When it comes to retrenchment, you may not know what exactly the law allows employers to do and what not – especially in light of the financial impact of the lockdowns. Scorpion Legal Protection takes a look at SA labour laws and debunks some common retrenchment myths.

Myth 1: Employers can retrench employees during the lockdown period without following required procedures because of Covid19.

FALSE. Even with the financial effects of Covid19, employers may not just skip the processes laid out in Section 189 of the Labour Relations Act (LRA). This includes notifying the affected employees in writing, holding consultation meetings to find alternatives to retrenchment, notifying the employees who will be retrenched formally in writing and eventually when they are retrenched, paying out the severance package. Finding an alternative to retrenchment is one of the topics listed in the Act that must be discussed at the meetings.

 

Myth 2: If you are retrenched for operational requirements and your employer says they don’t have money to pay you a severance package, they don’t have to.

FALSE. Section 41(1) of the Basic Conditions of Employment Act (BCEA) states that a retrenched employee is entitled to severance pay of at least one week’s remuneration for every year of completed service with the employer. Employees who feel they have been unfairly treated in terms of their retrenchment package can refer their matter to a bargaining council (if they fall under a specific council that deals with their matter) or the CCMA if the council does not cover their matter or they don’t have one. The CCMA or bargaining council will try to resolve the matter through conciliation, but if that fails, the matter can then be referred for arbitration.

However, if your employer offers you an alternative position and you unreasonably reject this position, your employer does not have to pay you severance.

 

Myth 3: Employers can retrench employees so that they can hire other people who will work for cheaper.

DEPENDS ON CIRCUMSTANCES. Employers can’t just decide to retrench employees because they want to save money or hire cheaper workers. However, the point of retrenchment is to cut positions that are no longer needed and reduce the wage bill of the employer. Retrenchment must be procedurally fair (proper processes were followed) and substantially fair (the reasons for the retrenchment are valid). All employers must follow Section 189, which means they must have valid operational reasons for any no-fault dismissal.

The retrenchment process should be the last resort and employers must show that alternatives were considered. If your employer offers you alternative employment or you unreasonably refuse to accept the employer’s attempts to avoid retrenchment (for example, taking a pay cut), by law they are allowed to start retrenchment procedures with you. They still have to follow the retrenchment procedures laid out in Section 189 of the LRA to retrench for operational requirements.

Tips

• Any retrenchment must follow the correct procedures of South African labour law, employers cannot skip the processes.

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* This is only basic advice and cannot be relied on solely. The information is correct at the time of being sent to publishing