Stephen needs to retrench 7 employees due to restructuring his business of over 100 employees. The document outlines the operational requirements and consultation process required for fair retrenchment. It defines operational requirements, discusses who to consult and topics for consultation. It addresses disclosure of information, fair selection criteria, severance pay, offers of reemployment, and the differences between small and large scale retrenchments as defined in Sections 189 and 189A of the Labour Relations Act.
Stephen needs to retrench 7 employees due to restructuring his business of over 100 employees. The document outlines the operational requirements and consultation process required for fair retrenchment. It defines operational requirements, discusses who to consult and topics for consultation. It addresses disclosure of information, fair selection criteria, severance pay, offers of reemployment, and the differences between small and large scale retrenchments as defined in Sections 189 and 189A of the Labour Relations Act.
Stephen needs to retrench 7 employees due to restructuring his business of over 100 employees. The document outlines the operational requirements and consultation process required for fair retrenchment. It defines operational requirements, discusses who to consult and topics for consultation. It addresses disclosure of information, fair selection criteria, severance pay, offers of reemployment, and the differences between small and large scale retrenchments as defined in Sections 189 and 189A of the Labour Relations Act.
OPERATIONAL REQUIREMENTS Su 5.5 Study outcomes 1. Define operational requirements 2. Know sections 189 and 189A 3. Distinguish between small and large scale retrenchments 4. Know ‘consultation’ 5. Answer questions about disclosure of information 6. Discuss the following: 1. With who consults ER about what topics? 2. Fair selection criteria 3. Severance pay 4. Offer of re-employment Due to the restructuring of his business (which employs over one hundred employees), during which various departments were shuffled and some functions ceased, Stephen has fifteen employees whose positions ceased to exist. He could move eight of the employees to alternative positions, but there is no longer place for the remaining seven employees, thus they have now become redundant. What now? Operational requirements 1. Economic, structural, technological and similar needs 2. S189 & S189A of the LRA 3. Small-scale and large-scale retrenchment 4. Sections indicate that dismissal should not take place if it can be avoided 5. If same results could be reached in another way without retrenchments – dismissal not substantively fair 6. Reduction must be absolutely necessary – Johnson & Johnson and BMD Knitting Mills 7. Thus, beware secret agenda! Operational requirements
8. Substantive and procedural fairness in these cases?
SUBSTANTIVE: Was there truly a need of the business that could only properly be addressed through retrenchments? Is the need commercially justifiable? PROCEDURAL: Did the employer follow the steps set out in the LRA? 9. S189 requires consultation, and subsection 2 indicates subjects for consultation Pre-termination consultation 1. ‘Consultation’ 1. “Meaningful joint -consensus seeking process” 2. Parties attempt to agree on certain aspects 3. Firstly attempt to avoid retrenchment altogether 4. If not – ameliorate the effects 5. Consultation must be exhaustive and all possibilities must be considered – Johnson & Johnson; BEMAWU obo Mohapi (consult thoroughly on every issue) 6. Employees or trade unions must make suggestions Pre-termination consultation 7. Employer must not have made a final decision before the consultation 8. Approach consultation with open mind and give each suggestion reasonable consideration 9. Final decision rests with employer 10. Must not rush the process 11. All parties have to work together to find a solution Pre-termination consultation 2. When must consultation commence? 1. When employer first contemplates retrenchment 2. Final decision must not have already been made 3. Employees informed as soon as it is realised that certain circumstances at work may lead to retrenchments Pre-termination consultation 3. Notice of consultation 1. Employer give proper notice to employees or trade unions of need for retrenchment 2. Notice in writing 3. Notice should contain important information, ex. - Reasons for retrenchment - Number of employees affected - When - Selection criteria - Severance packages - Possibility of future re-employment Pre-termination consultation 4. Who are consulted? 1. Anyone in terms of a collective agreement 2. If no such collective agreement exists – workplace forum 3. If no workplace forum – trade union 4. If no trade union – employees directly 5. Consult only employees affected by the retrenchment – therefore not independent contractors Pre-termination consultation 5. Topics for consultation 1. Measures taken to avoid dismissals 2. Measures taken to minimise number of employees affected 3. Measures taken to change the time of dismissals 4. Measures taken to mitigate the adverse effects of the dismissals 5. Selection criteria 6. Severance pay Disclosure of information 1. Employer disclose information to employees/trade unions to be able to make proper suggestions 2. Relevant information: Reasons for retrenchment Number of employees Method of selection Re-employment When Severance pay 3. Relevance sometimes difficult to determine 4. If employer refuses, prove lack in relevance 5. Certain information not obligated to provide: Which? Final decision 1. Rests with employer 2. Only after the consultation process has been exhausted 3. NB - Employer can return to consultation after the decision to address certain overlooked aspects 4. Can therefore revoke the final decision – has to be bona fide Fair selection criteria 1. Use criteria agreed upon by parties 2. If no such agreement – fair and objective criteria 3. Fairness forbid possible automatically unfair dismissal – specific groups for impermissible reasons 4. LIFO best option – must not stray too far 5. LIFO not mandatory if it could lead to loss in necessary skills 6. Other acceptable criteria? See item 9 of Code (Operational requirements) 7. CWIU v Latex Surgical Products and NUMSA v Columbus Stainless Severance pay 1. Severance pay at 1 week salary for every year of continuous service 2. If agreed on higher amount – use that 3. If lower – use legislation 4. Soften blow of circumstances – compensation 5. Amount unlimited 6. Limitations Only for continuous service Short break in service will not have affect Only with operational requirements Severance pay 7. When are employees not entitled? 8. Employee who accepts severance package can still open a case for unfair dismissal 9. Service not interrupted during the transfer of a business – service delivered at old employer are added to the total years of service Offers of re-employment 1. Employer inform parties of the possibility 2. Under no obligation – but if employer re-employ only a select few – regarded as dismissal 3. Employer must defend his actions 4. If employer made a promise by way of an agreement – bound by that agreement S 189A Retrenchments 1. Large scale retrenchment – 10% and more 2. Employers with more than 50 employees but less than 200 – only if at least ten are earmarked for retrenchment 3. More than 200 employees – 10% thereof retrenched, ex. 20 (on a scale as from 200) 4. Difference between 189 and 189A – employees can strike 5. Employers must give notice of retrenchment 6. Facilitator plays a role here 7. Summarise the procedure for yourself from the text book and Act Retrenchment of individual 1. Such employee can refer case for arbitration or to Labour Court 2. Employee has a choice 3. Requirements Only one employee affected For operational requirements