Labour Law in South Africa

Labour Law in South Africa on the Topic of Retrenchments

Economic challenges and technological advances may force your firm to retrench employees. However, it is essential to do so in adherence to the requirements of the Labour Law in South Africa. Retrenchments are allowed if done for economic, technological or structural reasons recognised by the Labour Relations Act of the country. The correct procedures must be followed which include consultation with the affected parties.


The consultation process must commence immediately upon consideration of possible retrenchments to allow all parties enough time to submit proposals for alternatives to retrenchments. The consultation period should be long enough to allow for negotiations, information sharing, reporting back and discussions of alternative solutions, preparation of documentation and submission, as well as reviewing of information received. The consultation process will give the parties the opportunity to set timeframes or to extend timeframes. The employees to be retrenched must receive notification of the intention and the opportunity to submit their proposals for alternative solutions.

The employer must be willing to and must actively review alternatives and proposals with the intention of finding a solution that will minimise the need for large-scale retrenchments. The process of consultation must be scheduled, starting with an initial meeting for the discussion of a formal memo regarding the potential retrenchments.

The memo must explain the reasons for the retrenchments, how the dismissal process will work, when the employees can expect to be dismissed and which parties are affected. The document and meeting will provide the parties the opportunity to consider solutions, such as reduced hours of work, lowered salaries and/or fewer shifts.

Retrenchment should not be used as an opportunity to get rid of older workers, underperformers or pregnant personnel. As an employer you may be tempted to retrench the part-time employees, but should most of them be females, you risk discrimination against a gender group. It is thus essential to obtain legal guidance from attorneys specialising labour law in South Africa to help you follow the correct procedures to avoid disputes.

How to Select People to Be Retrenched

The principle of selecting the newest employees first for retrenchment is widely applied, but you should also consider factors such as affirmative action positions and the core functions of the enterprise. Should you decide not to retrench a recently employed person who is in an important position for your business functioning, you will need good reason and will have to communicate the reasons at the consultation meeting.


The workers don’t have to respond to the memo of retrenchment, but it would be in their interest to submit proposals for alternative solutions. It is essential to provide the employees with adequate time to deal with the situation. They need to make arrangements for their future and they also need to come to terms with the prospect of losing their jobs.

Many disputes arise when the employer does not give enough time for employees to respond, seek new positions and to negotiate terms of the retrenchment. It is thus essential that you start the consultation process early on. In this respect, it is important to assess your company’s financial standing and strategies to overcome financial challenges regularly as to avoid a crisis situation where retrenchments must be done immediately or over a short timeframe. Though it is not a requirement by law, it is wise to give adequate support to the employees such as time-off if they need to go to job interviews, recommendations, references and updating of their CVs. The severance packages must be worked out according to the minimum allowable requirements.

Contact us at Allardyce & Partners for professional legal assistance in handling retrenchments. We are a well-established legal firm specialising in all aspects of Labour Law in South Africa.


*NB this article is for information purposes only and does not constitute legal advice. You are advised to consult with us before using/relying on this information.

Scroll to Top
Scroll to Top