Is a lay-off the same as a suspension?

Lay Off Vs Suspension

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Short-time work and lay-offs can be considered as alternatives to retrenchment. This has become more prevalent since the Covid-19 pandemic as employers were forced to re-evaluate their business operations, some still recovering years later, with the added strain of load-shedding. Lay-offs may be used when the employer cannot provide work for the employees, but believes it is a temporary situation, and can only be implemented if the employment contract allows for it or by agreement with the affected employees.

In an employment context, shortage of work serves as a basis to dismiss an employee due to operational reasons. Differently put, an employer faced with a work shortage has a fair reason to dismiss an employee affected by the work shortage (section 188 (1) (a) (ii) read with section 213 of the LRA defining operational requirements). Section 189 of the LRA compels an employer to consider alternatives before a dismissal for operational reasons is proposed. There are a number of alternatives that an employer may consider. One of the alternatives is a lay-off.

In the recent Labour Court case of Aminto Precast and Civil Engineering CC v CCMA and Others 44 ILJ 1491 LC the court commented that the LRA does not define the word suspension. Therefore, the word suspension must be given its ordinary grammatical meaning, namely a temporary cessation of or prevention from performing work and is generally imposed in a disciplinary situation as a form of disciplinary action short of dismissal. The term lay-off means to discontinue or discharge an employee permanently or temporarily, especially owing to a shortage of work.

In the above-mentioned case the employee was employed as a heavy-duty vehicle driver by the company. Because of the Covid-19 lockdown the company experienced a slump in business. Instead of retrenching the employee, the company conducted consultations with him and thereafter decided to follow lay-off procedures. The company gave written notice to the employee that he would be laid off for three months. The employee referred an unfair labour practice dispute to the CCMA contending that he had been unfairly suspended as contemplated in section 186(2)(b) of the LRA 1995. The commissioner found that the company had committed an unfair labour practice and ordered it to reinstate the employee with backpay. Aggrieved by the award, the company approached the Labour Court. It alleged that the commissioner had committed a material error of law because the suspension contemplated in s 186(2)(b) only referred to suspension as a disciplinary measure, and that, since there was no suspension within the contemplation of s 186(2)(b), the CCMA lacked jurisdiction to determine the matter.

The court took into consideration the meanings of suspension and lay-off and was satisfied that a suspension is used in a situation of discipline, whilst a lay-off is used in a situation of operational requirements. The court was convinced that what had happened to the employee arose from a shortage of work and was a lay-off, and that the commissioner had failed to appreciate the distinction between a suspension and a lay-off. This was clearly a material error of law which had a distorting effect on the outcome of the arbitration award.

The court found further that the CCMA lacked jurisdiction because there had been no unfair labour practice in the form of an unfair suspension as contemplated in section186(2)(b). An unfair labour practice is confined to conduct outlined and defined in section 186 (2) of the Labour Relations Act, 1995. A lay-off is not considered to amount to an unfair labour practice. Section 191(5)(a)(iv) of the LRA empowers the CCMA to arbitrate disputes concerning an unfair labour practice as defined. Where the conduct does not amount to an unfair labour practice as defined, the CCMA lacks jurisdiction to arbitrate such conduct that may have arisen between an employer and an employee. An arbitration award issued without the necessary jurisdictional powers is a nullity and ought to be set aside as such.

It is essential to remember that implementing short-time and lay-offs is a reality for many businesses in South Africa and will always be advantageous to both employer and employee as an alternative to retrenchment, provided it is temporary in nature and is done in a procedurally fair and correct manner.

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