Retrenchment is a crucial process for businesses facing the need to restructure due to economic, technological, or other changes. Governed by Section 189 of the Labour Relations Act 66 of 1995, retrenchment in South Africa must comply with both procedural and substantial fairness. This includes a structured consultation process to protect employee rights during operational changes.
Employers must consult with the relevant parties, including trade unions or employee representatives, to discuss and attempt to reach consensus on several key issues. These include exploring alternatives to avoid dismissals, minimizing the number of dismissals, altering the timing of dismissals, and mitigating the adverse effects on affected employees. It’s essential to determine fair and objective criteria for selecting which employees to dismiss.
During this process, employers are required to disclose all pertinent information such as reasons for retrenchment, selection methods, timing, severance pay, and support offered to employees. This transparent communication allows for meaningful representation and feedback from consulting parties.
Severance packages, notice pay, outstanding leave, and other contractual entitlements must be duly compensated. Additionally, retrenched employees have the right to refer disputes to the CCMA under specific circumstances.
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