Retrenchment Process in Botswana

The definition of Retrenchment is terminating an employee due to the surplus of labour or incapacity of employees to match the performance standards of the company.

Section 25 (1) of Botswana’s Employment Act Cap 47:01 provides that where an employer terminates contracts of employment for the purpose of reducing the size of his workforce, he shall do so in respect of each category of employee, whenever reasonably practicable, in accordance with the principle commonly known as first in last out; provided that in so doing the employer shall take into account: the need for the efficient operation of the undertaking in question; the ability/experience, skill and occupations qualifications of each employee concerned.

Retrenchment During Botswana’s State Of Emergency

In April 2021, Parliament extended the ongoing nationwide state of public emergency (“SoE”) for a further period of 6 (six) months. In terms of the Emergency Powers (Covid-19) (Amendment) (No. 2) Regulations, 2020 [S.I. 63 of 2020] (the “Regulations”) certain acts are prohibited during the subsistence of the SoE.

One such action, in terms of regulation 30E of the regulations, is the termination of employment or retrenchment of employees by an employer who is unable to have employees work remotely from home or is unable to pay salaries.

The question remains is, what does this mean for employers; especially in light of the extension of the SoE to September 2021?

In terms of regulation 30E of the Regulations, when a business is unable to have its employees work remotely from home or pay salaries, the business must cease operations. The intention of regulation 30E of the Regulations is to deter widespread retrenchment in the private sector, the consequence of which being such that a business must cease to operate in the event that it is unable to pay salaries.

Retrenchment is defined as the process whereby the service of an employee or employees is/are terminated by the employer due to the alleged financial/economic viability of the enterprise. The purpose should be to reduce labour costs in order to safeguard the survival of the organisation. The assumption is that if business improves, those retrenched could be offered re-employment in their previous positions.

What does it mean to cease operations? In the general context of Regulation 30E, ceasing operations take on the meaning of closing the shop. The Commissioner of Labour has taken the stance that retrenchment is wholly disallowed.

Employers do, however, have the option to place employees on unpaid leave or reduce staff on duty to only those members of staff critical to the business operations. Further, regulation 30E of the Regulations do not prevent employers from terminating employees for a cause such as serious misconduct, misconduct, or on notice.

Whilst the SoE and the provisions of the regulations are restrictive on what an employer can and cannot do, there are principles of labour law that may be tailored to your unique needs.

For any further information, please feel free to contact Tefo Gaongalelwe at tefo@bookbinderlaw.co.bw or +267 391 2397 or Andile L. Mthupha at andile@bookbinderlaw.co.bw or +267 391 2397.

Things To Consider During A Retrenchment Exercise – Part 1

The State of Public Emergency was lifted on 30 September 2021 and with it the prohibition against retrenchment exercises in terms of Regulation 30E of the Emergency Powers (Covid-19) (Amendment) (No.2) Regulations 2020 S.I 63 of 2020.

In this two (02) part series of articles, we seek to examine and discuss a few important factors that must be considered during a retrenchment exercise. 

What you need to know and consider:

  • the statutory requirement and the process to be followed;
  • equitable and substantive requirements;
  • the legal risks associated with retrenchment exercises; and
  • the payments and/or other benefits legally due to employees pursuant to retrenchment.

The Statutory Requirements And The Process To Be Followed

Section 25(1) of the Employment Act provides that where an employer terminates contracts of employment for the purpose of reducing the size of his workforce, he shall do so in respect of each category of employee, wherever reasonably practicable, in accordance with the principle commonly known as first-in-last-out (“FILO”). In applying for FILO, the employer must consider:

  • the need for the efficient operation of its undertaking; and
  • the ability, experience, skill, and occupational qualifications of each employee concerned.

While there is no exhaustive list of reasons open to an employer for a retrenchment, there must be a commercial or business justification for the retrenchment and fair procedure must be followed in the execution of such retrenchment.

Section 25(2) of the Act provides that when an employer forms an intention to terminate contracts of employment for the purpose of reducing the size of his workforce, “he shall forthwith give written notice of that intention to the Commissioner [of Labour] and to every employee to be or likely to be affected by the reduction”. In the premises, an employer must give written notice of its intention to terminate contracts of employment to the Commissioner of Labour (“the Commissioner”) and to the affected employees. 

Once notice has been given to the Commissioner and to the employees, a consultative process between the employer and the affected employees must take place. The purpose of the consultation is three-fold:

  • firstly, for the parties to seek ways of avoiding or averting the need to terminate the employee’s employment;
  • secondly, if the retrenchment proves unavoidable, then the parties should consult on a fair selection criterion; and 
  • thirdly, to consult on ways of alleviating the hardships of retrenchment, for example, a reasonable severance package and possible alternative employment elsewhere. 

After consultation, the employer retains the final decision and will communicate this decision to the respective/affected employees. 

The Equitable Requirements

In addition to the criteria set out in Section 25 of the Act, the employer must also comply with the following equitable requirements as recommended by the International Labour Organisation (“ILO”):

  • the employer must consider ways to avoid or minimize the retrenchment;
  • the employer must give sufficient prior warning to recognized or representative trade unions of the pending retrenchment, and to the employees selected for retrenchment;
  • if applicable, the employer must consult with the trade union prior to the retrenchment;
  • if no criteria are agreed upon, the employer must apply fair and objective criteria;
  • the employer must consult with the affected employee and consider any representations made on his behalf by the trade union; and
  • the decision to retrench must be reasonable and made in good faith and there must be a commercial rationale for the retrenchment.  

The Substantive Requirements

The employer must have a commercial reason for closing down its operations and terminating its employees’ contracts of employment. In order to comply with the substantive requirements for a fair retrenchment, employees must be given relevant information in respect of the employer’s reasons for the proposed retrenchment. 

Part two of the article will cover the legal risks associated with retrenchment exercises and the payments and/or benefits due to an employee pursuant to a retrenchment exercise. For more information, please contact Michael Moseki at michael@bookbinderlaw.co.bw or +267391 2397.

What is the process of retrenchment?

The retrenchment procedure as laid down in the Labour Relations Act (LRA) must be followed properly and in good faith by the employer. The employer must also prove that he/she has shared with the targeted employees (or their representatives) all documentary and other information pertinent to the retrenchment.

How long does a retrenchment process take?

Normally on average, such a process takes between two and three weeks. We employ more than 50 employees and contemplate dismissing at least 10 employees based on the company’s operational requirements. In such instances, the employer will have to follow the steps outlined in section 189A of the Labour Relations Act.

What is the procedure for retrenchment in Labour law?

Section 25N states that the worker who has been in continuous service for at least one year in the industry shall be retrenched by the employer only if he has been given the notice by the employer three months stating the reasons for retrenchment and the worker has been paid with the annual wages