Good morning, dear reader. Today we will be discussing Section 189 of the Labour Relations Act (LRA), what it is used for, when it can be utilised and what needs to be done in order to be in compliance with the LRA.
The first question is fairly simple, what is S189 used for?
When an employer needs to dismiss an employee for operational requirements.
This however spawns another question, what are operational requirements?
Simply put, they are requirements based upon the economic, technological, structural or any other similar needs of an employer. In layman’s terms, a dismissal based on operational requirements is one where the company has no choice but to dismiss an employee, through no fault of the employee but rather due to an external factor affecting the operation of the company, the most common one is due to the financial stability of the company being in question.
Second question is who can make use of S189A of the LRA?
Any employer who is considering retrenching less than 10 people, provided they employee less than 50 employees, alternatively if the affected employee’s number more than 10% of their work force, do note this is an overt simplification of the process. Should the employer exceed the aforementioned quota then they must embark upon S189A process and not S189.
Now the most important question, what needs to be done in terms of section 189 of the LRA?
It sets out the procedural and substantive obligations placed on the employer to maintain a fair retrenchment process.
In other words, what do you need to do to have a fair retrenchment process?
The LRA requires the employer to provide the employees with a Notice of Intention to Retrench to which each employee or their representatives has the opportunity to attend a consultation in which the notice is discussed and the reasoning behind the perceived retrenchment.
The Notice must outline certain requirements as depicted in law to which the employees have the right to provide suggestions or alternatives to retrenchment at the second consultation. Management / Employer are required to carefully consider input from the workforce and such suggestions cannot be disregarded without reason or cause. For example – when you do a retrenchment due to finances, the staff could offer short time for 3 months with reduction in salary to assist the business to gain financial sustainability again. This would be a feasible option and should be considered carefully.
Once the suggestions and alternatives has been discussed and considered, a third consultation is held in order to either discuss or inform the workforce that it has been approved or rejected. It is imperative that all presents undersign minutes as to record such suggestions, decisions and outcomes.
Acceptance of alternatives – An agreement is undertaken by all present on the implementation, process and duration of such alternatives, with a reconvening future date set and recorded.
Rejection of alternatives – The workforce is informed, and discussions held surrounding the reasoning for rejecting options.
In the case that there is no further alternatives or discussions, the 4th meeting will be to discuss and agree upon the Severance payment packages which is guided by the LRA to be:
· 1 Week for every year completed
· Notice pay (as per employment contract)
· Leave pay out
The procedure must be duly followed to avoid a Dispute raised at the CCMA or Bargaining Council for unfair retrenchment procedures.
