The Labour Relations Act actually attempts to avoid retrenchments at all costs. This doesn’t mean that retrenchments can never be contemplated. There are circumstances where job cuts must be implemented. However, employers should not retrench unless such job cuts are truly unavoidable.
Reasons not to retrench include:
- The retrenched employee and his/her family is likely to suffer as a result of the retrenchment.
- Last-in-first-out is the most common criterion for choosing the employees to be retrenched.
- This can result in the employer losing employees with valuable skills which can in turn do harm to the quality of products and services and hinder the acquisition of new business.
- The knock-on economic effect of retrenchments could well result in future losses for the employer.
- Labour law does not allow employers to retrench employees unless it cannot be avoided. That is, the law of retrenchment in South Africa is focused strongly on preserving employment and makes it clear that a retrenchment is a no-fault dismissal.
The law, therefore, requires the employer to turn over every stone in an effort to find alternatives to retrenchment.
The courts have become ever more intolerant of employers that fail to go the extra mile to make sure that there are truly no alternatives to retrenchment before cutting jobs.
In the case of Oosthuizen v Telkom SA Ltd (2007, 11 BLLR 1013) the employee was retrenched after his job became redundant. He was placed in a job pool for three months to give him a chance to find a new post within Telkom. He applied for 22 vacant posts and was short-listed for some of them but was unsuccessful.
The Labour Appeal Court found his retrenchment to be unfair because:
- The employer failed to consult with the employee on ways of avoiding retrenchment and the criteria for choosing potential retrenches;
- The employer had not given acceptable reasons to Oosthuizen for having rejected possible alternatives to his dismissal;
- The employer failed to bring evidence to the court to explain why Oosthuizen had not been offered one of the jobs for which he had been short-listed; and
- Oosthuizen had 22 years’ of service and should not, according to the court, have had to vie for the vacant posts with employees who had shorter service.
This case stresses the requirement for employers to make every effort to find ways of avoiding retrenchments. While not every type of alternative to retrenchment is viable in every case the following are a few examples of alternatives that employers can consider: Seeking new ways of increasing revenue, reduction of unnecessary expenses, curtailment of wastage, agreed pay cuts, working of short time, temporary layoffs, job sharing and freezes on recruitment.
