Four years ago Mauritius brought about a new era in its employment laws by re-defining the employer/employee relationship when it promulgated the Employment Rights Act 2008 (the ERA) that came into force in February 2009. This year Parliament sought to enhance the role of trade unions in the employer/employee relationship when it revised the ERA.

Of interest to employers, a new provision now exists in the ERA namely section 39B, in order to address the direct result of an international economic recession namely the issues of reduction of workforce and closure of industries for economic reasons. With this new provision there is now in place a procedure by which and a time-frame within which an employer must first consult a trade union in relation to its proposed reduction or workforce or closure before informing the Permanent Secretary of the Ministry of Labour, Industrial Relations and Employment (Permanent Secretary) of it and proceeding to implement it. Furthermore, there is a method for redress should an employer not comply with this new provisions. What is interesting however is that in order that the obligations of an employer are triggered under section 39B, two conditions must be fulfilled:

  • the employee must be captured under the definition of 'worker' namely whether any or all of the employees earn a basic wage or salary less than MUR 360,000 per annum [± US$12,000].
  • the employer must fall within the definition of 'employer' namely that it must employ a minimum of 20 workers.

Under section 39B of the ERA, an employer must provide written notice to the Permanent Secretary of its intention to reduce workforce or permanently close the company. The notice must be sent at least 30 days before intended reduction or closure and must provide a statement of the reasons for reduction of workforce or closure.

Furthermore, the employer must consult the trade union and must look into possible means of avoiding reduction or closing down such as restrictions on recruitment, retirement of workers who are beyond the retirement age, reduction in overtime, shorter working hours to cover temporary fluctuations in manpower needs, providing training for other work within the same enterprise.

Where redundancy has become inevitable the employer must establish the list of workers who are to be made redundant and the order of discharge on the basis of the principle of last in first out and serve the written notice to the Permanent Secretary.

In the event an employer reduces its workforce or closes down its enterprise without notifying the Permanent Secretary and without prior consultation with the trade union, the employer must pay a sum equivalent to 30 days' emuneration in lieu of notice plus severance allowance according to the formula prescribed by the ERA.

Under the ERA an employer and his workers may agree on the payment of compensation by way of settlement. Where such a settlement is reached, a worker shall not be entitled to join the Workfare Programme under the ERA. Furthermore, the employer will not be required to pay what is known as the Recycling Fee under the ERA.

In the event that there is no such agreement, the worker may either join the Workfare Programme under the ERA or lodge a complaint with the Permanent Secretary within 14 days of the termination of his employment. The employer must pay the recycling fee provided under the ERA. As regards the worker, he is entitled to lodge a claim for severance allowance before the Industrial Court.

Insofar as the Permanent Secretary is concerned, upon receipt of a complaint the Permanent Secretary will inquire into it in order to find an amicable settlement, failing which the Permanent Secretary has two options:

  • Either, the Permanent Secretary takes the view that the worker has a bona fide case and this entitles the worker to join the Workfare Programme. Furthermore, in the event that the worker has not lodged a claim for severance allowance before the Industrial Court, the Permanent Secretary may also refer the matter before the Employment Relations Tribunal.
  • Or, the Permanent Secretary takes the view that the worker does not have a bona fide case and does not refer the matter before the Employment Relations Tribunal. The Permanent Secretary then informs the worker that he may join the Workfare Programme.

Whilst it is a fact that the effectiveness of the changes brought to the ERA remains to be tested, there is no doubt that the enhanced role played by trade unions in sensitive issues underpinning the employment contract is a welcome change to the employment law scene that is more accustomed to strained State/Trade Union relations.

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