A COMPETITION Tribunal moratorium that prevented insurer MMI from retrenching employees after its merger in 2010 lapses on Thursday next week, paving the way for the company to retrench further to minimise duplication and cut costs.
However, MMI CEO Nicolaas Kruger said on Friday that the group had achieved recurring cost savings of R201m since the merger, and that it was on track to meet its target of R500m a year in savings over three years.
In 2010, Momentum and Metropolitan merged to form South Africa’s third-largest insurer, a financial services company catering for the lower-middle-income and upper-income markets in SA and the rest of Africa.
The tribunal approved the merger, but prohibited merger-related retrenchments for two years. The moratorium, however, excluded senior employees.
It also excluded voluntary retrenchments and early retirement packages, provided these were not coercive.
Mr Kruger said that through natural attrition, 1,269 employees had left the group over the past two years.
Momentum and Metropolitan had told the tribunal that the merger would affect 1,000 to 1,500 jobs.
When asked about the implications of the moratorium coming to an end, Mr Kruger said MMI would apply "a centralised process to manage future staff role duplication and redundancy".
"In order to manage the moratorium, MMI implemented a centralised redeployment centre with the main purpose of finding alternative roles within the group for staff affected by the merger," Mr Kruger said.
He said the redeployment centre was successful in redeploying staff where there was a duplication of roles.
Mr Kruger said that when the centre was established in September last year, 338 employees were registered with it. He said that 51% were redeployed to other positions in the group, while 43% took voluntary separation packages.
"We have learnt a great deal from having a centralised redeployment process during the moratorium period, and with fairness and consideration we will continue to apply the same principles to our future restructuring processes."
"Unfortunately, rationalisation and restructuring are inevitable in the normal course of any sustainable business. However, we will make every effort to minimise job losses. We will continue to apply the best practices gained from the redeployment centre as long as is necessary for the benefit of our employees who may be affected by future business restructuring," he said.
The company could not say exactly how many jobs were at risk now that the moratorium had come to an end.
If natural attrition has addressed duplication then the tribunal’s moratorium would have gone a long way in protecting job losses resulting from the merger. However, were MMI to cut 1,000 jobs by exploiting the end of the moratorium, it would raise the question of whether the tribunal’s decision had merely "kicked the can down the road".
© BDlive 2012