Economic hardships force large employers to make difficult decisions concerning the employment statuses of their employees. It is not uncommon to discover that such employers will make the decision to lay off several employees without consulting their legal advisers. The result is always multiple labour complaints, strained relationships and an extra cost to the employer to settle the labour disputes as soon as possible.
Here below I shall summarize the basic steps an Employer who seeks to lay off several employees must take before making the final decision to terminate the employment of his/her employees collectively.
Criteria for collective termination: The Employer must first determine if its circumstances fall under the ambit of collective termination as provided for under S.81 of the Employment Act. For a termination to amount to collective termination under the law, it must be due to economic, technological, structural or reasons of a similar nature and not less than ten employees must be structured for termination.
Notification of Employees: The Employer must then notify all employees of the commencement of the restructuring process. This is to enable them mentally prepare for whatever decision is to be reached regarding their fate with the company. This notification should be done in not less than a month’s time prior to the termination.
Assessment of which employees shall be affected: The Employer then carries out an objective, independent and fair assessment of all employees before determining who is eligible for termination. This can be done through an appraisal system and also employee interviews to determine their attitude, willingness and preparedness to leave or stay in the organisation. It is prudent at this stage for the Employer to engage a lawyer who will provide independent advice on the findings of the Employer and on the next steps to take.
Notice to the Commissioner: Upon making the decision of the employees that will need to be terminated, a notice to the commissioner of labour giving the particulars of the employees affected and the reasons for the termination should be drafted.
Notification to a labour union where applicable: If any of the employees belong to any labour union the Employer will also need to notify the labour union a month prior to the termination.
Preparation of terminal benefits: The Employer has to begin preparing the resources necessary to effect the termination including salary arrears/wages and any other staff entitlements upon termination. Different employers have different policies for their employees with different benefits and only by reviewing those documents can an Employer be able to accurately determine what is legally due to the employee affected. At this stage, the employer should seek legal counsel in order to compute the benefits accruing to each individual employee.
Termination Notices: The Employer then prepares and serves termination notices which are customized to the respective employees, giving them notice periods in line with the duration of service in accordance with their contracts.
Exit forms: Any organized Employer shall ensure that exit forms are given to the employees to fill in before leaving so that the process of handover and separation is handled professionally and amicably.
Salary loans: If there are any salary loans obtained by employees internally, the accounts must be reconciled and a payment plan agreed upon including setting off from the entitlements due to the employee upon termination. If the loan was externally obtained, then the relevant bank or lender must be notified immediately of the termination.
Notification of clients: Depending on the kind of work the employer is engaged in, it is a common occurrence for clients and staff to develop a relationship based on their interactions. For employees that have been dealing with customers regularly, it will be prudent for the Employer to notify the customers that the employees are no longer employees of the company to prevent any reputational risk or damage and misrepresentation by the affected staff.
Certificates of Service: The Employer should then prepare certificates of service for the respective employees who have handed over.
Notification of relevant statutory bodies: The Employer then notifies relevant statutory bodies including NSSF and URA and ensures that the necessary amendments are made at the respective authorities.
At a minimum if the above procedure is followed, then an Employer will have discharged its duty to the employees in collectively terminating them as required by law.
DISCLAIMER
This article provides general information only. It is not intended to provide advice concerning any specific set of facts, nor is it intended to be relied on as legal advice.
ABOUT THE AUTHOR
Abio Patience is an Associate and Firm Administrator at M/s TARA Advocates formerly Tibugwisa & Co. Advocates. For comments and inquiries contact her at patience@tadvocates.com or tel: +256787021216 or for other services by the firm check the firm’s website on www.tadvocates.com