Retrenchments : Standing The Test Of Time


By : Mr H.J Beyers
Date : 28 May 2020

During these though economic times a lot of small businesses and companies will have no other option as to let some of the employees go in order to keep their doors open. It is a sad reality in South Africa due to the enormous impact that the lockdown has had on businesses.

It is therefore of the utmost importance that companies and businesses understand the process that must be followed in order to dismiss employees based on operational requirements (retrenchment of employees). It is also important for employees to know their rights during such retrenchments.

Retrenchments are not only implemented when the company is struggling financially (Economic needs), it can also be implemented for reasons such as Technological needs, structural needs and similar needs. When retrenchments are considered, it is important for the employer to ensure the retrenchment process is substantively and procedurally fair.

In order to ensure that a dismissal based on operational requirements is substantively fair the following must be adhered to:

  • The dismissal was to give effect to a requirement based on the employer`s economic, technological, structural or similar needs;
  • The dismissal was operationally justifiable on rational grounds;
  • There was a proper consideration of alternatives, and
  • Selection criteria had been fair and objective.

In order to ensure a dismissal based on operational requirements is procedurally fair the following must be adhered to:

  • There must be prior consultation;
  • The consultation should be with the correct person and or representative;
  • There should be more than one consultation and the parties should try to reach consensus on issues like how to avoid/minimize the impact of the retrenchment;
  • Relevant information should be disclosed in writing in accordance with section 189(3);
  • The employer must use a fair and objective selection criteria when choosing the employees whom should be dismissed;
  • When a dismissal based on operational requirements is unavoidable and the correct consultation process was followed the employer should pay the correct severance pay and provide the employee with the correct documentation.

In short the above must be adhered to in order to ensure the dismissal process, based on operational requirements, was substantively and procedurally fair. It is highly advisable that if you are an owner of a small business or company that you seek advice from an expert such as an Attorney or experienced Labour Consultant in order to assist you in adequately dealing with the retrenchment process.

If you are an employee and the retrenchment process is instituted against you it is advisable to contact an Attorney to assist you going forward. In the event that you were dismissed based on operational requirements and you are of the opinion that the correct process was not followed, it is advisable that you contact an Attorney or experienced Labour Consultant for assistance. Always keep in mind that you must lodge a claim against the employer within 30 days at the CCMA for unfair dismissal and should same always be done timeously in order to ensure that you do not run the risk of having to apply for condonation for being out of time with your claim.