June 12, 2020

The national lockdown and retrenchments

Retrenchments during the national lockdown: only as a last resort

> In these uncertain times during the national lockdown caused by the COVID-19 virus, employers may be struggling to keep their normal operations going. This may lead to employers having to consider the possibility of retrenching certain employees.

> However, retrenchments must be considered as a last resort and employers have been urged by Government to make use of the specific measures and benefits put in place to assist employers and employees during the COVID-19 crisis and the lockdown. These specific measures and benefits include benefits from the Unemployment Insurance Fund and the Temporary Employee/Employer   Relief Scheme (read more on this at https://www.legalwise.co.za/help-yourself/legal-articles/clarity-uif-and-ters-benefits-during-covid-19-crisis-0)

> During the national lockdown, section 189 of the Labour Relations Act 66 of 1995 will continue to govern the procedures that must be followed for a fair and lawful retrenchment. Retrenchment is a form of dismissal due to no fault of the employee. It is a process whereby the employer reviews its business needs in order to increase profits or limit losses, which leads to reducing its employees. The employer must give fair reasons for making the decision to retrench and follow a fair procedure when making such a decision or the retrenchment may be considered unfair.

Can the national lockdown lead to retrenchments?

> An employer may retrench employees for “operational requirements”, in other words, for the business needs of the employer.

> The retrenchment may be based on the economic needs of a business, for example, a drop in sales or services, or closure of business. Seeing as the national lockdown may lead to a drop in sales or services, or even closure of businesses, an employer may be considering retrenchment as an option.

> However, it is not an easy task for the employer as it must be shown that there is a real reason for the retrenchment and that it is unavoidable (meaning it must only be considered as a last resort).

> There are also certain procedures that must be followed for the retrenchment to be considered as valid, such as:

-  The employer must consult with the employees who are likely to be affected by the retrenchment, or their workplace forum, registered trade union or elected representatives, or any person elected in terms of a collective agreement (“consulting employees”).

-  The employer must issue a written notice inviting the consulting employees to consult and disclosing all the necessary information for such consultation.

-  The employer and consulting employees must engage in a consensus-seeking process on certain matters contained in the notice.

-  The employer must allow the consulting employees to make representations about the matters contained in the notice and other matters relating to the proposed retrenchment.

- The employer must respond to the consulting employees' representations. If the employer disagrees with the consulting employees, it must state the reasons for disagreeing with them.

-  The employer must select the employees to be dismissed based on a selection criteria agreed with the consulting employees or a selection criteria that is fair and objective.

-  After the consultation process has been exhausted, the employer may make its decision to retrench, and then issue a notice of retrenchment to the affected employees.

> If the correct procedures were not followed leading up to a retrenchment, the retrenchment may be considered to be unfair.

>  An employee that feels that s/he was unfairly retrenched, may refer a dispute to the CCMA or bargaining council. The dispute must be referred  within 30 days from date of retrenchment.

> If the dispute is not resolved at conciliation, the employee may refer the dispute to the Labour Court.

> For more details, please read our full Quicklaw Guide on retrenchments at https://www.legalwise.co.za/help-yourself/quicklaw-guides/retrenchment