COVID-19: No more relief?

Carlo Torino, employment lawyer, June 2020

In our Employment Law practice unit, at Brookes Attorneys, we believe that to “survive and thrive” you have no choice but to think both tactically and strategically. Looking at your immediate priorities and your longer-term options, simultaneously. 

Let’s Use An Analogy Just To Illustrate The Point

Comparatively speaking, before Covid-19, you had a figurative superhighway at your disposal (as your “economic terrain”) and you drove a Ferrari (as the “vehicle” to operate your business) – which would have worked well (aside from one or two unplanned speed fines). With the Covid-19 pandemic (and the countrywide lockdown), the economic terrain has undergone a spectacular change. You’re now trying to navigate across some serious sand dunes, as opposed to speeding along the highway. If you are serious about business continuity, you’re going to have to change your “vehicle” so to speak (or the way you do business), otherwise you will quickly get bogged down with that high revving Ferrari of yours on this “new terrain”. 

So, What Are Your Labour Law Options?

In the context of this economic upheaval, when the various business relief schemes dry up and the UIF benefits are inevitably depleted, your next moves will determine whether or not your business “survive” 2020, and “thrive” again in 2021. 

Depending on your situation, several possible solutions could be considered to propel you in your journey and ultimately to help your business prosper: 

• Eliminating overtime pay by introducing a “shift roster” in circumstances where you previously did not have one. Where employees are scheduled to work on a rotating cycle, which could include 4 days on and 3 days off; or a 5:2 routine; or any other agreed system. This option could involve single; double; or even triple shift systems, and can be customised to suit any operating hours, including a 9 – 5 set up, or even a 24/7/365 operation.
• A temporary “short-time” arrangement, where employees’ working hours are cut and their salaries are proportionately reduced. 
• Implementing Saturdays as workdays (without pay), to accrue annual leave credits which may have been depleted during the lockdown, so that your employees have enough annual leave accumulated before the usual annual shutdown (which is less than 24 weeks away).
• Introducing a flexible as opposed to a fixed time period for the implementation of your shutdown, depending on your operational needs and demands.
• Dispensing with your annual discretionary bonus and/or with annual increases, even in a situation where you have union members. 
• Introducing an agreed “pure” pay cut across the board, with concomitant reductions in pension fund contributions, bonus, PAYE and annual leave liability. 
• Deferring the payment of full salaries for an agreed period, with the intention of a conditional or unconditional “topping up” of the deficit at a later stage. 
• Introducing a short-term voluntary salary sacrifice arrangement at your executive level, for a defined time period. (Several large corporates are doing this as part of their Covid-19 response).
• Reviewing commission benefits, especially in circumstances where these apply over and above one’s basic salary, and/or where there’s no direct line of sight between the commission earnings and the business opportunities secured. 
• Contemplating the possibility of retrenchments and/or a restructuring or “rightsizing” of your operation, based on a commercial review of your business model and the key principle that “structure follows strategy”. During the lockdown, certain organisations realised that they could achieve their core business objectives with a smaller staff complement. As the lockdown was eased, many businesses also realised that the demand for their products and services did not necessarily meet pre-lockdown levels. Retrenchments are however, a highly contested terrain, and should be done fairly and lawfully as a last resort, in order to avoid risking damage to your business (and its reputation).
• Updating your employment contracts and employment policies to take the above changes into account and to ensure that your business is fully compliant with any new statutes and various legislative amendments that have been promulgated over the past 6 – 18 months. This will avert an adverse report or a “compliance order” from the department of labour (DoL), which could come with hefty fines, should you be faced with the unpleasant prospect of a hostile DoL inspector. 
• “Outsourcing”, selling or transferring some of your non-core activities and services, to enable you to place greater focus on your core business offering to your clients.
• Evaluating the possibility of business rescue or liquidation proceedings.

Some of these options are controversial, and caution is generally advised regardless of which option is followed, as they all involve fairly intricate processes and legal technicalities which the public is not ordinarily aware of. If you are going to implement any of them, it is important to do so in a legally compliant manner. There are numerous laws, regulations, government directives and codes of good practice which apply depending on a wide variety of factors. Factors include, inter-alia, the extent of the contemplated change, the size of the business and/or the number of affected employees. In addition, in the recent past, several well-known firms (including major international brands) landed in hot water, because they unwisely attempted to take “short-cuts” and implement these changes incorrectly. They ended up paying dearly when the inevitable CCMA and/or Labour Court challenges followed. Talk to us, and we will help you through the legal quagmire, so that you don’t end up in the same unfortunate position. 

WHAT WE OFFER

1. We will assess your business continuity needs on a case by case basis – each business is different.
2. We will propose the options which are most applicable to your circumstances – viable, practical and sustainable labour law interventions, that make economic sense.
3. We will provide you with a full solution to suit your business and circumstances.
4. If you don’t have the resources or inclination to do so yourself, we will even get directly involved in the implementation of the solution, from beginning to end. 
5. It is so important to bear in mind that special measures and procedures are required to implement these arrangements, so talk to us if this is something you are contemplating. 
6. We offer a full legal service and have the right team of highly skilled people to advise and assist you at every stage of your business lifecycle.

If you would like to explore these and other labour law solutions for your business (however large or small), contact Carlo on 082 773 8130, to arrange a free consultation (terms & conditions apply).