HR Pulse

Employers still bungling retrenchments

We've regularly reminded employers of the factors that render dismissals for operational requirements (retrenchments) fair and unfair. Despite this, employers continue to get it wrong and end up paying a very heavy price. To win a retrenchment case at the CCMA or Labour Court, the employer needs to prove the retrenchment was fair in all respects. It's the employer who has the duty to prove there was a valid reason for the retrenchment, among others. Why are employer's failing to follow the correct retrenchment procedure?

The employer must also prove that:

• The employees chosen for retrenchment were chosen fairly,
• The retrenchment procedure as laid down in the Labour Relations Act (LRA) has been followed properly and in good faith,
• The employer has shared with the targeted employees (or their representatives) all documentary and other information relating to the retrenchment.

Employers are still failing to follow procedure

An example of employer failing to follow procedure is demonstrated in the case of NUMSA and others vs Dorbyl Ltd and another (2004, 9 BLLR 914).

In this case:

• 176 employees embarked on a protected strike.
• Thereafter, the plant at which they worked was closed down and 122 employees were retrenched.
• The employees claimed that the retrenchments were unfair because they hadn't been properly consulted by the employer before being retrenched.

The court found that:

• The decision to retrench was taken at an executive meeting held before the employer consulted with the employees about the retrenchments.
• This rendered the consultations meaningless as the employer had already made its decision before holding the consultations.
• As good faith consultation is the core requirement of the retrenchment procedure, the retrenchment was procedurally unfair.
• The employer was required to pay each of the 122 retrenchees two months' remuneration in compensation.

In the case of Masilela vs Leonard Dingler (Pty) Ltd (2004, 4 BLLR 381) Mr Masilela was retrenched from his position as an industrial relations manager after the employer hired a human resources manager with industrial relations experience. The possibility that a more junior post could've been created was not discussed before the retrenchment took place. However, after the retrenchment, a junior post was created but it was too late to avoid the retrenchment.

The court therefore found that the retrenchment was unfair and awarded the employee eight months' remuneration in compensation.

Why are employers not following the correct retrenchment procedure?

There are a number of possible reasons for the fact that employers aren't complying with retrenchment law, including:

• Employers know the law but don't believe it will be applicable to them.
• The employer's operational circumstances are so dire that the pressure distracts the employer from the legal aspects of the retrenchment.
• They believe that, if there is a good reason for retrenchment, the court will be lenient on the procedural side of the case.
• Employers misuse so-called retrenchments to get rid of poor performers. As their priority is getting shot of undesirable employees, the legal requirements are not taken into account.
• Employers are given poor legal advice about retrenchment law and implementation strategies.

Employers must take care to comply with retrenchment law

Although the courts have become stricter in applying retrenchment law, employers still implement retrenchments without complying with labour law.

Be warned: The courts see retrenchments as no-fault terminations. This means that the employee is losing his/her job through no fault of his/her own. In addition, the unemployment rate in South Africa is extremely high and it's very difficult for retrenchees to find new jobs. For these reasons, the courts won't hesitate to protect the rights of retrenchees and will penalise those employers who don't comply with the correct retrenchment procedures.

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. .