Retrenchment laws are still being broken
I frequently receive calls for help from HR practitioners being taken to the CCMA and Labour Court for unfair retrenchments. Often, the problem is that the employer did not have a fair reason to retrench the employees.
But by far the greatest number of cases arise merely because the employer failed to follow the retrenchment consultation procedure. This means either that:
- Some employers still do not know about the required legal procedures surrounding retrenchment; or
- ‘Clever’ employers feel they can get away without following procedure.
Adhere strictly to the retrenchment consultation procedure
The truth is that, while the Labour Court is fairly flexible about why you, the employer, have decided to retrench staff, the courts will strictly insist that you follow the retrenchment consultation procedure.
What is the difference between negotiation and consultation?
Negotiation means that the parties must reach agreement before any idea can become a decision or is implemented. This is not required in retrenchment law, although the trade unions are pressing hard for this to be legislated.
On the other hand, the law of consultation provides that, as long as the employer can prove that it disclosed relevant information and tried thoroughly and in good faith to reach consensus, it does not have to actually reach agreement with the employees or representatives.
3 points that you have to know about the retrenchment consultation procedure
1. The purpose of retrenchment law is to limit the number of job losses. However, government does not effectively distribute information about these laws in the media to:
- Inform employers; and
- Prevent unnecessary retrenchments.
Yes, if you visit the CCMA, you will see these laws well summarised on their wall notices. However, employers only get to see these excellent summaries when it is too late and the legal process has begun.
It is therefore understandable that some HR practitioners feel that the legislators have trapped them by keeping them in the dark about the retrenchment procedure and enabling the employees to use the CCMA to suck huge amounts of money out of the employer in settlements and compensation orders.
2. It is not necessary for employers to close down their businesses simply because the labour law interferes with their right to make business decisions. Every employer has the ability and opportunity to acquire the expertise necessary to implement business decisions without transgressing the law and still attain a viable business.
3. HR practitioners are not required to get their employees’ ‘permission’ to retrench. In other words, you are not required to negotiate retrenchments. You are only required to consult with:
- The trade union; or
- Other employee representatives (if these exist); or
- With the employees themselves.
Countless cases have been decided at the CCMA and Labour Court where employers have either had to reinstate retrenchees and/or have had to pay huge amounts in compensation. This is often a disaster for the employer because the biggest reason for retrenchments is financial weakness and these awards against employers can put a huge burden on the employer’s already-strained finances.
2 cases in which the employer had to pay up because he did not follow proper procedure
- Dhurghi VS DP Grant: The CCMA found that the employer had retrenched the employees for good and valid reasons but still ordered the employer to pay each retrenchee compensation because the consultation process had not taken place.
- Mkhize and Busisiwe vs Discount Steam Laundry: The employer also had to pay the employees compensation. The only reason that reinstatement was not ordered is because the employees did not want to return to working for the employer.
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Ivan Israelstam is the Chief Executive Officer of Labour Law Management Consulting. He is known as a leading practitioner in labour law and pragmatic labour relations management with many years experience in corporate human resources management. He has an honours degree from The University of the Witwatersrand and an IPM diploma in Personnel Management and in Training. Contact Ivan: This e-mail address is being protected from spambots. You need JavaScript enabled to view it. . |
