There has been a sudden economic downturn due to the COVID-19 pandemic, impacting many employers and employees alike in all business sectors, cascading down to families, communities, schools, churches and all spheres of our lives. As a result of the financial impact on employers, many will close down or are in the process of closing down as it is no longer financially viable to continue to operate. Other employers will scale down and reduce their workforce. It is suspected that this will continue in the aftermath of the pandemic as its impact and long-term effects are too severe and will continue long after the pandemic is over, whenever that is going to be. Consequently there are at present many job losses due to retrenchments which will continue in the aftermath of the pandemic as its effect is realised, not only in the short and medium term, but also in the longer term.
However, there are many employers that do not wish to retrench their employees due to various reasons. For example, employees working for the employer for years if not decades, loyal and hardworking employees and employees who have families to financially support as well as other financial responsibilities which can only be attended to by the income derived from the employer. For those employers who are not desirous of considering retrenching their loyal and long-standing employees, there are various alternatives to consider in order to avoid a retrenchment, the most utilised option being short time work. It is therefore an alternative to retrenchment.
What is short time work?
According to the Commission for Conciliation, Mediation and Arbitration (“the CCMA”), “short time work means a temporary reduction in the number of ordinary hours of work owing to reasons including slackness of trade, shortage of raw material, vagaries of weather, breakdown of plant machinery or buildings that are unfit for use or is in danger of becoming fit for use”.
In the circumstances of the COVID-19 pandemic short time work could be implemented as per some of the aforementioned definitions. An Employee is categorised as being on short time work if the following terms and conditions apply
- Short time work is imposed as a temporary measure for a temporary period where there is only limited amount of work for an employee to do for their employer. This is evident in the mass drop in customers in the hospitality, restaurant, tourism, retail and other industries which have as a result of the COVID-19 pandemic been hit hard from a financial standpoint and cannot afford to pay their full staff complement their full time salaries as per the norm prior to COVID-19. Accordingly, the employee will be working far less hours in a day, or week or month for the employer;
- Short time work is an alternative to retrenchment, providing the employee with the opportunity to still earn an income during the period the COVID-19 pandemic exists, but also after the pandemic is over due to its long term effects;
- The employee understands that he or she is still an employee of the employer and all the normal contractual obligations and rights of the contract of employment between the employer and employee still apply, save for the implementation of short time work which has been agreed upon.
How is short time work distributed amongst employees?
Due to less work being available during this time, for example hotels having less bookings and restaurants not being able to serve alcohol after a certain time, the employer does not need its full employee complement. Accordingly, short time work means that the little work that remains can be equitably shared amongst employees.
Can short time work be unilaterally imposed on employees?
Unless short time work is provided for in an employee’s contract of employment or a collective agreement in that industry, short time work cannot be unilaterally imposed on employees by the employer due to the fact that imposing short time work unilaterally entails a change to working hours and reduction in remuneration i.e. a unilateral change to the terms and conditions of employment, which if proved, could amount to an unlawful breach of the employment contract by the employer. To avoid retrenchment as well as a claim by the employee for a change to his or her terms and conditions of employment, the employee and employer need to agree to the implementation of short time work. Short time work cannot be implemented without consultation and the consent of the employee.
In the same manner that consultations must take place with employees if the employer is considering retrenchment, in terms of section 189 of the Labour Relations Act 66 of 1995 (“the LRA”), employers must consult with employees regarding imposing short time work. Employees must note and be mindful of the fact that short time work is an alternative to retrenchment. At the very least during this crisis period and beyond, an employee could earn income rather than be retrenched.
For those employees who have not been working long periods for their employers, short time work should be considered as they would not have accumulated enough severance pay at the basic minimum of one week’s remuneration for every continuous year worked as per the Basic Conditions of Employment Act 75 of 1997 (“the BCEA”). Accordingly, it is in the interests of the employee to agree to short time work as finding alternative employment during is doubtful.
What happens if an employee refuses to agree to do short time work?
If the employer has a justifiable reason for implementing short time work, which COVID-19 would be in this instance or its after effects, then employees may run the risk of dismissal for operational reasons i.e. retrenchment. The correct procedure for dismissal for operational requirements would apply to short time work. If the employer unilaterally imposes short time work without consulting its employees, its employees may then seek an interdict against the employer and adjudicate the matter in the Labour Court. Due to unilateral changes to terms and conditions being a dispute of interest, the CCMA cannot arbitrate the matter. Further if several employees are affected by the employer unilaterally imposing short time work upon them, they may strike if the correct procedures as it relates to strikes are followed. The employer may lock out the employees to force compliance.
What is the method of selecting which employee will be placed on short time work?
When selecting employees for short time work, an employer should apply the same standard of selection criteria used when contemplating dismissal for operational requirements (retrenchment) in terms section 189 of the LRA. For example, the last in first out rule (LIFO) is often applied in retrenchments and the same method can be applied for identifying which employees should be placed on short time work. It must be noted however, that this is not the only method that can be applied in these circumstances.
The implementation of short time work is a win-win alternative to retrenchment during any period of slackness of business and consequent financial strain if the employer has not shut down its operations completely.