Retrenchments

Breaking News



Ivan Israelstam


The Labour Relations Act (LRA) allows employers to dismiss employees for reasons of operational requirements (retrenchment). However, the LRA's provisions make the implementation of retrenchment, especially large-scale retrenchments, extremely difficult. Section 189 of the LRA lays down a number of strict requirements, the breach of which would normally place the employer in hot water. These provisions require that the employer must:

  • Have a good reason for the need to retrench
  • Use fair criteria in deciding which employees are to be retrenched
  • Follow an intricate consultation procedure aimed primarily at seeking ways of avoiding retrenchment.
 

This process is started off with a section 189(3) notification to advise the company's employees that the employer is contemplating retrenchments. The intricate requirements of this procedure make speedy retrenchments extremely difficult, if not impossible. Despite the existence of these stringent restrictions, section 189A of the LRA - read together with section 64 (10(a) - contains additional far-reaching provisions that further delay the completion of the retrenchment process.

Section 189A applies only where the employer has more than 50 employees and:

  • Where there are up to 200 employees employed, the employer contemplates retrenching at least 10 employees.
  • Where there are up to 400 employees employed, the employer contemplates retrenching at least 30 employees
  • Where there are up to 500 employees employed, the employer contemplates retrenching at least 40 employees
  • Where there are more than 500 employees employed, the employer contemplates retrenching at least 50 employees.

 

The number of retrenchments is calculated by adding the number of retrenchments over the previous 12-month period to the number of retrenchments currently contemplated. Section 189A allows employees wishing to dispute the fairness of the retrenchments to either challenge them in court or to go on strike. The section also requires that the CCMA must provide a facilitator to help with the retrenchment consultations should either party request this.

Whether or not a facilitator is requested, the employer is not entitled to finalise the retrenchments before 60 days from the date on which it gave the employees the section 189(3) notification. While section 189A has been written in a very confusing and unclear manner, it appears that, where the employees have neither lodged a dispute with the CCMA nor applied for a facilitator, the employer must either lodge a dispute in terms of section 64(1) of the LRA or must apply for a facilitator.

However, this can only be done 30 days after the 189(3) notification has been issued. It seems that this needs to be done even if the parties are in full agreement on all aspects of the retrenchment (although there is not complete clarity on this). Case law appears to have confirmed some, but not all of these complex, confusing and extremely peculiar legal provisions.

In the case of Leoni Wiring Systems (Pty) Ltd vs NUMSA & others (September 2007, CLL Vol 17 No 2),the Labour Court found that, if a facilitator has been appointed, there is no need for a dispute to be lodged. It appears that the application for and appointment of a facilitator takes the place of the dispute referral.

In the case of NUM vs De Beers Consolidated Mines (Pty) Ltd (September 2007, CLL Vol. 17 No 2), the Labour Court found that, if the employer wanted to complete the retrenchment process within 60 days of the date of issue of the section 189(3) notification, then it would need to lodge a dispute to the CCMA itself as soon as the law allowed it to do so.

It appears that the law relating to large-scale retrenchments is not only complex but is also incomplete. This is because it does not specify whether a dispute must be referred even if the parties are in full agreement on all issues.

The result is that employers will end up either lodging disputes where there are none, just in order to err on the side of caution, or even leave out this step and take the risk of being penalised for committing a procedural irregularity.
     
Due to the onerous, complex and dangerous nature of the requirements of the LRA, it is important that employers should not take any steps towards retrenchment before obtaining advice from a labour law expert. 

  • Ivan Israelstam, chief executive of Labour Law Management Consulting, may be contacted on 011-888-7944 or 082-852-2973 or via e-mail at
  • Our appreciation to Ivan and the Star  newspaper for permission to publish this article

Courses and Workshops

 

                                         

 

Health and Safety Representative Course

23 May 2019

Emperors Palace: Convention Centre

30 May 2019

Tsogo Sun: Century City (Canal Walk): Cape Town

The OHS Act and the Responsibilities of Management

24 May 2019

Emperors Palace: Convention Centre

31 May 2019

Tsogo Sun: Century City (Canal Walk): Cape Town

Workshop Policies and Procedures

30 May 2019

Southern Sun: Elangeni: Durban

06 June 2019

Tsogo Sun: Century City (Canal Walk): Cape Town

Trade unions in the workplace

31 May 2019

Southern Sun: Elangeni: Durban

14 June 2019

Emperors Palace: Convention Centre

Employment Equity Committee Training

31 May 2019

Emperors Palace: Convention Centre

Compensation for Occupational Injuries and Diseases Course

07 June 2019

Emperors Palace: Convention Centre

27 June 2019

Southern Sun: Elangeni:Durban

04 July 2019

Protea Hotel By Marriott Tyger Valley: Cape Town

Basic Labour Relations

07 June 2019

Protea Hotel By Marriott Tyger Valley: Cape Town

05 July 2019

Emperors Palace: Convention Centre

How to prepare for your unfair dismissal dispute/case at the CCMA/Bargaining Council

13 & 14 June 2019

Emperors Palace: Convention Centre

20 & 21 June 2019

Tsogo Sun: Century City (Canal Walk): Cape Town

 

 

 Our Clients