Page 6 - KZN Business Sense - 7.5 eBook

SELECTION CRITERIA & RETRENCHMENTS

Johan van Deventer, Another common mistake agreed upon between the parties
Regional Manager KZN, made by some employers during the consultation process.
LabourNet is to select the ‘problem’ or Should there be no agreement
‘underperforming’ employees between the parties, the employer
outh for retrenchment instead of
Africa using fair selection criterion. should follow Section 189(7)
Shas (b), which refers to the fair and
objective selection criteria. The
experienced Employers must ensure that the principal of ‘LIFO’ – last in first
several termination due to retrenchment
negative must be substantively and out – that refers to the employee’s
years of service is the most
economic procedurally fair to avoid commonly used selection criteria
factors spending time and money at the
including relevant dispute resolution forums in the absence of an agreement
the COVID-19 pandemic that like the CCMA, Bargaining between the parties. This is
however not the only alternative
have negatively affected the Council, and the Labour Court.
performance of companies When an employer is forced to selection criteria that may be used,
in all industries. Companies enter retrenchment consultations, when an employer is exploring
fair and objective selection criteria
have failed to achieve budgeted the selection criteria used when the employer should keep in mind
revenue while significant selecting which employees may be
financial losses over the past few affected falls within the fairness of that this selection criteria may Pulling employees names out of objective and in support of the
not discriminate against a certain
months have increased. the dismissal. group of people. a hat could be seen as objective, vision for their business.
This has led to an increase The LRA in section 189(2) Performance, skills and however this method could still be It is critical for employers
in employers being forced to prescribes that a joint consensus seen as unfair should an employee to consult knowledge experts
reduce the number of staff seeking procedure must be qualification or a combination of be selected on this basis with when they are considering
through retrenchments by followed and further continues these criteria is frequently used significant more years of service restructurings or retrenchments
as a selection criterion during
following Section 189 and in Section 189(2)(b) that an than the employee who is not to ensure they comply with
189A of the Labour Relations attempt to reach consensus on retrenchments. affected unless this was agreed to procedural and substantive
Act (LRA). Dismissals based the method for selecting the In Oosthuizen v Telkom SA Ltd by the consulting parties. fairness. Should you need further
on the employer’s operational employees to be dismissed. [2007] 11 BLLR 1013 (LAC) the There are different ways and advice or assistance, please do not
requirements, includes the Section 189(7) prescribes that the court found that the dismissal of means for employers to make
employer’s economical, employer must select employees the applicant was unfair when use of selection criteria when hesitate to contact us. 
technological, structural, or to be dismissed according to a the respondent made use of skills, faced with retrenchments. The
similar needs. selection criterion that has been suitability and the company’s sustainability of the business For more information contact
LabourNet Durban
agreed between the parties or employment equity policy, T: (0)31 266 6570
Some employers are under the failing agreement a criterion that without taking into consideration going forward is of outmost E: kzninfo@labournet.com
impression that retrenching is both fair and objective. importance and although
an employee is as simple as the appellant’s years of service. ‘LIFO’ is the most commonly
issuing a notice of termination This agreement can be agreed It is important that the selection used selection criteria for
of the employment relationship upon in the collective agreement criteria should be fair and retrenchments, there are other
based on the operational between the Union and the objective; not only inclusive criteria that employers could use
requirements of the company. employer and could further be of one of the above criteria. that would still be seen as fair and

ARE ONE-YEAR LEASE AGREEMENTS

A THING OF THE PAST?

Shanaaz Trethewey, CEO Globally, there may be a few of demand and lease cancellation generate an income. A month-to- and tenant with the ability to
RentMaster variances, but the basic principle process. Ultimately, this results in month lease only carries a 7-day work quickly and make these
is that landlords have the right landlords having to wait longer letter of demand which is effective changes with the least amount
eciding to claim their rent, demand before cancelling the lease if the for landlords when instituting of time between each legal step.
which unpaid monies, and cancel the payment is not received. There action should the tenant breach the But a 12-month agreement
Drental lease. In South Africa, the entire are also implications for the rental contract. allows a certain degree of
agreement is legal process is regulated by the property agent fees as the complete This form of lease provides perceived assurance regarding the
best for the Rental Housing Act, and the 12-months’ worth of fees would landlords greater ability to take property’s income over the year
income you rights and obligations derived be payable even if the lease is quicker action on non-payment. that follows.
want to earn from this act are also housed in cancelled early. The landlord would certainly be Our world is constantly
on your the lease agreement. Over time, the demand for able to act quicker on procuring changing. To maximise the
property Historically, lease agreements choice and flexibility over set another tenant given the short wealth creation from rental
can be have been signed for a 12-month contracts means that more and time-frames, taking a non- properties with minimal
challenging period, during which rental is more landlords and tenants are income generating or low-income emotional strain, property owners
for landlords. paid in advance monthly in 12 opting to give month-to-month generating asset and making it need to adapt their thinking from
As with any successful business,
your journey as a landlord should instalments. However, should leases a chance because of their earn the profits the landlord has the traditional contracting ways
tenants foresee that they will not
and be open to adjusting from
banked on. Also, in month-to-
ability to respond to non-payment
begin with a viable business plan be able to pay the rental amount by a tenant. That said, even in a month leases, the liability on agent fixed-term contracts to month-
of which your rental contract term as per the lease agreement, “fixed” lease, each party has the fees can be less onerous. to-month leases. In a competitive
is an essential part.
there is a provision for a tenant right to cancel at any time. They market, the sooner we can respond
The optimum lease agreement
In these difficult financial times, to cancel early. Similarly, a are only bound to give the amount type is ultimately one that the on behalf of landlords, the sooner
month-to-month leases should landlord also has a right to cancel of cancellation notice stipulated in tenant can live comfortably we can follow legal process
be considered as they provide the lease arrangement early – the contract. with and afford. As soon as towards them finding another
landlords with flexibility, increased given specific circumstances such Fundamentally, the pros for a affordability comes into question, tenant and earn the money they
profit, and protection in an as needing to occupy the property banked on. 
increasingly competitive market. themselves, or if they intend on landlord of a month-to-month a renegotiation between landlord
selling the property. lease is that if a tenant cannot and tenant should take place to
However, understanding the afford to pay their rent, the lease revise the rental value and decide W: www.rentmaster.co.za
law surrounding how rights and The negatives of these lease can be legally cancelled earlier, whether a new tenant is sought
obligations in your lease can be agreements are that for landlords allowing the landlord to place a out. A month-to-month lease
mind-boggling at first glance. it impacts the timing of the letter new tenant in their property and agreement provides the landlord

6