Bill of concern to high earners

Kevin Allardyce

The Labour Relations Act Amendments Bill 2012 proposes serious inroads on employees’ rights not to be unfairly dismissed.

Those who are affected must earn above a certain threshold, yet to be determined by the Minister of Labour but probably R1 million.

If an employee earns above this threshold an employer may terminate his or her services simply by giving three months’ notice – the dismissal is deemed to be for a fair reason and in accordance with a fair procedure.

So if you are an employee who falls into the category of high earner, your employer may terminate the employment contract at will, and without having to give you a fair reason and without having to follow a fair procedure.

There are safeguards, however. The employer may not terminate the contract if you participated in or supported a strike or protest action that is protected; or if you refused to do the work of another employee who was taking part in a protected strike, or you were dismissed to compel you to accept a demand; or you were dismissed because you were exercising a right in terms of the LRA; or because of pregnancy or intended pregnancy.

The purpose of this section, we are told, is that it will give more flexibility for employers in dealing with the dismissal of high-earning employees. So, if an employer wants to replace a senior executive with another employee who fits into the existing or proposed culture of the business, the employer ought to be permitted to do so without incurring the high costs normally associated with such terminations.

So, if you no longer fit into the leadership team, or the business is taking a new direction, an employer may simply give you notice of termination and this does not fit the current statutory definition of unfair dismissal. So it does not matter that it is not your fault that you do not fit in – if the CEO wants you gone, you are gone. High-earning employees may be “dismissed” at the whim of the employer.

A further consequence is that if an employer wants to dismiss you for operational reasons (retrenchment), in terms of the section 188B of the bill, he no longer has to follow a retrenchment procedure and pay you severance pay. He simply has to give notice of termination, never mind your years of service.

So if you are about to be head-hunted I suggest that you consider carefully the notice period and make provision for payment of severance pay.

The section is premised on the basis that because you are a high earner you have sufficient bargaining power to agree with your employer that there is adequate protection in your employment contract against an unfair dismissal.

I understand this to mean that you should negotiate a longer notice period and ask for more money if the employer wants to use section 188B to terminate your services.

In reality it’s gobbledegook. Who was representing high-earning employees when this was agreed upon?

l Kevin Allardyce; Kevin@allardyce.co.za 011 694 4060.