May an employer threaten employees with retrenchment if they don't agree to changed conditions?

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An employee is entitled, in terms of Section 77(3) of the Basic Conditions of Employment Act, to ask either the civil courts or to the Labour Court to determine any matter concerning a contract of employment. As a contract can be enforceable even if it is not in writing, the employee can even take a dispute relating to an oral or tacitly agreed contract to these courts. In addition the employee, if dismissed for refusing to accept changes to his/her employment conditions, can sue the employer for automatically unfair dismissal.

  • The above is a problematic for employers because their operational circumstances often create the genuine need to change the employment conditions of employees.

Modern day production pressures lead management to attempt to force the changes through as quickly as possible. This often results in severe employee relations problems and contraventions of the law. That is, labour law severely restricts the employer’s right to make such changes without the employees’ consent.

Specifically, under the Labour Relations Act (LRA):

  • It is not a disciplinary offence for an employee to disobey an unreasonable instruction.
  • In a takeover of a going concern the employer is compelled to retain the terms and conditions of employment of the employees concerned.
  • Unfair acts on the part of the employer as regards employee benefits are prohibited.
  • Section 187(1)(c) of the LRA prohibits the employer from firing employees, who refuse to agree to changes in terms and conditions of employment.

Specifically, this section provides that:

  • “A dismissal is automatically unfair if an employer, in dismissing the employee, acts contrary to section 5 or if the reason for the dismissal is …. to compel the employee to accept a demand in respect of any matter of mutual interest between the employer and employee…”.

This applies where the employer threatens the employee that, if he/she does not agree to a change in terms and conditions of employment, the employee will be dismissed. If the employee then refuses to agree to the change, and is consequently dismissed, this could be seen to be automatically unfair.

However, what if the employer needs to change the work circumstances due to its operational requirements? That is, what if for example, client work circumstances are such that a new shift system is required but the employees are not willing to agree to the change? Is the employer entitled to go into a retrenchment process with a view to hiring employees willing to accept the new terms and conditions of employment?

In the case of CWIU and others vs Algorax (Pty) Ltd) (2003 11 BLLR 1081) the employer needed to switch to a new shift system but the employees refused to accept this. The employer then retrenched its employees but consistently said that it would re-employ them if they would change their mind and agree to the new shift system.

The Labour Appeal Court found that:

  • The retrenchments could have been avoided or minimised if the employer had got rid of a number of contractors,
  • The employer’s firm and consistent statements that the employees would be taken back if they agreed to the new shift system showed that the employer had ulterior motives,
  • The dismissals were not genuine retrenchments but were instead a ploy to get the employees to agree to a change in their conditions of employment,
  • The dismissal was therefore automatically unfair in terms of section 187(1)(c),.
  • All the employees were to be re-employed with effect from the date of the court order.

In the case of Pedzinski vs Andisa Securities (Pty) Ltd (2006, 2 BLLR 184), the employer informed the employee that, if she did not agree to extend her working hours to full day she would be retrenched. When she was retrenched she took the employer to the Labour Court where it was decided that:

  • the employee had been threatened with retrenchment in order to coerce her into extending her working hours,
  • her dismissal was automatically unfair,
  • the employer was to pay the employee compensation equivalent to 24 months remuneration as well as the employee’s legal costs.

While the making of such changes are often justified, employers need to be extremely careful as to how they go about this. Therefore, before they begin to implement any changes that affect employees, employers need to get advice from a labour law expert who also understands practical operational needs.

BY: lvan lsraelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: [email protected]. Go to: www.labourlawadvice.co.za This article first appeared in The Star.
To attend our 17 November 2016 case law update seminar on NEW CHANGES AND DANGERS IN LABOUR LAW (Part 2) please contact Ronni on [email protected] or 0845217492.

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