The most common reason people are retrenched in South Africa – and how companies decide who goes

In South Africa, an employee can be terminated as a result of his/her misconduct or incapacity, or as a result of the employer’s operational requirements.

A dismissal based on the employer’s operational requirements is as a result of the employer’s business circumstances rather than an act or omission on the part of an employee, and as a consequence, is regarded as a “no fault” dismissal.

These include retrenchments and redundancy under section 189 and 189A of the Labour Relations Act (LRA).

“To prevent an unfair dismissal claim, the retrenchment must be substantively and procedurally fair,” said Bradley Workman-Davies, director at Werksmans Attorneys.

“In terms of substantive fairness, there must be a fair reason for the retrenchment, relating to the employer’s operational requirements. Procedural fairness requires a fair procedure to be carried out when retrenching employees.”

“One of the aspects surrounding procedural fairness includes the consultation process which requires the employer to send a engage in a meaningful joint consensus seeking process with employees who may be affected by the employer’s operational requirements.”

Selection for dismissal

According to Workman-Davies, the LRA in section 189(2) sets out the consideration of certain factors during the consultation process, one of which is ‘the method for selecting the employees to be dismissed’.

“In the absence of an agreement between the consulting parties on the selection criteria, the employer must apply a fair and objective criteria which does not have the effect of discriminating against a particular group of employees,” he said.

“If employees are selected in terms of unfair criteria, their dismissals will be considered unfair.”

He added that the most commonly used and often preferred selection criterion when retrenching employees is the last in first out (LIFO) principle.

“Other generally accepted selection criteria include length of service, merit, performance and qualifications or a combination of these criteria. It goes without saying that retrenchment of employees on the basis of an employer’s subjective preferences is unfair,” he said.

Re-applying for your job?

Any departure from these accepted selection criteria could be unfair, said Workman-Davies.

“In SA Breweries v Louw the court found that there was procedural unfair when the employer took into account objectively unfair selection criteria, by using the past performance ratings of the candidates interviewed to fill the newly created post of area manager.”

“Ordinarily, any retrenchment process which proposes that employees apply for their jobs, or apply for a limited number of jobs which are available in the restructured organisation, could be unfair,” he said.

“This will especially be the case of the employer tries to take irrelevant factors into account in the selection and recruitment process, such as past disciplinary or performance issues, or applies a subjective assessment of the employee’s suitability for the role.”

“Taking into account years of service, on the other hand, to determine who will be retrenched or who remains were there is a reduction of the number of jobs, is the fairest and most objective way to affect the downsizing.”

Read: These are the best and worst jobs to have in 2018

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The most common reason people are retrenched in South Africa – and how companies decide who goes