Where an employer wishes to retrench employees for reason of operational requirements, the employer could motivate that such retrenchment would be in compliance with its Broad-Based Black Economic Empowerment (BBBEE) requirements and Employment Equity. However, an employer should caution in doing so as the law pertaining to this has not yet been settled.
Affirmative Action as a selection criterion
Item 9 of the Code of Good Practice on Operational Requirements provides for the 'last-in first-out' principle (LIFO) as the required objective criterion with which to effect retrenchments.
However, it also provides that the LIFO principle should not operate so as to undermine an agreed affirmative action programme.
This Code can therefore be said to hint toward an argument that may be made to justify taking race into account in a retrenchment exercise. Should an employer intend on making this argument, the employer's employment equity plan would need to specify this as an affirmative action measure.
Furthermore, the employer would need to show that any targets in this regard which have been set in its employment equity plan would be jeopardized or undermined if these considerations are not made during its retrenchment exercise.
Possible case of discrimination?
Section 15(4) of the Employment Equity Act, No. 55 of 1998 (EEA) provides that there is no obligation on an employer to take any decision concerning an employment policy or practice that would establish an absolute barrier to the prospective or continued employment or advancement of people who are not from designated groups. This makes it clear that the EEA does not require employers to dismiss white male employees in favour of affirmative action appointments.
Furthermore, s6 of the EEA prohibits discrimination on the grounds of race or gender, despite s6(2)(a) which provides that "affirmative action measures" which are "consistent with the purposes of this Act" do not amount to unfair discrimination.
The Court in the Robinson and Others v PWC (2006) 27 ILJ 836 (LC) case held in passing that "affirmative action is not, and never has been, a legitimate ground for retrenchment". This is in line with international case law.
When implementing a retrenchment exercise, employers ought to be cautious when considering its selection criteria. Failure to do so may result in potential recourse available to a dismissed employee.
Although this may be a very controversial topic to which a clear answer has not yet been established, an employer should ensure that affirmative action measures have in fact been specified in its employment equity plan to avoid a clear-cut case of unfair discrimination on the part of the employer against a disgruntled employee.
In addition to this, an employer is encouraged to show evidence of its specific employment equity targets. An employer should also show that a retrenchment exercise, which is not based on affirmative action measures, would be detrimental to the operations and success of its business.