Labour Law Advice on the Issue of Retrenchments in South Africa
South Africa is once again in economic turmoil and many businesses are struggling to keep going. Understandably, in order to stay profitable and avoid having to liquidate, some companies have to restructure. This includes having to retrench employees. Your company may be one of the firms that must retrench workers in order to still make it during these tough economic times. But, how do you go about this? What are fair reasons for retrenchment? What are the correct procedures to follow?
When you use our legal services, your company will benefit from our labour law advice in South Africa regarding aspects such as strikes, industrial relations, disciplinary action, and retrenchment procedures. We strongly recommend making use of our labour law advice and guidance on important labour management issues, which is in line with the legislative requirements in South Africa.
Below is a brief explanation of retrenchments. For comprehensive information and guidance, call on our team of attorneys for labour law advice that is relevant to South Africa.
What Is Seen As Retrenchment?
Retrenchment is a type of dismissal, but where the employee is not at fault. It is the process that you, as an employer, must follow to reduce your workforce in order to meet your business’s needs. You must have a fair reason for retrenching employees. As such, it should never be your first step in dealing with business streamlining or rescue. To this end, it is essential to seek labour law advice on what is considered fair reasons and how to follow a fair procedure in reducing your workforce. You cannot retrench two or three workers just to employ other people in their positions a week or month later.
Operational requirements based on technological, economic, or structural needs are sufficient reasons for initiating retrenchments. If your company is experiencing a severe decline in business or faces closure, then you can consider retrenchments. If you invest in technology that replaces human labour, then retrenchments may be inevitable. The reason must be fair and retrenchment must be unavoidable. We recommend seeking labour law advice from our attorneys in South Africa on what is a fair reason and when retrenchment is seen as unavoidable.
The question is what is seen as a fair retrenchment procedure? For one, you must follow a process of consultation with employees likely to be affected by the process, or their union, elected representatives, or workplace forum.
You must give written notice regarding the intention to retrench. We also recommend seeking labour law advice on the wording of the written notice. The notice serves to invite the relevant parties to a meeting in which the potential retrenchment is discussed. The notice must include all the necessary details for consultation about retrenchment.
The consulting employees must have the opportunity to make recommendations. As such, it is a process to reach consensus between the employer and employees. Steps must be followed in deciding who to retrench and the relevant parties must be notified of the retrenchment. The selection criteria must be fair. Once the consultation phase is over, you can decide to commence with retrenchment if an alternative solution is not viable. To this effect, you must send out the written notice of retrenchment. If you have more than 50 employees, then additional procedures apply. To this end, seek labour law advice to ensure that you comply with the legislative requirements for retrenchment as applicable to the number of employees in your company’s service.
Call us on 011 234 2125 for labour law advice on retrenchments and other employment related issues in South Africa.
Disclaimer: This article is for information purposes only and does not constitute legal advice. Call on our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing – December 2018.