Facing Retrenchment? Know Your Rights

Aslam Moolla

In today’s tough economic climate, the word “retrenchment" is one many of us dread  hearing. It’s a stressful, uncertain time, and it’s easy to feel powerless. But it is crucial to  remember that as an employee in South Africa, you have clear, strong rights designed to  protect you. 

Retrenchment is not a tool an employer can use to get rid of a problem employee. It  must be a "no-fault" dismissal. This means the termination is not about your  performance or conduct, but because the employer has a genuine operational  requirement.  

This can mean the company is: 

• Facing financial struggles 
• Implemented new technology or new software making a job redundant - or structural reasons where the company is restructuring, and your post is no  longer needed. 

If your employer is considering retrenchments, they cannot simply hand you a letter and  show you the door. They must, by law, follow a specific, fair process governed by  Section 189 of the Labour Relations Act (LRA).

Consultation 

The heart of the retrenchment process is a consultation.

This is not just a one-way  information session, it is a legal requirement for your employer to engage in a joint  discussion with you. They must invite you (or your trade union) to consult and must  genuinely try to reach an agreement on several key issues before any final decision is  made. 

Your employer must issue a written notice (a Section 189(3) notice) disclosing all  relevant information, and they must consult with you on: 

Avoiding retrenchment

Which is the first and most important topic.

The employer must disclose the alternatives they have considered and must listen  to your proposals. Can a salary-cut across the board save jobs? Can employees be  re-skilled for new roles? Can voluntary severance packages be offered first? 

Minimising number of retrenchments 

If retrenchments are unavoidable, how can the number be reduced?

Timing 

When will the retrenchments take effect? When is your official last day? 

Support from company 

Discuss offering time off for job interviews, providing counselling services, or giving  employees letters of reference. 

Severance pay 

The calculation of the final payment (generally it is one week for every year worked- but  this can be negotiated). 

Selection criteria 

If retrenchments cannot be avoided, your employer must use selection criteria that are  fair and objective.

A common method is LIFO (last in, first out), where the newest  employees are selected first. However, employers can also use other criteria, such as  skills, qualifications, and experience, as long as they are applied fairly and consistently. 

It is automatically unfair to select an employee for retrenchment for a discriminatory  reason, such as their race, gender, pregnancy, or for exercising a right (like participating  in a strike). 

What is owed to you? 

If you are retrenched, you are entitled to a specific payout, which includes:

Severance Pay 

The legal minimum is one week’s remuneration for every completed year of  continuous service. Your contract or a collective agreement may offer more, but  never less. 

Notice Pay 

You must be paid your full notice period as per your contract (or the statutory  minimum, whichever is greater). 

Accrued Leave Pay

You must be paid out for all outstanding annual leave days you have earned but not  taken. 

Other Entitlements 

You are also entitled to any other amounts owing, such as pro-rata bonus pay or  incentives (if your contract allows for it) and your pension or provident fund withdrawal  (subject to the fund's rules). 

What if the process is unfair? 

If your employer fails to consult in good faith, uses unfair selection criteria, or does not  have a valid reason for the retrenchment, you may have been unfairly dismissed. 

You have the right to refer the dispute to the CCMA (Commission for Conciliation,  Mediation and Arbitration). It is vital to act quickly, as you must refer an unfair dismissal  dispute within 30 days of your dismissal date. 

Being retrenched is a difficult experience, but don't be a passive participant.

Know your  rights, engage in the consultation process fully, ask the hard questions, and propose  alternatives. Knowing your rights is the first and most important step in protecting  yourself. 

** Aslam Moolla is the founder and director of Legal Leaders and co-founder of Legal Leaders Insurance. He is a passionate labour lawyer with over 14 years of experience. Moolla and the Legal Leaders have become a prominent voice for workplace fairness and a commitment to ensuring every South African knows their rights and how to defend them.

***The views expressed here do not necessarily represent those of Independent Media or IOL.

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