Business owners should be careful about making hasty decisions around retrenchments
It is understandable that business owners feel panicky because of the toll Corona is taking on business income. However, many businesses realise that if they implement wholesale retrenchments they will not only lose valuable skills but will also reduce the buying power of the public. This would then further reduce the business’s ability to earn an income.
Many businesses with stressed finances are therefore seeking, in consultation with employees, ways of avoiding retrenchment. These include, amongst possible others, the working of a short time, pay cuts and temporary layoffs.
These employers are also finding out about the Department of Labour’s Corona Disaster assistance schemes. While the operation of these schemes is still unclear it appears that employer’s that temporarily lay employee’s off without any pay can apply to the Department of Labour for TERS benefits through which employees may qualify for state payments of up to R17000 per month for a maximum of three months. the Department of Labour’s COVID 19 TERS EASY AID guide states that employers may email their TERS benefit applications to [email protected]. together with the following documents:
- Letter of Authority granting permission to an individual specified to lodge a claim on behalf of the company
- An agreement between the state and the employer
- Critical information from the employer Evidence/payroll as proof of last three months employee(s) salary(s)
- Confirmation of bank account details in the form of a certified latest bank statement.
Employers that need information regarding available funding can enquire via the following email address: [email protected]. or phone 012 337 1997.
It appears that the new TERS benefit is confined to cases where employees are not been paid at all over a specific period. The Department of Labour’s guide states that it will also assist through other UIF benefit schemes that already exist including Illness and Reduced Work Time benefits.
Where employers are successfully able to assist employees with obtaining these benefits this could go a long way to alleviating their financial hardships and keeping the business going.
Employers are warned that, where retrenchments are truly unavoidable, these must be implemented according to the requirements of section 189 of the LRA.
At the Labour Court, the employer has the duty of proving that:
- There was a genuine and valid reason for retrenching
- The employees chosen for retrenchment were fairly chosen
- The retrenchment procedure as laid down in the LRA has been followed properly and in good faith by the employer
- The employer has shared with the targeted employees (or their representatives) all documentary and other information pertinent to the retrenchment.
As I have repeatedly warned employers, the courts see retrenchments as no-fault terminations. In addition, the unemployment rate in South Africa is extremely high making it close to impossible for many retrenched people to find new jobs. For this reason, the courts have no hesitation in protecting the rights of employees and making employers pay heavily where they deviate from the law. Thus, while Corona is currently the employer’s primary enemy, panic comes a close second.