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Retrenchment: Navigating The Minefield!
Long Leases - No Stamps Needed!
Landlords And Tenants: The "Lights Out" Risk
Firearms: Licencing, Surrendering, And Compensation
Phased Developments - What To Watch For, And Restoring Viability
Maintenance: Enforcing Payment With Contempt Of Court Proceedings
The May Website: Reducing Employee Debt And Stress!
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| MAY 2009 |
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RETRENCHMENT: NAVIGATING THE MINEFIELD!
"Increasing levels of business distress and failure = more retrenchments".
That unfortunately is an equation that will be with us for some time.
Some general principles to bear in mind (but note that whilst both employers and employees should have at least a basic understanding of their rights and obligations, retrenchment is a minefield - a complex minefield - and every case is different, so seek specific advice and assistance if and when it rears its ugly head):- - Retrenchment is a "no-fault" category of dismissal, allowed for "operational reasons" (financial distress, restructuring, technological changes etc, etc).
- Our law protects employees from all forms of "unfair dismissal", so retrenchments must be "fair" in all respects. All statutory requirements (and there are many of them!) must be strictly observed. Employers must prove both
- That they have fair, valid reasons for retrenching, and
- That they have followed fair procedures.
- Failure to comply will entitle the retrenched employee to re-instatement and/or compensation (the courts are understandably very protective of "no-fault" employees, so mistakes here will be costly!).
- Employers must (by written notice) make full disclosure to, and invite consultation with, affected employees and their representatives. Both sides must try for consensus on solutions and/or the process to be followed, payouts etc.
- This consultation process must start "as soon as the employer contemplates dismissals due to operational requirements" - employers, don't delay or you may be suspected of reaching a prior decision, which will of course be rejected as unfair.
- Retrenchment is a "last resort", so measures to avoid, minimise and mitigate retrenchments must be fully explored.
- Selection criteria ("who goes and who stays?") should be agreed if possible. If there is no consensus, the employer must make the selection based on "fair and objective" criteria (this selection process must not be used to get rid of undesirable employees - see note below *).
- Timing, assistance for retrenched employees, proposed severance pay and benefits - in fact anything relevant to the "fairness" of the process - should all be on the agenda.
- Employees - carefully consider any offer of alternative employment (with the same or another employer), as unreasonable rejection will disentitle you to severance pay!
* In a case recently before the Labour Court, an employer's reliance on past misconduct, for which employees had already been punished, was rejected - the employees were re-instated and given compensation of 12 months' salary. In another case, an employer was found to have "used the retrenchment exercise to address the poor performance of its managers" and a retrenched manager was awarded 12 months' salary. (Next month - what severance pay and other benefits are retrenched employees entitled to? Employers hold onto your hats - it's an expensive exercise!)
LONG LEASES - NO STAMPS NEEDED!
From 1 April 2009, leases no longer attract stamp duty. Previously leases of 5 years and longer were dutiable, at a cost of 0,5% of total rental payable - and note that stamping is still required for any such leases entered into on or before 31 March.
Stamp Duty having now been entirely abolished, if you have any unused revenue stamps, or credits in a revenue franking machine, get a refund from SARS.
LANDLORDS AND TENANTS: THE "LIGHTS OUT" RISK
In whose name should the electricity account be for leased premises?
The choice is with the landlord, in that most (possibly all) municipalities won't allow a tenant to open an electricity account without the landlord's written consent. Giving such authority as a landlord may reduce your admin burden, but it carries a risk - if the tenant runs up arrears, ultimately you will have to foot the bill, and tenants have been known to abscond leaving very large debts behind!
Conversely, where the electricity account is in the landlord's name, the tenant is at risk because - per a recent High Court decision - the municipality has the right to cut off electricity to tenants if the landlord falls into arrear. This is in contrast to the right of access to water, which is constitutionally guaranteed (strengthened by statutory protection against disconnection "if this would endanger the health of the residents, and if they are unable to pay for the service"). Bottom line - there is a fundamental right of access to water but not to electricity; electricity supply is always at risk.
Critically, the Court held that the disconnection of electricity could take place without any notice to tenants, putting them at risk of a very nasty (and possibly expensive) "lights out" surprise if your landlord - for any reason - fails to pay an outstanding account.
Landlords and tenants should ensure that leases protect both parties against default by the other. As an alternative, consider pre-paid meters; they literally put "power" - or the lack of it - directly into the tenant's hands!
(N.B. Disconnection directly by the landlord is unlawful! This case relates only to disconnection by a municipality.)
FIREARMS: LICENCING, SURRENDERING, AND COMPENSATION
If you are a firearm owner born between 1 October and 31 December who didn't renew your licence by the deadline of 31 March 2009, you have until 30 June 2009 to (as advised by SAPS) "opt for other options such as selling of their firearms to another person/ legal entity, applying to the South African Police Service to deactivate the firearm or voluntarily handing the firearm over to the South African Police Service for destruction".
Take advice if you are uncertain what to do, but comply before the deadline - unlawful possession of a firearm is a serious criminal offence.
If you surrender the firearm, claim compensation - a pending High Court case (due to be heard on 31 August 2009) should determine whether or not you will actually be entitled to payment, but in the interim you should fill in the correct claim forms at the police station at the time of surrender.
PHASED DEVELOPMENTS - WHAT TO WATCH FOR, AND RESTORING VIABILITY
Where a sectional title development is to be completed in phases, the developer will reserve the right to extend the scheme - usually by adding further buildings or extending them - per a plan registered in the Deeds Office.
Before buying into a sectional title scheme, check for such "rights of extension" - they may impact (whether positively or negatively) on your decision to buy. Full details should be disclosed in the sale agreement, but if you are a layperson and it reads like gobbledygook, get advice on what it all means before you sign.
From the developer's point of view, it is important to avoid, wherever possible, the need at a later stage to deviate from the original right of extension. You are obliged to develop "strictly in accordance" with it, unless you can prove to the Court (not just the Deeds Office) that there are "changed circumstances which would make strict compliance impracticable".
There is however potentially some good news here - although the legislation doesn't specify what will qualify as "changed circumstances", the High Court recently held that it is not necessary to show a change in "a physical state of affairs". It is sufficient to show that development in accordance with the original sectional plan is no longer economically viable in the light of "changed market conditions". So if your next development phase isn't viable in the current market, take advice - you may be able to modify your right to extend in order to bring it back to viability.
MAINTENANCE: ENFORCING PAYMENT WITH CONTEMPT OF COURT PROCEEDINGS
If your maintenance is in arrears, contempt of court proceedings may be an effective way to enforce speedy payment - as a farmer in effective control of two farms found out recently when his plea of poverty was rejected, and he was sentenced by the High Court to a suspended sentence of 3 months imprisonment, to come into effect unless he pays the arrears per a strict timetable.
To succeed, you need to prove (beyond a reasonable doubt) :-- That a court order for maintenance was granted against the other party, and
- That the other party was properly served with the order or given notice of it, and
- That he or she "either disobeyed the order or neglected to comply with it."
Then the onus shifts to the other party to produce evidence establishing a "reasonable doubt" as to whether or not the non-compliance was "wilful and mala fide", (i.e. intentional and in bad faith).
In the case in question, the Court held against the farmer purely on the papers (affidavits) lodged by both sides, as opposed to calling for evidence from witnesses - that's important, because delay in finalisation is inevitable if the matter requires oral evidence.
THE MAY WEBSITE: REDUCING EMPLOYEE DEBT AND STRESS!
Workplace morale and efficiency will be the first casualties if your employees are struggling to make ends meet - and that is becoming all too common a scenario in these hard times.
Help them, and anyone else you know, to avoid over-indebtedness (prevention being as always better than cure); or to cope with it if they are already in over their heads.
Refer them to the wealth of free advice offered by local consultancy North Star Solutions ("Specialists in Financial Education"), on the "Articles" page of their website at www.northstarsolutions.co.za. Start off with "Reduce Your Debt And Stress" and "The A to Z for a Debt-Free 2009".
Have a great May!
Note: Copyright in this publication and its contents vests in LawDotNews(law.news)
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