With the country's high unemployment rate, retrenchments as a result of a recession could be devastating to an already troubled economy. Photo: Fizkes
Financial experts and economists have been ringing the alarm and warning of a looming recession, which has struck fear in the hearts of South Africans as this may result in massive retrenchments.
This began in June, when the World Bank predicted that global economic growth would slow before the end of 2022, and that most countries should begin to prepare for a recession.
“Following more than two years of the Covid-19 pandemic, spillovers from the Russian Federation’s invasion of Ukraine are set to sharply hasten the deceleration of global economic activity, which is now expected to slow to 2.9% in 2022,” the institution said in a statement.
According to economist Dawie Roodt, the South African economy could, in fact, enter a recession.
“There are ways that an economist can tell when a recession will occur, such as when longer-term interest rates are lower than short-term interest rates or if the Reserve Bank is increasing the rates or when people are no longer investing,” said Roodt.
With the country's high unemployment rate, retrenchments as a result of a recession could be devastating to an already troubled economy.
Employees must therefore arm themselves with information on what to do if the worst should occur. Paralegal service Legal Wise describes retrenchment as a form of dismissal due to no fault of the employee.
It said that it is crucial that companies are transparent in this matter. “The employer must consult with the employees who are likely to be affected by the retrenchment, or their workplace forum, registered trade union or elected representatives, or any person elected in terms of a collective agreement “consulting employees”.
“The employer must issue a written notice inviting the consulting employees to consult and disclosing all the necessary information for such consultation.”
Here is what an employee is entitled to when they are retrenched, according to Legal Wise:
Severance pay
A retrenched worker must be paid at least one week's pay for each year of continuous service completed.
If the amount specified in any policy or in his/her employment contract is greater, the employer must pay the difference to the retrenched employee.
Employees who refuse to accept alternative employment with the employer or another employer will not be entitled to severance pay.
Leave
A sum of money equal to the employee's unused annual leave or time off must be paid out.
Notice pay instead of working the employee’s notice period
If the individual worked for less than six months, they must be paid one week's notice. If they worked for more than six months but less than one year, they must be paid two weeks' notice; and if the employee worked for more than one year, they must be paid four weeks' notice.
Other pay
This could be any pro-rata (proportional) payment of a bonus, pension, or other benefits, depending on the employment contract.
When an employee is laid off, they are eligible for unemployment benefits (UIF).
However, if you think you have been dismissed unfairly, you can refer your dispute to the CCMA. This has to be done within 30 days from the date of retrenchment. Subsequently, if the matter is not solved at conciliation, you may proceed to the Labour Court.
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