View Full Version : Relocating the business: What about the employees

06-07-2011, 13:15
The South African Labour Guide (http://www.labourguide.co.za/most-recent-publications/relocation-of-business?utm_source=MailingList&utm_medium=email&utm_campaign=art%2Fbasic)

André Claassen & Jan du Toit

What happens when a business relocates to new premises? Are the employees simply retrenched or must they resign? Is there a duty on the employer to consult with the employees or to provide transport to the new premises?

In TUSAA obo Hlongwane / Bergs Refrigeration cc [2007] BALR 612 (MEIBC), the employer relocated its business from Pretoria West to Brits. Some employees were allegedly offered retrenchment packages, but the two applicants in this matter declined the offer.

After the relocation had taken place, the employees informed the employer that they could not afford the extra transport costs to travel the further distance from their homes to the new workplace. The employer informed them that they should build shacks near Brits, as they were already living in shacks near the former workplace. The employees then abandoned the employment, claiming that they had been constructively dismissed.

The two applicants in this matter alleged that they were never consulted or informed of what was to happen to them after the relocation. They alleged further that they had asked the employer what will happen to them after the relocation, but despite promises from the employer, they were never told. The applicants informed the employer that they had a serious transport problem in reporting for work at the new premises and they were told by the employer that if they were not willing to relocate, they would be provided with the resignation forms.

They could not relocate as they had school going children and could not afford the transport costs as they had each spent R60 to report for work at the new premises on the first day. They then decided not to continue with work as the employer had made continued employment impossible and the employer was not willing to consider subsidising their transport.

They referred a dispute of constructive dismissal to the MEIBC, alleging that the employer had made working conditions intolerable. The applicants stated that the employer's attitude was that they must relocate to Brits, and that the employer would provide corrugated iron for them to build shacks. The employer had told them that if they were not willing to relocate then they must resign.

The employer said that when the business relocated, all employees were offered retrenchment packages, but the two applicants declined the offer as they wanted to move with the business. However, the business subsequently closed its doors.

The employer did not see the applicants again after 17th July, when the relocation had been completed.

The arbitrator noted that the onus is on the applicants to prove constructive dismissal, and the critical issues to be proved are whether it was the applicants who brought the contract to an end; whether the reason for the applicant's action was that the respondent had rendered the prospect of continued employment intolerable, and whether the applicants had no reasonable alternative other than terminating the contract.

The applicant's representative testified that the respondent did not discuss the conditions of the relocation with the applicants and nor were they offered retrenchment packages.

Retrenching employees that cannot relocate and severance pay?

In Barry and African Defence Systems (Pty) Ltd (2004) 13 CCMA 5.5.1 the company decided to close and relocate its branches in KZN and the Cape Province to Midrand. Severance package were offered to “non-core staff” that would be redundant in terms of the new structure in Midrand. The applicant was a core staff member and the company offered to pay for his relocation costs as well offered him a relocation bonus and a salary increase if he agreed to relocate. Due to personal circumstances the applicant could not relocate to Midrand and opted to be retrenched. Procedurally and substantively the retrenchment was fair but the company failed to pay the employee severance pay, arguing that the employee refused to accept a reasonable offer of alternative employment in Midrand and therefore forfeited his right to such payment. The applicant claimed R427812 severance pay arising out of having worked for the company for more than twenty eight years prior to his employment being terminated.

The commissioner ruled;

“The crux of this case turns on whether or not the applicant’s decision not to accept the new position offered to him in Midrand was unreasonable. It is my finding that his refusal was unreasonable and that therefore his application must fail.

… turning to the question of whether or not the applicant’s refusal to accept relocation was unreasonable, the onus rested with the applicant to prove that it was unreasonable to expect him to accept the alternative position offered to him in Midrand. And although it may well be that this was the case, from the evidence submitted by him I am of the opinion that he failed to discharge this onus.”

From the above it is clear that employees will have to be retrenched in terms of section 189 of the Labour Relations Act if a company decides to relocate and the employees cannot relocate with the company. Severance pay will have to be paid but not to employees that unreasonably refuse to accept alternative employment.

In the Barry and African Defence Systems case above the outcome would have been different if the employer did not offer the financial assistance it did; in such event the company would have had to pay the severance pay when they retrenched the employee.

For more information contact Jan du Toit jand@labourguide.co.za

06-07-2011, 21:09
Well you see, that's why I have a clause in my Letters/Contracts of employment.