Retrenchments in Lesotho

The COVID-19 pandemic has contributed detrimentally to the level of unemployment in Lesotho. This has been compounded by massive retrenchments in various sectors within the country. Retrenchments fall under the scope of dismissals based on operational requirements. It is a form of dismissal that is due to no fault of the employee and as such, the employer merely reviews the business needs in order to maximise profits or limit losses. This in turn leads to the reduction of the general labour force.

The Labour Code Order of 1992 (“Labour Code”) is the governing legislation pertaining to dismissals in the Lesotho context. Dismissals based on operational requirements are set out section 66 of the Labour Code. In order for a dismissal to be fair, it must comply with the provisions of Section 66 (1) of the Labour Code which states:

Whether adequate notice was provided or not, an employee may not be dismissed unless, a valid reason was provided for the termination, these reasons include:

  • The employee is not able to do the work he was employed for;
  • The conduct of the employee validates termination of employment; or
  • The dismissal is based on operational requirements.

 

In light of the above, there are three main reasons for dismissals based on operational requirements (retrenchments) and these include:

  • Economic or fiscal strains within the business;
  • Technological advancements within the business environment; and/or
  • Restructuring of the business.

 

The principles pertaining to the aforementioned are set out in the Labour Code Order (Codes of Good Practice) Notice 2003 (“Codes of Good Practice”) which maintains that an employer may dismiss an employee if it meets the requirements as set out in Code 7 (1)(a)(b)(c) & (d) which states that:

An employee may be dismissed if the employer:

  1. Complies with the terms of the employment contract;
  2. Complies with the terms of the Labour Code Order (Notice and severance pay);
  3. A fair procedure is followed; and
  4. A fair reason for the dismissal was provided.

 

These reasons are common reasons, but the list is not exhaustive. There should, however, be a rational link between the intended business objective from the employer and the dismissal.

The Codes of Good Practice makes provision for all the factors of retrenchment and lays out the guiding principles thereof.  As such, there are certain requirements that an employer must comply with before resorting to retrenchments. They include, but are not limited to:

  • Consultations in good faith between the employer and the employee(s);
  • The purpose of negotiation is to permit the parties in the form of a joint problem-solving exercise to reach an agreement on alternatives to dismissals;
  • Consideration of alternatives to the dismissal i.e. transfer to other jobs, temporary lay-offs, early retirement, reduced pay and/or demotion; and
  • The employer is under a duty to be implement fairness and transparency when considering the termination of the employment.

 

These obligations placed on an employer entail both procedural and substantive fairness in selecting the roles to be terminated. This is where the last-in, first-out (LIFO) criteria is applied. Consideration will also be had to the length of service, skills, qualifications, experience, age, and any other reasonable criteria. [Mpota v Standard Lesotho Bank (LAC/CIV/A/010/08) [2011] LSLAC 8].

 

Code 19 (5) states that the consultations between the employer and employees need to begin as soon as a reduction of the workforce is contemplated and should be long enough for a union to:

  1. Meet and report to employees;
  2. Meet with the employer; and
  3. Request, receive and consider relevant information.

 

It must be noted that there are no specified time periods defined in the Codes of Good Practice. However, it does state that in urgent matters, the negotiations may be done in a truncated fashion.

In conclusion, the Code of Good Practice provides that the Courts will look closely at the procedure to determine whether or not the employer has considered all possible alternatives to termination.  These additional requirements, as set out above, are done in accordance with the Codes of Good Practice. As such, it must be borne in mind that the courts will only use the aforementioned as a guideline when dealing with dismissals based on operational requirements.

 

This article was written by Zurayda Mayet and Palesa Nkoho.  For more information regarding dismissals in Lesotho contact Kleingeld Mayet.