What Is The Procedure for Retrenchment?

Navigating retrenchment is a delicate process for any business. South African law, through Section 189 of the Labour Relations Act, mandates a fair procedure, focusing on the employer’s economic and operational needs rather than employee fault. This process is designed to safeguard employees’ rights during restructuring.

A key step in the retrenchment procedure is consultation. Employers must enter discussions with either a trade union, a workplace forum, or directly with the affected employees. This dialogue aims to reach a consensus on how to avoid dismissals, reduce the number of affected employees, manage the timing, and lessen the impact.

Employers are also required to transparently disclose all relevant information including reasons for retrenchment, alternative solutions considered, selection methods for dismissal, timing, severance pay, and potential for future re-employment.

It’s critical that employers use fair and objective criteria when selecting employees for retrenchment. Consultation must also include the opportunity for feedback, with employers obliged to consider and respond to representations made.

Retrenched employees are entitled to a severance package, outstanding leave payout, and notice pay. Furthermore, employees can refer disputes to the CCMA under certain conditions.