RETRENCHMENT POLICY

PREAMBLE

The municipality council intends to provide a framework for handling any

retrenchments that may become necessary in accordance with the operational
requirements of the municipality.

OBJECTIVES OF POLICY

• The objective of this policy is to set out the circumstances, under

which a contract of employment can or shall be terminated, to set out
the procedural guidelines for termination in certain circumstances and
to ensure that termination criteria are fair and consistently applied.
• The goals of this policy are to ensure that:

(i) Termination action is taken in the interests of both the

municipality and its employees
(ii) Equitable practice and consistency of action are applied.
(iii) Legal principles are adhered to
(iv) Unnecessary hardship on the part of employees is avoided

THE POLICY

This policy covers termination due to the following situations:

(i) Notice by H.R. Manager to terminate employment
(ii) Retrenchment
(iii) Redundancy
(iv) Redeployment

• The company is committed to retaining the services of, and offering

ongoing opportunities to existing staff members in ways, which are
 consistent with achieving the company’s goals and objectives. This
policy aims to minimize retrenchment by ensuring a fair redundancy
process.

• Where a position is identified as surplus to requirements, the company

shall make every effort to provide alternative employment
opportunities at a similar classification level and salary, having regard
to qualifications and experience.

• Organizational change involving the loss of position can be very

stressful for staff. The company shall therefore make every effort to
minimize stress by keeping staff well informed, by offering personal
counselling and by assisting staff members to present their skills in a
positive way.

SCOPE

This policy applies to all employees of Vedanta Resources.

APPLICABLE LEGISLATION

(i) Labour Relations Act, 1995

(ii) Basic Conditions of Employment Act, 1997
(iii) Employment Act, 1998
(iv) Skills Development Act, 1998

TERMINATION DUE TO OPERATIONAL REQUIREMENTS

 i. This policy covers termination due to the operation requirements as
explained in section 197 of the Labour Relations Act on the applicable
collective Bargaining Agreement.
ii. The implementation of retrenchment program as concluded at Bargaining
Council Level (published in Government Gazette No 1647 dated 28
October 1994 and in the Conditions of Employment Agreement, and as
superseded and amended by the Basic Conditions of Employment Related
Act 75 of 1997 as amended, as well as any labour related Acts that may
come into force from time to time.
(a)In negotiations with employees and the appropriate Staff
Association/Union representatives, the company’s Human Resources shall
consider all possible and practical means for avoiding the proper
termination/s of services.
(b)While it may not be possible or practical to avoid
retrenchments/redundancies, the company shall be considered the following
alternatives prior to terminate:
(i)Allowing normal labour turnover to take its natural course by not replacing
employees who have resigned
(ii)Halting recruitment whenever possible
(iii)Discontinuing employment of contractors, temporary or casual employees
(iv)Transfers within the Municipality
(v)Voluntary severance
(vi)Voluntary early retirement
(vii)Job sharing
(viii)Contracting out with employees
(ix)Downgrading by agreement
(x)Abolishment or limitation of overtime except in job categories providing
for emergency services
(xi)Extended unpaid leave or lay-off
(xii) Providing adequate in-service or external training to existing staff in
order to equip them for appointment/transfer to other suitable posts within the
company.

REDUNDANCY
(a) No employee shall be entitled to receive a promotion as a consequence of
being declared redundant.
(b)Where potential redundancy situations arise the company shall provide
written advice to the employee/s and to the relevant Union. Such advice shall
detail the reasons for the potential redundancy or redundancies.
(c)An employee who has been notified that their position is redundant shall
be given a minimum period of four weeks to notify the company, in writing,
whether or not they wish to be considered for redeployment.

REDEPLOYMENT

(a)Where an employee elects to be considered for redeployment, the

company shall attempt to find suitable alternative employment for a period
of up to six months from the date that the employee was notified that the
position they occupy is surplus to the company’s requirements.
(b)The suitability of alternative employment or training shall be determined
after consultation with the employer and employees
(c)Human Resources shall be responsible for identified every endeavour shall
be made to facilitate the initial trial placement of the redeployment to the
position. This will include a requirement that the Head of Department and
the relevant departmental staff prior to the advertisement of the vacant
position interview the redeployed.

• Once such positions have been identified every endeavour shall

be made to facilitate the initial trial placement of the redeployed
to the position. These will include a requirement that the Head
of Department and the relevant departmental staff prior to the
advertisement of the vacant position interview the redeployed.
• As a result of the interview process shall determine that the
redeployed is not able to demonstrate that he/she meets the
essential criteria for the position the Head of Department shall
provide written reasons detailing why the redeployed is not
suitable. This information is to be forwarded to the Director
Human Resources.
 • The Director Human Resource is responsible for reviewing the
report submitted and providing clearance for the vacant position
to be advertised.
• The Director of Human Resources may direct that a redeployed
be placed in a position for which they are suitable.

5.15.2POLICY RNFORCEMENT AND EXCEPTIONS

(a) Retrenchment/redundancy measures shall not be used as a method for

the termination of services of non-performers or employees with
unsatisfactory disciplinary records.

Retrenchment shall not be used for the purposes of victimization of

any employee. Employees who are obligatory retrenchment shall not
be liable to repay the relocation and education loans.

Employee can initiate request for voluntary retrenchment or early

retirement but it is the Municipal Manager’s prerogative whether or not
to approve the request.

The request can be approved with immediate effect or with effect from
a mutually agreed upon future date. Early retirement is subject to the
result of the pension fund.

5.15.3 RETRENCHMENT PROCEDURE

a) Modimolle recognizes the need to provide all employees with

security of employment as far as possible. However, for
commercial reasons or as a result of poor economic conditions
and/or financial performance, downsizing numbers is sometimes
the only recourse.
b) In the event of it becoming necessary for Modimolle to engage in
downsizing and/or rationalizing and/or cost-saving exercises, which
may result in the need to retrench some staff, all other viable
 alternatives, shall be considered in an attempt to avoid
retrenchment. Retrenchment shall be viewed as a last alternative.
c) When the Municipality contemplates retrenchment it shall, as
required by the law, consult in advance with the appropriate
representatives of the workforce including registered trade unions,
workplace forums, any person appointed in terms of a collective
agreement or with the employees likely to be affected or their
representative nominated for that purpose.
d) Modimolle shall disclose in advance of the consultations and in
writing all relevant information including:
(i) The reasons for the proposed dismissals;
(ii) The alternatives considered before proposing the dismissals
and the reasons for rejecting each of the alternatives;
(iii) The number of employees likely to be affected and the job
categories in which they are employed;
(iv) The proposed method for selecting which employees to
dismiss;
(v) The time when the retrenchments are likely to take effect;
(vi) The severance pay proposed;
(vii) The assistance that the Municipality proposes to offer the
employees likely to be dismissed.
e) The employees concerned, or their representatives, shall be entitled
to make representations on any relevant matter including why any
specific individual should not be retrenched.
f) The Municipality shall attempt to reach consensus on appropriate
measures to avoid or minimize the dismissals, the method of
selecting employees to be dismissed and severance pay for
dismissed employees

5.15.3.1 SELECTION CRITERIA:

(aa) In all cases of retrenchment/redundancy, the Municipality shall

continue to meet its organizational goals and objectives as set out in
the Integrated Development Plan (IDP) while at the same time
acting fairly as an employer.
 (bb) If termination of service is unavoidable, then the selection of
persons to be retrenched or made redundant shall take account of
such factors as set below in the following order of priority:
• Operational needs of the Municipality.
• Job experience, qualifications, skills and training. Length of
service (the ‘last in, first out’ principal to apply). Note: The ‘last
in, first out’ principle will only be applied when all other factors
are truly equal
(cc) The selection of an individual to be retrenched shall be based on
criteria agreed to after consultation or criteria that are fair and
objective. Voluntary retrenchment shall be considered, subject to
the need to retain necessary skills.
(dd) The Municipality shall notify the employees or their
representatives of the criteria it intends to use and provide them
with a list of affected persons.
(ee) Once the employees have been selected for retrenchment and
finally consulted, the employees to be retrenched shall be given
reasonable notice practically possible to enable them to make
alternative plans for employment.
(ff) If necessary the employees to be retrenched shall be given a
reasonable amount of time off in order to find alternative
employment.

5.15.4NEGOTIATIONS WITH EMPLOYEE REPRESENTATIVES

ON SELECTION:

a) The Modimolle HR Manager shall meet and consult with the

appropriate Staff Association and/or Union at least three months prior
to the implementation of any retrenchment/redundancy in an
endeavour to reach agreement on the application of selection criteria.
b) The final decision for selecting employees for
retrenchment/redundancy resists with the Municipality
c) The Human Resources shall inform employees, in writing, that their
services are to be terminated.
5.15.5SEVERAGE PACKAGE:

a) Each employee whose position has been identified as being surplus to

the Municipality’s requirements and who cannot be found suitable
alternative employment and who elects to resign due to
retrenchment/redundancy shall be entitled to the following severance
benefits:
(i) Employees who are members of the Associated Institutions’
Pension Fund shall receive benefits in accordance with the rules
of the Fund
(ii) All employees (irrespective of whether or not they are members of
the Pension Fund) shall receive a severance gratuity equal to one
year’s salary, determined in accordance with the relevant salary
notch of the applicable scale.
(iii) All employees (irrespective of whether or not they are members of
the Pension Fund) shall receive an additional gratuity in
recognition of service to the Municipality calculated ate rate of
2% of the maximum salary notch of their salary scale per
completed year of service.

(iv) The payment to an employee, who is retrenched, will be severance

pay equal to at least one week’s remuneration for each completed
year of continuous service with the council.

5.15.6FURTHER ASSISTANCE:

a) The Municipality’s Human Resources shall provide each employee

with a certificate of service, which shall include details of their
appointment at the time of retrenchment/redundancy, length of service
salary and reason for termination.
 b) Where applicable, the Municipality shall provide the employee
concerned with an unemployment insurance card or assist in obtaining
it.
c) Employees who are required to work their notice period shall be
granted reasonable time off from duty to seek alternative employment.

5.15.7RETURN OF MODIMOLLE’S PROPERTY/MONIES DUE TO

THE MUNICIPALITY

a) At the end of the period of employment, the employee shall

return the entire Municipality’s property in his/her possession
and for this purpose a clearance certificate shall be completed
and submitted to the Manager: Human Resources.
b) The Salaries Section shall ascertain what monies are owed to the
municipality by the employee and shall effect the necessary
deduction from salary notice or leave pay due to the employee.

5.15.8CERTIFICATE OF SERVICE

In terms of the BCEA employees whose services terminate shall be

provided with a certificate of service.