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Retrenchments in terms of Sections 189 of the Labour Relations Act

Often employers find themselves in difficult financial positions. The employer sometimes has no choice but to retrench some of its employees in order for its business to continue.
Some employers however try to use retrenchments to get rid of employees, instead of following eg. Disciplinary procedures.
Much has been made about the retrenchment process. It is very important for employers to follow the correct procedures as set out in the act.
The first requirement in this regard, is the prior consultation when the employer contemplates dismissal. This is thus when the employer hasn’t decided to dismiss the employee(s) but is seeing dismissal of the employee(s) as a possibility.

The employer must further consult with the following role players:

  • The person or group indicated in a collective agreement;
  • In the absence of a collective agreement, a workplace forum and any registered trade union;
  • Should there be no union, the employer must consult with the employees who are likely to be affected.

The question also arises how the employer and employee(s) must consult. According to section 189(2), there must be an attempt to reach consensus. There should be more than only one meeting.
The employers and employees must try to reach an agreement about:

  • What could be done to avoid the dismissals;
  • What could be done to minimise dismissals;
  • What could be done to change timing of dismissals;
  • How to mitigate the adverse effects of the dismissals;
  • The selection criteria, and
  • Severance pay.

A retrenchment must also be substantively fair. This means that employers must really have an economical, technological, structural or a similar need, in order to retrench employees. The circumstances and facts of each case must be taken into account when deciding if a retrenchment is substantively unfair.

The content of this article is intended to provide a general guide to the subject matter.
Specialist advice should be sought about your specific circumstances.
Written by Elzahn Bloem
04 February 2019.


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