Articles

BY  Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: This email address is being protected from spambots. You need JavaScript enabled to view it.. Go to: www.labourlawadvice.co.za
 
I frequently receive calls for help from HR practitioners being taken to the CCMA and Labour Court for unfair retrenchments. Often, the problem lies with the fact that the employer did not have a fair reason to retrench the employees. But by far the greatest number of cases arise merely because the employer 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.
 
The truth is that, while the Labour Court is fairly flexible on the employer’s reason for retrenchment, the courts rigidly insist on adherence to retrenchment consultation procedure.
 
Employers discovering the hard way (at the 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, The purpose of the law on retrenchments is to limit the number of job losses. However, the government does not publicise these laws effectively in the media so as to inform employers and to prevent unnecessary retrenchments. Yes, if you visit the CCMA, you will see these laws very well summarised on their wall notices but employers only get to see these excellent summaries when it is too late after retrenchment has occurred and the legal process has begun.

It is therefore understandable that some HR practitioners feel that the legislators have trapped them by keeping them in the dark about the retrenchment procedure and then enabling the employees to use the CCMA to suck huge amounts out of the employer in settlements and compensation orders.

·         Secondly, it is not necessary for employers to close down their businesses simply because the labour law interferes with their right to make business decisions. This is because every employer has the ability and opportunity to acquire the expertise necessary to implement business decisions without transgressing the law and still attain a viable business.

·         Thirdly, HR practitioners are not required to get their employees’ “permission” to retrench. That is, they are not required to negotiate retrenchments but only to consult with the trade union or other employee representatives (if these exist) or with the employees themselves. The difference between consultation and negotiation is most important:

Negotiation means that the parties must reach agreement before any idea can becomes 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 have to actually reach agreement with the employees/representatives.

·         Fourthly, the halls of the CCMA and Labour Court echo endlessly with the groans of many thousands of employers (and some ex-employers) who refused to believe the labour law requiring retrenchment consultations and who failed 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 the biggest reason for retrenchments is financial weakness and these awards against employers can place an unbearable burden on the already strained finances of the employer. A few of the cases in point include 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 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 HR practitioners 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.

To book for our November 10 seminar on RETRENCHMENT, RESTRUCTURING AND OUTSOURCING please contact Ronni on 0845217492, (011) 782-3066 or This email address is being protected from spambots. You need JavaScript enabled to view it..