MTN employees fear job losses as it looks to sell-off stores

Read time 6min 00sec
MTN Branded Channel employs thousands at its shops across the country.
MTN Branded Channel employs thousands at its shops across the country.

MTN employees have expressed fears the company’s move to sell off its stores (Branded Channel) will result in them losing their jobs.

Last week, an employee representative, who opted to remain anonymous, contacted ITWeb alleging the mobile operator was looking to sell off its stores and in the process “dupe them into joblessness without proper consultations” with the workers at these facilities.

When contacted for comment, MTN denied the retrenchment accusation but confirmed there are plans to sell off stores, and employees will be transferred over to new employers with their current total cost to company packages, for a minimum period of 12 months.

“It’s unfortunate that this exciting project, that is seeking to achieve some important MTN and national objectives, has been either misunderstood or intentionally misrepresented in this manner,”  says Jacqui O’Sullivan, executive for corporate affairs at MTN.

According to O’Sullivan, MTN’s objective with this project is not to close stores, but to rather increase, not only the company’s store footprint, but also its BBBEE ownership of MTN stores.

“The plan will see MTN increasing its number of stores in the coming two years, creating businesses for new owners and new job opportunities for new store employees. The opportunity for staff to apply to become a store owner is not a once-off opportunity.

“This will become a standard process which MTN will use as and when we need to onboard a new dealer, to take up new store opportunities. This will add to our overall employee value proposition and creates an exciting potential career path for MTNers looking to use their industry knowledge to run their own businesses.”

MTN Branded Channel employs thousands at its shops across the country and the employee representative claims they are about to lose their jobs and the operator “isn’t being direct with the truth” for fear of full-blown industrial action.

The potential job losses at MTN comes at a time SA’s unemployment rate has hit the highest level since the global financial crisis 11 years ago.

The unemployment rate spiked to 29% from 27.6% in the first quarter, according to data released last month by Statistics South Africa. This has gone to the levels of 2008, when the economy was hammered by the global financial crisis.

Employees at MTN allege their employer’s plans are at an advanced stage and will “dupe them into retrenchments”.

ITWeb understands that last week, Simo Mkhize, general manager of MTN Branded Channel; Manoko Mapeka, from HR Branded Channel; and senior manager, Isaac Monamo, met in Morningside with 60 store supervisors, regional managers and area managers in Gauteng to share MTN’s intentions regarding its stores.

The meeting angered employees, who accused MTN of selling off the stores in what they believe is in retaliation to the Commission for Conciliation, Mediation and Arbitration (CCMA) directive that all people that had worked for MTN for years as temporary employees must be made permanent.

MTN had been taken to the CCMA by some employees who had worked for the operator for more than six months as temporary staff; some had been working for years, carrying the tag of temporary employees.

Jacqui O’Sullivan, executive for corporate affairs at MTN.
Jacqui O’Sullivan, executive for corporate affairs at MTN.

‘Misrepresentation of facts’

According to the Labour Relations Amendment Act that came into operation on 1 January 2015, employment in terms of a fixed term contract for longer than three months will be deemed to become permanent employment – with some exceptions.

It says an employer cannot circumvent this provision by using successive fixed-term contracts limited to three months each. It is not the current contract period, but the total period of employment, that must not exceed three months, the Act says.

“With the proposed sell-off, MTN staff are alleging effectively the company is retrenching us unfairly; we will lose our current salary structure, benefits that include medical aid, pension and incentives that are part of our current employment packages,” said the employee representative.

The angry employees allege they were told MTN is selling off its stores to dealers, and employees can source bank loans if the wish to take over any of the shops.

Discussions between MTN and its employees nationwide are set to begin on 1 September.

O'Sullivan tells ITWeb: “This is by no means a retrenchment exercise and the claim is a misrepresentation of the facts.

“If and when a store sale is concluded (no offers to sell have been issued to any third-party at this time), it would result in a Section 197 process, in which employees are transferred over with their current total cost to company packages, for a minimum period of 12 months.”

She adds: “MTN is currently looking to extend this to between 24 to 36 months and these criteria would be a condition of sale.”

O’Sullivan also denies the proposed changes at MTN Branded Channel are motivated by a CCMA ruling earlier this year.

“We are converting temporary staff who, as a consequence of changes brought about by the Labour Relations Act, fall within the definition of a ‘deemed employee’. The transition will be implemented in a phased approach and the engagement with the impacted employees will start during this month. MTN has already equalised the total cost to company for all affected employees.

“The only elements that will need to be completed, as part of the transition discussions, relate to bonuses and access to bursaries and training programmes.”

MTN says despite the employees’ accusations, it is actively seeking to place more stores in the hands of black owners and “in so doing, deliver on the clear desire of government, driven by the minister of communications, to bring new entrants to the telecommunications sector”.

Store ownership

MTN employees further alleged the mobile operator has told them to source their own funding if they wish to take over any store, but dealers are actively being helped by the telco to secure funding.

The employees say they need between R1.5 million to R4 million to take over an MTN store.

“Where do we get such money to own a shop?” the employee representative asked.

O’Sullivan says: “The cost of stores has not been communicated to any employees whatsoever, so I am unsure where the values claimed have originated. The price of stores would be extremely varied, depending on the store size, its location, the performance of the store, various cost structures associated with the business and others.

“So there is no single price point or price band under discussion. Pricing of stores will be done at the transaction stage and is based on a 10-year discounted cash flow valuation model.”

See also