Navigating the abyss – an overview of retrenchment

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 Section 189. Redundancy is a form of retrenchment whereby the employer, for financial or structural reasons, makes a position obsolete. The relevant sections of the LRA still apply.

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


This is the WHY – why the company is retrenching people. Retrenchment or redundancy must be necessitated by an operational requirement, defined in the LRA as: ‘Requirements based on the economic, technological, structural or similar needs of an employer.’

The courts seldom interfere in the decisions of employers to 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. They do determine whether the reasons put forward by the employer are legitimate, genuine and fair.

Employers need not only look at retrenchments when they are in financial trouble. As long as they 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 the most important. This process is specifically set out in Section 189 of the LRA. There are no shortcuts and, as the courts allow the employer a certain amount of leeway on the substantive component, they expect substantial procedural compliance.

The employer must consult with affected employees. Both parties must engage in a ‘meaningful joint consensus seeking process’ with a view to reaching an agreement.

Timing is crucial. The process must start when the employer contemplates dismissal. Employers may not 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 affected employees with a Notice in terms of Section 189 (3). This notice (letter) serves as an invitation to consult, providing a detailed list of information that will enable the employee to consult with their employer. The Section is very specific and failure to comply with it may render dismissals procedurally unfair.

Once the Notice is served a series of meetings need to take place. Parties should take time to properly consider what the other side says or proposes. Reasons for rejecting proposals need to be furnished.

I recommend that any meetings be recorded and minuted. Employees have the right to request information and to expect that all correspondence be done and/or confirmed in writing.

Nitty Gritty

Many breast cancer sufferers choose not to advise their employer of their medical condition as they fear that the employer will try and “get rid of them”. If you believe that you have been unfairly retrenched, or are being faced with a possible retrenchment, please obtain immediate legal advice!


Can I ask them to put me on early pension instead?

This is an option. It would depend on the Rules of your Pension Fund so look at the Rules first before agreeing to this option – make sure they allow for it and, if so, on what terms. 

Am I going to lose my medical aid?

The employer is under no obligation to continue medical aid, provident fund or pension fund contributions after you have been retrenched. Ask your employer if they would be willing to keep you on the medical aid past the date of termination BUT check with your medical scheme to see if this is permissible. Your medical scheme must also give you the option to stay on – BUT – you would be liable for the full amount.

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 within 30 days of your dismissal.

• If there was more than one person retrenched then the CCMA will conciliate the matter and it will then have 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 for free, but bear in mind that they are there to adjudicate your matter. They will gladly give advice but the CCMA will not represent you.

What about legal representation?

You are allowed legal representation and so is the employer. I recommend that you take legal advice before commencing litigation. Subject to a means test, your can 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.

Written by Charles Bailie