Our reader this week is a designer whose employer is apparently experiencing cash flow problems and plans to sell his company to an overseas investor.

The worried employee wants to know if her salary can be reduced by the owner without prior discussion and if she can still expect to receive her annual bonus.

She also asks what she can expect from her employer if he retrenches her and whether or not he is under any obligation to give his employees fair notice, giving them time to find alternative employment.

We covered a similar topic recently, but let’s go over the details again, since this scenario seems to be rearing its ugly head on a regular basis these days.

Our reader’s employer is bound by the terms and conditions he agreed on in his contract of employment with her. Therefore, it is unlawful to simply reduce her salary without consultation, or at least find a mutually agreeable solution in light of the company’s financial constraints.

It is, however, unrealistic for our reader to expect her 13th cheque, considering her employer’s circumstances. In addition, no employer is obligated to give annual bonuses, since this benefit is purely a bonus and not something to be expected.

In the current economic climate, employees should be sympathetic, realising that during tough times an employer may be unable to pay bonuses, no matter how much he or she may want to reward workers.

Should our reader be retrenched, her situation falls under the banner of operational requirements, which is categorised as a “no fault” dismissal. Simply put, an employee is not responsible for the termination of his or her contract.

In light of this, the Labour Relations Act obligates the employer to find all possible alternatives to retrenchment and ensures that dismissed employees are treated fairly.

The owner would, by law, be expected to consult with staff identified for retrenchment and issue a written notice to the relevant parties, inviting them to the meeting.
During the discussion, the employer must disclose the reasons for the proposed dismissals as well as the alternatives considered, and why these were rejected.

The employer must also reveal how many employees are likely to be affected and what method was used in the selection process.

The timeframe for projected dismissals, as well as proposed severance packages and the issue of re-employment, must be discussed. 

The consulting parties must then attempt to reach consensus and, if possible, decide on appropriate measures to avoid or minimise dismissals.

Employees must be given the opportunity to make representation on the issues under consultation and any of the parties may request the Commission for Conciliation, Mediation and Arbitration (CCMA) to appoint a facilitator.

Once the employer has reviewed the representations, he must respond to them in writing if he does not agree with them.

After consultation, the employer must select the employees to be dismissed in accordance with the agreed criteria or, if none have been agreed on, criteria that are fair and objective.

Retrenched workers receive severance pay of at least one week’s salary for every completed year’s service.

Lastly, our reader should find out if she can seek employment with the new owner of the business before rushing out to find work. If the new employer offers a position within the company, and the employee qualifies for it, she will forfeit her right to severance pay if she declines the offer.

Send your labour and injury on duty questions to coetzee@fullstopcom.com.

Booysen & Rossouw Attorneys in Port Elizabeth specialises in labour related legislation. The firm also covers injury on duty cases as well as all other aspects of the law.

Issued by:

Full Stop Communications

Coetzee Gouws
041 368 4992
082 575 7991

On behalf of:

Booysen & Rossouw Attorneys