retrenchment

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.

When employers are faced with financial challenges, and contemplate retrenching employees, it is critical for the employer to first consult on alternatives to avoid retrenchment. Ivan Israelstam explains what is required, and how employers should consider alternatives. If the employee makes proposals, which the employer does not accept, it is necessary that the employer provides a response on why the alternative proposed is not a viable option.    

This week Ivan Israelstam points out that the CCMA and bargaining councils do have the jurisdiction to decide upon retrenchment disputes, if there is a failure to agree at conciliation. This arises from the amendments to the Labour Relations Act in 2002. It is critical that employers follow a fair procedure and not simply go ahead with retrenchments without engaging in a fair consultation process.  

The sale of a business - or part of a business - may take place when a company is in financial difficulty, and wanting to restructure to avoid going into liquidation.  The new owner may want to reduce the staff complement - but the Labour Relations Act makes any retrenchment as a result of a transfer of a going concern an unfair dismissal. Who is responsible - the old or new employer? Ivan Israelstam explains further.

As the economy fails to grow and consumers struggle to make ends meet, businesses may suffer a loss of sales and profits.  May the employer automatically retrench workers? This week Ivan Israelstam examines the requirements upon an employer before they consider retrenching employees.    

Retrenchment consultations are potentially emotional and difficult discussions. This week Ivan Israelstam explains whether employees involved in a retrenchment consultation have a right to bring in a lawyer or other external labour law representative. 

Employers may suspend an employee in a number of circumstances, some are reasonable and fair, but others may simply be as a result of an employer trying to make life difficult for an employee so that the employee will resign.  This week Ivan Israelstam explains all the various circumstances of suspensions.

This week Ivan Israelstam addresses the danger of an approach used by some employers, who have not effectively managed performance and behaviour. To remove "troublesome" employees - who should have been disciplined or performance managed - the employer goes to great lengths to manipulate positions, and to create a redeployment pool, which effectively amounts to a redundancy pool. Ivan demonstrates how the Labour Appeal Court has the power to uncover alternative agenda, and the consequences of such poor management performance. 

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. 

This week Ivan Israelstam asks the question: why do employers continue to get it wrong?  The requirements are clearly laid out in plain English, but employers don't follow the procedural consultation requirements.  Even though there may be a valid operational requirement, it is still necessary to ensure that the procedures according to the Labour Relations Act are still followed - to ensure a procedurally fair retrenchment.  

Ivan Israelstam

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.  

Before embarking upon large scale retrechments, employers need to have a very clear understanding of what labour law requires. This week Ivan Israelstam explains the definition of large scale retrenchment and describes how the Labour Court has decided on retrenchment procedures. He concludes that everything is not clear and advises employers to seek legal assistance before embarking on large scale retrenchments.

When faced with challenges raised by employees, employers may be tempted to opt for a retrenchment exercise to remove employees who may seem to be too challenging of management authority. This week Ivan Israelstam explains what may genuinely be regarded as an operational requirement and why employers should be careful not to concoct reasons that will not stand up in court.

The world of work is changing rapidly. As a result of technological advances, globalisation, and competition employers need to make changes to their working conditions. This week Ivan Israelstam deals with how an employer should react when employees are reluctant to change their working arrangements, such as shift patterns. How should the employer respond?

Management, executives, and company boards do not always agree on an appropriate method to deal with senior employees when a company suffers a financial downturn. This week Ivan Israelstam points out how important it is to investigate the facts before deciding on the correct path to follow. A company should not agree on a retrenchment and then try also to dismiss for some form of misconduct or lack of performance.

Employers may retrench employees for reasons of economic, structural, or technological reasons, in terms of the Labour Relations Act and the Code of Good Practice on Operational Requirements Dismissals. The Labour Appeal Court has stated that retrenchment has a serious impact upon employees. Decisions on retrenchment therefore have to be made based upon sound objective criteria, which emerge after consultation with the parties concerned, and are backed by evidence. Ivan Israelstam sets out the issues determined by the courts in two cases.

The service that labour brokers provide is to find and to place workers with a business. But what happens when there is an incident and the business no longer wants to accept the worker who has been placed with them? Ivan Israelstam explains the findings of a case where exactly this scenario occurred.

Using retrenchment as a means of dealing with poor performers is not only risky and potentially very expensive, but also represents a failure of management. This week Ivan Israelstam explains what constitutes fair criteria for retrenchment and the possible costs to an employer of failing to conduct a procedurally fair consultation.

To avoid performance management procedures of instruction, counselling, training, and coaching some employers have utilised the "retrenchment pool" concept. Into this "pool" they place individuals they want to be rid of - for whatever arbitrary reason. However, employers using such tactics are warned that this method has every chance of backfiring. This week Ivan Israelstam explains the consequences - and type of financial penalty - of trying to circumvent good management practice.

Business takeovers - or transfers as a going concern - mean that the new owner of the business takes over all the employees and all the responsibilities of the old business. In addition, retrenchments as a result of a going concern transfer are regarded as automatically unfair. This week Ivan Israelstam explains some of the - potentially very expensive - technicalities.

Ivan Israelstam

Suspension is an action usually associated with the disciplinary procedures - sometimes before a hearing and sometimes as a sanction. However, there are other circumstances where suspension may be used. But are these suspensions on full pay and for what period can an employee be suspended? This week Ivan Israelstam explains the options and the potential pitfalls.

Ivan Israelstam

This week Ivan Israelstam explains the differences between a retrenchment (an operational requirements dismissal) and a mutually agreed termination of an employment contract. The procedures to be followed are different and the nature of the document that concludes the ending of the employment contract are significantly different. Mixing up these two types of agreement can be expensive.

Ivan Israelstam

One of the most difficult situations for companies to handle is an arbitration award that requires reinstatement or re-employment of previously dismissed employees. Apart from implications for the management of the rest of the workforce, the requirement not to be seen to victimise the employee/s is critical. Ivan Israelstam explains.

Ivan Israelstam

A retrenchment is considered a "no fault" dismissal. Therefore, while it may become necessary for a company to retrench, every consideration should be given to alternatives to retrenchment. This applies particularly to employees with long service, and also to employees who have the skills required to maintain and develop the business. Ivan Israelstam what aspects should be considered by companies before deciding on a path of retrenchment

Ivan Israelstam

While retrenchments may be considered necessary for a company, it is critical that employers understand the rights of employees in these circumstances, and the appropriate procedures to adopt to ensure that these rights are protected. Ivan Israelstam explains the three factors at the very heart of protecting the rights of employees.

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