Impact SA

Small Business Survival Toolkit Part-8: Restructure and retrenchments

Small Business_8_unsplash_edited

In part 8 of the Small Business Survival Toolkit series, Lauren Spence, Industrial Relations Executive at LabourNet, unpacks the issue of restructuring and retrenchments post-Covid, and the rights of both employers and employees.

As a LabourNet Industrial Relations Executive, Lauren’s focus is partnering with employers to ensure employment justice by implementing pro-active fair labour practices and giving clients peace of mind.

So, what has Covid and its aftermath meant for business owners? “Most importantly is that we were dealing with things we’ve never dealt with in my 16 years of labour law experience,” says Lauren. Covid took everyone by surprise – employees and employers had to deal with the announcement of the hard lockdown practically out of the blue and ensure that they start could work from home and ensure that policies were put in place to ensure that they had the correct the resources.

Most companies were not allowed to operate, and, of course, many employees could not work from home, and many businesses had to shut the door. This is where this concept of ‘supervening impossibility’ came to light. By definition, supervening means: ‘occurring as an interruption or change to an existing situation’. In labour law terms, this was something new, and meant that although an employer wished an employee to render service – but as the result of the directive, neither party was allowed to.

For example, let’s assume an employer wishes to allow the employee to renew the service, and the employee, of course, wishes to renew the service, but as a result of the directive (hard lockdown and subsequent regulations), not one party was allowed to renew the service. This would mean, from a labour law perspective, that there were almost no rules: the employer could not allow the employee to return to work, even if the employee wanted to return for duty. “Therefore, what had to be implemented was what’s called a layoff, which was a unilateral layoff, whereby both parties could not be allowed to work, and procedures were not followed.

“From a labour law perspective there were almost no rules.”

Many employers were forced to introduce ‘short time’. Some employees were fortunate enough to be able to work from home, and as part of this restructuring, employers had to introduce policies, procedures and resources to enable these employees to do so. Some employees were able to partially work from home – and employers implemented short time and restructured remuneration based on partial time worked.

As a result of this, the four business imperatives were introduced, namely: safety; business ‘unusual’; survival; and the business of the future.

Safety first

Immediately following the outbreak, and as a result of hard lockdown, we all went into defense mode. Businesses had to ensure that their employees were safe, that their families and kids were safe, and, of course, to look after their clients and business.

Thedirective from government was very clear. Safety First. From a business perspective, strict compliance meant protocols: social distancing meant a phased approach, in some instances through staggered work shift systems for example.

“The ‘normal’ rules relating to misconduct performance didn’t just fall away because of restructuring but monitoring and having clearly defined rules in place were tricky. For example, a line manager could no longer look over an employee’s shoulder – there was no way of knowing if they were getting out of bed by eight o’clock if there was an eight o’clock teams meeting. Old rules and regulations were difficult to follow. If that same employee did not not click start or join the meeting at eight o’clock could the employer take action against the individual? Yes, it’s a contravention of the business’ working hours, but what if the employee’s Wi-Fi was playing up, or what if the employee didn’t have Wi-Fi? Of course, load shedding put another spin on being able to log in to work in terms of performance,” says Lauren.

“The ‘normal’ rules relating to misconduct performance didn’t just fall away because of restructuring but monitoring and having clearly defined rules in place were tricky.”

Business unusual

The main focus of small businesses was that they had to ensure that they continued operating. For employers, the same rules and regulations as ‘usual’ had to apply. Performance had to stay the same, and in line with expectation.

Just because the work environment or the new way of work was different, it didn’t mean that anything should get in the way of quality of service, turnaround, and looking after clients. But from an employer perspective, and from a business ‘unusual’ perspective, employers had to ensure that they were looking after their employees so that they, in turn, could look after their clients.


As part of the defence mode, business owners had to ensure that they were prioritising their business for survival, and that goods and services were still delivered to their clients.

Both temporary and permanent measures were put in place to ensure the survival of their business. They had to prioritise their people (their staff) because people were their resources, they’re the ones who would be delivering to their clients. Before any business decision could be made, employers had to look at alternatives – what alternatives could be put in place to protect their business while at the same time protecting employees and their employment. Some alternatives were employment arrangements such as working from home, perhaps working half day from home, resulting in a cut in salary with reduced work and short time.

Business of the future

In order to survive, small businesses owners had to make the hard decisions to ensure that the business was something to be proud of post-Covid and emerge as a ‘business of the future’.

Business owners had to ensure that they were implementing procedures for the future and that rules and regulations were in place to protect the performance of their staff, including misconduct. But any decisions had to be made fairly quickly from a business perspective, in order to start looking at the business of the future. Of course, there were practical considerations: would it be an unfair termination in terms of procedure if employers did not consult properly with their employees, if their business rationale was not sound? Businesses entering into retrenchment consultation had to place a heavy business rationale behind it. It might have been as simple as making certain positions redundant. Other changes and restructuring may have included reducing work time, reductions in work area – perhaps even moving to a smaller premises, reducing commission, changing the type of employment, reconsidering bonuses, incentives, and so on.

Employers were entitled to make changes, as long as a fair process was followed. And, importantly, as long the business rationale ensured consulting with all parties timeously and correctly.

And then, what was the consequence of unfair dismissal? Employees, of course, have a right to fair labour practice, and all of this has a big impact on business, on emotions, on staff and on morale. Even now, post-Covid, it is important to ensure that we’re making these decisions with empathy.

Businesses need to ensure that they are embracing collective bargaining. The struggle you’re in today is developing the strength for tomorrow.

The effect of retrenchment is negative of course – people’s livelihoods are affected. But a retrenchment issue doesn’t need to be implemented because of financial poverty. A big consideration should be how to minimise it and focus instead on getting more revenue. Focusing on both strategies include careful consideration of staff members and strategising. Maybe it’s time to change your business model? Maybe it’s time to look for different paths?

A small business’s saving grace just might be pivoting and keeping their doors open and stabilising. Do any of us truly know what the future looks like? No one does. But we can only put our best foot forward.


Related Posts

Receive the latest news

Subscribe To Our Monthly Newsletter

Get notified about new articles