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Implementing a system of “Lay-off” as an alternative to retrenchments

Article written by Theo-Neil Williams (Labour and BEE Legal Advisor – SEESA)

As we pass the 100-day mark since the announcement of the unprecedented nationwide lockdown, employers are faced with fighting for survival in a bleeding economy. Employers may find themselves in situations where little or no work is available for employees to do and subsequently unable to pay employees indefinitely during this period. Employers may consider implementing a system of temporary lay-off (commonly known as the “no work, no pay” principle) as a measure to avoid retrenchments of skilled and experienced employees.

It is of great importance to note that the option of a system of temporary lay-off can only be implemented due to operational requirements and circumstances beyond the control of the employer by:

  1. Consulting with all the employees and come to a mutual agreement to implement the
    lay-off before initiating the retrenchment process;
  1. In terms of a bargaining council agreement where the employer has informed the employees of the anticipated lay-off and consulted and agreed on the terms for the lay-off; or
  2. As an agreed alternative between the employer and employee after a section 189 / 189A of the Labour Relations Act, 66 of 1995 notice of anticipated retrenchment has been issued to the employees. During the retrenchment consultation, the employer or employee may offer the option of the temporary lay-off as an alternative to avoid retrenchments.

Employers are advised to always consult with the employees and agree to the implementation of the lay-off. If the lay-off is implemented without prior consultation being conducted or consensus not reached amongst the parties, it will result to a unilateral change of the employment conditions which can be viewed as unfair labour practice.

It is advised that a reasonable selection criterion is used such as:

  1. LIFO (last in first out);
  2. Skills;
  3. Redundancy

Employees will have to claim from the Unemployment Insurance Fund (UIF) and both parties
should complete the following forms:

  1. Employer: UI-2.7 and UI-19
  2. Employee: UI-2.8, UI-6A and UI-2.1

The employees claim for the loss of income after being laid off for 14 days. They don’t have to register as job seekers as they are still employed.

Employers are advised to seek the relevant professional assistance as the procedure must be procedurally and substantively fair. Contact your SEESA Legal Advisor to assist you with the “Lay-off” procedure.

About the author:

Theo-Neil Williams obtained his LLB from the University of the Free State and was admitted as an Attorney of the High Court of South Africa in 2017. He joined SEESA in November 2018 and has since been employed as a Labour and BEE Legal Advisor at SEESA’s East London office.

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