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If an employer wishes to retrench some of its employees because it is in financial difficulty, it needs to follow the procedure in section 189 of the Labour Relations Act. The Section reads as follows:
189. Dismissals based on operational requirements.—(1) When an employer contemplates dismissing one or more employees for reasons based on the employer’s operational requirements, the employer must consult—
(a) any person whom the employer is required to consult in terms of a collective agreement;
(b) if there is no collective agreement that requires consultation—
(i) a workplace forum, if the employees likely to be affected by the proposed dismissals are employed in a workplace in respect of which there is a workplace forum; and
(ii) any registered trade union whose members are likely to be affected by the proposed dismissals;
(c) if there is no workplace forum in the workplace in which the employees likely to be affected by the proposed dismissals are employed, any registered trade union whose members are likely to be affected by the proposed dismissals; or
(d) if there is no such trade union, the employees likely to be affected by the proposed dismissals or their representatives nominated for that purpose.
(2) The employer and the other consulting parties must in the consultation envisaged by subsections (1) and (3) engage in a meaningful joint consensus-seeking process and attempt to reach consensus on—
(a) appropriate measures—
(i) to avoid the dismissals;
(ii) to minimize the number of dismissals;
(iii) to change the timing of the dismissals; and
(iv) to mitigate the adverse effects of the dismissals;
(b) the method for selecting the employees to be dismissed; and
(c) the severance pay for dismissed employees.
(3) The employer must issue a written notice inviting the other consulting party to consult with it and disclose in writing all relevant information, including, but not limited to—
(a) the reasons for the proposed dismissals;
(b) the alternatives that the employer considered before proposing the dismissals, and the reasons for rejecting each of those alternatives;
(c) the number of employees likely to be affected and the job categories in which they are employed;
(d) the proposed method for selecting which employees to dismiss;
(e) the time when, or the period during which, the dismissals are likely to take effect;
( f ) the severance pay proposed;
(g) any assistance that the employer proposes to offer to the employees likely to be dismissed;
(h) the possibility of the future re-employment of the employees who are dismissed;
(i) the number of employees employed by the employer; and
( j) the number of employees that the employer has dismissed for reasons based on its operational requirements in the preceding 12 months.
(4) (a) The provisions of section 16 apply, read with the changes required by the context, to the disclosure of information in terms of subsection (3).
(b) In any dispute in which an arbitrator or the Labour Court is required to decide whether or not any information is relevant, the onus is on the employer to prove that any information that it has refused to disclose is not relevant for the purposes for which it is sought.
(5) The employer must allow the other consulting party an opportunity during consultation to make representations about any matter dealt with in subsections (2), (3) and (4) as well as any other matter relating to the proposed dismissals.
(6) (a) The employer must consider and respond to the representations made by the other consulting party and, if the employer does not agree with them, the employer must state the reasons for disagreeing.
(b) If any representation is made in writing the employer must respond in writing.
(7) The employer must select the employees to be dismissed according to selection criteria—
(a) that have been agreed to by the consulting parties; or
(b) if no criteria have been agreed, criteria that are fair and objective.
This basically means that the employee should be allowed to make submission on how he can save his job and if he cannot save his job, the details of the dismissal. The employer is obligated to provide to the employee, full disclosure of his financials in order to do this.
More “user friendly” guidelines can be found in the Codes of Good Practice on Operational Requirements at http://www.ccma.org.za/Display.asp?L1=34&L2=67.
If no viable plan can be agreed on or if none exist, by which the employment of the employee can be saved, then the employer is obliged to pay the employee severance in terms of section 41 of the Basic Conditions of Employment Act. The section reads as follows:
41. Severance pay.—(1) For the purposes of this section, “operational requirements” means requirements based on the economic, technological, structural or similar needs of an employer.
(2) An employer must pay an employee who is dismissed for reasons based on the employer’s operational requirements or whose contract of employment terminates or is terminated in terms of section 38 of the Insolvency Act, 1936 (Act No. 24 of 1936) severance pay equal to at least one week’s remuneration for each completed year of continuous service with that employer, calculated in accordance with section 35.
(3) The Minister may vary the amount of severance pay in terms of subsection (2) by notice in the Gazette. This variation may only be done after consulting NEDLAC and the Public Service Co-ordinating Bargaining Council established under Schedule 1 of the Labour Relations Act, 1995.
(4) An employee who unreasonably refuses to accept the employer’s offer of alternative employment with that employer or any other employer, is not entitled to severance pay in terms of subsection (2).
(5) The payment of severance pay in compliance with this section does not affect an employee’s right to any other amount payable according to law.
(6) If there is a dispute only about the entitlement to severance pay in terms of this section, the employee may refer the dispute in writing to—
(a) a council, if the parties to the dispute fall within the registered scope of that council; or
(b) the CCMA, if no council has jurisdiction.
(7) The employee who refers the dispute to the council or the CCMA must satisfy it that a copy of the referral has been served on all the other parties to the dispute.
(8) The council or the CCMA must attempt to resolve the dispute through conciliation.
(9) If the dispute remains unresolved, the employee may refer it to arbitration.
(10) If the Labour Court is adjudicating a dispute about a dismissal based on the employer’s operational requirements, the Court may inquire into and determine the amount of any severance pay to which the dismissed employee may be entitled and the Court may make an order directing the employer to pay that amount.
Remuneration is not necessarily salary. It is benefits as well, but some benefits are excluded. What is in and what is out is set out in GN 691 of 23 May 2003. The notice can be obtained from http://www.info.gov.za/view/DownloadFileAction?id=64323
In addition to severance, the employee must also be paid what is due to the employee in terms of section 40 of the Basic Conditions of Employment Act.
40. Payments on termination.—On termination of employment, an employer must pay an employee—
(a) for any paid time off that the employee is entitled to in terms of section 10 (3) or 16 (3) that the employee has not taken;
(b) remuneration calculated in accordance with section 21 (1) for any period of annual leave due in terms of section 20 (2) that the employee has not taken; and
(c) if the employee has been in employment longer than four months, in respect of the employee’s annual leave entitlement during an incomplete annual leave cycle as defined in section 20 (1)—
(i) one day’s remuneration in respect of every 17 days on which the employee worked or was entitled to be paid; or
(ii) remuneration calculated on any basis that is at least as favourable to the employee as that calculated in terms of subparagraph (i).
The fact that she does not have UIF could cause a problem here, since she will not be able to claim unemployment benefits. This means that she would potentially have a claim against you for the benefits she would have obtained, had she been registered for UIF. She would obviously also not be able to claim maternity benefits now from the UIF.
I am, however, of opinion that the fact that she told you not to pay UIF and that she does not want it, will protect you against any claims that she may have for the UIF benefits. Having said that, it is a requirement that all employers pay UIF on behalf of their employees and failure to do so will result in penalties being levied against such employers. So, if she does go to the Labour Department, they can actually force you to pay the UIF contributions, plus penalties, that you would have paid during her time working for you. So, be wary of that before you decide to pay her more severance than what the law allows.
I hope I have answered all of your questions and addressed all your concerns, but if you have follow up questions before you rate, feel free to ask them at no extra cost. If you are satisfied with the service, kindly rate it positively.
If an employer wishes to retrench some of its employees because it is in financial difficulty, it needs to follow the procedure in section 189 of the Labour Relations Act. The Section reads as follows:
189. Dismissals based on operational requirements.—(1) When an employer contemplates dismissing one or more employees for reasons based on the employer’s operational requirements, the employer must consult—
(a) any person whom the employer is required to consult in terms of a collective agreement;
(b) if there is no collective agreement that requires consultation—
(i) a workplace forum, if the employees likely to be affected by the proposed dismissals are employed in a workplace in respect of which there is a workplace forum; and
(ii) any registered trade union whose members are likely to be affected by the proposed dismissals;
(c) if there is no workplace forum in the workplace in which the employees likely to be affected by the proposed dismissals are employed, any registered trade union whose members are likely to be affected by the proposed dismissals; or
(d) if there is no such trade union, the employees likely to be affected by the proposed dismissals or their representatives nominated for that purpose.
(2) The employer and the other consulting parties must in the consultation envisaged by subsections (1) and (3) engage in a meaningful joint consensus-seeking process and attempt to reach consensus on—
(a) appropriate measures—
(i) to avoid the dismissals;
(ii) to minimize the number of dismissals;
(iii) to change the timing of the dismissals; and
(iv) to mitigate the adverse effects of the dismissals;
(b) the method for selecting the employees to be dismissed; and
(c) the severance pay for dismissed employees.
(3) The employer must issue a written notice inviting the other consulting party to consult with it and disclose in writing all relevant information, including, but not limited to—
(a) the reasons for the proposed dismissals;
(b) the alternatives that the employer considered before proposing the dismissals, and the reasons for rejecting each of those alternatives;
(c) the number of employees likely to be affected and the job categories in which they are employed;
(d) the proposed method for selecting which employees to dismiss;
(e) the time when, or the period during which, the dismissals are likely to take effect;
( f ) the severance pay proposed;
(g) any assistance that the employer proposes to offer to the employees likely to be dismissed;
(h) the possibility of the future re-employment of the employees who are dismissed;
(i) the number of employees employed by the employer; and
( j) the number of employees that the employer has dismissed for reasons based on its operational requirements in the preceding 12 months.
(4) (a) The provisions of section 16 apply, read with the changes required by the context, to the disclosure of information in terms of subsection (3).
(b) In any dispute in which an arbitrator or the Labour Court is required to decide whether or not any information is relevant, the onus is on the employer to prove that any information that it has refused to disclose is not relevant for the purposes for which it is sought.
(5) The employer must allow the other consulting party an opportunity during consultation to make representations about any matter dealt with in subsections (2), (3) and (4) as well as any other matter relating to the proposed dismissals.
(6) (a) The employer must consider and respond to the representations made by the other consulting party and, if the employer does not agree with them, the employer must state the reasons for disagreeing.
(b) If any representation is made in writing the employer must respond in writing.
(7) The employer must select the employees to be dismissed according to selection criteria—
(a) that have been agreed to by the consulting parties; or
(b) if no criteria have been agreed, criteria that are fair and objective.
This basically means that the employee should be allowed to make submission on how he can save his job and if he cannot save his job, the details of the dismissal. The employer is obligated to provide to the employee, full disclosure of his financials in order to do this.
More “user friendly” guidelines can be found in the Codes of Good Practice on Operational Requirements at http://www.ccma.org.za/Display.asp?L1=34&L2=67.
If no viable plan can be agreed on or if none exist, by which the employment of the employee can be saved, then the employer is obliged to pay the employee severance in terms of section 41 of the Basic Conditions of Employment Act. The section reads as follows:
41. Severance pay.—(1) For the purposes of this section, “operational requirements” means requirements based on the economic, technological, structural or similar needs of an employer.
(2) An employer must pay an employee who is dismissed for reasons based on the employer’s operational requirements or whose contract of employment terminates or is terminated in terms of section 38 of the Insolvency Act, 1936 (Act No. 24 of 1936) severance pay equal to at least one week’s remuneration for each completed year of continuous service with that employer, calculated in accordance with section 35.
(3) The Minister may vary the amount of severance pay in terms of subsection (2) by notice in the Gazette. This variation may only be done after consulting NEDLAC and the Public Service Co-ordinating Bargaining Council established under Schedule 1 of the Labour Relations Act, 1995.
(4) An employee who unreasonably refuses to accept the employer’s offer of alternative employment with that employer or any other employer, is not entitled to severance pay in terms of subsection (2).
(5) The payment of severance pay in compliance with this section does not affect an employee’s right to any other amount payable according to law.
(6) If there is a dispute only about the entitlement to severance pay in terms of this section, the employee may refer the dispute in writing to—
(a) a council, if the parties to the dispute fall within the registered scope of that council; or
(b) the CCMA, if no council has jurisdiction.
(7) The employee who refers the dispute to the council or the CCMA must satisfy it that a copy of the referral has been served on all the other parties to the dispute.
(8) The council or the CCMA must attempt to resolve the dispute through conciliation.
(9) If the dispute remains unresolved, the employee may refer it to arbitration.
(10) If the Labour Court is adjudicating a dispute about a dismissal based on the employer’s operational requirements, the Court may inquire into and determine the amount of any severance pay to which the dismissed employee may be entitled and the Court may make an order directing the employer to pay that amount.
Remuneration is not necessarily salary. It is benefits as well, but some benefits are excluded. What is in and what is out is set out in GN 691 of 23 May 2003. The notice can be obtained from http://www.info.gov.za/view/DownloadFileAction?id=64323
In addition to severance, the employee must also be paid what is due to the employee in terms of section 40 of the Basic Conditions of Employment Act.
40. Payments on termination.—On termination of employment, an employer must pay an employee—
(a) for any paid time off that the employee is entitled to in terms of section 10 (3) or 16 (3) that the employee has not taken;
(b) remuneration calculated in accordance with section 21 (1) for any period of annual leave due in terms of section 20 (2) that the employee has not taken; and
(c) if the employee has been in employment longer than four months, in respect of the employee’s annual leave entitlement during an incomplete annual leave cycle as defined in section 20 (1)—
(i) one day’s remuneration in respect of every 17 days on which the employee worked or was entitled to be paid; or
(ii) remuneration calculated on any basis that is at least as favourable to the employee as that calculated in terms of subparagraph (i).
The fact that she does not have UIF could cause a problem here, since she will not be able to claim unemployment benefits. This means that she would potentially have a claim against you for the benefits she would have obtained, had she been registered for UIF. She would obviously also not be able to claim maternity benefits now from the UIF.
I am, however, of opinion that the fact that she told you not to pay UIF and that she does not want it, will protect you against any claims that she may have for the UIF benefits. Having said that, it is a requirement that all employers pay UIF on behalf of their employees and failure to do so will result in penalties being levied against such employers. So, if she does go to the Labour Department, they can actually force you to pay the UIF contributions, plus penalties, that you would have paid during her time working for you. So, be wary of that before you decide to pay her more severance than what the law allows.
I hope I have answered all of your questions and addressed all your concerns, but if you have follow up questions before you rate, feel free to ask them at no extra cost. If you are satisfied with the service, kindly rate it positively.
That is the basic guidelines as per the Labour Relations Act and it can be made suitable for your needs. So, if there are no unions and whatnot, then you just ignore those bits, but what has crystallized during the years is that the following must happen, irrespective:
1. The employee must be given notice of the fact that retrenchment is a possibility and must be advised of a consultation where it is going to be discussed and must be given an opportunity to give reasons and solutions on how to save her job. If she does not take that opportunity, then that is her problem.
2. The employer must give proper consideration to those suggestions received from the employee.
3. If the employee indicate at the meeting that she has no suggestions, or the suggestions is not going to solve the problem, then you retrench and then you give her the 30 day notice of termination, siting operational requirements.
Now to your questions:
1. The Basic Conditions of Employment Act state specifically that no annual leave can be taken during a notice period. So, you would not be able to give her notice over her annual leave period. It must be done before, or after that.
2. Your calculations seem correct, except that you would have to pay her a notice month (unless she is going to work her notice month, in which case it is just pay), plus her accrued leave, plus the other amounts. This is exactly why the BCEA prevents leave to be taken during a notice period. To prevent employees from losing their leave pay.
3. Yes. Have it signed in the presence of witnesses and ask her in front of the witness whether she signs under duress and whether she understands the contents of the document.
1. The employee must be given notice of the fact that retrenchment is a possibility and must be advised of a consultation where it is going to be discussed and must be given an opportunity to give reasons and solutions on how to save her job. If she does not take that opportunity, then that is her problem.
2. The employer must give proper consideration to those suggestions received from the employee.
3. If the employee indicate at the meeting that she has no suggestions, or the suggestions is not going to solve the problem, then you retrench and then you give her the 30 day notice of termination, siting operational requirements.
Now to your questions:
1. The Basic Conditions of Employment Act state specifically that no annual leave can be taken during a notice period. So, you would not be able to give her notice over her annual leave period. It must be done before, or after that.
2. Your calculations seem correct, except that you would have to pay her a notice month (unless she is going to work her notice month, in which case it is just pay), plus her accrued leave, plus the other amounts. This is exactly why the BCEA prevents leave to be taken during a notice period. To prevent employees from losing their leave pay.
3. Yes. Have it signed in the presence of witnesses and ask her in front of the witness whether she signs under duress and whether she understands the contents of the document.
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