Many business are faced with the daunting prospect of contemplating retrenchments due to the impact of COVID-19 on their businesses. Employers should however be aware that retrenchments are a matter of last resort and can only be undertaken after exploring all alternatives seeking to avoid retrenchment.
Here are 10 things to know before embarking on contemplated retrenchments:
- Employers are required to issue a notice in terms of section 189(3) or section 189A (if employing more than 50 employees and contemplating retrenching 10% or more of the workforce) of the Labour Relations Act.
- The written notice must set out, amongst others:
- the reasons for the proposed dismissals, the alternatives considered by the employer before proposing retrenchments and the reasons for rejecting each of those alternatives;
- the number of employees likely to be affected and the job categories in which they are employed;
- the proposed method of selecting which employees to dismiss;
- the time or period when the dismissals are likely to take effect, the severance pay proposed, the assistance offered to employees likely to be dismissed, the possibility of future re-employment, the number of employees employed by the employer, the number of employees that were dismissed as a result of operational requirements in the preceding 12 months.
- There must be consultation with employees, aimed at reaching consensus on appropriate measures to avoid dismissals, minimise the number of dismissals, change the timing of the dismissals, mitigate the adverse effects of the dismissals, method of selecting employees to be dismissed and severance pay for the dismissed employees.
- It is not necessary to reach agreement on the aforesaid issues but the consultations must be in good faith and all employee representations must be considered during the consultation process.
- An attempt must be made to reach agreement on the selection criteria identifying employees to be retrenched. If no agreement has been reached, the selection criteria adopted must be fair and objective – the most common being ‘last in, first out’ subject to skills, qualifications and experience.
- Employees are entitled to a minimum of one week’s severance pay for each completed year of service unless the employer has a more beneficial policy on severance.
- In the case of large scale retrenchments (section 189A) either party may request facilitation through the CCMA.
- If a facilitator is appointed to assist with the consultation process, an employer may give notice of termination of employment after 60 days have elapsed from the date on which the section 189(3) notice was issued.
- If no facilitator is appointed, either party may refer a dispute to conciliation after 30 days have elapsed from the date of issue of the section 189(3) notice.
- No notice of termination of employment may be given before the expiry of 60 days from the date of the section 189A(3) notice.