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May 2009
ISSN 1993 - 0798
Workinfo.com - the premier online resource for HR professionals
Focus on retrenchments
Expected increase in retrenchments
 
In February this year the Commission for Conciliation, Mediation and Arbitration (CCMA) told the portfolio committee on labour that plans were in hand to handle a difficult year ahead and that instances of retrenchment would become a feature of the forthcoming labour scenario in South Africa. Then in March this year the Labour Minister Membathisi Mdladlana warned that the rising tide of retrenchments in South Africa would adversely affect the job market.

There are basically three grounds of justification for dismissal, namely misconduct, incapacity and dismissal for operational reasons. Whereas an employee is clearly at fault in cases of misconduct, the employee who loses his job because of reasons outside of his control such as a recession is without blame. Dismissals of this nature deserve special attention, consultation and above all else - procedural fairness.

Failure to implement a sound retrenchment process could lead to even further expenses to a company both in the short and long term. 
CCMA now has jurisdiction over all retrenchment disputes
 
Until February 2009 the CCMA only had jurisdiction to hammerdetermine the substantive fairness of retrenchment disputes, and not the procedures which were followed.
 
Where employees disputed both the substantive and procedural fairness of disputes, such disputes had to be referred to the Labour Court. In normal circumstances, proceeding with such disputes would be prohibitive due to the costs associated with proceeding to the Labour Court.
 
In Scheme Data Services (Pty) Ltd v Myhill NO & others (Labour Court case no. JR1456/06 dated 5 December 2008, unreported; SILCS 2008:38), the Labour Court held that the CCMA had jurisdiction to entertain disputes concerning the substantive and procedural aspects of retrenchments.  As this is a cheaper option for employees, the potential for increased dispute referral must be acknowledged.

Note: This case overruled the earlier decision in Rand Water v Bracks and Others JR 1965/05 which provided that only disputes concerning the substantive fairness of the an individual retrenchment may be referred to the CCMA.
The 7 steps to a procedurally fair retrenchment
 
Here follows a short overview of the seven requirements for a procedurally fair retrenchment:
 

Step 1
Consultation

Step 2
Attempt to reach consensus on certain matters

Step 3
Disclosure of information

Step 4 
Employer must afford the other party an opportunity to make representations

Step 5 
The employer must consider and respond to the representations made by the other party

Step 6
The selection of employees for retrenchments
 
Step 7 
Payment of retrenchment packages
Important facts about retrenchments
  
Retrenchments are not necessarily the only solution to the employer's financial problems
 
Employers are not allowed to retrench merely because they expect their profits to decline.
 
An employer is obliged to consult with its employees when it contemplates dismissing one or more of the employees for operational reasons.
 
Restructuring exercises do not automatically allow the employer to retrench
 
The employer does not have the right to choose whatever criteria it prefers when deciding who to retrench
 
Even if retrenchments need to be implemented urgently, the employer is obliged to follow retrenchment procedures
 
When a company is bought over, or two entities merge, the resulting rationalisation does not justify the retrenchment of selected employees
 
Retrenchment is not an opportunity to get rid of bad performers or unfavourable employees.
In This Issue
Expected increase in retrenchments
CCMA now has jurisdiction over all retrenchment disputes
7 Steps to a procedurally fair retrenchment
Important facts about retrenchments
Need assistance with your retrenchment
Retrenchment workshops
Need Assistance?
 
Workinfo.com is able to assist you in numerous ways with your retrenchment process:

 
1.     Consultation - let our team of specialists assist and guide you through a retrenchment process.

 
2.       Training - let us train and coach you and your colleagues regarding all aspects of the retrenchment process. You can attend our public training or we can run the course in-house for you. Click here for the course outline.

 
3.       Buy the retrenchment manual as an electronic item off our online store. Click here to enter the online store.

 
4.       Subscribe to www.workinfo.com and get the retrenchment manual in addition to all the other content on the website. Click here it subscribe online.
 
Please contact:
Shirley Haddock
Tel: +27 (0)861 967 5463
Fax: +27 (0)86 684 6216
Cel: +27 (0)84 456 8346
Email: shirley@workinfo.com


Retrenchment Workshops
Workinfo.com is running public workshops on preparing for retrenchments:
 
29 June - JHB
03 July - CPT
10 July - DBN

Click here for a course outline
 
This course is also offered in house

Please contact:
 
Michelle du Toit
Tel:     +27 (0)861 967 5463(Office)
Fax:    +27 (0)86 566 4094
Cell:    +27 (0)83 232 2004
Email:michelle@workinfo.com
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Guidelines on planning for retrenchments - comprehensive manual
Workplace Communications Manual - comprehensive manual 
Confidentiality and Non Disclosure Agreement 
Human Resources Strategy and Operational Plan Templates 
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