The current pandemic and the implementation of the lockdown has forced companies to implement various cost cutting measures to keep afloat. Those companies considering the need to retrench employees must first make every effort to find alternatives to retrenchment.

Alternatives to retrenchment include:

  • Companies can make use of support measures implemented by government such as the COVID-19 Temporary Employer/Employee Relief Scheme and the Debt Relief Fund; and financial relief measures provided by banks such as loan instalment relief and preferential interest rates for COVID-19 funding.
  • Employers can require that employees take annual leave or unpaid leave, go into negative leave, or temporarily lay off workers or implement short time. The Training Layoff Scheme, which allows a company in financial distress to suspend the employment relationship for up to six months whilst employees go on a skills training programme is a further way to avoid retrenchments. For this period the employer only pays the employee’s basic social security contributions, such as UIF, death/disability cover and pension/provident funds, whilst 75% of the employees’ salary is paid as a training allowance by the scheme.
  • Companies should look into reducing their operational expenditure to find savings that would allow them to avoid retrenching employees.

In some instances, these measures may not be enough and companies may be left with no alternative but to consider the restructuring or rationalisation of their businesses, and the retrenchment of employees. A failure to show a genuine need or rationale for retrenchment, or a failure to properly consider alternatives, could result in the retrenchments being found to be unfair and the reinstatement of the employees with full back pay.

There is nothing in the Disaster Management Act, Regulations and Directives, which prevents an employer from engaging in a retrenchment process during the lockdown. However, employers must, even during the lockdown comply with the procedural requirements of Section 189 and 189A of the Labour Relations Act1995 before retrenching any employees.

An employer must give written notice to affected employees and to their representative trade unions once any retrenchments are contemplated. The requisite notice should provide the detailed reasons for the restructuring and rationalisation and possible retrenchments and the alternatives considered before engaging in the retrenchment process. The employer is further required to engage in a consensus seeking process by way of consultations. The employer must allow the other consulting parties an opportunity to make representations and the employer must consider and respond to the representations that are made. If any representations are made in writing, the employer must respond in writing.

Employers are entitled to use text messaging or emails to communicate the notice to employees. This allows for there to be a record of service of the notice on employees. The options open to an employer for conducting the consultation process are by written communication via emails or face to face meetings, teleconferences and audio visual or video conferencing equipment. The face to face meetings would need to be conducted in compliance with the social distancing obligations to ensure compliance with the disaster regulations and the Occupational Health and Safety Act1993, by maintaining, as far as is reasonably practicable, a working environment that is safe and without risks to the health of the employees.

Companies with employees that have access to laptops and the internet can consult via an online meeting app such as Skype or Zoom, or through a dedicated platform on the company’s internal website that allows employees to provide their input into the consultation process and to give feedback to them. There will however be many companies with employees who do not have these facilities, particularly in the manufacturing sector. It is suggested that employers engage with these employees through text messaging and via phone calls.

The risks in conducting a retrenchment which is procedurally fair during the course of the lockdown are far greater because of the limitations imposed in terms of the Disaster Management Act and therefore it is important that employers take legal advice before commencing a retrenchment process.