Fair Retrenchment Package

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Flora Harper
5 years ago
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1  My lst rticle tlked bout retrenchment in generl nd procedure tht should followed when one wnts retrench in terms Lbour Act Chpter 28:01. I received numerous e-mils from different reders sking numerous questions rnching from wht constitute fir or unfir pckge s well s formule pplied, how or nefits tht re level specific re suppose negotited for nd so on. For strters, it should known tht re is no universlly ccepted formul s pckges vry from compny compny nd from industry industry. The level pckge pid depend on numr fcrs chief mong m, ing orgniztion s bility py s well s brgining nd negotiting power nd skills employee representtive nd generl trends within industry. It s bd enough retrenched, but you do not wnt bdly structured pyout pckge compound your woes. Nowdys sries bound compnies downsizing, rightsizing, merging, restructuring nd so on, ten with thousnds jobs ing lost. 1 / 9

2 The Pckge should obviously contin notice py which depending on length service nd wht is contined in contrct is usully 3 month s bsic py nd severnce py which my rnge from two s mny months bsic py per for ech yer served. Some Works Council hve lso come up with wht is known s settlement or reloction llownces ssist employees nd this gin my rnge from 1.5 months s mny months bsic py. Best employers hve lso mnged cover medicl id for ir deprting stff for resonble period while employees y look for lterntive employment. Usully employees who were llocted compny crs, phones nd even mchines like computers my given right first refusl or my given those ssets s prt pckge. However it should noted tht ll se re negotited for nd depend on bility py. Lons tht my outstnding on prt employee my clered t resonble rte so tht ffected employee pckge is not severely strined. As regrds pension employees my 2 / 9

3 llowed eir get csh pyout or my dvised continue or pursue or investment options depending on fund rules nd regultions. Funerl cover for certin period my provided, nd course if you don t die during given period ceses when period expires. The employee still lso remins entitled his or her csh in lieu leve nd should pid ccordingly. Depending on employment contrct, employee my get pro rt pyment bonus. Insted giving you money, compny cn give you ssets, such s computer or compny cr. You will hve py perks tx on mrket vlue sset, but in cse computer this my negligible s y devlue quickly. Wher you should tke cr opt ion depends on your sitution. It's ll very well for compny fer you executive BMW, but you will hve py tx on its vlue. You re lso lugged with high mintennce nd insurnce costs. You could tter f tking money nd buying chep run-bout. As word dvice common mistke mde by newly retrenched is in buying smll business. Eddie Johnsne, senior consultnt t 3 / 9

4 ABSA Entrepreneuril Projects, sys people who hve en retrenched ten csh in ir pension, pckges nd bonds ir house hilt in order buy business. They ten py o much for ir business, he sys, cuse y don't know how vlue it or run fesibility studies, nd worse, y ten don't hve expertise run it nd t end dy, business crshes, leving m on bones ir bckside. You my negotite for medicl id, group life cover, finncil dvice, trining, nd or ssist nce i n getting nor job. Your compny my llow you 4 / 9

5 tke your group life cover with you. This mens you will py premiums in future. The sme thing pplies medicl id. Try negotite tht you sty on medicl id fund but continue py your own premiums - this is essentil if you re unlikely get on nor medicl id fter leving your present one. Some compnies re progressive in helping re-skill retrenched stff memrs so tht y cn find nor job. Ask your compny show you how do your CV, nd so on. Or compnies hve en pying for stff memrs visit finncil dviser get st dvice on structuring pckge nd your finnces nd you would lso do well by negotiting for this, though highly depended on vilbility funds on prt employer. The morl sry is tht you seek out expert dvice on structuring your retrenchment pckge nd mke sure you squeeze most from your employer while you cn. 5 / 9

6 However it s not like wht you negotite for will given outright. I know one mining Compny tht ws sked by Retrenchment Bord (Ministry Lbour) py recommended pck ge tht included one-nd-hlf months' slry per every yer served, severnce py up three months' slry, reloction llownces nd provision trnsport llownces for 12 months. The workers were lso expected nefit from pyment two terms school fees for ir children. The pckges lso included housing llownces for 12 months or up time compny re-opened its mines, insurnce cover s per compny policy, medicl id cover six months ll pid in United Sttes dollrs. However Compny ppeled ginst retrenchment pckge t Lbour Court rguing tht, tl pckge wrded by first respondent ( Ministry) is in excess US$15 million, which is lmost twice pplicnt's mrket cpitliztion," The Compny went on sy, even if compny ws sell ll its ssets, it will still not ble py pckge. It goes without sying, refore, tht first respondent's decision nd wrd ws unresonble nd in defince logic extent tht no resonble person pplying his minds correctly would hve come such n unresonble decision." It should lso noted tht pckge is subject tx nd in terms Finnce (No. 3) Act, 2009 effective 1st Jnury, 2010, first five thousnd United Sttes dollrs or one third, whichever is greter, mount ny severnce py, grtuity or similr nefit, or t hn pension or csh 6 / 9

7 in lieu leve, which is pid n employee on cession his or her employment, where his or her employment hs cesed due retrenchment under scheme pproved by Minister Lbour or Public Service shll tx free, provided tht exemption shll pply only in respect first forty five thousnd United Sttes dollrs ny such py, grtuity or nefit pyble him or her in ny one yer ssessment. As highlighted lst week employer hs duty disclose relevnt informtion in writing, including resons (for exmple economic, technicl or structurl) for retrenchment, lternti ves con sidered retrenchment nd why those lterntives were rejected, numr 7 / 9

8 employees likely ffected nd ir vrious job ctegories, proposed method selection criteri nd timing retrenchment tht is time when, or period during which exercise is likely tke effect. The kind ssistnce tht employer will fering (exmples could include fering employees time f ttend interviews, erly relese should new job found, issuing letters reference, psychologicl counseling etc); possibility future re-employment nd issues round re-employment should known well hed. Should re dispute bout informtion provided, it will up employer show why informtion is not relevnt. The employer must give or consulting prty n opportunity mke presenttions. Representtions must considered nd responded by orgniztion. If no greement is reched on criteri for selection, LIFO [lst in first out] principle is ten pplied t time retrenchment, but is not only considertion. Employees with key estblished skills or who occupy specific specilized position my retined, nd poor performnce record my tken in considertion. Offers lterntive employment should mde known nd fered ll employees. Voluntry retrenchment fers must considered initilly during consulttion fore ing fered employees. The terms must clerly defined ensure tht re is no dispute refter. Sttury notices termintion services should hnded those employees who re retrenched once consulttion process hs en completed nd ll employees' counter proposls, questions nd concerns hve en ddressed in writing. 8 / 9

9 Disclimer: I do not ccept ny libility for ny dmges or losses suffered s result ctions tken bsed on informtion contined herein. I m committed regulrly updte ll informtion tht is subject chnge from time time. The informtion contined herein does not serve s lterntive legl dvice. Turi Muskruk is Humn Resources Prctitioner nd for feedbck send n e-mil tmuskruk@gmil.com or turimuskruk@yhoo.com 9 / 9

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