Know your rights

Mpho Ngwato | Friday October 8, 2010 00:00

The law recognises and endorses the employers' right to terminate employment relationship due to among others, operational requirements of the business.  This type of dismissal has been categorised as a 'no fault' dismissal in that it is the employer's business hardship that leads to termination of employment and it is not the employee who is responsible for the parting of ways.

Dismissal based on operational requirements include  examples of economic reasons that relate to the financial management of the enterprise, technological reasons that refer to the introduction of new technology which affect work relationship either by making jobs redundant and requires restructuring of the workplace and structural reasons that relate to the redundancy of posts.

There is no particular Act of Parliament in our jurisdiction that regularises this particular type of 'no fault dismissal'. In the absence of such legal stipulation, protection of such an employment relationship will depend on various sources, namely the agreement between the parties, common law principles (mainly the contract), jurisprudence of industrial court principles, International Labour Practice and statutory provisions such as those found in the Employment Act. In other words the courts in determining fairness of this dismissal will apply the basic principles governing the employment relationship of employees. 

As stated previously in our past editions, the courts will only endorse the right by the employer to dismiss an employee, if the dismissal is substantively and procedurally fair.

Substantive FairnessSubstantive fairness implies that these must be a valid reason to dismiss an employee.  In the case of dismissal based on operational requirements of the business, the courts would accept the prerogative of managerial economic and policy decision leading to redundancy or retrenchment, only if the decision is taken on bona fide grounds and it is not a result of an improper motive seen as an attempt to victimise individual employees or union members.  Other substantive  grounds of dismissal based on operational requirements include;

incompatibility i.e. where an employee is unable to work in harmony within the corporate culture or irreversible breakdown of trust and/or demotion in as far as it relates to an alternative to retrench but not used as a negative form of penalty for disciplinary reasons.  Employers may also retrench employees who refuse to agree to change of the conditions of service that has an impact on the economic demands of the company or business.

Retrenchment in its sense has an adverse effect on the social plan of any government. To address this negative impact, some established jurisdictions put an obligation on the Department of Labour to work collectively with the business that intends retrenching employees by setting up a retrenchment response team and job advice centre. 

The purpose is to provide services pertaining to standard information packs, registration of job seekers, counseling to deal with emotional impact, skills assessment, certificates of prior learning, career plan development and training placement services. These are issues of mutual interest which as an employee you must propose to your employer or for the trade union to bargain on for their members.

Procedural Fairness Generally the courts will not interfere with the merits of economic or policy decision of the employer who plans to retrench employees but it will insist on compliance with certain procedural requirements.  An obligation is therefore placed on the employer to ensure that all possible alternatives to dismissal are explored and that the employees to be dismissed are treated fairly.  The following obligations are placed on the employer:

* Proper consultation * Prior consensus over issues * Selection of employees for retrenchment* Written disclosure of relevant information * LIFO (last in first out) principles*Skills selection * Payment of severance pay

Proper consultationThis implies that even if the employer has already taken a view to retrench, the employer is not entitled to take a final decision to retrench without prior and proper consultation with the employees or the trade unions.

The rational behind proper consultation is behind the backdrop that whilst retrenchment is a managerial prerogative it is only fair for the employer to issue a moratorium and a reasonable notice to the employees or union that retrenchment will or may take place before exercising its power. The reasonable notice is intended to give the employee or union an opportunity to make representations like proposing and persuading other possible alternatives to retrenchments. This approach is in line with bargaining in good faith and protecting management from being accused of union bashing. 

Consultation process involves the employer explaining the nature of the problem to the employees or union and what the employer has identified. The union in return must be given an opportunity to make representation on what management has tabled. The period over which consultation must take place is difficult to stipulate but circumstances surrounding the consultation process are relevant to determine a reasonable period.

Prior consensus over issues Once the process of consultation has commenced, the employees and employer must consider whether alternatives to retrench exist. The parties may try to accommodate employees by proposing for example working shorter time, transferring of employees, voluntary retrenchments, changing of shift system, stopping overtime work, natural attrition, introducing different conditions of service, no casual labour or changing remuneration structures and finally acceptance by all parties that there is no viable alternative.

Selection of employees for retrenchmentOnce it is accepted that there are no viable alternatives, it is important to start identifying the employees who will be retrenched.  The employer is required to select employees according to the selection criteria that has been agreed upon between the employer and the other party, if no criteria has been agreed, the criteria that is fair and objective is acceptable.

The acceptable selection criterion is last in first out (LIFO) principle which is usually endorsed by courts and employee representatives. Usually employers do not endorse the LIFO principle when the employer wants more flexibility.  Other criteria which are considered legitimate include length of service, attendance, efficiency and experience where an employee wants to use a criterion such as work performance and conduct.

If employer wants to rely on work performance and disciplinary record, the employer is obliged to give the employee/ representative prior notice that it intends to evaluate performance and the employee must be given an opportunity to challenge poor performance.

Written disclosure of relevant informationEmployer is required to disclose the following*Reasons for proposed retrenchment * What alternatives have the employer considered before proposing dismissals and why did it reject such alternatives*Number of employees likely to be affected and the job categories*Proposed method of selecting employees * Severance pay proposed * Any assistance the employer proposes to offer to the employees and, * Any possibility of future re- employment must be disclosed in writing

Employer is not to disclose information *That is legally privileged * That is confidential and if disclosure may cause substantial harm to an employee or to the employer * That is private, personal to any employee unless employee consents to disclosure of that information

Payment of severance payThe function of a severance pay is to compensate an employee for the no fault of the job loss in the circumstances where dismissal has been taken to promote the economic welfare of the employer.  Retrenchment pay includes any payment in money or in kind (full package).  In the absence of historical retrenchment in a workplace on the amount payable or where no other collective agreement is in place on severance packages, the statutory minimum stipulation will apply.

The statutory minimum is usually an amount equivalent to one week's remuneration for each year of completed service with the employer or one week for each year of completed continuous service. However, where it is evident that the employer does not have financial resources, the duty to pay severance pay does not arise.  The employer is also obliged to give selected employees for retrenchment time-off to find alternative work once retrenchment is envisaged.

Prepared by: Adv Mpho Ngwatomaine@bbi.co.bw