Retrenchment is understood by the man in the street as simply that he has lost his job because there is no longer a job in the current economic climate. Many employers are contemplating retrenchments due to technological reasons (the introduction of new machines or technological innovations) that result in jobs been made redundant or by requiring employees to adapt working methods to new technology. Alternatively, it could be due to economic reasons (which relate to the financial state of the business).



Up to June 2013, John Abrahams* had been working for Furniture Den*, a furniture store situated in Woodstock. He was the only salesman employed. He had 11 years of service and was a dedicated and loyal employee. Unfortunately, due to the downturn in business, his employer, Paul Retief* had no choice but to retrench John Abrahams as he could no longer afford to pay his salary. After considerable deliberations, Paul Retief issued John Abrahams a letter of retrenchment, dated 18 June 2013. The letter reflected that John Abrahams would be required to work out his 30 day notice period, that he would be paid his outstanding salary and commission, accrued leave pay and one week’s salary for every competed year of service. Furthermore, it reflected that he would be issued with a written reference and UI-19 form to enable him to register for UIF benefits. John Abrahams was the only employee ever to have been retrenched since the inception of the business. Low and behold, John Abrahams felt aggrieved and sought advice from a specialist practising labour law. He was advised that his employer failed to comply with fair and lawful procedures as required in terms of Section 189 (3) of the Labour Relations Act.

Paul Retief failed to issue John Abrahams with a written notice of contemplated retrenchment. No reasons were provided for the retrenchment, no consultation processes took place between the parties, no alternatives were canvassed to avoid the employee’s retrenchment, the employee was not told how many employees were likely to be affected, no proposed method for selecting which employee to dismiss was discussed, nor was the timing when, or the period during which, the dismissal was likely to the effect discussed and nor was the severance payments discussed. The possibility of future re-employment was not discussed, nor was the number of employees that the employer has dismissed for reasons based on its operational requirements in the preceding 12 months discussed.

In fact, the employer acted unilaterally and prepared a letter of retrenchment without conferring with the employee. In the circumstances, John Abrahams decided to declare a labour dispute at the CCMA within 30 days of the date of retrenchment.
A CCMA conciliation meeting took place early in August 2013 and the employer failed to wish to conciliate and he felt that he had paid the employee monies, as prescribed by the Labour Relations Act. The employee referred the matter to arbitration. In October 2013, the CCMA commissioner presiding over this matter, awarded the employee a further 5 month’s remuneration as the employer failed to comply with the procedures in terms of Section 189 (3) of the Labour Relations Act and found that the employer did not have a good reason to retrench John Abrahams.

*Not their real names
For further information you can contact Bernard Reisner:

W.Tel no.: 021 423 3959
Fax: 021 423 2105
Cell: 082 433 8714