All employers have two goals: to make a profit and be sustainable. Employers should therefore consistently evaluate all factors that can have an influence on the long term success of the business in order to create a cost effective environment enabling the business to stay competitive with in the market. In the current economic climate, many employers struggle and consider different options to adjust to a changing environment. Retrenchment is a no fault dismissal, as the employee did nothing wrong and dismissal is due to operational requirements. As with all dismissals, the retrenchment process must be both substantively and procedurally fair. But how does an employer decide who stays and who goes?

It is very difficult question to answer on which is the best selection criteria to apply in the retrenchment process.

In terms of Section 189(7) there are two types of section criteria recognised that an employer may use to select the employee to dismiss namely:

• one that has been agreed to by the consulting parties; or
• one that is fair and objective.

During the retrenchment process, an obligation is placed on the employer in terms of Section 189(2) of the Labour Relations Act and the other consulting party/parties to engage in a meaningful, joint consensus-seeking process in an attempt to reach a consensus on the method for selecting the criteria to be applied when determining which will stay and which will go.

To the extent that the consultation on selection criteria does not result in an agreement, it is then left to the discretion of the employer to unilaterlly decide on a selection criteria to be used. Provided that the employer will then have to prove that the criteria used was fair and objective.

Traditionally employers and consulting parties tend to rely on the “last in, first out” (“LIFO”) principle. This principle is generally accepted as a selection criteria according to the CCMA Code of Good Practice on Operational Requirements. It is also the criterion associated with the least risk, even though that it has never been endorsed as the only fair and objective criterion. Employers and consulting parties however fail to give consideration to the other available fair and objective criteria’s. The failure to give due consideration to other criteria’s might result in the court finding that a fair criteria was not applied and that the retrenchment process was procedurally unfair.

There are numerous decisions in which the Labour Court has held that an employer is entitled to adopt a multi-rating selection criteria such as:

• Years of service (“First in, First out”)
• Qualifications and experience
• Direct supervisor review (including an assessment of factors such as commitment to company and team goals, teamwork and dependability, attendance, flexibility, initiative and career potential)
• Competency, efficiency, key skills retention
• Continued service delivery
• Performance appraisals and past performance (or discipline, for that matter) and
• “Bumping”
• Voluntary severance package
• Retirement package
• Redeployment package

As long as the aforementioned criteria’s are applied fairly, consistently, objectively, clear and transparent, and applied in such a way that the process does not degenerate into a dismissal for misconduct, poor performance or incapacity. The Labour Court referred to these as “procedural safeguards”.

This multi-rating selection criteria may cure a certain amount of subjectivity attached to the selection criteria themselves. This would also most probably be found to be consistent with the requirements of the Labour Relations Act.

We strongly advise employers to implement clear rules in the workplace and follow correct procedures with regards to all labour matters. Employers should especially focus on retirement and general discipline in the workplace, by acting proactively and consistently.

Labour legislation is not negotiable and non-compliance holds huge business risk for employers. The employer can greatly contribute towards the business’s sustainability and profitability by addressing labour risk proactively. This also ensures a working environment with reduced conflict, friction and misunderstanding. In turn, this will also create a structured environment receptive for growth. Labour legislation is applicable to all employers and employees. It aims to regulate labour relations ensuring fairness in the workplace.

The basic requirements that must be complied with in the employment contract:

• Employer and employee details – the employer’s full name and address as well as the employee’s name and occupation or brief description of the work.
• Employment details – place/s of work, stating date of employment, working hours and days of work.
• Payment details – salary/wage or rate and method of calculating wages, rate for overtime, any other cash payments, any payments in kind and their value, frequency of payment and any deductions.
• Leave details – any leave to which the employee is entitled.
• Notice period required for termination of the employment contract.
• Contract period of the employment contract – is the position of a permanent/indefinite nature; or is the position of a temporary nature, for spesific time period or for a specific project? Employers must clearly understand that to disguise what is actually permanent employment in the form of a fixed term contract is illegal.

Proactive clauses to include in the employment contract

To comply with labour law is not negotiable but doesn’t have to be a headache. Employers can use labour law to their advantage to protect their business by including proactive clauses in the employment contract. By doing this the employer can eliminate possible future disputes and put the himself/herself in the best position with regards to the employment relationship going forward.

Proactive clauses includes:

• Reference to policies, procedures and disciplinary code that describe rules and procedures the employer and employees must adhere to.
• Time periods – probation period, retirement age, short time, lunch breaks, etc.
• Consent – medical testing, alcohol and drug testing
• Consent – deductions for damages, training, etc.

Add annexures to the employment contract

In addition to the employment contract, the employer can add annexures to further protect the business going forward. Typical annexures that form part of the employment contract include:

• Declarations of duties – what is expected from the employee with regards to duties and the employee’s fixed standard
• Restraint of trade and confidentiality information, unique methods and procedures, patents, etc.

We strongly advise employers to make use of proactive clauses in the employment contract. It is also extremely important to follow correct procedures with regards to all labour matters.

A bargaining council is a body that is established by one or more employers’ organisations and one or more trade unions. It must be registered under the Labour Relations Act for a particular industry. This means that there are restrictions on what kind of dispute specific bargaining councils may hear.

Powers and functions of bargaining councils include:

• making and enforcing collective agreements
• preventing and resolving labour disputes establishing and managing a dispute resolution fund
• promoting and establishing training and education schemes
• establishing and managing schemes or funds to benefit its parties or members
• making and submitting proposals on policies and laws that affect a specific sector or area

Certain bargaining councils have the status to resolve labour disputes in the same way as the CCMA. Therefor, the CCMA does not have jurisdiction to preside over labour disputes in a spesific industry, if an accredited bargaining council exists.

Does an employer have to register with the bargaining council?

Hefty fines can be imposed if an employer fails to comply with the collective agreement of the bargaining council.

What are the benefits of being registered with the bargaining council?

What must employers know?

Contact the LWO at 086 110 1828 or info@lwo.co.za to ensure your business complies with applicable labour legislation.

Many factors can influence productivity in a workplace. This has a direct impact on a business’s profitability and sustainability. When an employee works in a positive environment he/she will be more productive.

Employers can consider the following:

Workplace culture

Every business is unique and it is important to appoint the correct employee not only to do the job, but also fit in with the workplace culture which should support the long term goals for the business. Employers should always include a probation period in the employment contract. This will allow the employer to assess if the employee’s performance meets the required standards, as well as fit in with the workplace culture. The length of the probation period will depend on the nature of the job. The more complex the nature of the job, the longer the period of probation will be. The employer can never just terminate an employee’s service, even if the employee is on a probation period and does not perform according to the required standards. This can lead to an unfair dismissal claim against the employer.

Personal management style

• Trust your employees and inspire them
•  Avoid micro management
• Recognise employees’ efforts and reward them
• Always be fair and reasonable

Compliance with relevant legislation

Communication

It is important to consult with your employees on a regular basis and also keep a record of all consultations. Topics to discuss can include:

• The employer’s expectations and fixed standards in the workplace.
• The employee’s performance.
• The employee’s role in the business.
• The impact the employee has on the business as a whole.

The employer can hold regular meetings with employees, individually or in a group. This will create a platform for employees to voice their thought and ideas, as well as to discuss any specific needs.

Grievances procedures

The aim of the grievances procedure is firstly to create a harmonious working environment by identifying and resolving any dissatisfaction or feelings of injustice from an employee’s side. Secondly, the grievance procedure helps to protect the employer in a case of constructive dismissal. In such  a case the commissioner of the CCMA will always ask whether a grievance procedure was in place. This procedure contains information of how a grievance is dealt with, as well as the different stages in the procedure, should the matter not be resolved during stage one.

Labour risk is a huge business risk. To ensure the sustainability and profitability of your business, labour risk needs to be managed in a productive manner. A positive workplace leads to a happy and productive employee.

A vast amount of legislation regulates labour relation in South Africa with the added minimum wage as announced, to be implemented om 1 May 2018. The Department of Labour has made it know that they are planning to inspect as many businesses as possible for compliance with the national minimum wage. The inspector form the Department of Labour will also make sure that employers comply with all other relevant labour legislation, regulations and rules.

Make sure you comply with labour legislation and have the following 4 things in place:

Employment contracts

The employment contracts is the basis of the relationship between the employer and the employee. This states the terms and conditions as agreed upon by the employer and employee. Terms and conditions of verbal agreement cannot always be proven. Therefore, the written particulars of employment in form of a contract creates clarity and certainty between the employer and the employee. This also diminishes the risk of disputes arising about these terms and conditions. An employment contract is the most important document for the employer in managing labour relations.

Employers can also include additional clauses in the contract to proactively manage possible future disputes. This will save time and money. General proactive clauses can be placed in categories involving time periods (retirement age, short time, daily rest period and probation period), the employee’s content (additional deductions, subtraction of training cost when the employee resigns, alcohol testing, cameras in the workplace and searching of personal belongings) and other (confidential and restraint of trade).

Disciplinary code

Clear rules and guidelines in the workplace ensure that friction and misunderstandings are kept to a minimum. This, in turn promotes not only productivity but also a positive working environment. The disciplinary code serves as a guideline for employers of appropriate sanction for certain offences. These sanctions may be adjusted depending on the circumstances and merits of each case. This will also influence how progressive discipline should be applied. The disciplinary code should ensure that all employees are aware of the rules in the workplace, as well as the consequences should these rules be broken.

Policies and procedures

To have policies and procedures in place in the workplace is extremely important. A policy informs employees of the rule(s) in respect of a certain topic. The employer puts these rules in place to ensure the smooth and efficient running of business operations. Policies are not underwritten by labour legislation, but define the employer’s own rules. These rules must be reasonable. Typical policies include a code of conduct, smoking policy, sick leave, cell phone policy, sexual harassment policy, internet and e-mail policy, hygiene policy, etc. These policies are often used to proactively manage labour risk. The employer can amend policies when necessary. It is vital that employees are informed of these policies, as well as any changes made to the policies, preferably in writing.

A procedure is an established or official way of handling a situation. Procedures are put in place to inform the employees and employers alike, of necessary steps when a certain incident occurs. Typical procedures include a disciplinary code, appeal procedure and grievance procedure.

Registration for UIF and the Compensation Commissioner

All employers must be registered with the Compensation Commissioner for workmen’s compensation. This ensures that all injuries on duty are reported and employers and employees are compensated accordingly. Employers must also register at the Unemployment Insurance Fund (UIF). Employers must also ensure that all employees working more than 24 hours per month are registered. It is the employer’s responsibility to make sure that UIF contributions are deducted from employees remuneration. An inspector from the Department of Labour will always check this during an inspection.

An employment contract is crucial in managing labour relations. It forms the basis of the relationship between the employer and the employee. It defines the terms and conditions as agreed upon between the parties and regulates their relationship. Furthermore the employment contract describes rules and responsibilities that the employer and employee must adhered to. The employer can implement proactive clauses in the employment contract, such as a period of probation, to eliminate possible future disputes.

The goal of a period of probation

The Labour Relations Act’s Code of Good Practice makes provision for a probation period. The purpose of a probation period is for the employer to assess if the employee’s performance meets the required standard. The length of the probation period will depend on the nature of the job. Therefore, the more complex the nature of the job is, the longer the period of probation will be. The employer can never just terminate an employee’s services. This applies even if the employee is on a probation period and does not perform according to the required standard. Such discrepancies can lead to an unfair dismissal claim against the employer.

What must I as the employer know?

Employers must take note that using a fixed term contract as a probation period constitutes unfair labour practice. Termination of the contract after completion of the fixed term, may be seen as unfair dismissal. Therefore, an employer must clearly understand that to disguise what is actually permanent employment in the form of a fixed contract is illegal.

The employer has certain legal obligations when placing an employee on probation. We recommend that the employer clearly state all of these obligations in writing in the employee’s employment contract. The employer must also explain this to the employee.

The employer has the obligation to:

• make it clear that the employee is on probation;
• clarify the length of the probation period;
• set reasonable performance standards;
• specify and explain to the employee the performance standards required;
• evaluate and monitor the employee’s performance regularly against the set performance standards;
• inform the employee of performance shortcomings;
• give the employee the opportunity to present more information and explain the situation from his/her point of view;
• assist, guide, counsel and train the employee where necessary;
• follow the correct disciplinary procedure or poor work performance procedure, depending on the circumstances.

Poor work performance

Poor work performance is an ever increasing challenge in the workplace. It refers to an employee failing to reach and maintain the employer’s work performance standards in term of quality and quantity. Labour legislation sets clear guidelines of how employers should deal with poor work performance. All employment contracts imply that the employee undertakes to perform according to the reasonable, lawful and attainable work performance standard set by the employer. Should the employee fail in this duty, despite assistance to reach the required standards, he/she is said to be “incapable” and the employer has the right to dismiss the employee. It is vital to note that the employer can under no circumstances dismiss an employee without following the correct procedure. All dismissals must be procedurally and substantively fair.