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Laying off employees a situation that no employer wants to find themselves in. Knowing the process can and will alleviate many head-aches down the road. 

The lay-offs provisions of the Main Agreement provide a practical alternative to retrenchment. These provisions enable the management of employee layoffs on a temporary basis pending an improvement in prevailing business conditions or other adverse conditions facing a company at a particular time.

The Agreement defines “Lay-off” to mean the temporary suspension of employment due to a reduction in the volume of work in an establishment or section of an establishment or due to other economic reasons. The maximum duration of the lay-off is an eight week period unless otherwise agreed between management and any trade unions representing the affected employees. 

The employment of the laid-off employees during this period is merely suspended and is not terminated. No wages are paid during the lay-off and the affected employees do not accumulate any shifts for purposes of leave and leave enhancement pay purposes.

Notification

Management wishing to implement the lay-off arrangements to the Main Agreement must notify the regional office of the bargaining council and any trade unions representing the affected employees 14 days before the intended date of the commencement of the lay-off. The notification may be made by telephone (provided that this is subsequently confirmed in writing), telegram, registered email, or telefax transmission.

The notification must contain the following information:

  • The occupational categories of the employees proposed to be laid off;
  • The reason for the lay-off; and 
  • The estimated duration of the lay-off.

Consultation 

Following notification of the intended lay-off, management must consult jointly with all the trade unions representing the affected employees. The objective of this consultation process is to discuss:

  • Ways and means of avoiding or limiting the intended lay-off; and
  • The selection criteria to be used to identify those employees who will be laid off.

It is to be expected that the trade union representatives may wish to explore alternatives to the lay-off. The following measures may be considered in this regards:

Measures to avoid lay-offs

The following types of measures may be implemented to avoid or reduce the effect of lay-offs:

  1. Reduction of the workforce through natural attrition.
  2. Restriction of new hirings by means of recruiting and promoting from within the organisation.
  3. Elimination of all “casual” labour.
  4. Non-renewal of short-term contracts of employment. [Note that the termination of fixed period short-term contracts of employment, prior to their expiry date, is not possible without the agreement of the employees concerned].
  5. Ceasing overtime.
  6. Voluntary retrenchments
  7. Placing employees in a short time.
  8. Job sharing and job rotation schemes.
  9. Any other viable scheme that will result in a reduction of the impact of retrenchment.

Management must ensure that the employees who are selected for lay-off have been identified according to clear criteria that have either been:

Agreed by the consulting parties; or

Where no such criteria have been agreed upon, according to criteria that are fair and objective.

Fair and objective selection criteria

Fair and objective section criteria may compromise certain or a combination of the following International Labour Organisation [ILO] guidelines:

  • The need for the efficient operation of the undertaking, establishment, or service;
  • The ability, experience, skill, and occupational qualifications of individual workers;
  • Length of service [the so-called LIFO principle]; and 
  • A family situation or such other criteria as may be appropriate under the circumstances.

Ideally, the consultation process should conclude with an agreement between the parties regarding the manner of implementation of the lay-off. However, this is not a precondition for the implementation of a lay-off. Management, having consulted with the respective parties, has a right to implement the lay-off even where no agreement is reached with the consulting parties in this regard.

Employee notification

Following the joint consultation process, management must give the affected employees a minimum of five full shifts notice of their lay-off. This notice must also include details of the date on which the employees are required to report back to work.

Where an employee does not return to work within three working days of the stipulated return date, he or she will be deemed to have terminated his/her employment with the company unless this absence is condoned by management.

General Provisions

The following general provisions apply in respect of employee lay-offs:

  • Employees on lay-off are entitled to elect to have their services terminated.
  • Employees are entitled to engage in any employment for gain during the lay-off period.
  • Where an employee is required to report for duty to ascertain whether or not work will be made available, the employee must be provided with not less than four hours’ work or be paid in lieu thereof where no work is available.

The Main Agreement ensures that Employee layoffs don’t become a minefield for employers. Remember, that the dangers for employers are that the employees could contest the fairness of the suspension itself or could take the notification as a dismissal and take the employer to CCMA or bargaining council on this basis. 

Contact SEIFSA for training or consultation and ensure you are on the right track.

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