What does the law say?

The Labour Relations Act states that when the employer contemplates retrenching employees based on operational requirements, he or she must consider Section 189-195 of the Labour Relations Act, which provides accepted reasons for retrenchments and the procedures that need to be followed. The Act provides procedural steps to be taken before embarking on retrenchment. The employer must consult with the worker representative from the union or workplace forum if there are no unions in the workplace. The consulting parties must attempt to reach consensus on the following:

• Appropriate measures to avoid the retrenchments
• Appropriate measures to minimise the number of retrenchments
• The timing of the retrenchment
• Ways to mitigate the adverse effect of the retrenchments
• The criteria to be used in selecting which employees to retrench, for example, last in first out, or those close to retirement
• Terms of the severance package to be issued to retrenched workers

The employer must provide relevant information in writing to the other consulting party, which might include: reasons for the proposed retrenchment, the alternatives that the employer considered before proposing retrenchment, and the reasons for rejecting each of those alternatives.

Dispute Procedures

If there’s a dispute regarding retrenchment based on operational requirements, the aggrieved party can refer the matter to the CCMA and then go directly to the labour court if no settlement is reached through conciliation and mediation.