Temporary employment services help mitigate the negative impact of retrenchment

By Lucinda Alfonica, Commercial Manager at Workforce Staffing

The recent period of economic instability has meant that many businesses have been forced to downsize and retrench. The ongoing uncertainty, coupled with unforeseen circumstances, dramatically impacted productivity, and the current loadshedding crisis is only exacerbating the problem. Retrenchments are on the rise as a result, but this comes at a cost. With the future and the external forces that will affect business impossible to predict, Temporary Employment Services (TES) providers can assist in several areas to help mitigate the negative impact of retrenchment.

The cost of retrenchment

With multiple external factors impacting business and a lack of predictability around the future, permanent employees may need to be let go as businesses are forced to downsize. In addition, fluctuating operational requirements mean that the capacity of workforces has become difficult to predict. With permanent staff, however, there is a lengthy process that needs to be followed, in line with the Labour Relations Act and in good faith, to reduce or optimise the workforce.

Employees cannot randomly be retrenched but must be selected based on specific criteria that is fair and objective. There must be a consultation with workers who are likely to be affected, written notice issued of the need for the consultation, and ongoing discussion aimed at reaching consensus between the employer and affected employees. Only once this process has been exhausted may a notice of retrenchment be issued. Larger organisations may have additional steps that must be followed.

In addition to the time and cost of the retrenchment process itself, the financial implication of retrenchment can be significant, as notice must be given to either be worked or paid for. A severance packages of a week’s pay or more for each completed year of service must be paid. Aside from this direct cost, the impact on productivity can be significant, business can be disrupted and may take time to recover from the reduction in staff and the loss of skills.

Adding flexibility into the workforce

Regarding permanent workforces, flexibility is limited, and they cannot easily be scaled up or down to meet fluctuations in demand. In the current climate, this can result in costly, disruptive retrenchment processes. An alternative is to make use of a TES provider, which can provide skilled, qualified staff on fixed-term contracts to address skills gaps, increase production on a project basis, or fill in gaps with extra staff.

Employees hired through a Temporary Employment Service are employed by the TES provider itself, and not the employer, and are placed at the client. This offers much greater flexibility that caters to peaks, troughs, and fluctuations in demand. Staff are supplied as and when they are needed, allowing employers to far more easily scale down should this be required, without the need to follow the lengthy, costly, and disruptive retrenchment process.

In the event where retrenchment becomes unavoidable, TES providers can often offer affected staff reasonable alternative employment at another client or even another industry, mitigating the impact of unemployment. In addition, employers can lean on the human resources expertise of the TES provider to assist with administrative processes, enabling them to focus on their core business while their TES partner manages employment challenges.

The perfect partner

A reputable and experienced TES partner has a large pool of vetted, qualified staff on the books across various industries, enabling them to supply appropriately skilled labour on demand. They will also oversee the HR and industrial relations functions for the staff they provide, including necessary training, so that clients are confident that staff will be able to integrate into the working environment seamlessly.

If retrenchment becomes unavoidable, a TES partner can provide alternative employment as well as assist with reducing the number of staff affected, which helps to minimise the negative impact. In addition, a TES partner will ensure that processes are followed in line with labour legislation requirements and are fair and compliant, so that they do not create extra risk. However, the goal is to avoid and reduce retrenchment, which is why a flexible workforce has become such an invaluable tool. A TES provider can be a perfect partner in providing this flexibility to cater for uncertainty and fluctuations in demand.

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