There has been an increase in the number of retrenchments in various industries as many are just keeping their heads above water, says Kristy Keating an executive committee member of the South African Payroll Association (SAPA).
Keating said that despite assistance from TERS, UIF and other loan-based initiatives, increases in almost everything including fuel and imports are contributing to a rise in retrenchments as seen in the hospitality and beauty industries.
The minimum amount a person is entitled to upon retrenchment is governed by the Basic Conditions of Employment Act or certain bargaining councils that have main agreements agreeing to differing amounts, said Keating.
In terms of section 41 of the Act, an employee is entitled to one week of severance pay for every year of completed service.
Prior to retrenchment notice needs to be given. Under section 37, the notice period is:
- One week for 6 months of service or less.
- Two weeks if between 6 months and one year of service.
- Four weeks for over a year of service.
Interestingly, Keating said that if an employer does not want the employee working the notice period, they still need to pay it out. Keating said that the employer is required to pay any annual leave pay accrued to date and not yet used and other payments due until the last day of work.
The employer must further apply for tax directives for accrued payments as well as severance pay, said Keating. The employer under section 42 must also issue a certificate of service. UIF documentation also needs to be provided to employees for the to claim.
Keating said the main reasons for which people are retrenched are for structural and economic considered ‘operational requirements, however, there is a new trend of ‘similar needs’ cases where employees are refusing to comply with vaccination policies.
According to SAPA, the Labour Relations Act defines “operational requirements” to mean requirements based on the economic, technological, structural or similar needs of an employer.
Typically, operational requirements involve measures adopted by the employer to cut costs or improve profit or in order to restructure its business or alter the manner in which its employees work, to meet an operational imperative, said Keating.
In Johnson & Johnson (Pty) Ltd v CWIU  12 BLLR 1209 (LAC), the Labour Appeal Court noted that in todays world operational requirements do not always flow from the local needs of an employer but may also arise from the impact of global developments on the profitability of the parent company of South African subsidiary, said Keating.
Section 189 of the Labour Relations Act governs retrenchment or what is called dismissals based on operational requirements and places requirements on employers in terms of notices for consultation with employees as well as the actual consultations with employees, said Keating.
Similar needs of the employer
The issue of ‘similar needs of the employer’ has also received its share of attention, said Keating. She added that there have been up and coming ‘similar needs’ cases where employees are refusing to comply with vaccination policies.
In SATAWU v Khulani Fidelity Security Services (Pty) Ltd (2011) 32 ILJ 130 (LAC) the Labour Appeal Court found that an agreement requiring certain employees to undergo polygraph tests was designed for operational reasons, namely, to ensure that only people of proven integrity could be maintained in these positions. Passing such tests therefore constituted an operational requirement in respect of the affected employees, added Keating.
To sum up, in the case there was an agreement designed for operational reasons, namely, to ensure that only people of proven integrity could be maintained in certain positions, said Keating.
The positions were also known to all workers employed therein; that is, failure of the test gave rise to termination from the post as it related to an operational requirement.