The importance of preparing your company to downsize
In the current economic climate, it has become increasingly necessary for many companies to start taking a hard look at their operational costs and find ways of maximizing productivity while minimizing expenditure. The fact that labour costs ordinarily constitute the lion’s share of a business’ expenses makes it the first target for penny-pinching managers and often times this will result in a management decision to reduce the workforce as a “quick-fix” to rebalance the books. The problem with this approach, however is that managers fail to grasp the legal complexities of a “Retrenchment” process, or Dismissals for Operational Requirements as it is legally known. Not only are there very specific procedural requirements which a company must adhere to, but there also exists a single major cost implication which could, in many cases make the decision to downsize less attractive to management who are seeking interim short term relief to budgetary pressures. Additionally, failing to prepare for the massive expense of such dismissals may very well turn out to be the final nail in the coffin of small businesses. Sections 189 and 189A of the LRA (Labour Relations Act 66 of 1995 as amended) provide the outlines of the procedure that must be followed and Section 189A(13)(c) allows the Labour Court to reinstate* employees who were dismissed without such procedure. Read more “Retrenchment?”
Following the promulgation of The Labour Relations Amendment Act (Act 6 of 2014) on the 1st of January 2015, various changes occurred within the framework of the Labour Relations Act (Act 66 of 1995, as amended). While many of these amendments became effective immediately on the 1st of January, some of the sections only became active on the 1st of April 2015 [Section 198B(8(b)].
Among these latter amendments were the new regulations surrounding Temporary Contracts of Employment. Specifically the new Sections 198B and 198D govern the manner in which these contracts should be dealt with.
The biggest concern for business has been the much publicized limitation of fixed term contracts to a period of only three (3) months [Section 198B(3)] and the manner in which a fixed term contract that has lasted for more than three (3) months would be deemed to be of an indefinite nature (Permanent) [Section 198B(5)].
While the above is true, moreover, that any fixed term contract that was in place at the time of implementation of the above amendment (1 April 2015) would suffer the same fate and be deemed to be indefinite as well, there are certain exemptions that exist, i.e.: Read more “Are Fixed Term Contracts Dead”