Key points to keep in mind – retrenchment process

Retrenchment process

In recent news reports, it seems that floodgates for retrenchments are open. This could indicate a stressful first quarter of 2024 for labour relations in South Africa.

The retrenchment process in South Africa is a regulated process governed by the Labour Relations Act (LRA) and other relevant labour legislation. Here are key points to keep in mind if you might be a part of a retrenchment process:

Substantive and Procedural Fairness:

Employers must have a valid reason for retrenchment, such as operational requirements, economic reasons, or technological changes.

The process must be fair and follow proper procedures.


Employers are required to consult with affected employees or their representatives.

Consultation should involve discussing the reasons for retrenchment, alternatives to retrenchment, and ways to mitigate the impact.

Selection Criteria:

Fair and objective criteria should be used when selecting employees for retrenchment.

Common criteria include skills, qualifications, and performance.

Notice Period:

Adequate notice or payment instead of notice must be given to affected employees.

The notice period depends on the length of service.

Severance Pay:

Severance pay may be required, especially if the retrenchment is due to operational requirements.

The amount of severance pay is usually determined by the employee’s length of service.

Alternative Employment:

Employers are encouraged to explore alternatives to retrenchment, such as offering alternative employment within the company.

Retrenchment Packages:

Some companies offer retrenchment packages that may include severance pay, notice pay, and other benefits.

Dispute Resolution:

Employees have the right to refer a retrenchment dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA).

Disputes can include claims of unfair retrenchment.

When to involve an attorney:

While it’s not mandatory to involve an attorney in the retrenchment process it is certainly advisable, legal advice can be valuable, especially in complex cases.

SVN Attorneys can ensure that the process adheres to legal requirements, help with dispute resolution, provide guidance on potential legal challenges and assist if you are of the opinion that you have been unfairly retrenched. Click here for assistance.

It’s important to note that labour laws and regulations may be subject to change, so it’s advisable to consult with legal professionals or updated sources for the most current information.


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