IS THE SIX-MONTH POST RETRENCHMENT PRINCIPLE IMMOVABLE?

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  • #12435
    Ivan Israelstam
    Keymaster

    IS THE SIX-MONTH POST RETRENCHMENT PRINCIPLE IMMOVABLE?
    It is very common practice for employers to include, in their letters of retrenchment, that they will re-employ the retrenchee if a suitable vacancy arises within six months after retrenchment. However, this six-month period is not provided for in any statute; it is just a customary practice. What would a court find where the six month period has elapsed and the employer fills the post of the retrenchee with a new recruit? Would the employer be protected by the six-month convention or would the retrenchee be able to argue successfully that he should have been given his job back?

    #12436
    Michael Bagraim
    Keymaster

    Not only was the 6 month period post-retrenchment principal well entrenched but it has been endorsed by our Labour Court for many years.

    #12437
    Patrick Deale
    Keymaster

    The employer would be protected. The purpose of the 6 month right of first refusal is to demonstrate that the employer had a genuine need to retrench the employees.

    The practice of including a preferential re-employment clause in retrenchment agreements probably had its origins in retrenchment negotiations with unions. The practice found its way into the LRA as one of the issues for consultation between management and employees in the s189 retrenchment procedure.

    This is evident from s189(3)(h) of the LRA. It requires an employer to consult with relevant parties and to provide information about –

    the possibility of future re-employment of the employees who are dismissed.”

    This creates a statutory obligation on an employer to at least consider the possibility of including a re-employment clause in the retrenchment agreement. It does not make it compulsory to agree to such a clause -nor does it specify a period.

    Six months has become the accepted norm as a reasonable period. If parties agree to six months or a shorter or longer period – they’ll be contractually bound by it. Neither party to the contract would have a right to reduce or increase the period without the other party’s consent.

    #12444
    Ingrid Lewin
    Keymaster

    As far as I know, there is no legal obligation on an employer to re-employ a retrenched employee. If the consultation process ends in an agreement in terms of which the employee agrees to the six-month re-employment clause, he/she would be bound by that and would have no claim to re-employment after the six months expires. However, should the employer employ someone else into the position of the employee during or after the expiry of the six months, and the employee can prove, because of that, that there was no fair reason for the employer to retrench him/her, then the employee could refer an unfair dismissal claim in the ordinary course and the arbitrator / judge would determine whether the dismissal was fair or not and whether re-employment was the appropriate remedy in the circumstances.

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