Legislation was introduced in 1980, after the Wiehahn Report, to allow the old Industrial Court and now the Labour Court to rule on the fairness of all matters of mutual interest.  This included the fairness of many retirement schemes.  One of the unintended consequences was that employers decided to transfer certain investment risks to employees.  Previously most large employers deducted money from the remuneration of employees and then added their own contributions.  On retirement employees were effectively guaranteed a ‘defined benefit’ in the form of an annuity, and very often inflation was also built into the promise.  In other words employers assumed the risk of the investments being insufficient to meet the obligations.  But once the system changed from ‘defined benefit’ to ‘defined contribution’ the investment risk passed to the employees and there was no point in attacking the fairness of the retirement schemes.

Now Numsa intends taking protest action to force employers to put pressure on the government to repeal the recently announced amendments.  Upon ‘retirement’ some employees will be forced to convert their savings into an annuity policy.  This will deprive them of the use of the bulk of their own savings and force them to accept monthly payments.  In other words it could be argued that they will be deprived of their own ‘property’, in the sense of only being able to access it via annuity payments.  Whether such a system falls foul of s 25 of the Constitution, in the sense of being arbitrary, is a matter that needs further consideration.

Protest action is not the same as strike action.  Not only are the procedures different but protest action relates to socio-economic demands, unlike strike action, where demands are made directly against the employer.  Employees engaged in protected protest action need not be paid.  Employers are at liberty to engage the services of ‘temporary replacements’ to assist in keeping the enterprise going.  If the protest action reaches the point where the viability of the enterprise becomes unsustainable or threatened, employers have the right to follow the statutory ‘joint consensus-seeking procedure’ and ultimately dismiss for reasons based on operational requirements.  Dismissed employees would probably forfeit their right to severance pay, but not notice pay.  Severance pay is not payable in terms of the BCEA when employees unreasonably refuse to accept an offer of alternative employment.  They would be offered their own jobs and would surely forfeit the right to any severance pay.

Read: Numsa to strike over tax amendments on retirement funding by Karl Gernetsky which first appeared in BDlive on yesterday published by Business Day.