End of Term FAQ's
1. What is retrenchment?
Retrenchment is a form of dismissal due to no fault of the employee, it is a process whereby the employer reviews its business needs in order to increase profits or limit losses, which leads to reducing its employees.
The employer must give fair reasons for making the decision to retrench and follow a fair procedure when making such a decision or the retrenchment may be considered unfair.
2. When may employees be retrenched?
An employer may retrench employees for “operational requirements”.
Operational requirements are requirements based on the economic, technological, structural or similar needs of an employer, in other words, the “business needs” of the employer:
o An example of economic needs would include a drop in sales or services of the employer, or closure of business or end of a contract and termination of services required under such contract i.e. as is the situation with the Telkom contract.
o An example of technological needs would include new technology developed that can replace some employees.
o An example of structural needs would include restructuring the business.
3. What is considered to be a fair procedure for retrenchment?
The employer must consult with the employees who are likely to be affected by the retrenchment, or their workplace forum, registered trade union or elected representatives, or any person elected in terms of a collective agreement (“consulting employees”).
The employer must issue a written notice inviting the consulting employees to consult and disclosing all the necessary information for such consultation.
The employer and consulting employees must engage in a consensus-seeking process on certain matters contained in the notice.
The employer must allow the consulting employees to make representations about the matters contained in the notice and other matters relating to the proposed retrenchment.
The employer must respond to the consulting employees’ representations. If the employer disagrees with the consulting employees, it must state the reasons for disagreeing with them.
The employer must select the employees to be dismissed based on a selection criteria agreed with the consulting employees or a selection criteria that is fair and objective.
After the consultation process has been exhausted, the employer may make its decision to retrench, and then issue a notice of retrenchment to the affected employees.
The law provides for additional procedures that the employer, employing more than 50 employees, must follow when deciding to retrench this is done in terms of s189A, the process we are following and of which a summary is provided below at point 17.
4. What does it mean to consult?
• Consultation is a joint consensus-seeking process between the employer and the consulting employees. This means that the consulting employees are invited to come up with suggestions in respect of the proposed retrenchments and the employer has to respond.
• During the consultation there are certain matters that must be discussed, such as:
• suggestions to:
avoid retrenchment, for example, no new appointments, early retirements, voluntary retrenchment, adjusting work hours or no overtime;
decrease the number of employees to be retrenched;
change the timing of the retrenchment, for example, the time needed to understand the information, make representations, and contribute in a meaningful way;
mitigate effects of retrenchment, for example, when the employer decides to retrench the employees, the employer may provide time off to attend interviews, training, or issuance of reference letters;
the selection criteria of which employees are to be retrenched.
severance pay for the retrenched employees.
5. Have the Unions been notified?
All the registered unions have been notified and a suitable date to commence the 189 discussions are awaited. Perx is hopeful that this could be done virtually.
6. When will my questions be addressed and where can I send my questions to?
Should you have any other queries not dealt with herein we encourage you to click on this link which will be send to or support email. Thereafter, these questions will be dealt with in the consultative meetings between us and the Unions. Please ensure to send a copy of your concerns to your Union.
7. By what date must all of the questions be raised/ sent to the support line?
This will be communicated to you once we have a date for the first consultative meeting as per question 5 above.
8. Going forward (in the event of retrenchment) what will happen to our medical aid, funeral policy, Life Insurance, and benefits?
These policies will continue as long as the individual continues paying the policy premium, unlike pension which requires the individual to be employed.
9. What do I need to do to prepare for consultation?
We encourage employees, together with the Unions, to come prepared with all of their questions, any proposed solutions or alternatives to dismissal as well as anything they wish to address in line with the agenda outlined in the notices which were sent to staff during November 2022 and well as on 07 February 2023. A summary of the agenda is also contained in the table under point 17.
10. What payments must be made to a retrenched employee?
10.1 Severance pay – a retrenched employee must at least be paid 1 week’s pay for each completed year of ongoing service.
10.2 NOTE: If an employee refuses alternative employment with the employer or other employer, s/he may not be entitled to severance pay.
10.3 Notice period.
11. What about leave pay?
As all staff are aware we do not carry over leave and staff are urged to take all of their leave by 30 April 2023.
12. What about my commission?
Staff will be paid all of their commission which is due to them in terms of the normal process, namely: Commissions are paid 2 (two) months in arrears.
13. In the event of retrenchment when is the last day of the notice period afforded to staff?
The contract between Perx and Telkom comes to an end on 31 March 2023, however, as a means of Exit Assistance and in order to comply with the Labour Relations Act the notice period has been extended to 30 April 2023.
14. In the event of retrenchment, when will our official last day of work be?
The final date is to be determined during the consultative process.
15. Will I be able to claim UIF if I am retrenched?
Yes, once an employee is retrenched, s/he is entitled to claim unemployment benefits (“UIF”). The Company will provide you with assistance in terms of the required forms and proof of retrenchment should this be the outcome.
16. Is a transfer in terms of s197 anticipated?
At this point Telkom’s comments to us confirm that no staff stand to transfer due to the new business model they have set up and therefore all staff are affected in terms of section 189A of the Labour Relations Act. However, should suitable alternative work be secured by Perx, the employees will be notified thereof and then in which event no severance will be paid. No transfer of service is being contemplated at this stage as per Telkom’s letter.
17. Retrenchment process in terms of S189A of the LRA in a nutshell:
Section 189A 1(a) (iv) of the Labour Relations Act calls for a Section 189A procedure to be followed in the case of an employer employing between 401 and 500 employees but also contemplates the dismissal of between 40 and 49 employees.
Notice of contemplated retrenchment
30 days’ notice of intention to begin the process, Employees are also to be informed they can refer to CCMA within 30 days for facilitation. UNIONS are informed at this stage.
1st Consultation can be held in the meantime (date to be determined between Perx and UNIONS):
Agenda to cover during consultation
(a) the reasons for the proposed dismissals;
(b) the alternatives that the employer considered before proposing the dismissals, and the reasons for rejecting each of those alternatives;
(c) the number of employees likely to be affected and the job categories in which they are employed;
(d) the proposed method for selecting which employees to dismiss;
(e) the time when, or the period during which, the dismissals are likely to take effect; the severance pay proposed;
(g) any assistance that the employer proposes to offer to the employees likely to be dismissed;
(h) the possibility of the future re-employment of the employees who are dismissed;
(i) the number of employees employed by the employer; and
(j) the number of employees that the employer has dismissed for reasons based on its operation requirements in the preceding 12 months. (Remember the rules contained in S189 and S189A in re. no of employees).
Parties go away and Company considers the alternatives put forward
CCMA referral time lapsed (calculate 30 days from notice)
Further consultation to tie up loose ends (where necessary)
Final Written notification of decision taken i.e. termination must include:
-Confirmation of decision taken and in the event of dismissals - the reasons why any alternatives are not viable
-Last day of employment
-Post retrenchment assistance i.e. references and severance package, send cvs out etc.
-Payment packages and final payment date must be communicated and must include: severance pay, the notice period we gave them, any outstanding commission etc.
Must give paid notice period
Final payment must be affected on the date allocated
Link to question form: https://forms.office.com/r/eXzKH0zPAm