White Noise

Sun sets on New Dawn staff

1 November 2006

Smart restructuring, step one: ditch sales staff and leave them with a big hole in their pockets.

Employees dismissed from New Dawn Holdings during a recent retrenchment process say they will be seeking legal action against the company. These employees feel that they were not given adequate notice of the process and that correct procedures were not followed.

A source close to the company explains that the problem started with irregularities on the payment of commission to sales staff. "Commissions started becoming staggered, with the company saying that the delays were caused by a glitch in its new payroll system. Then a few days later, some staff members were given letters of dismissal."

In a letter dated September 29, company executives apologised to employees for salary delays, stating that the issue would be resolved by the following day, September 30. However, only basic salaries were deposited into the accounts of the sales department the following week, with no mention of overdue commission payments.

Dismissal for operational reasons

Amendments made to the Labour Act of 2002 on retrenchment:
* Individuals who are retrenched may refer a dispute either to arbitration by the CCMA or a council or to the Labour Court for adjudication
* The consultantion process in large scale retrenchments may be facilitated by a person appointed by the CCMA
* Employees involved in a large-scale  retrenchment may either strike or may refer a dispute over the substantive fairness of the retrenchments to the Labour Court.

Where's my commission?

"When staff enquired about their commissions, they were told that the company is experiencing cash flow problems and were then given notice of their dismissal via e-mail," adds the source.

The e-mail states that the company is undergoing a restructuring process and has decided to terminate 21 employees based on operational requirements.

"The reasons for the proposed dismissal is that the company is in a restructuring process, prompted by the unsustainable salary bills and the economically unjustifiable existence of a sales department, when New Dawn Holdings is not responsible for its subsidiaries' acquisition of business," says the letter.

It further explains that the company's envisaged structure will comprise executives, a few administrative and cleaning staff. The staff were further invited to a consultation process in which they could motivate for any assistance they would need from the company, but it was stressed that re-employment would not be an option.

Company CEO Elijah Mahlangu confirmed that the company had been going through a restructuring process, prompted by the need to have a lean and efficient shared services centre. "The process has been going on since the end of last year and we are now in the second phase [of restructuring]. Unfortunately, people get nervous when they hear of a restructuring process and that can result in misunderstandings."

Change for the better

He says that, in terminating the 21 jobs, the company is doing what needs to be done in an effort to ensure that it becomes profitable.

A media statement from the company echoes his sentiments, stating that the first phase of the process included restructuring the company with four subsidiaries: New Dawn Spectra (SAP implementation and solutions), New Dawn Prophesy (packaged Oracle services solutions), New Dawn Technologies (IT infrastructure solutions) and New Dawn Human Capital (business consulting and body shopping).

While all this may explain the reasoning behind the process, disgruntled employees still feel that they have been done an injustice.

"There were a few individuals who where approached to negotiate to go to the subsidiaries, which will mean they take a cut in their basic salary," adds the source. "These negotiations are currently taking place."

The majority of the people who received the first letter had been dismissed with immediate effect as of Monday, 9 October.

The letter of proposed dismissal states that the process affected 18 sales staff, three from human resources and one employee from the finance department. It also states that the severance pay proposed is the statutory minimum of one week's pay for every year of service, but mentions nothing on commission monies still owed to the sales staff.