In last month’s article, we dealt with the consultation process. This month we finish off by looking at notification, assistance to employees and recalling/re-employment where this final stage is applicable.
Good Practice Step 4. Notification Procedure
Following the conclusion of consultations, management should, as soon as possible, notify those employees to be retrenched of the decision. Discussions should be held with ALL employees to be retrenched, including those to be relocated in new positions, put onto early retirement, transferred, etc., and letter should be sent to them containing details of notice, retrenchment pay, forwarding address, etc.
If you have agreed on the retrenchment details, put all the details into writing and sign the retrenchment agreement. This will be your only fall back in the event of the employees \ union reneging upon your settlement!
Good Practice Step 5. Assistance to Retrenched Employees
There is an onus upon management, given the no fault nature of a retrenchment exercise, to assist employees wherever possible in applying for UIF payments, Pension Refunds, and Tax Directives (1st R30,000 tax free), for Retrenchment payouts, and in seeking new employment, etc.
Adequate time is also needed to calculate individual’s packages, arrange for pension or provident fund withdrawals, or transfer to retirement annuities, etc.
Note: Again, that Sec. 196 of the Labour Relations Act provides for payment of a statutory minimum severance payment of one week per completed year of service with no upper limit. Employers may apply for exemption in case of intense financial distress.
Good Practice Step 6. Recall and Re-Employment
Should business improve and justify an increase in staff subsequent to a retrenchment exercise, first refusal of new positions should be given to retrenched employees (although there is no legal obligation to do so).
The following records of retrenched employees should therefore be maintained:
- Name of employee
- Postal and home address
- Telephone number, or number of a close friend
- Address of close relatives
- Details of dependants
- Any other essential information