Navigating the Abyss


Retrenchments or, as employers like to call them, Dismissals for Operation Requirements, can be overwhelming. It is important to remember that retrenchment is a "no fault" dismissal.

The retrenchment process is governed by the Labour Relations Act No 66 of 1995 (LRA), in particular Section189. Redundancy is a form of retrenchment whereby the employer, for financialor structural reasons, makes a position obsolete. The relevant sections of theLRA still apply.

Any dismissal has two components, the substantive and the procedural.

The Substantive

This is the WHY component - why the company is retrenching people. Retrenchment or redundancy must be necessitatedby an operational requirement. The LRA defines operational requirements as,  "Requirements based on the economic,technological, structural or similar needs of an employer."

This is a broad definition and our courts have interpreted the definition of operational requirements in the same way. The courts are seldom inclined to interfere in the decisions of employersto retrench, even if the employer has made a poor decision from a business point of view, as it is not within the scope of the court.

The court will get involved in determining whether the reason put forward by the employer is legitimate, genuine and fair. As long as the employer can show an economic, technological or structural rationale they are within their rights to explore retrenchments.

The Procedural

This is the HOW and is probably themost important. This is a process and the LRA sets out specifically in Section189 what the process is. There are no shortcuts and the courts expect substantial compliance with the correct procedure.

The LRA compels the employer toconsult with the affected employees. The LRA specifically says that both parties must engage in a "meaningfuljoint consensus seeking process" with a view to reaching an agreement. Many employers simply going through the motions with no intention of avoiding thedismissals or trying to minimise the effect they will have.

Timing is crucial. The process must start when the employer contemplates dismissal. It is not good enough for an employer to take a decision to dismiss and then single out employees for retrenchment. Once it is clear that dismissals are a possibility, the employer must issue the affected employees with a Notice in terms of Section 189 (3). This notice (letter) serves as an invitation to consult and is supposed toprovide a detailed list of information that will enable the employee to consult with the employer. The Section is very specific and failure to comply with itmay render dismissals procedurally unfair.

Once notice is served a series ofmeetings must take place. Parties are encouraged to take time to properly consider what the other side is saying or has proposed. Reasons for rejecting proposals need to be furnished. I recommend that all meetings be recorded andminuted. As an employee you have the right to request information and to expect that all correspondence with you be done and/or confirmed in writing.

Nitty Gritty

If you believe that you have been unfairly retrenched or are being faced with a possible retrenchment please obtain immediate legal advice!


Q: I have become disabled. Are they allowed to retrench me?

A: Yes they can - BUT - they cannot use your disability as the reason. They are only allowed to use criteria that are fair and objective, such as Last In First Out or Skills Retention. If the employer is concerned about how your health is impacting on your work performance they must conduct an Incapacity Investigation. We will cover Incapacity dismissals in another issue.

Q: What about early pension?

A: This is an option. It would depend on the Rules of the Pension Fund, and I would recommend that you look at the Rules first before agreeing to this option - make sure they will allow for it and, if so, on what terms.

Q: Am I going to lose my medical Aid?

A: If iti s a company medical aid, and it is a condition of employment, then yes. The employer is under no obligation to continue your medical aid contributions or your provident fund or pension fund after you have been retrenched. Your medical aid must give you the option to stay on - BUT you would be liable for the full contribution. As part of the consultation, ask about the medical aid and ask ifthe employer would be willing to keep you on the medical aid past the date oftermination. Again, check with the medical aid scheme and see if this is permissible in terms of their Rules.

Q: Can I fight it at the CCMA?

  • If you have been dismissed, and you feel that your dismissal was unfair, you are entitled to refer a dispute to the CCMA or relevant bargaining council.
  • This has to take place within30 days of your dismissal.
  • If there was more than one person retrenched then the CCMA will conciliate the matter and it will thenhave to proceed to the Labour Court.
  • If you were the only person retrenched then the CCMA will conciliate the matter and thereafter you have the choice of proceeding in the Labour Court or remaining in the CCMA. There are pros and cons to both approaches.
  • The CCMA renders its services forfree, but bear in mind that they are there to adjudicate your matter. They will gladly give advice but the CCMA will not represent you.

Q: What about legal representation?

A: You are allowed legal representation and so is the employer. If you cannot afford the services of an attorney youcan, subject to a means test, get legal representation for free from one of the following organisations:

  • The Legal Aid Board
  • The SASLAW pro-bono office at the Labour Court
  • Most Universities have Law Clinics which, at the very least, dispense free legal advice.