The recent announcement by ArcelorMittal to close its long-steel plants in Newcastle and Vereeniging has sent shockwaves through the South African steel industry. This decision, driven by challenging market conditions, high energy and logistics costs, and competition from low-cost imports, threatens approximately 3 500 direct and indirect jobs.

Sean Snyman, one of the founding shareholders of Snyman Attorneys and an executive director of Labournet, the largest industrial relations and labour law consulting business in South Africa, says it is crucial to examine the role of the Labour Relations Act (LRA) in this context and its implications for both the company and its employees.

“The Labour Relations Act is a cornerstone of South African labour law,” Snyman says, “and is designed to promote economic development, social justice, labour peace, and democracy in the workplace. One of its key provisions is Section 189, which outlines the procedures for large-scale retrenchments. This section mandates that employers engage in a meaningful consultation process with employees and their representatives before any retrenchments can take place.”

ArcelorMittal's announcement triggers the Section 189 process, requiring the company to issue a notice to employees and unions. This notice initiates a consultation period where the parties must engage in discussions to explore alternatives to retrenchments, such as redeployment, voluntary severance packages, or reduced working hours. The goal is to mitigate the impact on employees and ensure that any retrenchments are conducted fairly and transparently.

The LRA provides robust protections for employees facing retrenchment. During the consultation process, employees have the right to be represented by their trade unions, and the employer must disclose all relevant information to facilitate meaningful engagement. This includes the reasons for the proposed retrenchments, the number of employees likely to be affected, and the criteria for selecting employees for retrenchment.

“Because the number of employees involved at ArcelorMittal, it is highly likely that the provisions of section 189A of the LRA would apply, which provides for facilitated consultation at the CCMA for a period that generally amounts to at least 60 days,” says Snyman.

While the LRA aims to protect employees, the reality is that the consultation process can be challenging. Employers may face financial pressures that limit their ability to offer alternatives to retrenchment. Additionally, the competitive nature of the steel industry means that companies like ArcelorMittal must constantly adapt to survive.

However, the LRA also presents opportunities. By engaging in a transparent and collaborative consultation process, ArcelorMittal can build trust with its workforce and potentially identify innovative solutions to avoid or minimise job losses. This could include exploring new markets, investing in technology to reduce costs, or seeking government support for the steel industry.

The closure of ArcelorMittal's long-steel plants is a stark reminder of the challenges facing the South African steel industry. The Labour Relations Act provides a framework for managing these challenges in a way that balances the interests of employers and employees. By adhering to the principles of fairness, transparency, and meaningful consultation, ArcelorMittal can navigate this difficult period while upholding the rights and dignity of its workforce.

As we move forward, it is essential for all stakeholders to work together to find sustainable solutions that support both economic growth and social justice. The future of the South African steel industry depends on our ability to adapt, innovate, and collaborate in the face of adversity.

Written by Sean Snyman, Executive Director, Labournet