Considering Short-time work and Lay-off as an alternative to retrenchment in 2021

Considering Short-time work and Lay-off as an alternative to retrenchment in 2021

Short-time work and Lay-off

The Second Wave of the Covid-19 pandemic will irrefutably place a further colossal financial constraint on businesses and/or numerous revenue sources and/or sector(s). 

With a fragile economy and an ailing health sector, employers will be compelled to re-evaluate their business operations going into 2021.

Notwithstanding the economic recession and/or additional strain as a result of the pandemic in 2020, several employers may not wish to retrench their employees except as a last and/or necessary measure in early 2021.

In this blog, we aim to address the elements of short-time work and lay-off as an alternative to retrenchment in 2021.

Short-time work and the Labour Relations Act

Whilst the Labour Relations Act and/or other labour-related legislation and/or regulations are silent on a specific legal principle that addresses short-time work, this system has been recognised to an extent that an employee can claim from the UIF for a reduced time (short time). Certain bargaining councils have set prerequisites for the application of short time. This can be used as a blueprint for short-time purposes to normalise the process and ensure coherence amongst the different sectors.

  • Short-time work is an alternative to retrenchment, offering employees the opportunity to continue earning an income during the Covid-19 pandemic.
  • In the event of short time and/or lay-off, employees must understand that they are still in the employ of the employer and that all the normal contractual obligations and rights referred to in the contract of employment between the employer and employee still apply, save for the implementation of short-time work as agreed upon.

What are short-time work arrangements?

Short-time work refers to a very specific situation where–

  • the employee’s weekly and/or monthly and/or salary is less than half their normal pay;
  • the hours that the employee works are reduced to less than half of their normal working hours;
  • the employer has a reasonable and/or justifiable belief that the situation will be temporary and notifies the employee of the reduction in hours and/or pay.

What is a lay-off?

A lay-off situation arises in instances where the employer–

  • is unable to provide work for the employee(s);
  • reasonably and/or justifiably believes that this is a temporary situation;
  • gives the employee notice of the lay-off before the work ends;
  • allows employees to remain in its employ although they are not being paid.

What are the rules for short-term working and lay-offs?

An employer should follow certain rules if they wish to implement short-time or temporary lay-off arrangements. The employer can implement short time and/or place the employees on lay-off if their contract of employment allows for it and/or per agreement with the 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 imposed on employees by the employer in the absence of their consent because short-time work entails a unilateral change in working hours and a corresponding reduction in remuneration.
  • The employer should explain the reason for the short time and/or lay- offs to the employees and keep them informed of the situation during the period of short time and/or lay-off. In both cases, these must be temporary situations and the employer must notify the employees of this before they proceed to implement same. During the current Covid-19 pandemic and/or load-shedding circumstances, the employer may be justified in providing the employee(s) with shorter notice period(s).

How does an employer select employees for short time and temporary lay-offs?

When selecting employees for short time and/or lay-off , the employer must implement the short time and/or lay-off across the board within the entire company or the entire department or division that is affected to ensure that it is seen as procedurally fair. Further, the period of short time and lay-off will need to be fairly distributed across the board for all affected employees. In summary, there needs to be an equal distribution of the short time and lay-off implementation processes and the reduced hours per each affected employee.

In conclusion

The implementation of short time and/or lay-off is a win-win alternative to retrenchment during this period if the employer has not ceased operating altogether.

SERR Synergy assists businesses with the required notices and guidance in respect of the consultation and joint consensus-seeking exercise as it relates to the short-time process. Speak to our Legal Advisors should you require any guidance in implementing the short-time process lawfully in your business.

About the Author: Anil Singh holds the title of Labour Legal Advisor. He is an admitted attorney with more than 15 years’ experience in the legal and medical industry. He holds an LLB degree, Master’s in Business law (LLM), a Post-Graduate Diploma in Compliance Risk Management and several other Post-Graduate Certificates. He specialises in compliance with Industrial Relations or Labour Relations legislation. This includes providing guidance and assistance to businesses in proactive and supportive ways with regard to the required processes and procedures to ensure compliance with labour legislation and to mitigate the risks to which businesses are exposed in relation to employment issues.


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