A NUMBER of companies, among them state entities, have applied to the Retrenchment Board to be exempted from paying retrenchment packages as stipulated in the amended Labour Act, businessdigest has learnt.
According to the Labour Act, employers are obliged to pay two weeks’ salary for every year served as part of the severance package.
“We have had several companies that have applied for full exemption from paying two weeks’ salary for every year served as prescribed in the Labour Act,” an insider told businessdigest on Wednesday.
“We have however refused to completely exempt any company from paying a retrenchment package.”
Among the who applied for full exemption are Grain Marketing Board (GMB) and CMED, sources revealed.
GMB has applied to the Retrenchment Board to lay off 90 workers while the CMED are looking to retrench more than 70 employees.
“We told the GMB to go back and discuss with their workers before coming back to us,” a board member said.
Some companies, sources revealed, have applied to pay retrenchment packages over a period of between 24 and 36 months.
“We have cases where a company is applying to pay a sum of US$5 000 as a retrenchment package over a two to three-year period, which is unacceptable,” the board member revealed. “We have to protect not only the employer, but the employees as well.”
Retrenchments have been on the increase as companies struggle to stay afloat amid a plethora of challenges that include a debilitating liquidity crunch, lack of affordable funding and low capacity utilisation of less than 35%.
Last year thousands of workers found themselves in the street after a July 17 2015 Supreme Court ruling allowed employers to dismiss workers on three months’ notice without paying a retrenchment package.