IURI 222

STUDY UNIT 5.5

OPERATIONAL REQUIREMENTS
 Su 5.5 Study outcomes
1. Define operational requirements
2. Know sections 189 and 189A
3. Distinguish between small and large scale retrenchments
4. Know ‘consultation’
5. Answer questions about disclosure of information
6. Discuss the following:
1. With who consults ER about what topics?
2. Fair selection criteria
3. Severance pay
4. Offer of re-employment
Due to the restructuring of his business (which employs over one hundred
employees), during which various departments were shuffled and some
functions ceased, Stephen has fifteen employees whose positions
ceased to exist. He could move eight of the employees to alternative
positions, but there is no longer place for the remaining seven
employees, thus they have now become redundant. What now?
 Operational requirements
1. Economic, structural, technological and similar needs
2. S189 & S189A of the LRA
3. Small-scale and large-scale retrenchment
4. Sections indicate that dismissal should not take place if it can be avoided
5. If same results could be reached in another way without retrenchments –
dismissal not substantively fair
6. Reduction must be absolutely necessary – Johnson & Johnson and BMD
Knitting Mills
7. Thus, beware secret agenda!
 Operational requirements

8. Substantive and procedural fairness in these cases?

 SUBSTANTIVE: Was there truly a need of the business that could only
properly be addressed through retrenchments? Is the need
commercially justifiable?
 PROCEDURAL: Did the employer follow the steps set out in the LRA?
9. S189 requires consultation, and subsection 2 indicates subjects for
consultation
 Pre-termination consultation
1. ‘Consultation’
1. “Meaningful joint -consensus seeking process”
2. Parties attempt to agree on certain aspects
3. Firstly attempt to avoid retrenchment altogether
4. If not – ameliorate the effects
5. Consultation must be exhaustive and all possibilities must be considered
– Johnson & Johnson; BEMAWU obo Mohapi (consult thoroughly on
every issue)
6. Employees or trade unions must make suggestions
 Pre-termination consultation
7. Employer must not have made a final decision before the
consultation
8. Approach consultation with open mind and give each suggestion
reasonable consideration
9. Final decision rests with employer
10. Must not rush the process
11. All parties have to work together to find a solution
 Pre-termination consultation
2. When must consultation commence?
1. When employer first contemplates retrenchment
2. Final decision must not have already been made
3. Employees informed as soon as it is realised that certain
circumstances at work may lead to retrenchments
 Pre-termination consultation
3. Notice of consultation
1. Employer give proper notice to employees or trade unions of
need for retrenchment
2. Notice in writing
3. Notice should contain important information, ex.
- Reasons for retrenchment
- Number of employees affected
- When
- Selection criteria
- Severance packages
- Possibility of future re-employment
 Pre-termination consultation
4. Who are consulted?
1. Anyone in terms of a collective agreement
2. If no such collective agreement exists – workplace forum
3. If no workplace forum – trade union
4. If no trade union – employees directly
5. Consult only employees affected by the retrenchment –
therefore not independent contractors
 Pre-termination consultation
5. Topics for consultation
1. Measures taken to avoid dismissals
2. Measures taken to minimise number of employees
affected
3. Measures taken to change the time of dismissals
4. Measures taken to mitigate the adverse effects of the
dismissals
5. Selection criteria
6. Severance pay
 Disclosure of information
1. Employer disclose information to employees/trade unions to be
able to make proper suggestions
2. Relevant information:
 Reasons for retrenchment
 Number of employees
 Method of selection
 Re-employment
 When
 Severance pay
3. Relevance sometimes difficult to determine
4. If employer refuses, prove lack in relevance
5. Certain information not obligated to provide: Which?
 Final decision
1. Rests with employer
2. Only after the consultation process has been exhausted
3. NB - Employer can return to consultation after the decision to
address certain overlooked aspects
4. Can therefore revoke the final decision – has to be bona fide
 Fair selection criteria
1. Use criteria agreed upon by
parties
2. If no such agreement – fair and objective criteria
3. Fairness forbid possible automatically unfair dismissal – specific groups
for impermissible reasons
4. LIFO best option – must not stray too far
5. LIFO not mandatory if it could lead to loss in necessary skills
6. Other acceptable criteria?
See item 9 of Code (Operational requirements)
7. CWIU v Latex Surgical Products and NUMSA v Columbus Stainless
 Severance pay
1. Severance pay at 1 week salary for every year of continuous
service
2. If agreed on higher amount – use that
3. If lower – use legislation
4. Soften blow of circumstances – compensation
5. Amount unlimited
6. Limitations
 Only for continuous service
 Short break in service will not have affect
 Only with operational requirements
 Severance pay
7. When are employees not entitled?
8. Employee who accepts severance package can still open a case
for unfair dismissal
9. Service not interrupted during the transfer of a business –
service delivered at old employer are added to the total years of
service
 Offers of re-employment
1. Employer inform parties of the possibility
2. Under no obligation – but if employer re-employ only a select
few – regarded as dismissal
3. Employer must defend his actions
4. If employer made a promise by way of an agreement – bound by
that agreement
 S 189A Retrenchments
1. Large scale retrenchment – 10% and more
2. Employers with more than 50 employees but less than 200 – only if at least
ten are earmarked for retrenchment
3. More than 200 employees – 10% thereof retrenched, ex. 20 (on a scale as
from 200)
4. Difference between 189 and 189A – employees can strike
5. Employers must give notice of retrenchment
6. Facilitator plays a role here
7. Summarise the procedure for yourself from the text book and Act
 Retrenchment of individual
1. Such employee can refer case for arbitration or to Labour Court
2. Employee has a choice
3. Requirements
 Only one employee affected
 For operational requirements