With the ongoing price shocks from the war in Iran, employers are encouraged to explore alternative strategies, such as hybrid work and temporary financial support, to alleviate employee burdens without defaulting to job cuts. (Photo: iStock) That was one of the key messages from a Cliffe Dekker Hofmeyr webinar on global conflict, local economic pressure and the workplace, where Aadil Patel, practice head and director at the firm, and Annabel Bishop, chief economist at Investec, unpacked what the latest external shock could mean for South African employers and employees.
The discussion lands in a country already bruised by weak growth, high living costs and fragile household finances. Fuel prices feed directly into commuting costs, food prices and wage demands. For employers, this creates a difficult question: How much responsibility does a company have when global shocks make it more expensive for staff simply to get to work?
Bishop cautioned against panic, saying the current environment was not yet comparable with the global financial crisis or the Covid-19 economic shock.
“What that really means is that we haven’t seen a collapse in our financial market indicators,” she said. “The rand, the bond market, the equity market – they have had sharp moves, but they are pretty similar to a short, sharp impact of a supply-side oil crisis.”
The distinction matters because the policy and business response to a temporary fuel price spike should not be the same as the response to a deep recession.
Bishop said the current shock was best understood as a “classic oil price shock”, with the main impact coming through fuel prices and inflation rather than a collapse in economic activity.
‘No one’s expecting a recession yet’
“No one’s expecting a recession yet, globally or domestically,” she said. “Of course, there is a risk that if the Middle East crisis were to persist for the rest of this year and next year, and block off the supply of oil, then you’d start to get an impact on operations of economies.”
For now, Investec’s base case appears to be that the shock will be sharp, but temporary. Inflation may rise, but if oil prices retreat and fuel prices are later cut, the Reserve Bank may be able to look through the shock rather than respond with aggressive interest rate hikes.
That does not mean the pain is imaginary. A temporary shock can still feel permanent to a worker whose commute has become unaffordable or whose grocery bill has swollen dramatically in a short space of time.
Patel’s argument was that employers should use the lessons of previous crises before defaulting to retrenchments. He described 2026 as a possible “gathering season”, a moment in which employers should gather what they learnt from 2008 and Covid-19 and apply those lessons more creatively.
“In 2008, when we had this financial crisis or a real financial strain, we didn’t know what to do as employers. So, what did we do? We resorted to mass retrenchments,” Patel recalled.
The Covid-19 pandemic forced a different kind of thinking. Remote work, forced leave, medical leave and other support mechanisms became part of the employer toolkit. Those measures were imperfect, but they proved that companies had more options than simply cutting jobs.
Patel said one possible response to high fuel prices was to allow remote or hybrid work for a limited period, particularly where commuting costs were placing pressure on employees. However, he warned that any such arrangement should be carefully drafted and time bound.
“If you are to adopt a work-from-home policy because you’re saying to yourselves that I need to assist my employees, draft your policy as opposed to making the term and condition firm,” he said.
Legal nettle
This is the legal nettle: many employers are still struggling to get workers back to the office after the pandemic. A temporary concession can easily mutate into an expectation. Patel said employers who wanted to use remote work as short-term relief should make it clear that it applied for a defined period and could be withdrawn after consultation.
The same applies to other possible benefits, such as meal allowances, fuel allowances or once-off subsidies. Employers with the means to assist staff could do so, but Patel warned against permanently increasing the total cost to company unless that was the intention. Temporary benefits should be structured through policies, with clear start and end points.
The debate echoes a point made by Professor Waldo Krugell of North-West University about remote work and fuel prices: hybrid work may help households reduce commuting costs, but the real calculation is not only about petrol. It also involves productivity, time, transport patterns and the practical realities of different jobs.
“During the lockdown, working from home was really an emergency measure. Since then, it has become much more common and has been studied more,” he says.
Krugell quotes a study by Stanford University, which found that fully remote work carried the danger of employees becoming disengaged, difficulty incorporating corporate culture, or managing a team that required close interaction.
For many South African workers, the fuel price is not an abstract macroeconomic indicator. It is the difference between getting through the month and borrowing from the next one. That pressure may also surface in wage negotiations, where unions may push not only for salary increases, but also for benefits that soften the blow of transport and food costs.
Patel said financial education should form part of the employer response, particularly in a country where many workers are already under severe financial pressure.
“We are in a country where our employees need to understand and need to be empowered with knowledge as to how to manage their finances and how to balance their daily living expenses,” he said.
Larger warning
The larger warning is that employers should not use the Middle East conflict as a flimsy business case for retrenchments if the underlying economic evidence does not support it. Courts may not second-guess every commercial decision, but they can interrogate whether a retrenchment rationale is genuine.
Bishop’s concluding caution was that risks remain. The expected case is not guaranteed.
“As we said, we talked about the expected case today, there are always risks to this,” she said. “Bear in mind, I did outline the risk that it doesn’t turn out as we said; it’s not a short war.”
For employers, that means this is a moment for scenario planning rather than panic pruning. Retrenchments may be lawful where a business case exists, but they are blunt instruments with long tails. When conditions improve, rehiring can be expensive, slow and culturally disruptive.
“The idea of fully remote work is not very fashionable. I think hybrid work, working at home one to two days a week, could be a possible solution to saving on fuel costs. We don’t need a crisis to make this argument,” Krugell says.
Patel’s final point was less legal than human: companies may not have a strict legal duty to cushion workers from global shocks, but they may have a moral one.
“My personal view is that we may have a moral obligation, as opposed to a legal obligation, to find creative ways that do not place us in a precarious position to look after the very people who come to work each day to serve us,” he said.
In other words, the oil shock may be temporary. The choices employers make in response may last much longer. DM