Retrenchment 101: What the law says about companies making job cuts

If you receive a notice of contemplating retrenchment from your employer, this does not mean that a final decision has been made.

Labour attorney Sherisa Rajah explains that companies are required by law to follow certain processes when cutting jobs.

Section 189(3) of the Labour Relations Act (LRA) requires an employer to give an employee a notice and conduct consultations when they contemplate dismissal.

Rajah explains that a retrenchment notice is not a concluded decision and can be interdicted in the labour court or challenged through industrial action, if it is unlawful.

Once a notice is given, all parties must engage in consultation, otherwise known as a joint consensus seeking process, to determine the options available.

Rajah explains that retrenchments can be on the basis of technological, economic or structural requirements for the company. She says that there is also the question of operational incapacity.

Once the terms of retrenchment are finalised, employees will be paid one week's income for every completed year of service and can be paid out for all their accrued annual leave.

When an employee is first notified [about retrenchment], it's notification of a contemplation. The process is by no means finalised at that stage.

Sherisa Rajah, Labour attorney and partner at Fasken law firm

A retrenchment is underpinned by an operational requirment.

Sherisa Rajah, Labour attorney and partner at Fasken law firm

Until you get to no other alternatives, it's difficult for the employer to justify a procedurally and substantively fair dismissal.

Sherisa Rajah, Labour attorney and partner at Fasken law firm

Rajah described the details of the retrenchment process for various employment contracts and offered advice to listeners seeking recourse.

Take a listen as Sherisa Rajah discusses the legalities around retrenchments:


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