Retrenchment laws still being broken
Posted on 08 Mar 2018
Retrenchment laws still being broken
Hardly a day goes by when I do not receive calls for help from employees complaining about unfair retrenchment or from employers being taken to the CCMA and Labour Court for unfair dismissal due to operational requirements.

Often, the problem lies with the fact that the employer did not have a fair reason to retrench the employees. For example, many employers retrench their employees without any genuine operational requirements such as financial losses, reductions in work, technological innovation or other factors that cause job redundancies. Instead, they misuse retrenchment to get rid of ‘trouble makers’ or workers whose work or behaviour is poor. Such employers normally lose at CCMA.

But by far the greatest number of cases lost by employers at CCMA arise merely because the employer, who had valid reasons for the retrenchment, failed to follow the retrenchment consultation procedure. This means that some employers are still unaware of the required legal procedures or that ‘clever’ employers feel that they can get away without following procedure.

Employers discovering the hard way (at the CCMA and Labour Court) that they are forced to follow procedure get angry and threaten to close down their businesses. In order to avoid the necessity of such a drastic step I need to put the legislative situation into perspective.

Firstly, employers are not required to negotiate retrenchments but only to consult with the trade union or other employee representatives. The difference between consultation and negotiation is most important:

Negotiation means that the parties must reach agreement before any idea can become a decision or is implemented. This is not required in retrenchment law although the trade unions are pressing hard for this to be legislated.

On the other hand, the law of consultation provides that, as long as the employer can prove that it disclosed relevant information and tried thoroughly and in good faith to reach consensus, it does not actually have to reach agreement with the employees/representatives.

Secondly, many thousands of employers who refused to believe the labour law requiring retrenchment consultations end up paying dearly for failing to acquire the knowledge and expertise necessary to reconcile business pressures with legal requirements.

Countless cases have been decided at the CCMA and Labour Court where employers have either had to reinstate retrenchees and/or have had to pay huge amounts in compensation. This is often a disaster for the employer because these awards can place an unbearable burden on the already strained finances of the employer. A case in point is Dhurghi VS DP Grant where the CCMA found that the employer had retrenched the employees for good and valid reasons but still ordered the employer to pay each retrenchee compensation because the consultation process had not taken place.

In the case of Mkhize and Busisiwe vs Discount Steam Laundry the employer also had to pay the employees compensation, and the only reason that reinstatement was not ordered is because the employees did not want to return to working for the employer.

In the landmark Toyota SA case reported in the Business Report of 30 November 1999 the employer was required to reinstate 280 employees and to pay them R 15,2 million because Toyota had failed to disclose to the employees sufficient information necessary for effective consultation.

Proper legal procedures would have prevented these costly awards!

Keeping to the law by following the proper statutory procedures can be tricky but is far from impossible. I have successfully assisted dozens of employers to go through these procedures so neutralising the threat of huge compensation orders at the Labour Court. These employers have then been able to get the retrenchments behind them quickly, sleep peacefully at night and carry on with running the business.

Article by Ivan Israelstam, Chief Executive of Labour Law Management Consulting.

To buy our Ebook, ‘Walking The New Labour Law Tightrope’ please contact Ivan via ivan@labourlawadvice.co.za. Or 011-8887944.