An exemption to severance pay
Case:
Khanya Cleaning Group (Pty) Ltd vs SATAWU, NUMSA & CCMA & 1 OTHER (PR32/23)
Background:
A contract cleaning service provider, Khanya Cleaning Group (Pty) Ltd (“the Applicant”), provided services to a tyre manufacturing business (“its client”). The cleaning contract between the Applicant and its client elapsed by effluxion of time, however, the contract was extended on a month-to-month basis to afford its client to complete the tender application. The Applicant was unable to keep its employees who were providing cleaning services to the Applicant’s client after the contract expired.
The Applicant started the LRA retrenchment process under Section 189 considering the aforementioned. Super-Care, a new business that was the Applicant’s competitor were awrded the cleaning contract (as opposed to the Applicant). SuperCare was contacted by the Applicant, who proposed that it provide alternative employment to the laid-off employees. As a result of the proposal and the engagement between the two parties, 30 employees who were impacted by the retrenchment process were afforded the opportunity to begin working for SuperCare on 1 July 2022, after being provided alternative employment. Only 11 employees were dismissed for operational requirements and were therefore paid their severance pay in terms of the Basic Conditions of Employment Act (“BCEA”).
Accordingly, SATAWU and NUMSA filed a dispute with the CCMA on behalf of the 30 employees who were given alternative employment, requesting that they be paid notice pay and severance compensation under sections 41 and 37(1)(c) of the BCEA respectively. The CCMA ruled that the 30 employees were eligible for severance pay under section 38 of the BCEA in lieu of a notice of termination. Additionally, the commissioner found that the affected employees had secured alternate employment for themselves without any assistance from the Applicant.
The Applicant took the matter on review, where the Labour Court was of the view that the Applicant aided in acquiring alternative employment for their laid-off workers rather than just sitting on their hands and watching the world pass by.
Additionally the Labour court found that the commissioner erred in concluding that a retrenching employer does not have to insist on the inclusion of a special term in an agreement with a prospective employer who is to offer employment to their retrenched employees that it will employ these employees at the same rate of remuneration in order to avoid the statutory obligation to pay severance pay to employees dismissed for operational requirements.
The Labour Court relied on the same arguments made for severance pay to overturn the commissioner’s notice pay award, ruling that the commissioner had erred by misinterpreting the onus and neglecting to take into account pertinent and material evidence that had been presented to him.
As such the Labour Court found that the 30 employees were not entitled to both severance and notice pay.
Key Learnings:
Section 41(2) of the BCEA states that an employer must provide severance pay to an employee who has been dismissed on the basis of an employer’s operational requirements.
Section 41(4) of the BCEA further states that if an employee unreasonably refuses to accept an employer’s offer of alternative employment, that employee will not be entitled to severance pay. Thus employers are to ensure that they are not passive in assisting their employees to secure alternative employment.
An employee cannot obtain for themself both alternative employment with the assistance of the former employer and then insist on severance pay.
Each case is fact dependant and is to be assessed on its own merits.
