Backpage 29 May 2012 Retrenchment and Lay-off

In these difficult times of scarce business, it is sometimes necessary to consider a reduction in ones workforce. To effect this it is necessary to follow due process so as not to fall foul of the law. A written code of good practice instituted in your business is necessary. This requires that you formally produce a document setting out the process to be followed in your business. This is so that when faced with a need to practice the action you always do the same. Consistency is the key to good labour relations, particularly when defending an action in the CCMA or Labour Court. Following is an example for you to base your code on and remember that Gerhard Olivier gerhard@ecmba.org.za is available for you to check it out before implementation.. Code of Good Practice / Code of Conduct Retrenchments Lay-off

The purpose of this document is to give the employer an insight into the procedures to follow in the event of one of the above topics occurring in the Company. This is not a complete and exhaustive procedure, and further advice should be sought prior to the implementation of any action. The purpose of any such procedure is to ensure that an appropriate standard of behaviour is achieved and maintained by all employees at all levels within an organisation. The principle of corrective and progressive discipline is adopted to ensure that such standards are achieved and maintained. Disciplinary action should be consistent, fair and prompt. The code should not be regarded as rigid, but should serve as a guideline, as each case is unique with its own set of circumstances. All employees should treat each other with mutual respect.

1.

Retrenchments Where an employer faces retrenchments due to economic, technological or structural conditions, and where a lay-off has not succeeded in changing the situation of the employer, all possible alternatives to retrenchment must be explored before any dismissals take place. Those employees who are to be dismissed must be treated fairly. The procedural obligations placed on the employer are: a) consultation with affected employees before a final decision is taken b) selection of employees to be fair c) payment of severance pay The purpose of consultation, which should take place as soon as it becomes apparent that a reduction of the workforce is likely, is to explore all possible alternatives to retrenchment. Relevant information should be provided by the employer.

The employer should provide sufficient time for a report back to employees, and time to consider any alternatives as provided by employees. The criteria to be considered for the selection of employees for retrenchment should be either agreed with the consulting party or be based on fair, objective and non-discriminatory reasons. Some criteria are length of service, skills based and qualifications. Selected employees are entitled to severance pay of at least one weeks pay for each completed year of continuous service. Retrenched employees should be given preference where the employer again hires employees with comparable qualifications, subject to: d) the employee having expressed a desire to be rehired, e) the right of the employer to limit preferential re-hiring to a specified but reasonable period of time. 2. Lay-off a) Introduction The Now expired Collective Agreement between the parties to the Building Industry Bargaining Council (Southern and Eastern Cape) provided for retrenchment (Clause 8). The Labour Relations Act (Act 66 of 1995) provides for dismissal of employees based on operational requirements such as economic, technological, structural or similar needs of the employer (Section 189). Clause 8 (1) iii of the Agreement and Sections 189 (2) a I, (3) b & h refer to the consideration which the employer must give to alternatives to retrenchment (dismissal), avoidance thereof, and the possibility of future re-employment of dismissed employees. In an industry, which is extremely cyclical in nature, it is inevitable that, at times, employers find themselves in a situation where, due to operational requirements, it is essential to reduce their workforce on a temporary basis. In such cases it is often desirable to maintain contact with employees who would otherwise be dismissed. It is our understanding of both the Act and the Agreement, that dismissal should be seen as a last resort. It must also be noted that this document does not constitute a new concept, as an arrangement known as lay-off has been operating in the industry in one form or another for sometime. This arrangement has generally been in the form of an informal agreement between employer and employee as an alternative to retrenchment or dismissal. b) Lay-off For the purposes of this document, a lay-off maybe implemented as an alternative to retrenchment when an employer finds that due to: 1. 2. 3. a temporary shortage of work suspension of work on a specific contract late awarding of a tender, etc.

that employer can no longer retain employees in his employ for the duration of the temporary loss of work.

c) Procedures and conditions The suggested conditions and procedures to be followed are as follows: 1. An employer who proposes to lay-off employees, should, not later than 5 working days before the proposed lay-off, in writing provide a representative trade union with the following information, where reasonable; i) ii) iii) the names of all employees to be laid off the proposed date of the lay-off the reasons for the proposed lay-off and the measures which the employer has taken to prevent such lay-off iv) work on hand and expected completion dates v) tenders under consideration vi) tenders awaiting outcome vii) expected other work

2.

In the event of an employee likely to be affected not being a trade union member, the information referred to in paragraph (1) shall be forwarded directly to such employee 3. The trade union(s) and / or employees shall provide the employer with a written response to the employers lay-off proposals within three working days of receipt of the employers proposals, which shall include all of its/their proposals in respect of the lay-off 4. Following disclosure of information as outlined above, the period of lay-off is to be agreed through consultation, which period should not exceed 4 months 5. Failure to reach agreement on lay-off as an alternative will not prevent the employer from proceeding with retrenchment in terms of the Act 6. Employers should undertake to re-employ laid-off employees in the event of their operational situation improving at any stage during the agreed lay-off period 7. Employees laid off must report back to their former employer at such times agreed between themselves and that employer 8. Employees are not prevented from taking up alternative employment provided they notify their former employer of the resignation 9. Should the agreed lay-off period expire and the employee remain unemployed, the employer and employee will have the option by mutual agreement to either re-employ, proceed with retrenchment in terms of the Act or to extend the lay-off period by mutual agreement. 10. Should employees be re-employed or retrenched in terms of (9) above, the employees period of service should be regarded as continuous through the lay-off period. 11. Employees laid off will not receive remuneration from the employer during the lay-off period 12. All agreements must be in writing and signed by both parties.

(GA)

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