Retrenchments,  Restructurings and Transfers

Consultation and Facilitation

The act requires that prior to termination based on operational requirements that these consultations be a joint consensus seeking process so as to avoid these retrenchments. All staff affected including their unions, if any, have to be consulted on numerous points prior to termination based on operational requirements.

  • Individual – In instances of individual consultations that apply to one employee only, the CCMA does have jurisdiction to adjudicate the matter should fairness of this be an issue.
  • Group – However in instances of groups, there are different legislative requirements to be met based on the number of staff that you intent to terminate.
    Staff may also legally go on strike in instances of group restructurings after the 60 days consultations have passed and no consensus have been reached.

Furthermore on the fairness of such dismissal, the Labour Court would take jurisdiction to adjudicate the matter

Voluntary Separation Packages

Prior to , or during such restructuring consultations nothing prohibits the employer to offer any employee a voluntary retrenchment which may be negotiated.

Severance Packages

Severance and the entitlement thereto is a legal requirement, such is calculated (with the exception of some Bargaining Counsels) at 1 week for every years continued service. Such package would also include notice pay, leave pay, one month’s employer contribution to any applicable fund (provident or medical aid), where applicable.

Necessary documents such as the UI 19 and the Service Certificate will have to be issued.

However should there be a reasonable alternative position / job, so as to avoid retrenchment and should the employee, who has been earmarked for retrenchment, decline such reasonable alternative, severance will not be payable.

Transfers and Sales of Business – Going Concerns

When a business is sold as a going concern in terms of section 197 of the LRA, the current staff and their contracts are deemed to be transferred to the new employer / business owner as if they were with the old employer.

Thus no terms and conditions or benefits can be changed and must remain the same.

There are numerous legal requirements involved and such would also include consultations with the relevant affected employees and organized labour.

Closures of Businesses and Liquidations

Upon the closure of businesses employees should be consulted on the reasons for such and the proposed date of closure and statutory monies payable, if any.

In terms of liquidations employees may have a preferential claim with regards to statutory monies, however such claim have to be lodged against the liquidator.