Legal Case Studies
Is a lay-off a suspension or not? What’s next after an employee refuses a layoff?
The legal question: Can an employer dismiss an employee for operational reasons if an employee refuses to accept a change of the terms and conditions of employment aimed at avoiding a retrenchment?
The Labour Relations Act (LRA) regulates relationships between employers and employees. At the core of LRA is the protection against unfair labour practices.
What is the role of the CCMA: Section 191 of the LRA empowers the Commission for Conciliation, Mediation and Arbitration (CCMA) to arbitrate disputes concerning any unfair labour practice. However, it is vital to note that where the conduct does not amount to an unfair labour practice as defined, the CCMA lacks jurisdiction to arbitrate such a matter.
What are unfair labour practices: Unfair labour practices are actions or behaviours by employers that violate the rights of employees and contravene the LRA. The LRA identifies various unfair labour practices that are prohibited. Examples of unfair labour practices include unfair dismissals, unfair issues related to promotions and benefits, interference with trade unions, unfair workplace policies, suspensions, and unfair disciplinary practices.
What are fair labour practices: The LRA also defines actions and activities of employers that do not constitute unfair labour practices. For example, in terms of section 186 of LRA, lay-off and lockouts do not constitute unfair labour practices, provided carried out in terms of the LRA.
However, there are instances where employees are aggravated when employers invoke fair labour practices. There are cases where employees may refuse to accept a lay- off resulting in conciliation or arbitration in terms of the LRA.
Aggrieved employees may render such lay-offs as unfair labour practices and in some instances, lay-offs may be confused with suspensions.
The CCMA has the duty to distinguish between lay-offs (fair labour practices) and suspensions (unfair labour practices). The Labour Court recently gave a judgment in the case of Aminto Precast and Civil Engineering CC v CCMA and Others (Aminto Case) that involved considering whether layoffs deemed by an employer can fall within the ambits of unfair practices.
The distinction between law-offs and suspensions: A lay-off and a suspension are two different employment concepts with distinct meanings. The LRA is silent on the definitions of lay-off and suspension. Therefore, courts normally adopt the general grammatical meaning.
1. Lay-off: A lay-off, also known as retrenchment refers to the temporary or permanent termination of an employee's employment due to factors such as economic downturn, operational restructuring, or business closure.
- The employer typically initiates it.
- During a lay-off, the employee may be entitled to certain benefits or severance pay as per the applicable labour laws or employment contract.
2. Suspension: On the other hand, a suspension involves temporarily removing an employee from their duties and workplace for disciplinary reasons or pending an investigation into alleged misconduct or wrongdoing.
- During a suspension, the employee is usually not allowed to perform their job responsibilities until the investigation is complete.
- The terms and conditions of suspension, including any pay entitlements, are determined by the company's policies, employment contracts, or collective bargaining agreements.
There are similarities between these two. In both, an employee becomes without work for a duration. However, what sets a lay-off apart is that it only happens in situations where there is a shortage of work. Suspensions are used in situations of disciplining the employee.
Aminto Case: This case was a review of the judgment made by the CCMA. In this case, Mr Mqokolo was employed by Aminto Company as a truck driver. However, Mr Mqokolo’s working operations became impossible during the Covid-19 lockdowns. As a result, Aminto decided to lay him off for a short duration in November 2021 and the lay-off would be reviewed in the by February 2022. Mr Mqokolo was aggrieved with this decision, and he lodged unfair dismissal against Aminto with the CCMA. Mr Mqokolo then changed the arbitration to an unfair labour practice of suspension in terms of section 186 of the LRA.
The CCMA had decided that Aminto had committed an unfair labour practice against Mr Mqokolo. Mqokolo was given relief of reinstatement of his position on the same salary and benefits as they applied at the date of his suspension and backpay. Aminto was displeased and launched the present application. In dealing with the case, the court had to apply the principle of legality to determine whether the CCMA had erred in its findings.
Labour Court decision: The court set-aside the decision by the CCMA on the basis that Aminto had not committed an unfair labour practice against Mr Mqokolo. The court highlighted that there is a distinction between suspensions which are most likely to fall within ambits of unfair labour practices. The Court also emphasised on the importance of ensuring that a lay-off is not associated with employee’s misconduct. Although Aminto had approached the Labour Court for review on the CCMA case, the court held that the lay-off was appropriate as Aminto had given written notice to Mr Mqokolo and did not fall within the ambits of a suspension in terms of the LRA.
Lessons from the Aminto case: It is important to note that it is justified under the law for employers to dismiss employees in instances where operational reasons, for example, work shortage. This goes without saying that employers can also dismiss employees if employees refuse to accept a change of the terms and conditions of employment aimed at avoiding a retrenchment. Employers need to ensure that they consider alternatives before a dismissal for operational reasons is proposed in terms of section 188 of LRA.
However, for a lay-off be deemed as a fair labour practice, it is important for employers to give prior written notice to the employee. Furthermore, an employer must meet the employee or a trade union in good faith, and attempt to develop an adjustment plan to mitigate the effects of the change.
Employers also need to be aware that a lay-off can only be invoked for this purpose of operational reasons only and anything beyond this will amount to unfair labour practice. The effects therefore will be detrimental on the company. These include reinstatement of the employee to their position on the same salary and benefits. The court can also decide that the employer backpays the employee from the time the lay-off was implemented. The court may also decide to grant the employee with other financial relief, for example, damages.
Employers need to be aware that they can also approach a court in cases where an employer has carried out appropriate procedure and an employer is aggravated by a lay-off.
Consulting with an employment attorney or referring to the relevant legislation would provide accurate and up-to-date information in such cases.