retrenchment

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Employers sometimes think that employing a person on a fixed-term contract will save the company any obligations in terms of labour law. Under employment equity legislation and codes, there are already implications for employing people on long term contracts in what are permanent positions. This week Ivan Israelstam explains the implications of a Labour Court decision, which finds the employer did not have a right to terminate a fixed-term contract before the end of the term.  


This week, Ivan Israelstam explains the legally distinct reasons for dismissal: for misconduct, for poor work performance, and for operational requirements.  These are distinctly different reasons, and each has a distinctly different procedure to achieve a legally compliant dismissal. There are always exceptions in the cases, but employers are well-advised to follow the standard methods for each circumstance. 


It is contentious as to whether second generation outsourcing falls under section 197 of the Labour Relations Act, which is the law protecting employees when a business or a part thereof is taken over.

 


The legal procedures that an employer is required to follow in implementing dismissals for misconduct, retrenchments and poor work performance are all different. For instance, it is not normally acceptable to use the procedure laid down for retrenchments in order to deal with poor work performance. 


 Labour law provides scant protection for employers. That is the opinion of Ivan Israelstam. This week Ivan explains why he holds that opinion, and gives advice to employers on how he believes they should react, and protect their businesses going forward.


This week Ivan Israelstam looks at fixed term contracts. What happens when an employer is consulting with employees on means to reduce the need for retrenchment? Usually, there are calls for voluntary retrenchment, then employees on casual or temporary contracts are considered first before permanent employees. BUT,  Ivan cautions that may not be as simple as previously.


Retrenchment exercises are defined as dismissals for operational requirements, and may be contemplated by employers for economic, structural, or technological reasons. During the difficult economic times of the COVID-19 pandemic, employers may be contemplating retrenchment of employees. This week Ivan Israelstam lays out the requirements for large scale retrenchments - with the definition of constitutes large scale.  


This week Ivan Israelstam explains what these terms of the Labour Relations Act section 213 mean - economic, technological, structural or similar needs of the employer.


When business conditions change, employers may want to change the terms and conditions of employment of the employees. This week Ivan Israelstam explains what employers should not do in these circumstances. 


Over the last few decades, many companies have transferred parts of a business to another company, which continues to provide a service to the original company. Transfers of the employees takes place under Section 197 of the Labour Relations Act. If the company subsequently decides to cancel that arrangement and appoints another company to provide the service, do all of the employees move over again? Ivan explains the complexities and implications of this question.


The retrenchment of a senior management employee will always be a difficult exercise, and all the more reason why the employer should ensure compliance with the Labour Relations Act and Codes of Good Practice, and that the correct procedures are followed. Ivan Israelstam quotes a case where the employer tried to both retrench and disciplline a senior employee.


Two important issues are raised his week by Ivan Israelstam - first that employers should not use retrenchment as an excuse to deal with their failure to manage employee performance, and when conducting restructuring and retrenchment exercises, there are clear steps to be followed to consult with employees - these include consultation, information sharing, and consideration of alternatives. For details on the requirements - see Labour Relations Act sections 189 and 189A, and the Code of Good Practice on Operational Requirements Dismissals.


As with all disciplines, labour law has its own terminology. What does "hiding behind the corporate veil" mean? Ivan Israelstam explains how employers sometimes seek to hide the true nature of a business practice, and how the CCMA, bargaining councils, and labour courts will respond.   


This week Ivan Israelstam explains the process an exployer should adopt if a retrenchment of employees is contemplated. He explains what the steps are to be followed, to ensure that the employer complies with the requirements of the Labour Relations Act for what is an operational requirements dismissal.


There are a number of reasons why an employer might find a mutually agreed termination more time effective or efficient than other disciplinary procedures.  However, the employer should be very careful not to confuse a retrenchment situation - with very specific procedural requirements - and a genuine mutually agreed termination of the employment relationship. Importantly, such an end of the contract is not legally classed as a dismissal. Ivan Israelstam explains.

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