Retrenchment, your rights, and obligations – Section 189 of the Labour Relations Act.

During our current economic climate which is worsened by the Covid-19 Pandemic retrenchments have become necessary for the continued existence of businesses. This does not mean that an employee is not protected by the law. The main purpose of the Labour Relations Act is to firstly ensure that employees and subjected to fair labour practices but secondly to ensure that as many South Africans as remain employed by setting out procedures for either dismissals or retrenchments.

 

Section 189 states the following:

 

(1)       When an employer contemplates dismissing one or more employees for reasons based on the employer’s operational requirements, the employer must consult—

(a) any person whom the employer is required to consult in terms of a collective agreement;

(b) if there is not collective agreement that requires consultation—

(i) a workplace forum, if the employees likely to be affected by the proposed dismissals are employed in a workplace in respect of which there is a workplace forum; and

(ii) any registered trade union whose members are likely to be affected by the proposed dismissals;

(c) if there is no workplace forum in the workplace in which the employees likely to be affected by the proposed dismissals are employed, any registered trade union whose members are likely to be affected by the proposed dismissals; or

(d) if there is no such trade union, the employees likely to be affected by the proposed dismissals or their representatives nominated for that purpose.

(2)        The employer and the other consulting parties must in the consultation envisaged by subsections (1) and (3) engage in a meaningful joint consensus-seeking process and attempt to reach consensus on—

(a) appropriate measures—

(i) to avoid the dismissals;

(ii) to minimise the number of dismissals;

(iii) to change the timing of the dismissals; and

(iv) to mitigate the adverse effects of the dismissals;

(b) the method for selecting the employees to be dismissed; and

(c) the severance pay for dismissed employees.

(3)        The employer must issue a written notice inviting the other consulting party to consult with it and disclose in writing all relevant information, including, but not limited to—

(a) the reasons for the proposed dismissals;

(b) the alternatives that the employer considered before proposing the dismissals, and the reasons for rejecting each of those alternatives;

(c) the number of employees likely to be affected and the job categories in which they are employed;

(d) the proposed method for selecting which employees to dismiss;

(e) the time when, or the period during which, the dismissals are likely to take effect;

(f) the severance pay proposed;

(g) any assistance that the employer proposes to offer to the employees likely to be dismissed;

(h) the possibility of the future re-employment of the employees who are dismissed;

(i) the number of employees employed by the employer; and

(j) the number of employees that the employer has dismissed for reasons based on its operational requirements in the preceding 12 months.

(4)

(a) The provisions of section 16 apply, read with the changes required by the context, to the disclosure of information in terms of subsection (3).

(b) In any dispute in which an arbitrator or the Labour Court is required to decide whether or not any information is relevant, the onus is on the employer to prove that any information that it has refused to disclose is not relevant for the purposes for which it is sought.

(5)        The employer must allow the other consulting party an opportunity during consultation to make representations about any matter dealt with in subsections (2), (3) and (4) as well as any other matter relating to the proposed dismissals.

(6)

(a)The employer must consider and respond to the representations made by the other consulting party and, if the employer does not agree with them, the employer must state the reasons for disagreeing.

(b) If any representation is made in writing the employer must respond in writing.

(7)        The employer must select the employees to be dismissed according to selection criteria—

(a) that have been agreed to by the consulting parties; or

(b) if no criteria have been agreed, criteria that are fair and objective.”

 

To summarize in short there must be a notice served on employees in terms of Section 189(2) informing them of the contemplated retrenchments and what their rights are with regard to the retrenchments. The employee and employer can then engage in a join consensus seeking process which is used to determine how job losses can be minimized by either, inter alia, a reduction in working hours, shift rotations, a reduction in salaries etc.  

 

Employers are obliged to make the following payments in terms of the Basic Conditions of Employment Act when retrenching employees:

 

  1. One week’s salary for every completed year of service (severance);
  2. Notice, depending on the length of the employees service.
    1. 6 months employment = 1 week notice;
    2. 6 – 12 months = 2 weeks notice;
    3. 1 year and more = 4 weeks notice;
  3. For leave days that employee is entitled to for the 12-month cycle.

 

If a dispute arises about severance pay, such can be referred to the CCMA at anytime as there is no statutory time limit for the referral unlike dismissal and unfair labour practices.

 

Furthermore, employees are entitled to request that the employer furnish to them a UI19 form, which would enable the employee to claim UIF from the Unemployment Fund. In terms of Section 42 of the Basic Conditions of Employment Act employers are obligated to also furnish employees with a certificate of service.

 

More often than not, employers will suggest that employees take a voluntary exit package or early retirement for older employees who are closer to retirement.

 

 A recent Labour Court matter namely, National Union of Metal Workers of South Africa and Others v Aveng Trident Steel , dealt with the question whether employees are automatically dismissed when they refuse changes to terms and conditions of their employment cause by the employer’s operational requirements. The Court found that it is not an automatically unfair dismissal and employers are entitled to dismiss employees who refuse such changes since it is done for reasons of the employer’s operational requirements. Such terminations should still be done in terms of Section 189.

 

Employees should therefore be cautioned that it is the purpose of Section 189 to seek ways to prevent job losses even if such includes restructuring. Should the employee feel aggrieved with the restricting or changes to remuneration, the employer will have the right to dismiss the employee.

 

It is always advisable for employees if they are confronted with changes to terms of conditions of employment, to get proper legal advice in advance. Advice is, more than often, sought too late and when damage to the work relationship has already been done.

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