Retrenchments

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Ivan Israelstam


Already in 2009 we have received dozens of calls from employers who have retrenched employees and are being taken to the CCMA, bargaining council or Labour Court. Because the current economic downturn has only just begun, retrenchments are likely to spiral over the next year and beyond.

Exacerbating the effect of the economic downturn is the rampant culture of crime that our government only talks about addressing. In contrast to this "talk" of addressing crime we have excessively high levels of violent crime and corruption. These facts deter those foreign investors who might have considered bringing labour intensive projects to South Africa. In the light of increasing workforce cut-backs it is now more important than ever before that employers become aware of the plethora of myths that relate to retrenchments.

Many employers operate erroneously and dangerously according to the following myths:

  • Retrenchments are the only solution to the employer's financial problems
  • Employers are allowed to retrench merely because profits have dropped slightly or are expected to drop slightly
  • Restructuring exercises automatically allow the employer to retrench
  • When new technology is introduced into the workplace the employer can immediately retrench those employees who have not been trained in the use of the new technology
  • The employer has the right to choose whatever criteria it prefers when deciding who to retrench
  • As long as the employer has good reasons it can go ahead and retrench whenever it likes
  • Because retrenchments need to be implemented urgently, the employer is not obliged to follow retrenchment procedures
  • The employer is not obliged to find out whether the employees concerned belong to a trade union before beginning retrenchment consultations
  • Employers only have to consult on the issue of the amount of the retrenchment package
  • When a company is bought over, or two entities merge, the resulting rationalisation justifies the retrenchment of superfluous employees
  • Employers are entitled to decide to retrench employees before consulting with them on reasons why the retrenchments should not take place
  • Retrenchment is a golden opportunity to get rid of poor performers, bad eggs, trouble-makers, pregnant women, elderly employees, members of unfavoured race groups, religious or tribal origins and misconduct.

 

In the case of Janse Van Rensburg vs Super Group Trading (Pty) Ltd (2009, 3 BLLR 201), the employee was retrenched after the employer found itself in financial difficulties. The employer alleged that the employee had been retrenched because of restructuring.
 
However, the Labour Court found that:

  • The employer had chosen the employee for retrenchment before consulting with him on the matter
  • The employer's real reason for selecting the employee for retrenchment was because it had received complaints from clients about his negative attitude, his lack of interpersonal skills, his disciplinary record and other allegations of misconduct

 
The retrenchment was procedurally and substantively unfair and the employer was ordered to pay the employee the equivalent of 12 months' remuneration in compensation. Having been made aware of the above 12 myths and of the outcome of the Janse Van Rensburg case cited above employers need to:

  • Train their managements as to the do's and don'ts of retrenchment
  • Use a reputable labour law expert to advise them before embarking on retrenchments, and to carry out the necessary management training.
 

Ivan Israelstam is the chief executive of Labour Law Management Consulting. Contact him at 011 888 7944 or   

Our appreciation to Ivan and The Star newspaper for permission to publish this article.

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