It is safe to say that the Covid-19 pandemic has consumed everything from our conversations to our economy. We are currently right in the middle of our 21 day lockdown in South Africa, and while we welcome this act from our President to flatten the curve, many businesses are left asking the question: but how do I recover from this after lockdown? On the face of it reinstituting trade should be the solution, but if operations have been financially crippled, it cannot simply be business as usual 22 days later. This article will briefly outline the options available to employers as they begin to navigate trading after lockdown. Unfortunately, employers are in for some tough decisions.
THE OPTIONS
Short-Time
Employer’s subject to Collective Agreements
Employers who are members of bargaining councils, and are thus subject to their respective main agreements, will have options available to them such as short-time (also referred to as reduced working time or lay-offs) that can be implemented unilaterally.
Short-time is great option for employers that see the prospect of full recovery in the short-term. If your business has been temporarily stifled by the lockdown, you may foresee that three months from now, it will be business as usual. It is in these circumstances that an employer may wish to follow the required processes in order to implement short-time. This allows the employer to hold onto its full staff complement, while having staff work reduced hours for reduced pay. Then, in three months, when the employer wants to return to full operation, it has the workforce it needs to do so.
Employers not subject to Collective Agreements
Many businesses will not be subject to collective agreements. In such cases, an employer will not be permitted to unilaterally inform its staff that hours and pay will be reduced. However, in these extraordinary circumstances that we find ourselves in, we have been reaching out to employers asking them to engage with their staff to reach agreement on short-time on a once-off basis.
This is the time where employers may need to appeal to their staff to avoid the employer having to consider retrenchments. Employers can enter into agreements with each individual staff member that the employees will take a temporary pay-cut and work reduced hours in order to attempt to keep the entire workforce while the employer recovers.
During any time of reduced working time, employees are able to apply to the Unemployment Insurance Fund for benefits to assist in topping up their salary. If you are interested in more information on this, we discuss the benefits available as a result of Covid-19 in detail in our previous articles. These are available on our website and on our social media platforms (See: https://www.labourguy.co.za/index.php/newsfeed/ and https://www.facebook.com/LabourguySA/). We encourage employers to make use of the benefits available in addition to any other measures they may take in order to survive this financial hit.
Retrenchments
Lastly, the “R”-word. Sadly, it has been predicted that unemployment in South Africa is expected to potentially increase by one million jobs lost as a result of the worldwide economic impact of Covid-19, as well as due to the localised effects of our lockdown. Economists have extrapolated that there is likely to be a global recession in coming months similar to, if not worse than, the 2008/2009 crisis. The reality is that many businesses will be forced to reduce their operations and workforce for the foreseeable future while the health of the economy is restored, and demand for goods and services progressively increases again.
This option should be considered by employers that require something more permanent. If temporary measures are likely to assist the company in returning to full operations, these should be considered first.
It is important to note for employers considering retrenchments, that there are strict legal provisions in the Labour Relations Act which govern the fair process required. An employer may not simply inform its workforce that sales have dropped, therefore retrenchments are being implemented. If you are an employer who feels this may be an option you need to consider in the coming months, we strongly advise contacting us for advice and assistance in order to ensure your process followed cannot be faulted and that any retrenchments effected are fair.
LIGHT AT THE END OF THE TUNNEL
We appreciate that many employers are feeling despondent as a result of the economic climate. In the months ahead, employers will need to prioritise the growth of their business above all else. The law does provide for mechanisms which will give employers the freedom to do so. The only requirement is that these mechanisms are utilised fairly and in accordance with legislation – this is where we are able to assist. Please contact us once you have decided which option is right for you, or if you need further information and guidance.