We are carrying out restructuring of our company and have decided to phase out some of the positions in the new organisational structure. One of our employees whose position has been phased out in the new structure has refused an alternative job we offered him in another company of ours. She is arguing that she was not employed by the sister company so cannot be offered an alternative position there? How strong is this employees position? In the circumstance what do we do? Will the employee be entitled to severance pay if we decide to terminate her?
According to rule 23(2) of the Employment and Labour Relations (Code of Good Practice) Rules, 2007 restructuring rendering some of the positions redundant is a reason for retrenchment. However, rule 23(4)(b) requires the employer, before resorting to retrenchment, to look for alternative jobs within or outside the company. It is not necessary that the alternative job offered in lieu of retrenchment must be given within the employer’s organisation.
In the circumstances where an employee refuses an alternative job with the sister company, the employer has a right to proceed with the retrenchment. Section 42(3)(b) of the Employment and Labour Relations Act and Rule 26(2)(c) of the Rules are very clear that where the employment is terminated by way of retrenchment after the employee has refused an alternative job with the same employer or another employer, such employee will not be entitled to severance pay. This means the employer may proceed with the retrenchment and not be bound to pay severance. The employee will only be entitled to notice pay, untaken leave pay, remuneration for days worked before termination and transport to the place of recruitment if she has working in a place different from where recruited.