Employment law update touches on burning issues of the day, such as major increase in retrenchment cases as tough economic conditions bite

Poor economic conditions continue to wreak havoc, with smaller businesses in SA not being spared the fallout in global markets. The challenging macro-economic backdrop has led to a major increase in retrenchments and the need for the courts to answer a number of key legal questions.

The CCMA has reported a rise in small scale retrenchments of 13,020 in the past 2 years, while a mammoth 40% rise in retrenchment cases was seen in the first quarter of the year.

The Cliffe Dekker Hofmeyr annual employment conference in early November heard that while most sectors of the economy have been affected, increases in retrenchment cases were more pronounced in the mining sector, which has seen a recent rapid decline in commodity prices. This is not the only sector faced with adverse trading conditions, with the steel industry for instance also on the ropes as poor demand places thousands of jobs in jeopardy.

National Practice Head and Director, Employment, Aadil Patel, says a number of important cases have been decided recently, providing more clarity about both the permissible rationale for retrenchments and the fair process to be adopted.

In large-scale retrenchments, the prescribed minimum consultation period must elapse before notices of termination of employment may be issued. Where no facilitator is appointed to such process, the exact duration of the minimum consultation period can suffer from some uncertainty, because of a legislative requirement that, at some point during the process, either party must refer a dispute for conciliation. If the employees fail to do so, it is up to the employer to refer a dispute. The question of what happens if neither party referred the dispute for conciliation, and the employer proceeds to issue termination notices, was decided in the important case of Edcon v Steenkamp and others [2015] (4) SA 247 (LAC). Contrary to the previous prevailing position, the Labour Appeal Court found that a failure to refer a dispute to conciliation before the issuing of termination notices did not render the dismissal unlawful but could result in a procedural unfairness, says Mr Patel. Unlawfulness would have resulted in reinstatement of the dismissed employees, while procedural unfairness may not be visited with that result.

In the as yet unreported judgment on 17 August 205 - AUSA v South African Airways SOC Limited (under case number J1506/15) – the Labour Court held that a majority union/s may conclude a collective agreement with the retrenching employer, and may further validly extend its terms to all other consulting parties. This case will assist parties in reducing the risk of litigation and/or industrial action arising from the retrenchment process where a number of groups or persons are consulted. “The courts have faced an influx of major questions about retrenchment processes and it is positive our law is being developed to bring about more certainty for both employees and employers. This can only be good for our economy,” says Mr Patel.

Cliffe Dekker Hofmeyr director Fiona Leppan, meanwhile, says aspects of collective labour law have focused on the extension of agreements between majority unions and employers being extended to minority unions.

“In Chamber of Mines of South Africa obo Harmony Gold Mining Company Ltd and Others v Association of Mineworkers of SA and Others [2014] 9 BLLR 895 (LC), for example, it was found that mines collectively constituted single workplace as they were not independent of one another and AMCU’s members accordingly bound by wage. The dispute was whether each of the three employers’ mines collectively constituted a single workplace,” she says.

Meanwhile, Cliffe Dekker Hofmeyr immigration expert Michael Yeates, provided a key immigration update. He says the various changes and initiatives introduced by the Department of Home Affairs (DHA) are intended to create a more efficient and legitimate service, thus ensuring that it achieves its mandate set out in the Immigration Amendment Act.

“The regulations as a whole seek to improve the DHA’s ability to manage immigration effectively, so as to optimise and improve South Africa’s immigration laws. Due to the DHA’s strict stance with regard to the effect of the changes introduced by the Amendment Act, it is important that employers ensure that foreign nationals in their employ are compliant with the Act at all times,” he says.

The tightening of controls on immigration may, somewhat cynically, be a reaction to the loss of employment.