By Danie van Graan
In terms of section 189 of the Labour Relations Act (No. 66 of 1995), hereinafter referred to as the “LRA”, any employer that contemplates dismissal due to its operational requirements must inter alia seek to avoid dismissals and to minimise the number of employees to be dismissed. To this end, employers often make available Voluntary Severance Packages (VSP) to the staff in general or to the possibly affected employees. Since VSP contracts are entered into freely and willingly, one cannot compel any party to either accept or offer such a contract.
It may happen that an employer declines a VSP offer from an employee and then offer the employee an alternative position. The question then arises whether the employee may decline the alternative and compel the employer to accept the VSP offer?
With regard to the acceptance or not of alternative employment, it is trite in our law that when considering whether a reasonable alternative should have been accepted, the first criterion to be met by the employer is to prove that in general there was a need to retrench (dismissal due to operational requirements). The second question would be whether the position in question should have or could have reasonably been affected.
In a situation where an employer dismisses an employee due to its operational requirements, such employer may be obligated to pay severance pay, which in most instances is significantly less than the terms of the VSP.
It follows from the above, that when an employer has alternative employment available which they indeed offer, the real question is whether the alternative offer is reasonable. The applicable provisions of the Basic Conditions of Employment Act (No. 75 of 1997), dealing with reasonable refusal of an alternative offer are contained in section 41(2) and (4), which read as follows:
“(2) An employer must pay an employee who is dismissed for reasons based on the employer’s operational requirements or whose contract of employment terminates or is terminated in terms of section 38 of the Insolvency Act (No. 24 of 1936), severance pay equal to at least one week’s remuneration for each completed year of continuous service with that employer, calculated in accordance with section 35.
(4) An employee who unreasonably refuses to accept the employer’s offer of alternative employment with that employer or any other employer, is not entitled to severance pay in terms of subsection (2).”
In Irvin and Johnson Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2006) 27 ILJ 935 (LAC) the Labour Appeal Court found that the purpose of this provision was to promote employment and to incentivise employers to take the necessary steps to provide alternative employment for all employees facing dismissal for operational requirements. While this provision clearly underscores the importance of job preservation, it is also important to point out that an employee’s refusal of an unreasonable offer of alternative employment would not absolve the employer from having to pay a severance package. The Labour Court, as a court of fairness and equity, will inevitably inquire into the fairness and reasonableness of the employer’s chosen alternative as well as the final decision to implement the alternative unilaterally (see Astrapak Manufacturing Holdings (Pty) Ltd t/a East Rand Plastics v Chemical Energy Paper Printing and Allied Workers Union (2014) 35 ILJ 140 (LAC)).
Thus, an employee cannot compel an employer to approve a VSP application when the employer offers an alternative to the employee. If an employee refuses to accept a reasonable alternative, the employer is not obliged to pay the employee any severance pay, however, if the alternative is unreasonable, the employee may proceed to an unfair dismissal case.