The Main Collective Agreement of the National Bargaining Council for Hairdressing, Cosmetology, Beauty, and Skincare Industry (HCSBC) has very specific conditions associated with retrenchments within the industry, and the below should be read and applied in conjunction with the provisions of the collective agreement to ensure compliance.
Retrenchment is a complex and often emotional process, both for employers and employees. In South Africa, the retrenchment process is governed primarily by the Labour Relations Act 66 of 1995 (LRA), with specific reference to Section 189 and Section 189A. Understanding the legal requirements and the procedures required is essential for both parties to ensure that the process is conducted fairly and in compliance with the law.
What is Retrenchment?
Retrenchment refers to the dismissal of employees based on the operational requirements of the employer. Unlike dismissals for misconduct or poor performance, retrenchment is driven by the need to reduce the workforce due to economic, technological, structural, or similar needs of the business. The process must be managed carefully to avoid unfair dismissal claims and to protect the rights of employees.
Key Steps in the Retrenchment Process
1. Consultation: A Joint Consensus-Seeking Process
The cornerstone of the retrenchment process is consultation. As mandated by Section 189(1) of the LRA, the employer must engage in a meaningful, joint consensus-seeking process with the affected employees or their representatives, such as trade unions. This is not a mere formality, but a legal obligation intended to explore all possible alternatives to retrenchment.
2. Written Notice: Inviting Employees to Consult
The process begins with the employer issuing a written notice to the employees or their representatives, inviting them to consult. This notice must include essential information such as:
The reasons for the proposed retrenchments.
The alternatives considered before resorting to retrenchment.
The proposed method for selecting which employees will be retrenched.
The severance pay proposed.
Any assistance the employer will offer to the retrenched employees.
3. Disclosure of Information: Ensuring Transparency
For the consultation to be effective, the employer must disclose all relevant information to the employees or their representatives. This transparency is crucial as it allows for a meaningful engagement on the reasons for the retrenchment and the possible alternatives. The information shared should be clear, comprehensive, and timely.
4. Consideration of Alternatives: Exploring Other Options
During the consultation process, the employer must genuinely consider any alternatives to retrenchment. Common alternatives include (but are not limited to):
a. Short-time work or reduced hours.
b. Lay-offs.
c. Voluntary severance packages.
d. Reduction in overtime or elimination of contract workers
The goal is to avoid or minimise the need for retrenchment by finding other solutions that may be acceptable to both parties.
5. Selection Criteria: Fair and Objective
If retrenchment becomes unavoidable, the employer must apply fair and objective criteria for selecting employees for retrenchment. The criteria should be agreed upon during the consultation process and may include factors such as:
a. Last In, First Out (LIFO).
b. Retention of key skills.
c. A combination of factors. The selected criteria must not be discriminatory or arbitrary.
6. Severance Pay: Compensation for Service
Retrenched employees are entitled to severance pay, which will be determined by area according to the Main Collective Agreement specific to each area. This payment is intended to provide some financial relief to the employees as they transition out of employment.
Payments may include the following:
Severance pay – this amount will be prescribed per area according to the Main Collective Agreement – please ensure you make contact with an EOHCB representative to assist you in this regard.
However, the employer must pay the retrenched employee the amount specified in any policy or their employment contract, if that amount is larger. If an employee refuses alternative employment with the employer or another employer, they will not be entitled to severance pay.
Leave – an amount of money equal to the annual leave, or time off, that has not yet been taken by the employee must be paid out.
Notice pay instead of working the employee’s notice period – this amount will be determined by the Main Collective Agreement – with an industry standard of two weeks’ notice in mind.
Other pay – depending on the employment contract this would be any pro-rata payment of a bonus, pension, Personal Services Commission, and so on.
Once an employee is retrenched, they are entitled to claim unemployment benefits (“UIF”).
7. Notice Periods: Compliance with Employment Contracts
In addition to severance pay, employers must provide employees with notice of termination in accordance with the terms of their employment contract or the notice periods prescribed by the Main Collective Agreement. This ensures that employees have sufficient time to prepare for the termination of their employment.
Large-Scale Retrenchments: Additional Requirements
For large-scale retrenchments, Section 189A of the LRA imposes additional requirements. These include:
A 60-day consultation period to allow more time for discussions and exploration of alternatives.
The possibility of involving the Commission for Conciliation, Mediation, and Arbitration (CCMA) to facilitate the consultation process and help resolve disputes.
Retrenchment is a challenging process that requires careful adherence to legal procedures and a commitment to fairness and transparency. By following the steps outlined in the LRA and considering all alternatives, employers can manage the process in a way that minimizes the impact on employees while ensuring the operational needs of the business are met.
Note:
Remember to consult with an EOHCB representative to assist you in this process as each geographical area must meet certain requirements and payment(s) for the retrenchment process to be deemed as completed.
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