for the need for retrenchments.

 

Section 213 of the LRA indicates that the reasons for retrenchment may be based on the economic, technological, structural or similar needs of the employer. It is necessary to look at each of these reasons more closely.

 

  • Typically, economic reasons given for the need for retrenchment include the ability to make money or to retain sufficient funds to continue operations. Such reasons need not be confined to the current financial situation but could include the company’s projected financial circumstances. The courts are divided on whether the desire to increase profits is a fair reason for retrenchment.
  • Technological reasons advanced for the need to retrench often include the introduction of new chemical formulas, equipment, computer packages, electronic systems and techniques that might reduce the need for labour.
  • Structural reasons advanced for the need to retrench include the need to flatten the management structure or to switch from a functional corporate structure to a project based structure.

 

The question that is left without a clear answer is: ‘What does the LRA definition mean when it refers to “…. or similar needs of an employer”?’ That is, what other operational needs (similar to economic, technological or structural needs) would be acceptable in law as reasons to justify retrenchments? The case of Tiger Foods Brands Limited vs L Levy (CLL May  2007 page 102) provides an inkling as to a possible answer to this question. In this case the employer wished to introduce a system whereby employees would work on public holidays. The employees embarked on a strike in protest against this move. During the industrial action a large number of strikers attacked replacement workers with knobkerries. Also, a manager was shot and several other received death threats. As the company was unable to identify the perpetrators it concluded that it was unable to continue managing the workplace. It therefore decided to consider retrenching several employees. The union disputed the CCMA’s jurisdiction to facilitate the retrenchment consultations on the grounds that the reasons for the proposed retrenchments did not fall under the definition of operational requirements in section 213 of the LRA. The CCMA agreed with the union stating that retrenchment is supposed to be based on no fault dismissals. The employees targeted for retrenchment had already been suspended for reasons related to misconduct.

 

When the company took this ruling to the Labour Court the Court found that the CCMA was wrong. It found that the CCMA arbitrator had, amongst others, made the error of ignoring the last part of the LRA’s definition of operational requirements that says: “or similar needs of an employer”. The Court decided that the company’s need to protect its managers and to manage the business fell under the definition of ‘operational requirements’ as they affected the viability of the business. These were grounds “similar to economic, technological or structural needs.”

 

In my view this finding makes sense. It seems that the legislators’ decision to include in the definition “economic, technological or structural needs” was based on the intention to give examples of what operational requirements entail rather than to consider this list of three needs as exclusive. The inclusion of the phrase “or similar needs” makes it clear that the definition should be interpreted broadly rather than narrowly. It would make no sense to include some types of operational requirements and to exclude others arbitrarily.

 

Employers are warned not to interpret this finding as a licence to invent their own reasons for retrenchment. Should the reasons given for retrenchment be found by the courts to be bogus or not to constitute operational requirements the employer will lose the case. Losing a case where a number of employees have been retrenched is likely to be extremely costly for employers. This is more so because a likely remedy for the unfair retrenchments will be the reinstatement with full back pay of all the retrenchees.

 

For example, it would be folly for an employer to retrench employees on the basis of its operational requirement for ‘employees who perform their work well’. While the need for good work performance can well be argued to be an operational requirement there is a separate legal procedure prescribed in Schedule 8 of the LRA for dealing with poor performance. In the case of NEHAWU vs Medicor (Pty) Ltd (2005, 1 BLLR 10) the Labour Court forced the employer to reinstate 67 unfairly retrenched employees with full back pay. This was because the employer had used the retrenchment process to get rid of alleged poor performers.

 

In the light of the above, before dabbling in the dangerous area of retrenchments, employers should obtain legal advice from a reputable expert in labour law.

 

Ivan Israelstam is the Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 082 852 2973 or on e-mail address: [email protected]

 

 

What does POPI compliance mean?

By Jan du Toit

 

Latest developments – Registration of Information Officers:

 

On 17 May 2021 the Information Regulator’s long awaited online portal went live for the registration of Information and Deputy Information Officers.

 

The Information Officer of a Responsible Party is the person at the head of your company (CEO or MD) or any person acting in such capacity, or specifically appointed by the MD or CEO to be the Information Officer. Registration must be completed before the end for June 2021.

 

The address for the portal is  https://justice.gov.za/inforeg/portal.html   

 

The following information is required to successfully register: 

  • Company name.

  • Company registration number.

  • Company type.

  • Company physical and postal addresses.

  • Company telephone and fax numbers.

  • Information Officer gender, nationality, full name and surname, ID or passport number.

  • Deputy Information Officers same details as per above.

 

POPIA Compliance – what must be done?

With a little more than a month left before POPI becomes fully effective, many employers may find themselves out of time to become fully compliant to amongst other considerations, the 8 processing conditions prescribed in the Protection of Personal Information Act.

 

To be considered compliant the following must be considered and applied in the business of a Responsible Party before 1 July 2021. 

  1. POPI training / awareness sessions for the CEO / MD, managers and others tasked with the company’s POPI compliance project. Have a look on our website for the next POPIA training dates.

  2. Compliance audit to be conducted company-wide per department / division to determine the current processing practices within the organization and to establish what needs to be done to be compliant.

  3. Correction of contraventions as identified, and to introduce reasonable technical and organizational measures to prevent the loss or unauthorized access of Personal Information.

  4. Introduction of Data Subject rights and consent in the business through policies and consent clauses / paragraphs / contracts.

  5. The introduction of a PAIA manual (Promotion of Access to Information Act) that incorporates data subject rights and participation in terms of POPIA. This manual must be published on one of the company’s websites. It is also important to note that the current exemption granted by the Minister of Justice for some business to not have such a manual in place currently, expires at the end of June 2021.

  6. General staff POPI policy and legislation awareness training.

  7. Registration of the company’s Information Officer (the CEO, MD or any person acting in such position).

  8. Follow-up assessment on compliance measures and adherence thereto.

 

It is important to note that no institution, not even the Information Regulator, can “accredit” any Responsible Party in South Africa to be compliant in terms of legislation. Compliance (or otherwise) will only be determined should an investigation be launched by the Information Regulator following a complaint. Should such an investigation confirm a lack of compliance, consequences such an administrative fine not exceeding R10m may follow (which one may luckily pay off in instalments). Further to this those whose rights are infringed upon by a Responsible Party not adhering to the requirements of POPIA, may also institute civil proceedings. Such  proceedings may result in compensation being awarded for loss, as well as aggravated damages determined at the discretion of the court.

 

In terms of section 19 of the Act, the Responsible Party (business owner / employer) is required to introduce reasonable organizational and technical measures to secure the integrity and confidentiality of Personal Information. The organizational measures referred  to above includes inter alia both internal and external policies to introduce the principle of protection of personal information in the workplace, as well as the rights of data subjects.

 

To allow you more time to focus on your business, the author of this article compiled a bundle of detailed policies for your business, ready to use. This includes all relevant forms to be used and a template document with draft consent clauses / paragraphs / rules  to be incorporated into service and employment contracts, job applications, credit and other applications forms, WhatsApp and Facebook groups / pages, and Independent Contractor agreements.

 

Also included is an Operator Agreement as required in terms of section 21 of the Act and a consent letter for existing clients / service providers, to agree to the continued processing of their Personal Information beyond June 2021.

 

The policies bundle includes: 

  • Privacy notice template to be published on your website.

  • Personal information protection policy.

  • Personal information retention policy.

  • Data breach policy.

  • Data breach register - form.

  • Data breach report - form.

  • Data security policy.

  • Data subject access request policy and procedures.

  • Data subject access request forms.

  • Processing agreement with third parties as Operators - contract.

  • Data subject participation - draft consent paragraphs / clauses to be incorporated into service and employment contracts, job applications, credit and other applications forms, WhatsApp and Facebook groups / pages and Independent Contractor agreements

  • Guidelines on the appointment of deputy information officers, inclusive of appointment letter.

 

For only R3750 you can now order you set of POPI policies, ready to use. Contact Jan du Toit for further assistance at [email protected]

 

 

 

 

 

 

 

 

Courses and Workshops

 

                   

The OHS Act and the Responsibilities of Management

30 September 2021 (08:30 – 16:00)

Interactive Online Course

Employment Equity Committee Training

30 September 2021 (09:00 - 16:00) (Fully Booked)

Interactive Online Course

27 October 2021 (09:00 - 16:00)

Interactive Online Course

Managing Day to Day Issues/ Problem Employees Full day workshop

01 October 2021 (09:00 - 16:00) (Fully Booked)

Interactive Online Course

28 October 2021 (09:00 - 16:00)

Interactive Online Course

Compensation for Occupational Injuries and Diseases Course

01 October 2021 (08:30 - 16:00) (Fully Booked)

Interactive Online Course

15 October 2021 (08:30 - 16:00)

Interactive Online Course

Basic Labour Relations

07 October 2021 (09:00 - 16:00)

Interactive Online Course

AARTO and the Impact on Your Business

08 October 2021 (09:00 - 12:00)

Interactive Online Course

POPIA: Protection of Personal Information Act

15 October 2021 (09:00 - 12:00)

Interactive Online Course

Workshop Chairing Disciplinary Hearings

21 & 22 October 2021 (09:00 - 16:00)

Interactive Online Course

Strategic Human Resources Management (HRM) and - Business Partnering

27, 28 & 29 October 2021 (08:30 - 16:00)

Interactive Online Course

Health and Safety Representative and Committee Training Course

28 October 2021 (08:30 - 16:00)

Interactive Online Course

Managing Poor Performance/ Incapacity

29 October 2021 (09:00 - 12:00)

Interactive Online Course

Management and Leadership Skills

10, 11 & 12 November 2021 (08:30 - 16:00)

Interactive Online Course

 

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