CCMA Retrenchment Codes of Good Practice
According to the CCMA retrenchment guidelines summarised in the Codes for Good Practice as related to operational retrenchments, the Labour Relations Act (LRA) defines retrenchments based on the employer’s inability to operate with the number of employees based on economic, structural or technological needs of the specific employer as acceptable and legitimate, but only if the correct procedures are followed.
The specific circumstances of retrenchment according to the CCMA Good Practice Codes must be considered. Economic reasons relate directly to the financial aspects of the employer, while the technological factors refer to the implementation of technology that makes certain positions or tasks redundant and thus leads to restructuring of the workforce and the work environment. Structural factors relate directly to positions no longer necessary, because of the company’s restructuring of operations.
Retrenchments because of the operational needs of the employer are straightforward dismissals where the employer and employee are not at fault. These dismissals are thus considered as “no fault dismissals” only where the employer has taken all possible steps to make use of alternatives to the retrenchment of employees and has ensured that the employees to be retrenched receive fair treatment according to the regulations of the LRA.
The employer must provide for consultations to gain consensus as far as possible to minimise the need for dismissals or retrenchments. The consultation phase must begin the moment that retrenchments are considered in order to consider and find alternatives to dismissals. The employer must be open to proposals for alternative solutions.
The employer furthermore has to disclose the necessary information about retrenchments and possible alternatives to employees during the consultation phase. Should there be retrenchment disagreements at this stage, the matters can be referred to the CCMA. The consultation period must be reasonable and provide enough time for meeting with employees and reporting back on progress and consultation, as well as to request information, receive such and have time to consider and report back on the information received.
The urgency of a retrenchment based on either technological, structural or economic reasons may not be used as an excuse to avoid consultation and the correct procedures. In this instance, it will be imperative to provide the parties opportunities to meet at the soonest possible time.
Should only a few employees be selected for retrenchment, the criteria for the decision must be agreed with by the consulting parties. The criteria must be fair and in accordance with the regulations of the LRA. Criteria cannot be based on the employee’s membership to a specific union or for example their pregnancy status. As such, the criteria must not be based on any form of discrimination. Examples of acceptable criteria are that of the employee skills, work service period, and the employee’s qualifications.
Where the employer retrenches a specific number of workers for operational reasons, the retrenched workers will have the right to receive severance pay according to the regulations of the LRA. If the employees do not accept an alternative employment offer from the employer for unreasonable reasons, the employees do not have the right to severance pay.
The employer must give preference to the reinstatement of workers retrenched for operational reasons where the employer hires workers with similar qualifications subject to specific conditions as stipulated in the LRA. Such conditions include that the employees have shown an interest in being reinstated or re-employed and within a reasonable period from the date of retrenchment and within a set time limit for preferential reinstatement. The employer must furthermore take the necessary steps to notify the employees or the trade union representatives regarding the employer’s offer to re-hire the retrenched employees.
Employers should study the Codes of Goof Practice regarding retrenchment from the CCMA to avoid disputes regarding dismissal. Contact us at Allardyce & Partners for legal advice, representation, appeals and litigation assistance regarding aspects of Labour Law including CCMA, retrenchments, unfair treatment, and related topics.
*NB this article is for information purposes only and does not constitute legal advice. You are advised to consult with us before using/relying on this information.