https://www.polity.org.za
Deepening Democracy through Access to Information
Home / Legal Briefs / Cliffe Dekker Hofmeyr RSS ← Back
Close

Email this article

separate emails by commas, maximum limit of 4 addresses

Sponsored by

Close

Embed Video

With retrenchments on the rise consider the retrenchment process carefully

With retrenchments on the rise consider the retrenchment process carefully

17th May 2016

SAVE THIS ARTICLE      EMAIL THIS ARTICLE

Font size: -+

On 20 March 2016 Chris Baron, writing in the Sunday Times, stated as follows: “South Africa’s premier dispute resolution body, the Commission for Conciliation, Mediation and Arbitration, is bracing itself for a massive increase in the number of referrals as companies retrench, says its new director, Cameron Morajane.

Some 687 cases a day are already being referred to the CCMA, which represents an increase of almost 23% over the past five years.

Advertisement

And the deteriorating economic situation, together with last year’s labour law amendments, mean this number will rise sharply...”

As the economic situation potentially deteriorates employers will seek to further streamline their businesses, while employees will attempt to hold employers to strict compliance with the Labour Relations Act.

Advertisement

In undertaking a restructuring exercise employers, as an alternative to terminating permanent employees, look to terminating the employment of fixed term employees. As a further alternative they look towards changing employees’ terms and conditions of employment.

Despite it being previously authoritatively decided that fixed term employees’ employment may only be terminated if there is an express provision in their contracts of employment allowing this, the issue came before our courts once again in the matter of Adam Nord v Civicus World Alliance for Citizen Participation Inc. The relevant clause in this case stated:

“in light of the sometimes uncertain future of grant based funding, the duration of this contract is subject to the availability of dedicated and/or restricted funds that can be used to cover the costs of this position.”

The above clause is not a model of clarity. It does not expressly provide that the employer may terminate the employee’s employment for operational requirements.

The court, after defining what an operational requirement is, found that the above clause, despite its vagueness, meant that the employee could be retrenched if the employer had no funds. In order to avoid disputes of this nature, it is important that all fixed term contracts include a clause which expressly provides for the termination of employment.

During the course of the trial, the employee held that the alternatives provided by the employer were presented so as to compel him to accept a change to his terms and conditions of employment, thus rendering his dismissal automatically unfair. To determine whether a dismissal falls within this category, a factual enquiry must be undertaken.

The entire structure of consultation in terms of the LRA is geared towards preserving employees’ employment. In determining whether the retrenchment is genuine the employer would need to lead sufficient evidence to illustrate that there is a substantive need for the retrenchment. Consequently, if the employer is unable to illustrate that there is a commercial need for the retrenchment, alternative offers of employment which seek to change an employee’s terms and conditions of employment may be regarded as not being made in good faith and simply used to force employees to accept the change.

The termination of fixed term employees and the alternatives to retrenchments dealt with above shows how fraught with difficulty any retrenchment process is. It requires careful planning by employers prior to embarking on such exercises.

Written by Aadil Patel, Director and National Practice Head in Cliffe Dekker Hofmeyr's Employment Practice

EMAIL THIS ARTICLE      SAVE THIS ARTICLE

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here

Comment Guidelines

About

Polity.org.za is a product of Creamer Media.
www.creamermedia.co.za

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more

Subscriptions

We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store

Advertise

Advertising on Polity.org.za is an effective way to build and consolidate a company's profile among clients and prospective clients. Email advertising@creamermedia.co.za

View options

Email Registration Success

Thank you, you have successfully subscribed to one or more of Creamer Media’s email newsletters. You should start receiving the email newsletters in due course.

Our email newsletters may land in your junk or spam folder. To prevent this, kindly add newsletters@creamermedia.co.za to your address book or safe sender list. If you experience any issues with the receipt of our email newsletters, please email subscriptions@creamermedia.co.za