By lvan lsraelstam, chief executive of Labour Law Management Consulting
One of the amendments to the Labour Relations Act (LRA) entitled the CCMA to arbitrate certain retrenchment disputes. That is, where there has been only one employee retrenched, the CCMA may arbitrate the retrenchment dispute where conciliation has failed to resolve it. This had previously been the sole jurisdiction of the Labour Court. This amendment has made it much easier for retrenched employees to oppose retrenchments as CCMA process are much simpler to handle than those of the Labour Court.
Despite the strict and clear retrenchment legislation employers are still having to pay large sums of money to employees who have been retrenched incorrectly. Three areas where employers infringe the law on retrenchment are:
· Failing to follow the very detailed and rigidly enforced procedure for retrenchment. For example, many employers do not, during the lead up to the retrenchment decision, carry out genuine and comprehensive consultations aimed at trying to save the jobs of the targeted employees.
· Making the decision to retrench for the wrong reason. For example, it is illegal to retrench any employee for any reason related to a takeover of a business (or part thereof) as a going concern. And ‘business’ can mean any organisation whether it is a company, sole trader, welfare organisation, NGO, government department or other employer.
· Using legally unacceptable criteria for deciding on which employees to retrench. That is, targeting an employee for subjective reasons is unfair. For example, deciding to retrench Mr A because he is old, sick, injured, outspoken, strong-willed or performing badly would be considered unfair. An exception is where the employer can show that the work performance of all employees has been:
· Precisely, accurately and fairly measured
· Recorded in writing
· Used fairly in deciding on which employees should be retrenched.
That is, the employer must:
1. Implement proper performance appraisal exercises
2. Arrive at accurate measurements of performance of all employees whose jobs might become redundant
3. Be able to show that the appraisal ratings were arrived at objectively rather than resulting merely from the manager’s feelings towards the employee or unreasoned opinion of the employee’s work performance
4. Have made it clear at the outset of the retrenchment procedure that work performance was going to be the criteria for selecting retrenchees.
In the case of Mokoena vs Power Man (2005, 10 BALR 1047) the employee, an electrician, was retrenched after the division he worked in was closed down. However, the employer failed to prove that there was a need to close down the division and retrench the employee. The employer also failed to follow the legally prescribed procedures for retrenchment. In addition, the employer was unable to explain why it had employed new electricians shortly before the employee’s retrenchment and why the new employees had not been retrenched instead of Mokoena. Thus, in this case, the employer managed to infringe all three fairness criteria of procedure, fair reason and fair criteria for retrenchment. The arbitrator ordered the employer to pay the employee eight months’ remuneration in compensation.
Also, if there is a different post to which the employee could, in terms of his/her skills, be appointed, it is unfair to retrench him/her unless he/she turns it down.
In the case of Masilela vs Leonard Dingler (Pty) Ltd (2004, 4 BLLR 381) Masilela, the IR Manager, was retrenched after a HR Manager with Masilela’s skills was appointed as the employee’s senior. This created duplication of skills because the new HR Manager was able to carry out Masilela’s duties. However, Masilela was given a letter informing him that he could apply for a new junior post. The Court found that:
· It was fair to make Masilela’s post redundant due to the duplication of industrial relations skills
· The employer should have given Masilela the new junior post instead of requiring him to apply for it
· The retrenchment was unfair
· The employer had to pay the employee 8 months’ remuneration in compensation.
Case decisions continue to refine and make subtle changes to labour legislation. This means that employers and employees cannot become complacent. Employees risk losing their jobs unnecessarily and employers run the very serious risk of having to reinstate employees and/or to pay huge amounts in compensation in addition to retrenchment packages.
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