RETRENCHMENTS: How do I go about it and what are the alternatives?

Since the lockdown has commenced, many businesses have found themselves unable to meet their monthly obligations and are considering a reduction of staff.

Whilst measures have been implemented by Government to assist employers in retaining staff during the Covid 19 lockdown period, if an employer contemplates dismissing one or more of its employees for reasons based on operational requirements, it must comply with the provisions of Section 189 of the Labour Relations Act, 1995.  

The Act defines “Operational requirements” as requirements based on the economic, technological, structural or similar needs of the employer.

In terms of the relevant provisions of the LRA it is not sufficient just to have good reasons to retrench employees – as many employers certainly will after the lockdown – but employers must do so in accordance with a fair procedure which primarily entails a “meaningful joint consensus-seeking” consultation process on the specific issues listed in Section 189.

The LRA requires employers to consult with the relevant stakeholders as soon as they contemplate retrenching one or more employees and not only after they have already taken a final decision to retrench.

Even if an employer is already disposed towards a particular conclusion, the courts have stated repeatedly that they are obliged to keep an open mind during the consultations. They must give their employees a real opportunity to engage on alternatives to retrenchment or on measures to mitigate its effects, and seriously consider these inputs before taking a final decision.

Alternatives to retrenchment which may be considered, especially if the lockdown is seen as being a short-term difficulty and the employer would therefore opt to preserve its workforce, rather than losing skilled and experienced members of staff, are, inter alia, remote working and flexible working arrangements, short time or temporary lay-offs, demotion or utilisation of annual leave.

In conclusion, the Covid 19 Regulations and Directives neither permits an employer to deviate from the provisions of Section 189 of the Act, nor does it prohibit an employer from dismissing employees for operational requirements, provided that any retrenchments are substantively and procedurally fair for them to be legally defensible if challenged.

Employers are accordingly advised to seek legal advice when they envisage the possibility of having to retrench any of their employees, before these considerations become a foregone and unavoidable conclusion.

We trust that the above information will be of assistance to you.

Should you require any assistance please contact us at:

Office: 012 882 0976


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