DOES SEC 197 ALLOW EMPLOYEES TO WAIVE THEIR SEVERANCE PAY RIGHTS?

Home Forums Labour Law Debate DOES SEC 197 ALLOW EMPLOYEES TO WAIVE THEIR SEVERANCE PAY RIGHTS?

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  • #12143
    Ivan Israelstam
    Keymaster

    Does section 197 of the LRA entitle employees to agree, via section 197(6), to waive their rights to severance pay should they agree to be retrenched during a 197 takeover?

    #12151
    Patrick Deale
    Keymaster

    Yes – they are entitled to waive their rights to severance pay. This is provided they are fully informed of their rights and they do so voluntarily with no duress. This would be an odd situation if it were to occur. And it would be equally as odd if an employer were to be “forced” to pay severance pay to an employee who did not want to be paid for whatever reason!!

    A distinction should be made between an employee’s legal right vs an employer’s reciprocal legal obligation. In this case…the employee’s BCEA right to severance pay and the employer’s obligation to pay it. If the employee waives his or her right, the employer’s obligation falls away. But the employer obligation does not fall away if the employee does not waive the right.

    #12152
    Michael Bagraim
    Keymaster

    CAN EMPLOYEES WAIVE THEIR RIGHTS TO SEVERANCE PAY?

    Unfortunately the severance payment is something contained in the Basic Conditions of Employment Act as one week per year of service, and one cannot waive their rights in terms of the Basic Conditions of Employment Act.

    Michael Bagraim

    #12160
    Ingrid Lewin
    Keymaster

    CAN RETRENCHEES WAIVE THEIR RIGHTS TO SEVERANCE PAY?
    This is a difficult question. I think I would tend to agree with Michael unless an employer could invoke the contractual claim of “impossibility of performance”. Or in terms of a suspensive condition in the retrenchment agreement that the employer will pay the severance when in a financial position to do so adding that the employer agrees to full disclosure of its financial position monthly.

    However, a practical way to address the issue of severance where the employer simply does not have the money, is to enter into a mutual termination agreement (along the lines of Patrick’s suggestion) with the employee (so that the employee can claim ordinary unemployment insurance benefits) on terms that as soon as the employer is financially able to do so, the employer will re-employ the employee on the same terms and conditions without loss of service. On this basis, the termination would not amount to a dismissal as defined in the LRA because the termination would be by agreement.

    Ingrid Lewin

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