Due to the global economic downturn and advances in automation technologies, we have seen an increase in organisations implementing restructuring and rationalisation exercises.
As part of these exercises, organisations would often undergo a retrenchment process. In this article, we provide some practical insights regarding retrenchments in Africa.
Generally, for retrenchments to be lawful in most jurisdictions they must be substantively and procedurally fair.
Substantive fairness requires the retrenchments to be for a fair reason. Generally, a fair reason for retrenchment relates to the operational requirements of the employer. We provide a couple of examples of fair reasons below.
In South Africa fair reasons include the economic, technological or structural requirements of the employer.
In Sierra Leone fair reasons include where:
- an employer has ceased or intends to cease doing business or a part thereof in which the employee was involved;
- an employer ceases to be in full control of the overall management of the administration of the business;
- an employer intends to transfer all or a part of the business to a third party; and
- there is a change in management or operations method.
In general, the courts in most African countries are reluctant to enter the commercial sphere and make business decisions on behalf of an organisation. Accordingly, provided that there is a reasonable and bona fide fair reason that falls within the ambit of the local law, retrenchments would generally be regarded as being substantively fair in various African jurisdictions (such as the Democratic Republic of Congo, South Africa and Sierra Leone).
Procedural fairness requires the retrenchments to follow a fair process. Depending on the jurisdiction, a fair process could include (i) delivering notifications of the proposed retrenchment to relevant parties, (ii) consulting with the relevant parties, (iii) obtaining approvals for the retrenchments from certain statutory bodies and (iv) issuing termination notices to the relevant parties.
Another common feature of retrenchments in African jurisdictions (such as Burkina Faso, Burundi, Gabon, Mali and Niger) is the involvement of the labour inspector in the retrenchment process. The labour inspector plays a key role in the retrenchment process as employers are obliged to keep the labour inspector informed. For example, in Niger, the employer needs to report the following inter alia to the labour inspector: (i) the reasons for the retrenchment, (ii) the number and categories of employees that are affected, (iii) the dismissal criteria, (iv) the list of employees likely to be dismissed and (v) the period during which the redundancies are planned. In certain instances, the labour inspector must also authorise the retrenchments.
We provide a brief overview of the procedural fairness requirements for a couple of African jurisdictions below.
In South Africa, procedural fairness requires the employer to undertake a “consensus-seeking process” with the affected employees, trade unions (if any) and workplace forum (if any) before deciding to retrench these employees. As part of this process, a notice should be delivered to the relevant parties when the employer contemplates retrenchment.
In Niger, the employer must inform the staff representatives and the labour inspector of the decision to retrench to ensure that the process is procedurally fair. The employer thereafter must consult with the staff representatives and the labour inspector before implementing the retrenchment. The labour inspector will ensure that the procedure that the employer follows is in accordance with the Labour Code. Further, before termination notices are issued to the affected parties, the employer must notify (i) the Niger Department of Labour of the conditions of the redundancies and (ii) the staff representatives of the retrenchments.
In Sierra Leone procedural fairness requires the employer to notify the Union General Secretary that a redundancy situation has arisen. The employer and the Union General Secretary will then consult to discuss the proposed redundancy. Should the employer and Union General Secretary not reach agreement, the employer cannot proceed with the retrenchments and the matter should be referred to the Minister of Labour for conciliation.
In addition to retrenchments being substantively and procedurally fair, there are certain requirements that should be borne in mind when dealing with retrenchments. By way of example:
- in the Republic of Congo it is a legal requirement to have a minimum staff complement after the retrenchment process is completed in order to continue doing business in those jurisdictions; and
- in Niger, upon finalisation of the retrenchments, the employer must issue a certificate of employment detailing the length of the employee’s service to the employees.