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Retrenchment

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A basic guide to retrenchment

Retrenchment can be defined as a cutting down or off, as by the reduction of expenses or a forced lay-off of employees by a firm, usually to cut down its payroll.

Employers must consider alternatives to retrenchment. Employers must consult all the relevant parties when considering worker retrenchment. If retrenchment is unavoidable, fair procedures must be followed.

When an employer considers retrenching workers because of operational needs, he must, in writing, consult the people mentioned in the collective agreement; or workplace forum; and the registered trade union of affected workers; or if there is no trade union, the workers or their representatives.

The employer and the consulting parties must agree on ways of avoiding or minimising retrenchments; changing the timing of retrenchments; reducing the effects of retrenchment; choosing which workers to retrench; and on severance pay.

Employers must give the consulting party written notice and information on the following: reasons for an intended retrenchment; why a specific retrenchment method was used; how many workers are employed; how many workers are to be retrenched; how many workers were retrenched in the previous 12 months; when retrenchments will take place; what assistance the employer intends to give retrenched workers; and possible re-employment.

An employer must allow a consulting party to respond to a retrenchment notice. If the employer disagrees with the response, he must state why. If the consulting party responds in writing, the employer must respond in writing.

If a dispute arises as a result of retrenchments, workers may strike; an employer may lock workers out; and the parties may agree to change the consultation or facilitation periods.

The Commission for Conciliation, Mediation and Arbitration (CCMA) must appoint a facilitator 15 days after a retrenchment notice if requested by the employer; or most of the retrenched workers.

If a facilitator is appointed, and 60 days have elapsed since the date of the retrenchment notice the employer may give notice to end the job contracts; the registered trade union or the workers may give 48 hours’ ( or 7 days’ for public servants) notice of a strike; or refer the dispute to the Labour Court. If an employer gives notice before the above periods have elapsed, workers may give notice to strike.

If a facilitator is not appointed a party may not refer a dispute to a council or the CCMA unless 30 days have elapsed from the date of giving notice and once 48 hours or 7 days (for public servants) have elapsed , the employer may give notice of retrenchment; workers may give notice of a strike; or workers may refer the dispute to the Labour Court.

If an employer gives notice of retrenchment before the above periods have elapsed, workers may give notice to strike.

If an employer’s retrenchment proced ure is unfair, a consulting party may apply to the Labour Court, within 30 days after the employer’s notice, to order the employer to comply with a fair procedure; prevent him from retrenching a worker; or re-employ a worker; or award compensation to a worker.

If a party has already referred a retrenchment dispute to the Labour Court, it may not give notice to strike.

If a party has already given notice to strike, that party may not refer the dispute to the Labour Court.

Date: 7th March 2014
Legislation: Labour Relations Act, 66 of 1995.

Retrenchment

 

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