South African labour law has a very well-structured approach to assist employers and employees in identifying their rights, and the proper formal recourse to make use of should either party feel aggrieved. Post-democracy South Africa required a new approach to the employer-employee relationship. It needed to promote employee participation in decision-making through the establishment of various workplace forums and processes. Although not explicitly mentioned by the same name, one such process is retrenchment, which is included and provided for under the Labour Relations Act, 66 of 1995 (hereinafter referred to as ‘the LRA’).
Dismissal due to operational requirements
Section 189 and Section 189A of the LRA provide the correct process to follow when seeking to make dismissals due to operational requirements. Employers are first to determine whether they need to use the provisions relating to small-scale retrenchments (Section 189 of the LRA) or large-scale retrenchments (Section 189A of the LRA) as this will guide the engagement between parties from initiation of the process.
How many employees are being dismissed?
If the employer plans to retrench and has less than fifty (50) employees employed, then the small-scale process under Section 189 is to be followed. However, should the employer have more than fifty (50) employees and satisfy employment numbers within the below brackets, then the large-scale process under Section 189A would need to be followed:
“ if the employer contemplates dismissing by reason of the employer’s operational requirements, at least –
i. 10 employees, if the employer employs up to 200 employees;
ii. 20 employees, if the employer employs more than 200, but not more than 300 employees;
iii. 30 employees, if the employer employs 300, but not more than 400 employees
iv. 40 employees, if the employer employs more than 400, but not more than 500 employees,
v. 50 employees, if the employer employs more than 500 employees.”
Substantive differences
The main difference between the small-scale and large-scale retrenchment process relates to the appointment of a third-party facilitator by the Commission (CCMA). The use of a facilitator extends the time periods involved as then specific requirements have to be met before the matter can be referred to the CCMA for consideration. The process of large-scale retrenchment also deals with the option of striking or a lockout and what time periods are to be followed.
The Commission for Conciliation, Mediation and Arbitration (hereinafter referred to as ‘the CCMA’) must appoint a facilitator if either the employer has requested facilitation or if, after consulting with the parties representing the majority of the employees under contemplation of dismissal, requests facilitation and has formally requested same within fifteen (15) days of receiving a notice indicating the contemplation of retrenchment by the employer.
Segmented retrenchment to avoid the large-scale process
Employers are further to be made aware that a segmented approach to the retrenchment process to avoid having to adhere to the process for large-scale retrenchments will not be deemed as separate instances if the previous retrenchment has taken place within twelve (12) months of the contemplated retrenchment.
Where such a segmented approach is used, employers, in considering whether to adhere to the small-scale or large-scale process, would need to combine the number of employees currently under consideration for retrenchment with the number of employees retrenched in the twelve (12) months preceding such contemplation to determine if they fall within one of the previously mentioned brackets directing large-scale retrenchment.
Conclusion
If COVID-19 has adversely affected your business, it might be tempting to circumvent legislature in terminating the employment of employees, however, should an employer not adhere to the proper process, it invites liability for an unfair dismissal claim by improperly terminated employees. This could end up costing the company more in the long run and do extensive reputational damage. As an employee, it is recommended that you familiarise yourself with the proper process to be followed. If there is any improper conduct, you can ensure your rights are being properly protected.
Contact SchoemanLaw Inc for all your labour law needs!
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