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Retrenchment: Navigating the minefield! |
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by
LawDotNews
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Published
2009/05/05 12:00:00 AM
(Viewed
661
times) |
“Increasing levels of business distress and failure = more retrenchments”.
That unfortunately is an equation that will be with us for some time.
Some general principles to bear in mind (but note that whilst both employers and employees should have at least a basic understanding of their rights and obligations, retrenchment is a minefield – a complex minefield - and every case is different, so seek specific advice and assistance if and when it rears its ugly head):
• Retrenchment is a “no-fault” category of dismissal, allowed for “operational reasons” (financial distress, restructuring, technological changes etc, etc).
• Our law protects employees from all forms of “unfair dismissal”, so retrenchments must be “fair” in all respects. All statutory requirements (and there are many of them!) must be strictly observed. Employers must prove both
o That they have fair, valid reasons for retrenching, and
o That they have followed fair procedures.
• Failure to comply will entitle the retrenched employee to re-instatement and/or compensation (the courts are understandably very protective of “no-fault” employees, so mistakes here will be costly!).
• Employers must (by written notice) make full disclosure to, and invite consultation with, affected employees and their representatives. Both sides must try for consensus on solutions and/or the process to be followed, payouts etc.
• This consultation process must start “as soon as the employer contemplates dismissals due to operational requirements” – employers, don’t delay or you may be suspected of reaching a prior decision, which will of course be rejected as unfair.
• Retrenchment is a “last resort”, so measures to avoid, minimise and mitigate retrenchments must be fully explored.
• Selection criteria (“who goes and who stays?”) should be agreed if possible. If there is no consensus, the employer must make the selection based on “fair and objective” criteria (this selection process must not be used to get rid of undesirable employees – see note below *).
• Timing, assistance for retrenched employees, proposed severance pay and benefits – in fact anything relevant to the “fairness” of the process - should all be on the agenda.
• Employees - carefully consider any offer of alternative employment (with the same or another employer), as unreasonable rejection will disentitle you to severance pay!
* In a case recently before the Labour Court, an employer’s reliance on past misconduct, for which employees had already been punished, was rejected - the employees were re-instated and given compensation of 12 months’ salary. In another case, an employer was found to have “used the retrenchment exercise to address the poor performance of its managers” and a retrenched manager was awarded 12 months’ salary.
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