Cell C, labour unions ready to square off over jobs

Read time 4min 30sec

Under-pressure mobile carrier Cell C and two labour unions in the sector are readying to square off over the future of jobs at the telco.

On Friday, Cell C announced job cuts of up to 40%, targeting junior management and semi-skilled staff. The telco says it was a “difficult decision” to reach and it has initiated discussions with affected parties.

However, the unions – the Information Communication Technology Union (ICTU), the majority union at Cell C, as well as the Communication Workers Union (CWU) – have hit back at the company, saying it is being “disingenuous” in pronouncing the layoffs.

Cell C denies the allegation, saying the retrenchment exercise is a logical business decision as over time its operating model has resulted in several inefficiencies, and this is contributing to the operating and financial challenges the company is facing.

The ICTU has hit back, saying it “is readying its vast majority membership to be ready for the battle of their livelihood”.

The union says it has communicated its displeasure to Cell C management and hopes to get an urgent meeting to engage on this matter.

In a statement, Thabang Mothelo, ICTU media officer, says the union is “reliably informed that Cell C’s positive financial performance has been increasing steadily before the lockdown period and has performed much better during lockdown period”.

He adds the union is “enraged by the unlawful notification because Cell C hasn't officially notified the union about its plans to retrench and Cell C is violating the conditions set out on the recapitalisation application made out to the Competition Commission (CompCom).

“One of the key conditions was that recapitalisation support by the Competition Commission will include guaranteeing job security of workers.”

Cell C recently received a lifeline when the CompCom recommended conditional approval of the proposed acquisition of certain Cell C assets by special purpose vehicle Gatsby SPV.

Gatsby is a ring-fenced newly incorporated special purpose vehicle which was incorporated for the sole purpose of entering into the proposed transaction.

Not a solution

Equally, the CWU has rejected the planned retrenchments at Cell C, saying the reasons given by the company “fall short to mention mismanagement”.

It has blamed Cell C’s woes on management, which it says misused “finances with absolutely no consequences.

“The layoffs of close to a 1 000 workers wouldn't solve the company's loan default of R2.7 billion which was due in December 2019, but it will only deepen the crisis. In their turnaround strategy, they mentioned the network strategy. CWU advises Cell C to re-look at opportunities that come with the WOAN [wholesale open access network], and offers to assist the troubled company in that process,” says CWU general secretary Aubrey Tshabalala.

CWU has also partly blamed the delay in auctioning of spectrum by government for job losses in the sector.

“We, therefore, call for government to swiftly move on the release of spectrum as part of a strategic intervention to save jobs.”

Further, Tshabalala says Cell C is a beneficiary of the relief fund to be offered to financially distressed employers coming from the UIF, and therefore must be saving jobs.

“Cell C has been one of those employers who applied for COVID-19 Temporary Employer/Employee Relief Scheme (TERS). Therefore, it is disingenuous of the company to apply and afterwards lay off workers. If Cell C insists on retrenching workers, we will make a call that it should pay back TERS. We propose a comprehensive review of their turnaround strategy,” Tshabalala says.

Right-sizing the business

Cell C did not respond to the relief fund allegation.

However, it says it has followed the process as per the requirements of Section 189A of the Labour Relations Act, which requires companies to advise staff and unions of the possibility of redundancy of certain positions and contemplated retrenchments.

“The consultation process is due to start this week; it is a joint problem-solving exercise and employees’ contributions will be taken into account throughout the process, which will be facilitated by the CCMA,” Cell C says.

It adds for many years, Cell C has under-performed and generated significant losses.

“The loss for FY 2019 was R4.2 billion. A turnaround strategy was put in place in early 2019. One of the pillars of the strategy is a focus on operational efficiencies. Efforts to streamline the business to date have included cost savings through procurement cuts, a year-long hiring freeze, a review and discontinuation of certain product offerings, all in an effort to turn the business around.

“It is the company’s view that over time the operating model has resulted in several inefficiencies. This is contributing to the operating and financial challenges the company is facing. There is a need to right-size the business and reduce the headcount to ensure the company is competitive and sustainable.”

See also