Retrenchments - what employers need to know

The retrenchment process is clearly set out in the Labour Relations Act and must be followed to ensure that it is substantively and procedurally fair

- Christiaan Swart

Retrenchment is a no-fault termination of an employee’s services and is governed by Section 189 of the Labour Relations Act (LRA). Retrenchment becomes necessary when there are operational requirements from the employer’s side to reduce the workforce. Operational requirements are defined as requirements based on economic, technological, structural or similar needs of the employer.

The retrenchment process is set out in Sections 189 and 189A of the LRA.

It is important that each employer takes note that the retrenchment process must be instituted as soon as it is contemplated.

Employers are encouraged to commence with the process well in advance in order to establish whether there are any actions that can be taken to avoid retrenching any employees.

REASONABLE ALTERNATIVES

Employers must take note that the retrenchment process entails that all reasonable alternatives must be exhausted in order to try and prevent any retrenchments, and the courts have stated that retrenchment of any employee must be the last resort.