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PART 4: RETRENCHMENTS AND RESTRUCTURING IN THE WORKPLACE

In this series of articles, we unpack practical pointers for employers as a trouble shooting guide, based on frequently seen problems and questions raised by employers.

Below is some advice to consider in relation to dismissal for operational requirements is set out in section 189 of the Labour Relations Act, 1995 (the “LRA“):

1.         A retrenchment is based on the employer’s “operational requirements”.  These are defined as “requirements based on economic, technological,                    structural or similar needs of an employer”.  A retrenchment cannot be justified based on an employee’s conduct or performance.

2.         Section 189 of the LRA is designed to ensure that retrenchment is a last resort and an employer must satisfy the court that dismissal was the only                  option under the circumstances.

3.         Before initiating the consultation process, an employer must properly plan the exercise. A key consideration is to clearly articulate the commercial                   rationale for the restructuring and what objectives the employer is seeking to achieve.

4.         Consultation must be exhaustive and requires a real effort to justify the decisions taken or to be taken, to listen to the employees and to seek                           consensus on all the relevant issues.

5.         A reasonable amount of time must be provided to the employees to prepare for the consultation meetings and to make representations on any                       issue arising from the consultations.  There is no hard and fast rule as to how many consultation meetings must be held and this would depend on                 the nature, scale, and complexity of the operational exercise.

6.         The test for whether there has been genuine consultation prior to retrenchment is whether the employee is concerned or their representatives                      were given a fair opportunity to suggest ways in which job losses could be avoided or the affects of retrenchment on the work force as a whole or                  on particular individuals might be ameliorated.

7.         Where the consulting parties have agreed on the selection criteria to be used, the employer is obliged to apply those criteria. Where there has been               no agreement, the employer is obliged to use only fair and objective criteria.

8.         An employee who unreasonably refuses an offer of alternative employment or alternative position as an alternative to retrenchment forfeits his/her              right to severance pay.

Should you require any more information on the subject, please contact our partner Melanie Hart at melanie@bv-inc.co.za.