Understanding Case Law : Severance Pay and Alternative Employment

By admin | 05 Sep 2023

In a recent legal case, the central issue revolved around whether certain employees were entitled to severance pay following their transition to new jobs with another company. Let's delve into the key aspects and implications of this decision.

Background and Dispute: This case centered on a group of employees who joined Bidvest while undergoing a retrenchment process at their current employer, Servest. The dispute hinged on whether these employees were eligible for severance pay.

The Arbitrator's Ruling: An arbitrator meticulously examined the situation and determined that the employees had not provided sufficient evidence to establish that their new employment at Bidvest was the result of an agreement or offer from Servest. While Servest had aided these employees in finding jobs at Bidvest, the arbitrator ultimately found that Servest had not secured this new employment without a clear agreement in place.

Jurisdictional Issue: One contentious point was whether the employees were genuinely retrenched from Servest before joining Bidvest. While Servest contended that the retrenchment process was still ongoing, the arbitrator did not consider this a decisive factor. She found no evidence supporting the claim that Servest had voluntarily terminated the employees' services.

Application of the Law: The arbitrator referred to the Basic Conditions of Employment Act (BCEA) and the principle of offering alternative employment to retrenched employees. According to the law, an employee forfeits their right to severance pay if they unreasonably reject an employer's offer of alternative employment. However, the arbitrator concluded that the offer of alternative employment was not directly linked to Servest's efforts. Therefore, the relevant section of the BCEA did not apply.

Legal Precedent and Interpretation: The arbitrator also drew parallels to a previous legal decision involving a similar scenario. She noted that in that previous case, there was no requirement for a binding obligation on the new employer to hire retrenched workers. Instead, the critical factor was whether the retrenching employer had actively participated in securing alternative employment.

Review and Decision: Upon review, the court determined that the arbitrator had made an error by downplaying the significance of the evidence presented by Servest. The court believed that Servest's efforts had indeed led to the employees finding new jobs with Bidvest. The arbitrator's misinterpretation of the legal principle had resulted in a conclusion unsupported by the evidence.

Conclusion: Ultimately, the court opted to set aside the initial arbitration award and replace it with a new ruling.

Lessons Learned: Section 41(4) of the Basic Conditions of Employment Act may not be applicable to employees when an employer has played a significant role in helping the employee secure new employment with a different employer.

If you are contemplating a retrenchment, we strongly recommend reaching out to us for expert guidance and insights on effectively managing the process.

Disclaimer: It is crucial to seek advice from a labour law consultant or lawyer before taking any action based on the information provided. This article's content does not constitute legal advice.