Businesses operate in a challenging environment where the economy and other external factors can limit their ability to remain competitive and sustainable in the labour environment. To overcome these challenges, businesses can consider a range of options, including reorganising, restructuring, and even implementing layoffs (retrenchment).

Employers must consider many aspects to limit their risk in relation to the process and payment of severance pay.  It is essential that employers always follow the correct procedure as required by labor law when considering any changes to employees’ terms and conditions of employment, especially when there is a possibility that employees may lose their jobs as a result.

LAYOFFS:  CONSULTATION PROCESS

Before an employer can consider any layoffs, they must follow a strict procedure as outlined in the Labour Relations Act. Consultations form an extremely important part of this process and include the following:

• Written notice: Employers must notify employees of the intended consultation by means of a written memorandum with at least 48 hours’ notice before the consultation.  Each employee must sign a copy of the memorandum as proof of receipt.  It is important that employees have the opportunity to prepare for the consultation and find possible alternative workable solutions.  If an employee is a member of a trade union, the trade union must also be notified of the consultation.
• First consultation: Consult with the employees to discuss the content of the notice.  The purpose of the consultation is for the employer to give employees an opportunity to make representations regarding the proposed layoffs.  Both parties now have the opportunity to discuss alternative considerations.  The employer must at all times act in good faith and keep an open mind throughout the process and give serious consideration to all alternative proposals presented.  The consultation must be held with all potentially affected employees and/or the union.
• Alternatives: All alternatives presented during the consultation must be investigated and discussed.  If the alternatives are not workable and there are no further alternatives, the process can be concluded.  Employees affected by the layoffs must be informed of this in writing and receive the necessary documentation. The notice period begins when the employee becomes aware of the layoff.

  If an employee suggests at any given moment during the consultations that they can be laid off voluntarily, the employer can accept it as such.  However, if an employee chooses voluntary redundancy, they must be aware that they will not be able to claim unemployment benefits from the Unemployment Insurance Fund.

TAKE SPECIAL NOTE

Employers must take special note of the following:

• Do not pre-identify employees to be laid off.
• The reason for layoffs must be fair.
• All parties must be consulted with.
• Selection criteria must be fair and objective.
• The final payment of remuneration must be correctly calculated and paid out.

WHAT IS “SEVERANCE PAY”?

An employer must pay “severance pay” to an employee who is laid off.  This severance package is normally equal to at least one week’s compensation for each completed year of continuous service.  However, the amount can vary depending on industry-specific legal provisions.

In addition to the severance pay, the employer must also pay the following as part of the final payment of remuneration:

• Salary up to and including the last working day.
• Accumulated leave.
• Payment for notice period, even if the employee is not required to work the notice period.

Employers must comply with strict requirements set by labour legislation.  Compliance is non-negotiable and requires specialist knowledge, which poses a business risk for the employer.

Article supplied by Beehive OH&S.

People attempting to sell legal posters (wall charts) are on the increase. Some of these persons pretend to be representatives from the Department of Employment and Labour to sell their products.

Compulsory legal posters (wall charts):

• Summary of the Basic Conditions of Employment Act (BCEA):

  Section 30 of the BCEA, as amended, requires all employers to display the employee’s rights at the workplace. It must be in the prescribed form and displayed in the official language(s) spoken by employees at the workplace.

• Summary of the Employment Equity Act (EEA):
  Section 25(1) of the EEA, as amended, requires employers to display a summary of the Act. “An employer must display at the workplace, where it can be read by employees, a notice in the prescribed form, informing them about the provisions of this Act.”

Prescribed health and safety notices:

According to the prescriptions of the General Machinery Regulations (GMR) of the Occupational Health and Safety Act (Act 85 of 1993) (OHSA), as amended, employers with boilers as well as employers with machinery other than boilers on their premises must display certain notices:

• Employers with boilers on their premises:
  Regulation 9(2) of the GMR requires employers with boilers on the premises to display a copy of Schedule C. This Schedule must be in a legible form in a conspicuous place on the premises.

• Employers with machinery other than boilers on their premises:
  Schedule D of the GMR requires employers with machinery other than a boiler to display a copy of Schedule D. This Schedule must be in a legible form and displayed in a conspicuous place.

Order your legal posters from the LWO’s One stop Labour Shop.

The top three frustrations are as follows:

• Absenteeism and poor punctuality:

  Absenteeism and poor punctuality are one of the biggest frustrations and a huge time waster in the workplace. Apart from the employee who does not provide services according to agreed hours, absence negatively impacts the team.  Aside from not being at work, absenteeism also means arriving late, leaving early, unauthorised breaks, extended breaks, feigned illness, and other unexplained absences from the workstation or premises.

  How to deal with it:
  It is the employee’s duty to commence and end duties at the times required by the employer.  When employees do not follow the rules, employers have the right to act.  Three important steps include:

  • Interview the employee and record what he/she says;

  • The employee has to prove that the absence was justified;

  • The employee may produce reasons, but even if a reason is valid it can still be unacceptable – apply the disciplinary code.  Always apply progressive discipline according to the seriousness of the offence and keep detailed record thereof.

• Insubordination:
  Insubordination is defined as “resistance to or defiance of authority, disobedience, refusal or failure to obey reasonable and lawful instructions, insolence, cheekiness, rudeness, bringing the employer’s name into disrepute, and rebellious or mutinous behaviour resulting in an actual work stoppage”.  The most common form of insubordination is when employees wilfully disobey the employer’s instructions.

  How to deal with it:
  Apply progressive discipline.  Take note that in order to prove ‘insubordination’, the employer has to prove that the instruction was performable, fell within the scope of the employee’s duties, was reasonable, and that the employee wilfully refused to obey the instruction.

• Poor work performance:
  Poor work performance is the failure of an employee to reach and/or maintain the employer’s required work performance standards.  This has a huge impact on a business’s normal operations, as most employers don’t have the luxury of spare capacity concerning their workforce to compensate for this deficit.

How to deal with it:
Firstly, it is crucial to differentiate between misconduct and incapacity, as this will determine what process the employer should follow to address the issue:

• • Misconduct refers to an employee’s failure to adhere to the employer’s rules and policies, and is a behaviour issue of the employee. Such behaviour is normally deliberate or negligent, and employees can be held accountable for their actions.

  • Incapacity refers to when an employee is incompetent and inherently unable to meet fixed performance standards whether due to ill health or poor work performance.  The employer is required to provide an employee with training and guidance, as well as the opportunity to improve, where the employee lacks the required skill or knowledge to perform a certain task.

Labour law pothole!

Frustrations can easily lead to impulsive or explosive reactions.  When the employer dismisses an employee in the heat of the moment without following the correct procedure, it can lead to an unfair dismissal dispute at the CCMA where the employer can face an award to pay up to 12 months compensation to the employee and/or reinstatement.

Employment Equity Amendment Act – Prominent changes are as follows:

• Revision of the definition of a ‘designated employer’:
  From 1 September 2023, only employers with 50 or more employees will be considered designated employers. The total annual turnover that was previously also taken into account will no longer be a consideration.

• Numerical targets for each sector:
  The Minister of Employment and Labour was given the power to identify national economic sectors and establish numerical targets for each sector.

• Certificate as a compliance requirement:
  The introduction of a certificate as a compliance requirement has significant implications for employers regarding agreements with the state. In order to enter into contracts with government entities, designated and non-designated employers must obtain a certificate of compliance issued by the Department of Employment and Labour.

The big question is when what should happen at this point.

Earnings threshold 2023: What is earnings?

• Basic Conditions of Employment Act (BCEA): Employees earning in excess of the earnings threshold are excluded from certain sections in the BCEA.  These exclusions refer to the provisions that regulate ordinary hours of work, overtime, compressed working weeks, averaging of hours of work, meal intervals, daily and weekly rest periods, pay for work done on Sundays, pay for night work and pay for work done on public holidays.

• Labour Relations Act (LRA): In terms of the LRA, employees employed by a temporary employment service/labour broker who are not performing a temporary service are deemed to be employees of the client.  The LRA furthermore states that employees on a fixed term are employed indefinitely and deemed to be permanent employees after three months in the absence of justifiable reasons for fixing the term of the contract.

Employees earning in excess of the earnings threshold are not subject to either of these provisions and can be employed on a fixed term basis exceeding three months without a justifiable reason.

• Employment Equity Act (EEA): If an employee earns above the threshold and has a dispute under Chapter II of the EEA relating to unfair discrimination, the matter may not be referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) for arbitration and must be referred directly to the Labour Court for adjudication, unless:
  • the dispute relates to alleged unfair discrimination on the grounds of sexual harassment; or
  • the parties all agree for arbitration to be held at the CCMA.

In terms of the National Minimum Wage Act (NMWA), the National Minimum Wage Commission (the Commission) annually assesses and reviews the national minimum wage.  The Commission then submits a recommendation to the Minister of Employment and Labour to adjust the minimum wage. The current national minimum wage came into effect on 1 March 2022, and the highly anticipated review of this wage for the 2023/2024 period is almost upon us. This will likely be released and published in the Government Gazette by the Minister and come into effect on 1 March 2023.

The criteria the Commission generally uses to determine the proposed increase is the consumer price index (CPI) plus 1.0%.  The CPI was 7.2% in December 2022, and the minimum wage increase is thus calculated at approximately 8.2%.  This means an increase in the current national minimum wage of R23.19 per hour to R25.09 per hour (based on December 2022’s CPI as released by Statistics South Africa on 18 January 2023 – available when this article was written).

However, the Department released a media statement on 22 December 2022, which indicated that the Commission, in its preliminary report, was looking at an annual increase in the national minimum wage in the range of CPI + 0.5% and CPI +1% for 2023.

Are there options for businesses that cannot afford to pay minimum wages?

However, section 15 of the NMWA stipulates that employers can apply online for exemption if they cannot afford the national minimum wage (http://nmw.labour.gov.za).  The employer will still have to pay at least 90% of the national minimum wage if the exemption is granted.  In addition, the exemption is only valid for a maximum period of 12 months.