Answer to a question from a reader

Can my wife’s employer refuse to retrench his staff during lockdown?

The short answer

I don’t think your wife’s employer can be compelled to retrench his employees during the lockdown.

The whole question

My wife’s employer has been closed throughout lockdown and still is. He refuses to retrench his staff because he doesn’t want to pay them packages. He tells them they are free to look for other work – which is nonsense and, I believe, unlawful and unethical. Some, like my wife, have been there for 13 or more years. The owner is sitting in New York living the high life while his staff suffers. He owns a major jewellery business and says he will only open when tourists return to S.A.

The long answer

Thank you for your email asking if your wife’s employer whose jewellery business has been closed throughout lockdown can refuse to retrench his staff because he doesn’t want to pay severance packages.

The problem is that the lockdown means that if the business is closed, the employees cannot work and so an employer is not legally obliged to pay their salaries. This is why the UIF set aside R40 billion for the Covid-19 Temporary Employer-Employee Relief Scheme (TERS). 

At first an employer had to demonstrate “financial distress” to claim the TERS benefit for their employees, but in April new regulations were published that enabled an employer to claim this benefit for any of their employees who lost income as a result of the closure of the business due to Covid-19.  

Brian Patterson and Audrey Johnson in an article in ENSafrica in April 2014 say: “Even prior to the COVID-19 pandemic, the UIF had a Temporary Employer-Employee Relief Scheme in place in terms of which employees that have been placed on short time or temporary layoff by their employer, as a measure to avoid their retrenchment, could claim compensation from the UIF. It appears that these benefits will continue to be available to employees.”

Generally, the position is that retrenchment should be a last resort, and that employees should preferably apply for UIF benefits and the TERS benefits. In a situation where an employer has to retrench employees but cannot afford to pay severance packages, the employer can apply to the Minister for an exemption. Of course, this means that an employer who can afford to pay severance packages, but would prefer not to, would not gain this exemption. Paying severance packages is a legal obligation under the Basic Conditions of Employment Act. 

In summary, I don’t think your wife’s employer can be compelled to retrench his employees, during the lockdown,

She could ask the CCMA for advice on what her rights are going forward.

These are their contact details:

Email: [email protected]

Complaints: [email protected]

National Office telephone: 011 377 6600

Answered on Oct. 27, 2020, noon

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