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Are you thinking of retrenching to reduce salary costs? You don't have to...

by , 13 July 2015
Do you need to reduce employee costs? Are you thinking of retrenchments, but still need to keep certain employees? There's another option! Why not reduce your employee's working hours instead by implementing short-time. Here's everything you need to know about short-time.

Do you need to reduce employee costs? Are you thinking of retrenchments, but still need to keep certain employees? There's another option! Why not reduce your employee's working hours instead by implementing short-time. Here's everything you need to know about short-time.
 
What is short-time?
You can use short-time when you want to reduce your employee's working hours. They'll work for a shorter time than they'd usually work in terms of employment contracts. And you'll pay them less than what they'll earn if they work full-time. 
 
You might need to reduce the working hours of employees for a number of different reasons. For example, you lose a large contract and don't have enough work for all your employees. 
 
Just be careful though… Short-time will change your employees' terms and conditions of employment. So you can't just implement it. You need to follow a legally correct procedure.
 
Here's what you need to do...

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The number one mistake employers make when retrenching employees...
 
If you know how to avoid it, you'll save your company hundreds of thousands of rands in compensation at the CCMA... When it comes to retrenching staff legally, there's no room for error! One false step can equal your company's ruin. 
 

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Here's how to implement short-time in your business
 
You have to get your employees to agree 
You have to get each employees consent if you want to reduce their working hours. This is because working hours are part of your employment contracts, and you can't just change this.
 
To get their consent, consult each employee and persuade them to agree to the new working hours. This consultation will be a meeting with employees it's going to affect. During the meeting, you need to explain why you want to implement the change. You must tell employees you're asking them for their agreement. Tell them you aren't forcing them to agree – the decision will always be theirs.
 
Explain you're doing this instead of retrenchments because the business is under financial pressure. If they understand your reasons, they'll probably be more likely to agree to the change.
 
This will work if there are only a few employees, if they're on a senior level and they understand your reasons. It won't be as easy when you have to consult with a hundred employees, at a lower level within your company. There's also the risk that employees won't agree to the change. In this case, your efforts to introduce a change may be fruitless. If this happens, follow step#2.
 
What to do if employees agree to the shorter working hours 
If employees agree to the changes, give them an addendum to their letter of appointment or employment contract. This can be a short letter outlining the changes they agreed to. Get them to sign this addendum. 
 
If you can't get employees to agree, move on to the below...

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Legally deduct money from negligent employees' salary starting today
 
In The employer's guide to legally deduct money from negligent employees, we'll show you:
- The five deductions you can legally make from an employee's salary...
- The four salary deductions you can't make...
- The five instances you can deduct money from an employee's salary...
- How to deduct money if the employee signs an acknowledgment of debt...
- When you can deduct money from an employee's pension benefits...
- If you can request a pension fund to withhold an employee's retirement benefits...
- And much more...

You'll always know what you can make your employees pay for when an incident causes damage or loss.

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Engage in collective bargaining
 
Engaging in a collective effort with a trade union, if you have one, is an effective way to present the change in working hours. This involves meeting with the trade union and, if you're successful in the collective bargaining process, signing a collective agreement. The collective agreement will set out the changes to working hours you agree to. 
 
You can do this instead of individual, time consuming consultations with each employee. Getting agreement is the key factor to this process, but there's no guarantee you'll reach an agreement with the trade union. They might refuse to agree. In this case, you might have to offer extra benefits to get them to agree. For example, an extra day's leave.
 
You'll need to work out how much the agreement is worth to you and what you can afford to give in return.
 
What if you don't have a representative trade union at your workplace? 
If there's no trade union there can't be collective bargaining. In this case you'd have to get each and every employee's consent. 
 
What happens if you can't strike a deal?
If you can't reach an agreement, start the retrenchment process. But if you want to implement short-time because of affordability and the economic viability of your business, and employees won't agree to it, you can start a retrenchment exercise. This'll help you reduce costs in line with your operational requirements. 
 
You can tell employees that the offer of short-time is an alternative to retrenchments. If they won't accept this you can dismiss due to operational requirements. But only if you've followed the process of Section 189 or Section 189A of the Labour Relations Act.

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