Retrenchment Part Three – Consultation Procedure

Retrenchment Part Three – Consultation Procedure

Human Resources

Editor’s Note: an important part of any retrenchment process. This is the area many employers fail and get into trouble.

In last month’s article, we dealt with notification procedures. This month we look at step 3, the consultation procedure.

Good Practice Step 3. Consultation Procedure

This is the most difficult and complex stage in the retrenchment process and most often leads to Unfair Labour Practices and labour unrest unless adroitly handled. It is also the stage where I recommend that you keep written notes, and contact me for assistance in the consultation process if you encounter problems with individuals. (Read LRA Sec 189)

Management is required to “consult in good faith and “to attempt” to reach agreement (consensus)” with the employees affected. If the duty to consult went no further than giving employees or a trade union an opportunity to make representations or to advise the employer, there would be no need for s189 (2), which states that the consulting parties “must attempt to reach consensus”.

“The consultation process should constitute a real and serious attempt by Management to hear and seriously consider any views and proposals put forward by the employees. This may, for instance, include the need for the retrenchment, ways and means of alleviating the retrenchment, and proposals and suggestions relating to severance packages, etc.”

“To consult means to take counsel or advice from someone and does not imply any kind of agreement. Having consulted in good faith, Management has the right to implement the retrenchment even if no agreement is reached.”

Management should not rush through this stage, and if necessary must hold four or five meetings to ensure that every opportunity is given to employees to consult. If there is a union that has sufficient representation and/or a recognition agreement, they must be allowed to represent their members, and be given notice, etc.

A proposed agenda should be prepared in writing and would include:

1. Confirmation that prior notice of the proposed retrenchment has been given

2. A repeat of why retrenchment is being considered:
a. Information on why retrenchment has become necessary
b. Financial or operational disclosure to support the above
c. Alternatives to retrenchment which were considered, and reasons why rejected where applicable
d. Opportunity for employees to put forward any views and proposals, or alternatives to retrenchment
e. Discussion on how the retrenchment will affect the business

3. Discussion of the proposed time frame of the exercise
a. Arrangement of further opportunities to meet with individuals – dates and times
b. Proposed date of the retrenchment

4. Selection criteria (LIFO, retention of essential skills, downgrading, apprentice contracts, voluntary retirement, temporary workers, employees on short time, poor disciplinary record (only if properly documented!), selection process and notification of redundancy. In a small operation, names of those who may potentially be affected.

5. Details of proposed severance package, UIF cards, PAYE, Tax Directives, etc. Sec 196 of the LRA states that an employer must pay severance pay of at least one week’s pay for each year of completed service. Note that if you have an alternative position, e.g. driver instead of foreman, then there is no entitlement to a severance package if the employee “unreasonably” refuses to accept the offer of the alternative position. (Sec 196 (3) of the LRA).

6. Opportunity to discuss any “other” issues, counselling, etc.

NOTE: Proper minutes and a recording, if possible, should be kept of every meeting. Particular note should be made of all, and any, proposals, queries, alternatives, etc., made by the employees / union.