Managing staff expenses and Work Schedules during power outages/load shedding.
Eskom’s load shedding is putting a damper on the prospects of many small businesses. It is undermining business confidence, may result in retrenchment of staff and loss of income for both the employee and the employer.
Frequently Asked Questions:
CAN AN EMPLOYER REFUSE TO PAY AN EMPLOYEE FOR TIME LOST DURING A POWER FAILURE?
The employment contract is a reciprocal service contract which is governed by the common law, and supplemented by the Basic Conditions of Employment Act 75 of 1997, in terms of which contract the employee agrees to work for the employer and the employer agrees to pay the employee a specified remuneration for the work. The employer’s obligation to pay is subject to the employee doing the work. Where the employee in fact offers to do the work (tender service) and the employer does not want the employee to work or cannot provide the employee with the work (for whatever reason) the employer must still pay the employee.
CAN THE EMPLOYER TREAT THESE STOPPAGES DUE TO POWER FAILURES AS MEAL INTERVALS, THEREBY REDUCING THE COSTS?
Section 14 of the BCEA for example provides that employees must be paid for any lunch break in excess of 75 minutes, unless the employee lives on the premises. These provisions therefore make it impossible to save wages during power failures by instructing staff to take lunch breaks.
MUST THE EMPLOYER PAY THE EMPLOYEE OVERTIME IF HE WANTS TO CATCH UP PRODUCTION AT THE END OF THE WORKDAY?
If any hours lost during the day as a result of power failures are regarded as work hours, which such hours clearly still are, then any work after normal hours will be regarded as overtime and will still be subject to additional pay. This means that where the employer lost 2 hours production time during the day and wishes to catch it up by working 2 hours longer after normal working hours, he will be obliged to pay overtime, thus actually increasing the cost of the power failure.
CAN I RESTRUCTURE WORKING HOURS TO MINIMISE THE EFFECT OF POWER FAILURES?
Employers and employees can agree to almost anything as long as it is not prohibited by law. Many employers, especially in a production environment, will have to consider changes to their work hours or shift structures to minimize the financial losses caused by power failures. It is however obvious that pro-active steps to reduce losses would only be possible as far as structured load shedding is concerned and that it would be impossible to provide for unforeseen power failures.
One can also propose to employees that payment in terms of the employment contract as a result of power failures due to load shedding be suspended during such period of power failure, and thus employees are not paid for such period, which would be permissible in law for employees whom agree thereto.
All the measures designed to reduce costs and cater for prejudice to the employer in the event of load shedding /power failures requires consensus with, and agreement by, the employees. If employees agree, a change is effected, put in writing, signed, which will resolve the matter.
However, what would the case be where employees refuse to agree?
HOW DO I IMPLEMENT CHANGES IF EMPLOYEES DO NOT WANT TO AGREE?
Any of the above changes, as stated, can only come about by agreement. The changes referred to above cannot be implemented unilaterally. The following process can be adopted in the case where there is no such agreement or the employees refuse to agree.
Where the employees belong to a trade union, the employer would have to consult with the union regarding the changes to working hours or shift times or payment terms before implementing any changes. Where no trade union exists, staff should be consulted directly in this regard.
If the trade union or staff refuse to accept these proposed changes, the employer may utilise the provisions of Section 189 or 189A (whatever is applicable) to effect a change. This means that the employer will argue that due to its operational requirements, it needs to restructure its business in the form of a change to conditions of employment, by either changing shifts, or working hours, or suspending payment during power failures. These are clearly both economical and structural reasons as contemplated by Section 213 of the Labour Relations Act.
The end result is that employees that refuse to accept the change in working hours may be retrenched after proper consultation, and replaced with employees who are willing to work under such terms proposed.
Due to the time needed to consult (especially in terms of Section 189 A), these steps will only be viable once it is certain that load shedding schedules will be implemented consistently and that it will apply for long periods of time. If not, the effort and effect of restructuring on the business may be even more costly than the loss of production during these power failures.
Provided that a proper process is followed, the employer would be able to have working conditions changed by either having working hours amended to correspond with load shedding, or to have payment suspended if employees cannot work due to load shedding.
For further information you can contact Bernard Reisner:
W.Tel no.: 021 423 3959
Fax: 021 423 2105
Cell: 082 433 8714