From unfair retrenchments to not paying UIF, Newcastle businesses under the microscope

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The pandemic is deeply embedding its roots within South Africa, affecting thousands of businesses. Both nationally and within Newcastle.

With the number of confirmed COVID-19 cases increasing on a daily basis, are there business owners in Newcastle which are bending the labour laws?

We speak to Rob Russell of Labour Advice and Dispute Resolution and learn more about business-related issues during the pandemic.

Since the start of the lockdown, has Russell seen an influx of unfair dismissals? 

“Yes, definitely. I feel that some employers have reached a state of panic, and whether intentionally or out of ignorance of the law, they tend to use COVID-19 as an excuse/reason to dismiss staff without following the correct procedures.”

Furthermore, what irregular procedures are taking place during the pandemic? 

Russell explains unfair retrenchments is currently an issue. As well as employers failing to adhere to Section 189 of the LRA procedures.

“This is indicative by the spurt of CCMA referrals being made. For instance, countrywide, there have been 28 000 more referrals made in April and May of this year, than last year at the same time.”

Has Russell noticed an issue in UIF claims, where companies are not making the necessary payments? 

“There have been some unscrupulous employers who have not paid the money from the UIF over to the staff. Or making deductions, which is also unlawful, or alternatively making late payments to the staff. Incidentally, the money must be paid over to employees within two days of receiving it from the UIF,” Russell explains.

Through his line of work, what are the most common issues Russell has noticed that people are facing in Newcastle? 

“Uncertainty, fear of the unknown, and not being sure of what the future holds for their jobs and businesses, and in general the adverse effect on the economy of the whole town. I have seen many companies have adopted a very blasé attitude to the pandemic by not following the COVID-19 safety procedures, thus putting their staff, themselves and clients at risk,” Russell says.

While there are employers who are taking advantage of the situation, what about staff? Is there staff taking advantage of the pandemic and in what ways? 

“Yes, there have been some instances. Abuse of Sick Leave is the most common complaint from employers. And to a lesser degree some employees, embark on a “down tools” or refusal to work exercise without first following the correct procedures.”

What about restructuring after the pandemic is under the control and the lockdown is lifted?

When looking at restructuring after the COVID-19 lockdown, Russell explains that according to some financial experts, approximately 60% plus of small businesses will face total closure once the pandemic has been brought under control. 

During this time, Russell says certain employers are under the impression they are not obliged to adhere to Section 189 of the Labour Relations Act. This, however, is not so.

“The Labour Relations Act, 1995, Section 189 makes provision for termination based on operational requirements. Many companies may view retrenchment as a necessary means to continue operations after the lockdown or as result of COVID-19 and the negative impact it has on the business.” 

However, Russell says this must be a last resort and the employer must explore all alternatives to avoid retrenchment.

Alternative options to avoid retrenchment include placing employees on short-time or temporarily laying off staff.

“In the case of short-time work, unless it is provided for in the employment contract, an agreement must be reached with the employee. If an agreement is not reached in this regard, and the employer unilaterally enforces short-time work on its employees, this could result in a labour dispute.” 

According to Russell, other options include a reduction in salary or demotion. However, he emphasises a demotion must be considered with extreme caution. If an employee feels the demotion is unfair, they may approach the CCMA or bargaining council for relief.

“It is imperative for an employer to consult with employees in finding a way forward and to obtain consent where required to ensure that the employees’ rights have not been infringed.”

Despite the challenges stemming from the pandemic, employers must adhere to the labour laws. As well as the legal implications for non-compliance with such laws. 

Should the need for a restructuring exercise arise, Russell says it is advised to engage the services of a Labour Law expert. This will help ensure the process runs smoother.


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Quinton Boucher

Quinton Boucher

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