Dismissals and Retrenchments

Retrenchment is a form of dismissal. However, it’s not due to a fault on the side of the employee (for example poor work performance). It is a process wherein the employer reviews the business needs, profitability and other operational factors in order to increase profits or limit losses. As a result, in most cases, this means that the business has to reduce employees.

This process is quite complex and requires “exhaustive” consultation with the affected employees or their representatives. The employer must give fair reasons for retrenching employees and follow a fair procedure when making such a decision. Thus, ensuring that they comply with the Labour Relations Act and the rights of their employees. However, if an employer doesn’t provide the proper reasons and doesn’t follow the proper procedures, the CCMA or Labour Court can consider the retrenchment unfair.