Retrenchment

Correct Procedure
Consultation must take place as soon as the employer contemplates retrenchment. Consultation must take place –

With a workplace forum;
with a registered trade union whose members are likely to be affected; or
with the employee/s likely to be affected

Parties must engage in a meaningful joint consensus-seeking process and attempt to reach consensus on:
Avoiding the dismissals (examples could include adjusting working hours, eliminating temporary labour, eliminating overtime, offering early retirement);
Minimising the number of dismissals;
The timing of dismissals;
Ways to lessen the effects of the retrenchment;
The method for selcting the employees to be dismissed and
Severance pay

Disclosing information in writing
An employer has to disclose relevant information in writing, including the –

Reasons for retrenchment;
Alternatives considered and why they were rejected;
Number of employees likely to be affected and their job categories;
Proposed method of selection;
Timing;
Severance pay proposed;
Assistance that the employer will be offering  (examples could included offering employees time off to attend interviews, early release should a new job be found, issuing letters of reference, psychological counseling); and
Possibility of future re-employment

Opportunity for feedback
The employer must give the other consulting party and opportunity to make presentations that must be considered and be responded to.

Criteria for selection
If no agreement is reached on the criteria for selection, criteria chosen must be fair and objective. The LIFO (last in first out) principle is often applied, but is not the only consideration. The staff with key skills may be retained and a poor performance record may be taken into consideration.

Payments
The following payments need to be made –

Severance pay
Employees should be paid at least one week’s remuneration for each completed and continued year of service. (‘Remuneration’ includes basic salary, payment in kind and discretionary payments related to working hours or performance). Should an employee unreasonably refuse an offer of alternative employment he/she will not be entitled to a severance package.

Outstanding leave to be paid out

Notice pay
If employed for one to four weeks – one week’s notice;
If employed for four weeks to one year – two week’s notice; and
If employed for more than a year – four week’s notice;
Domestic and farm workers, who have been employed for four weeks or more must receive four week’s notice;
The employed may require employees to work / not to work during the notice period.

ALSO NOTE: That a collective agreement may permit a notice period shorter than that required by the Basic Conditions of Employment Act, but no agreement may require a longer notice period.

Employees in accommodation provided by employer
If the employer of an employee who resides in accommodation that is situated on the premises of the employer or that is supplied by the employer terminates the contract of employment of that employee, the employer is required to provided the employee with accommodation for a period of one month, or if it is a longer period, until the contract of employment could lawfully have been terminated.

Other
Depending on the employment contract, the following may be relevant – pro rata payment of bonuses, pension and provident fund. If relevant, ensure that blue card is issued.

Relevant legislation
Labour Relations Act, s189.
Basic Conditions of Employment Act, s35, s37 and s41.

For more information you can visit www.ccma.org.za or contact the CCMA call centre on 0861 16 16 16