South Africa’s economy is limping along with the unemployment rate seemingly climbing each quarter, and even employees at large companies aren’t immune. So far 2019 has already seen Standard Bank shed roughly 1200 jobs, while Absa retrenched more than 800 people, Tongaat Hulett roughly 5 000, Sibanye-Stillwater almost 3 500 and Multichoice another 2000.
Becoming retrenched is one of the more financially crippling events that can occur in a person’s life and IOL reports that with the “tough economic conditions, the widespread application of technology and the cost of labour, more companies are having to downsize or cut jobs totally to remain financially feasible”.
Fortunately, retrenchment doesn’t have to be all bad, and there are numerous ways you can mitigate the damage it does on your life at each step along the way.
What to do if you suspect you are about to be retrenched
Labour law expert Robin Gerhold of Gerhold and Van Wyk Attorneys in Johannesburg explains that people who suspect they may become targeted for retrenchment should not just wait for the axe to fall. He urges clients who think they may be about to become retrenched to consider the long-term consequences as well as the short term benefits when choosing what to do in that circumstance.
“Proper preparation is always a good idea when approaching any legal process. Not only being prepared for the process itself, but also for the worst-case scenario,” he says.
“Many South Africans live month to month, and someone who is retrenched may not be able to survive for a significant period without a salary. Any groundwork that can be laid before getting retrenched will, therefore, save valuable time when it does actually happen,” he continues, suggesting it may be wise for people to already begin seeking other employment.
“Check to see if your policies, cards and accounts have any benefits that payout on retrenchment. Often there is some form of income protection incorporated into products such as car or home loans,” he says.
What to do when you find out you are being retrenched
Once the process has been initiated, Gerhold insists employees should ask questions, get clarity, and use the opportunity to engage with their employer saying, “It is important to find out the reasons for the proposed retrenchment”.
“One mistake we often see employees make is when they fail to engage with their employer, with the intention of referring the matter to the CCMA after the dismissal is effected, regardless of whether or not the employer has complied with the requirements,” he says.
“As an employee, you may benefit far more through the consultation process, rather than refusing to engage and crying foul later. In some instances, employees who are retrenched are re-employed at a later stage so try not to burn bridges. Using the consultative process to the benefit of all parties can go a long way in preserving relationships,” Gerhold adds.
Gerhold says employees shouldn’t necessarily assume they need a lawyer but explains legal assistance may be necessary, depending on the circumstances.
“In some instances, the cost may outweigh the advantages of being represented, and in others, there may be a great benefit in appointing an attorney to assist. The need for representation depends on the facts of the matter,” he says.
In general, Gerhold says legal counsel should not be necessary if the process has been properly conducted.
“There are safeguards in place, such as the Labour Relations Act and Basic Conditions of Employment Act, that assist the employer and employee in ensuring that a fair process is followed and that the employee receives what he is entitled to. The fact that the process is a consultative process further protects the parties, in that it assists in reaching consensus,” he says.
These safeguards also rule on what employees should receive at the moment of their retrenchment, with Section 41 of the Basic Conditions of Employment Act dictating at least one week of severance pay for each completed year of continuous service with the employer.
According to Gerhold what many people may not know is that they are also entitled to be paid out
for leave that has been accrued and not been taken, as well as for any days they had already worked but not yet been paid for.
“Section 37 of the Basic Conditions of Employment Act states that assuming the company does not want the employee to work off their notice period, they must still pay that employee in lieu of what they would have earned if they had indeed worked out that notice,” says Gerhold, who says that in some cases, and dependent on the contract, that there may even be additional amounts such as bonuses or shares that need to be paid out too.
What to do after retrenchment
Gerhold insists that employees should always go into the process of retrenchment trying not to burn bridges. Assuming you have come out with a settlement, and aren’t intending on moving to the CCMA, now is the time to make the money you do have last as long as possible and start rebuilding your life.
“If you haven’t already, call your bank and other financial institutions. Creditors are often willing to grant payment holidays to their clients. It is best to contact them as soon as possible to make arrangements for the uncertainty that lies ahead,” he says.
Gerhold also advises applying for UIF and says the employer must provide the employee with the necessary UI-19.
“The process of receiving UIF benefits can take some time, so it is best to start as soon as possible,” he cautions, before suggesting you try to keep positive, and get your CV in front of as many potential employers as possible.
“With luck, this will only be a temporary setback. It doesn’t have to be the end of the road,” he says.