RETRENCHMENT: FORCED OR VOLUNTARY – THAT IS THE QUESTION

The past two to three months, feels like twelve, will always be remembered as a period of job losses, insecurity, fear and a cocktail of emotions.

One of the methods to soften the impact of a retrenchment, if it is even remotely possible, is to engage with employers to open ‘Voluntary Retrenchments’ to their employees. At least it gives you some control, some choice in this very stressful and unasked for situation or process.

Having said that, please be mindful when you choose voluntary retrenchment as you need to make an informed decision. There might be a financial implication as well.

Retrenchment

SearchSpecifics TRANSEARCH Africa take the word retrenchment back to its origin and identified the origin as from an old French word that means ‘to reduce or cut something down’.

The rationale for the ‘reducing or cutting down’ was touched on in a previous article. The first important fact to grasp is that the ‘reducing or cutting down’ is through no fault of you as person or employee. The second is that the employer must do ‘reducing or cutting down’ in a fair and objective manner. The third fact is that even when an employer does the ‘reducing or cutting down’ fair and objectively, you still do not have control or a choice!

Voluntary Retrenchment

Here the operative word is ‘voluntary’! The Miriam Webster Dictionary defines ‘voluntary’ in a legal context as something ’done by design or intention’ and ’acting or done of one’s own free will, without valuable consideration or legal obligation’.

It begs the question; why will anyone choose to be retrenched? In the consultation process MISA will negotiate on a better severance package, something in addition to the package negotiated for the employees who are employed in positions that are reduced or cut, employees who do not have a choice when the process and criteria is fair and objective. In laymen’s terms we refer to ‘a sweetener’ which may include, but are not limited to an additional week or two, per completed year, of service or an ex-gracia amount on top of the severance package.

The MISA Retrenchment Benefit

This is a monetary benefit that will be paid to MISA members when they are retrenched, subject to the terms and conditions of the Fund Rules.

Important to take note of is that this is a ‘Retrenchment Benefit’ and not a ‘Voluntary Retrenchment Benefit’. It goes without saying that when you volunteer to be retrenched, regardless the reason, it is done out of your own free will.

Should it be a retrenchment as defined above, MISA will be able to consult and possibly safeguard you, should the criteria not be applied fairly or objectively, or if there is no sound and fair reason to retrench you.

SARS and Voluntary Retrenchment

The good news is that you will still qualify for a tax exemption provided in the Income Tax Act. In an article by Bowmans this aspect was dealt with and SARS agreed that the Voluntary Retrenchment severance package should be treated as a ‘severance benefit’ as per section 1 of the Income Tax Act, 1962 that defines a ‘severance benefit’ as:

‘any amount that is received by or accrued to a person in respect of the relinquishment, termination, loss, repudiation, cancellation or variation of the person’s office of employment or of the person’s appointment to any office or employment, if-

1. Such person has attained the age of 55 years;
2. Such relinquishment, termination, loss, repudiation, cancellation or variation is due to the person becoming permanently incapable of holding the person’s office or employment due to sickness, accident, injury or incapacity through infirmity of mind or body; or
3. such termination or loss is due to-

• the person’s employer having ceased to carry on or intending to cease carrying on the trade in respect of which the person was employed or appointed; or
• the person having become redundant in consequence of a general reduction in personnel or a reduction in personnel of a particular class by the person’s employer,
  unless, where the person’s employer is a company, the person at any time held more than five per cent of the issued shares or members’ interest in the company.’

How to contact MISA during the lockdown?

Kindly utilise the following e-mail addresses and links for assistance during this time:

Employer UIF/TERS Submissions                             UIFClaim@ms.org.za

Legal/Labour-related enquiries                               Legal@ms.org.za

* Legal Reception                                                      0114763920

MISA Benefit claim-related enquiries                     Claims@misa.org.za

Any other enquiries                                                   Info@ms.org.za

Website                                                                       www.misa.org.za

Mobile App                                                                 https://onelink.to/w9a7ku

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