By Londiwe Buthelezi for News24
Troubled clothing retailer Edcon says the reason it sent retrenchment notices to all its staff is because it has not received any binding offers from people interested in buying the company or any of its divisions.
The retail group’s executive of corporate affairs and communications Vannie Pillay said the company sent Section 189 retrenchment notices to 22 000 workers, meaning that jobs of everyone employed by the retailer are on the line – as the owner of Edgars and Jet has approximately 17 000 people employed on full-time basis and about 5 000 seasonal workers.
“We did send notices to all our staff as per the LRA [Labour Relations Act] because we have no binding offers that have been received at this stage. So, it’s the prudent thing to start consultations in terms of Section 189,” said Pillay.
Biggest retrenchment plan yet
Edcon’s move makes it be the biggest retrenchment plan yet that any local company has announced during the lockdown, blaming it on the coronavirus-induced restrictions. For instance, the national carrier, SAA which is also in business rescue said 4 708 jobs were affected when it started retrenchment consultations in March.
Edcon said before going into voluntary business rescue in April that the lockdown caused it to lose about R2-billion in sales and did not see any other way out of its woes. But in the business rescue plan that Edcon published on the 9th of June, its business rescue practitioner (BRPs) envisaged that employees would be transferred to potential buyers of Edcon businesses. At the time, the plan said only unavoidable retrenchments would take place if there are remaining employees who were not absorbed by the buyers after the accelerated sales.
The plan said there was no conclusion to be drawn that people working in “non-viable” stores would “definitely” be retrenched. The BRPs were supposed to get final offers from businesses and parties interested in buying Edcon’s divisions by the end of June and finalise successful bids by early July 2020.
Therefore, it was expected that the extent to which the company would be able to retain jobs would become clearer then. But the business rescue plan did budget R597-million for proposed retrenchments of employees whose jobs the BRPs might not be able to save.