Retrenchment is one of the most challenging processes employers face. The Labour Relations Act imposes strict requirements to ensure fairness and protect employees' rights.
Legal Requirements
The employer must prove that the dismissal was based on genuine operational requirements and that less drastic alternatives were considered. Section 189 of the LRA requires employers to consult with affected employees, provide written notice, disclose all relevant information, and allow employees to make representations.
Selection Criteria
Selection criteria must be fair, objective, and applied consistently. Common criteria include last in first out (LIFO), skills and qualifications, performance records, and disciplinary records.
Severance Pay
Employees are entitled to severance pay of at least one week's remuneration for each completed year of service.
Alternatives to Retrenchment
Employers must consider alternatives such as reducing working hours, temporary layoffs, salary reductions with consent, voluntary retrenchments, and natural attrition.