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Retrenchment: can you force employees to apply for their own jobs?

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Many employers resent being told that they cannot misuse retrenchment to get rid of their deadwood or cannot cut their expensive employees.

As a result of the restrictive legislation employers threaten to close down their businesses. But it is not necessary for employers to take such drastic steps merely 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 maintain a viable business.

Employers 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.

However, it is in the employer?s interest to negotiate the criteria for choosing retrenchees because, if the employees agree, then the agreed criteria are legal. 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.

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 fair or agreed retrenchment criteria 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 case in point is that of Toyota SA reported in the Business Report of 30 November 1999. Here, the employer was required to reinstate 280 employees and to pay them R15,2 million because Toyota had failed to disclose to the employees sufficient information necessary for effective consultation.

Requiring Employees to Apply for Their Own Jobs

In Clive Niaker vs Q Data Consulting (2002, 23 ILJ 730) the Labour Court found that, in certain cases, it is acceptable, in a restructuring situation, to require employees to re-apply for their own jobs. This approach appears to have been acceptable to the Court in this case because:

  • In the IT industry it is necessary for employees to have the most up to date skills
  • The use of this criterion is akin to the legally acceptable criterion of "Necessary Skills?. That is, the employer is entitled to select for retrenchment those employees who do not have the skills necessary for the job.

Despite this finding employers are warned to be very careful when using this criterion. That is, while the courts will often tolerate the employer retaining the employees with the most appropriate skills this does not mean that the employer can misuse the re-application criterion in order to get rid of poor performers. In other words, if the criterion chosen is Necessary Skills then the employer will be required to show in court that:

This was the criterion actually applied in every case

  • The employees not given the available posts truly did not have the skills required
  • Potential retrenches were given the opportunity to be considered for other posts even if they were lower paid positions.

    In Wolfaardt and another vs IDC of SA (Pty) Ltd (2002, 11 BLLR 1127) the employer failed to give the two employees a chance to apply for alternative posts before retrenching them. The Labour Court found this to be procedurally and substantively unfair and awarded a total of R600 000,00 in compensation. The employer was, in addition, required to pay the employees? legal costs.

    Proper strategic thinking and understanding of these complex legal principles would have prevented these costly awards! Employers and employees therefore require advice and training on how to restructure businesses and how to deal with retrenchments fairly and effectively.

    By lvan lsraelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on 0828522973 or on e-mail address: [email protected] Go to: www.labourlawadvice.co.za This article first appeared in The Star.

    To book for our 23 September seminar in Durban on CHANGES AND DANGERS IN LABOUR LAW please contact Ronni at [email protected] or on 0845217492 or (011) 782-3066.

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