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Beware Using Retrenchments For Clean Out

BY Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 082 852 2973 or via e-mail address: ivan@labourlawadvice.co.za. Website: www.labourlawadvice.co.za.


The CCMA and Labour Court are wise to employers who misuse retrenchments in order to get rid of employees who they do not want. Due to this and the dire consequences of such misuse employers should consider the retrenchment route only when there is a genuine redundancy.

These authorities are putting more and more onus on employers to provide good reasons for retrenching employees. For example, in the case of FAWU vs SA Breweries Ltd (Contemporary Labour Law Vol 14 No. 2 September 2004) the employer retrenched employees after a major reorganisation in the way that work was done. This change required that production employees would need to be able to perform a much wider variety of work than previously. In order to establish whether these employees had the required skills to work in the changed jobs the employer applied, amongst others, the ‘ABET test’. That is, in the absence of other suitable educational qualifications, the employer tested the employees to assess their levels of at Adult Basic Education and Training (ABET). Certain employees who failed these tests were selected for retrenchment.

The Labour Court found that:

In the case of Pedzinski vs Andisa Securities (Pty) Ltd (2006, 2 BLLR 184) the employer retrenched Pedzinski. However, the Labour Court found that:

In Makwela / Unilever [2014] 4 BALR 371 (CCMA) the applicant was retrenched after the manager of a client’s store in which he worked informed his employer that he would no longer be allowed entrance to the store. The employer therefore retrenched the employee.

The Commissioner found that the respondent’s acquiescence to the wishes of its client had deprived the applicant of his right to fair labour practices – in particular the process required to address his alleged poor performance. Reliance on “operational requirements” was a fiction designed to avoid calling the client to justify its allegations.

The applicant was awarded compensation equal to ten months’ wages.

Employers need to learn form the above cases that:

To book for our 5 November webinar on BALANCING WORKPLACE EFFECTIVENESS WITH LEGAL COMPLIANCE please contact Ronni on ronni@labourlawadvice.co.za or 084 521 7492.