COVID-19 – Excuse to retrench?

With the president’s announcement 23 April 2020 of the gradual phasing and upliftment of the national lockdown, many of us are facing the great unknown – whether we will be returning to work or be let go as a consequence of COVID-19. We have been inundated with calls from desperate employees who have already been retrenched by their employers on the auspices of COVID-19, with employers believing that this is a fair excuse to do so without following any procedures, and most certainly not in compliance with the objectives and procedures in section 189 of the LRA.

Employers are not legally entitled to disregard the provisions of the Constitution (right to fair labour practice) and the LRA. The COVID-19 crisis has simply exacerbated South Africa’s vulnerable economy pre-lockdown. It is self-evident that many businesses will find themselves in desperate situations when faced with the uncertainties going forward in an attempt to ensure the survival of their businesses. However, this does not mean that employers can simply disregard their legal obligations.

Here are some of the rights and obligations of employers and employees in terms of section 189 LRA:


  1. Substantive fairness (fair reason): An employer’s reasoning for the need to restructure/retrench must be based on objective grounds, establishing the employer’s operational requirements.
  2. Procedural fairness: The employer is obliged to comply with the procedural aspects in the provisions of section 189 of the LRA (not simply as a checklist and substance over form is required) and applies equally to restructuring and/or retrenchment. The objective of the consultative process is to avoid retrenchments, where possible, to minimise the number of retrenchments where not possible to avoid.
    1. Notice (Section 189(3)): When the employer contemplates the need based on its operational requirements to restructure (often involves a change to the terms and conditions of employment) or dismiss one or more of its employees, the employer is required to issue the employee with a notice to this effect. This notice should invite the employee to consult with the employer, which should disclose in writing all relevant information, including (but not necessarily limited to):

(a) the reasons for the proposed dismissals (simple reliance on the COVID-19 lockdown/crisis not sufficient but must establish the operational needs as a consequence thereof);

(b) the alternatives that the employer considered for proposing the dismissals and the reasons for rejecting each of these alternatives. In these novel circumstances, greater emphasis should be placed on genuinely seeking alternatives to retrenchments. In this respect, an employer is encouraged to consider options such as temporary layoffs, short-time, and furlough of employees to name  a few;

(c) the number of employees likely to be affected and the job categories in which they are employed;

(d) the proposed method for selecting employees to dismiss;

(e) the time or period during which dismissals are likely to take effect;

(f) the proposed severance amounts;

(g) any assistance that the employer proposes to mitigate the adverse effects of possible restructuring and/or dismissal. This can include any assistance in kind, be creative. At this stage, as a minimum employer should assist employees in claiming benefits under the TERS scheme and the like;

(h) the possibility of future re-employment of the employees who are dismissed (this may also be a form of assistance to the employees and is recommended as a consideration, especially if the employer’s operational needs have come about solely and as a direct consequence of the COVID-19 lockdown and crisis);

(i) the number of current employees;

(j) the number of dismissed employees based on its operational requirements in the preceding 12 months.

2.2 Consultation:

(a) The employer must consult with trade unions (if applicable) or the individual employee (or nominated representatives), and such consultation must be by engaging “in a meaningful joint consensus – seeking process” and in an attempt to reach consensus on the factors already addressed above;

(b) Consultation during lockdown can happen over digital platforms and communicating via various apps;

(c) The employer must provide a fair reason and follow procedural fairness in any labour dispute. Thus record-keeping is of the utmost importance in these circumstances;

(d) There is no prescribed number or time period for consultation sessions. However, each matter should be decided on their own circumstances. The consultation process may not necessarily be prolonged because of COVID-19 and may in fact be even shorter than usual.


  • Consultation Process: Employees are required to participate in the consultation process. Therefore, all employees should use this process as a means to engage with the employer in a meaningful manner to avoid or minimise the necessity for their retrenchment. In this regard, alternatives should be fully explored to secure your employment.
  • Alternatives:

(a) Changing to the terms and conditions of your employment including short time, temporary layoffs, and Furlough. This means that you will remain employed. However, you will effectively be on “unpaid leave”(furlough/temporary layoffs), which then entitles you to claim benefits from the TERS scheme for the COVID-19 period and thereafter, UIF in the normal course as envisaged in terms of section 12 of the Basic Conditions of Employment Act (“BCEA”);

(b) Consider every alternative, whether proposed by the employer or by you, because failure to do so  may result in your retrenchment. The employer retains the ultimate decision in this regard, and you may lose your entitlement to claim severance pay if you have unreasonably refused the alternatives (section 41(4) BCEA);

(c) Thoroughly prepare and participate in the process in an effort to save your job particularly in view of the current global and national economic crisis facing us all.

Recommendation: Whether you are the employer or employee, we recommend that you consult with your labour lawyer to get the best advice and help you minimise the risks especially in these dire circumstances.

NB: Please note that this guide is for informational purposes only and not for the purpose of providing legal advice. Should you require more information on this topic, or any issue arising out of this, please contact Allardyce & Partners on 011-234 2125 or

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