South Africa is now getting into a ‘retrenchment season’ because it grapples with the influence of the coronavirus lockdown, says regulation agency Cliffe Dekker Hofmeyr.
Talking in a digital seminar on Wednesday (eight July), Thabang Rapuleng, a director at Cliffe Dekker Hofmeyr mentioned that large-scale retrenchments have turn into the ‘order of the day’ for most of the nation’s companies.
He famous that these retrenchments are regulated by S189 of the Labour Relations Act (LRA) and envisage a session interval of 60 days.
Nonetheless, he famous that the timing of the retrenchment differs on whether or not a facilitator is appointed and that an employer could retrench after solely 30 days the place a facilitator has not been appointed.
Rapuleng mentioned that among the key points that come up round these retrenchments, particularly through the Covid-19 pandemic, are the next:
- When is an employer allowed to introduce voluntary severance packages?
- If an employer can not afford to pay workers on a month to month foundation, what can it do, notably to keep away from retrenchment?
- What if an employer can not afford to pay severance packages?
When is an employer allowed to introduce voluntary severance packages?
Rapuleng cited the latest case of SACU vs Telkom which handled an employer who launched a voluntary severance bundle earlier than a S189 (3) session course of.
The difficulty was referred to the Labour Court docket which held that:
“Even when a celebration has reservations about whether or not there’s a want for retrenchment, it have to be ready to interact in consultations on options.
“Nothing prevents a celebration from partaking on a provisional foundation, by making it clear upfront that its consent to the adoption of sure various measures is topic to it being persuaded that retrenchment would in any other case be required.”
“Primarily the courtroom held that there was nothing untoward with the employers conduct and this case now signifies that the employer could supply voluntary severance packages even earlier than initiating a S189 (3) course of,” defined Rapuleng.
What if an employer has fallen on exhausting occasions?
The second case offers with an employer who has already fallen on exhausting occasions and can’t pay salaries both earlier than or whereas the facilitation course of is pending.
On this case, Rapuleng referred to the case of Numwsa vs SAA the place an employer launched voluntary separation agreements throughout enterprise rescue proceedings.
“The courtroom was referred to as to resolve on the knowledge of the employer to provoke the voluntary separation agreements within the technique of a enterprise rescue continuing,” he mentioned.
“You will need to be aware that the corporate, at that individual stage, had positioned a moratorium on retrenchment and the query was whether or not or not the packages would represent a dismissal.
“The courtroom held that there is no such thing as a foundation to argue that an employer can not provoke a voluntary retrenchment course of if there’s a moratorium on retrenchment.
“If the events attain an settlement to terminate the employment relationship, it will represent an settlement and won’t represent a dismissal.”
Rapuleng mentioned that this, subsequently, extends the probabilities of employers if an organization falls on exhausting occasions. He added that voluntary severance packages could also be concluded even earlier than retrenchment is contemplated or a S189 (3) course of is initiated.
What if an employer can not afford to pay severance packages?
Rapuleng mentioned that in these circumstances the unhappy actuality (for firms) is that the cost of severance is a authorized obligation as supplied for within the Primary Situations of Employment Act.
Nonetheless, if an employer is unable to take action, the employer could apply to the minister of Labour for an exemption, he mentioned.
“Within the absence of that individual exemption, the employer is sadly required to pay severance pay,” he mentioned.
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