Assisting Employers with Retrenchment Agreements

I assist employers in the event that they are considering the possibility of retrenching.

Section 189 of the Labour Relations states (inter alia) that when an employer contemplates dismissing one or more employees for reasons based on the employer’s operational requirements, the employer must consult with either the employees who are affected, their representatives of the trade unions involved, depending on the situation. (In a nutshell, as soon as it becomes a reality that retrenchments are on the table, the obligation to consult arises.)

The employer and the other consulting parties must engage in a meaningful joint consensus-seeking process and attempt to reach consensus on appropriate measures to avoid the dismissals; to minimise the number of dismissals; to change the timing of the dismissals; and to mitigate the adverse effects of the dismissals; the method for selecting the employees to be dismissed; and the severance pay for dismissed employees.

The employer must issue a written notice inviting the other consulting party (i.e  employee or representative  party if applicable) to consult with it and disclose in writing  all relevant information, including, but not limited to the reasons for the proposed dismissals; the alternatives that the employer considered before proposing the dismissals, and the reasons for rejecting each of those alternatives; the number of employees likely to be affected and the job categories in which they are employed; the proposed method for selecting which employees to dismiss; the time when, or the period during which, the dismissals are likely to take effect; the  severance pay proposed; any assistance that the employer proposes to offer the employees likely to be dismissed; the possibility of the future re-employment of the employees who are dismissed; the number of  employees employed by the employer; and the number of employees that the employer has dismissed for reasons based on its operational requirements in the preceding 12 months.

The employer must allow the other consulting party an opportunity during consultation to make representations about any matter dealt with the above as well as any other matter relating to the proposed dismissals; consider and respond to the representations made by the other consulting party and, if the employer does not agree with them, the employer must state the reasons for disagreeing (if any representation is made in writing the employer must respond in writing); and must select the employees to be dismissed according to selection criteria.

The employer must always and without exception follow a fair procedure. Failing this, in the case of dismissals for operational reasons, the employer may be ordered to pay the employee up to one year’s salary as compensation.

At Cape Labour, we assist employers in South Africa with the consultation process, mutual separation agreements, voluntary retrenchment, and termination of employment in line with the Basic Conditions of Employment Act. Contact Cape Labour today for expert support on retrenching employees, notice pay, and reaching a full and final settlement that protects both employer and employee.