MUST EMPLOYERS APPLY FOR CORONA ASSISTANCE IN ORDER TO AVOID RETRENCHMENT?

[Ivan Israelstam]

MUST EMPLOYERS APPLY FOR CORONA DISASTER ASSISTANCE AS A MEANS OF AVOIDING RETRENCHMENT?
In a company with 9 employees the owners notify the employees that, due to Corona, the company might have to liquidate and retrench all employees. The owners propose a 3-month layoff of all staff as an alternative to retrenchment. The staff respond that they will accept the layoff on condition that the employer applies on their behalf for the Temporary Employee Relief Scheme benefits offered by UIF for workers losing pay due to Corona. The owners reply that they do not have the resources to make these applications and that the law allows employees to claim themselves. The employees reject this response, are unable to propose other alternatives to retrenchment and are therefore dismissed for operational reasons. Is this an unfair retrenchment?

[Michael Bagraim]

Employers do not have to apply for the disaster assistance which does not necessarily help them as a means of avoiding retrenchment. The company itself, with the nine employees may embark upon the Section 189 process and, as an alternative, they can suggest the three-month layoff. The staff are probably correct to request that the company applies for the temporary employee relief scheme. The company does not require any resources to make these applications and, in fact, the Department of Employment and Labour has asked for the company to apply rather than the employees. One does not understand the reasoning given by the company, but in fact the employees could, as a last resort, apply by themselves.

One of the real issues is that we are not sure if the Department is going to be functional in paying out these funds and, over and above this, they have the right to reject the application at any stage.

There is a rather convoluted agreement that every company is expected to sign as part of the application. This agreement is badly written and is almost impossible to decipher. It could be interpreted to mean a whole lot of things including that, if an employer applies for relief, it cannot go ahead with the retrenchment. If this is fact the meaning of the agreement it would tie the hands of every company in terms of being able to retrench if they believe the situation is so bleak that there won’t be jobs in the future.
Michael Bagraim

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