We receive several inquiries from members regarding the process an employer should follow before employees can be retrenched. The process that should be followed was properly explained in the case of Macuvele v Kensington Ridge Primary School (JS20/2013)  ZALCJHB 74. In this case the court confirmed that the employer must be able to prove that the retrenchment was necessary due to an economic or commercial rationale. The reason for retrenchment must therefore relate to the employer’s financial position and cannot be because, for example, the employee is guilty of misconduct. This is also the reason why a retrenchment is known as a “no fault dismissal”. The employer also does not necessarily have to be financially in ruins before he or she can start with retrenchments. A retrenchment can be justified in order to simply make the employer more profitable.
In the abovementioned court case, the court also confirmed that a retrenchment process must commence by the employer issuing a notice in terms of section 189 of the Labour Relations Act (No. 66 of 1995). The purpose of this notice is to invite all interested parties to participate in a consultation process where efforts are made to find alternatives in order to avoid possible retrenchment. If it becomes clear that a possible retrenchment is unavoidable, items such as the severance package, the possibility of reappointment etcetera must be discussed.
If you are a member of Solidarity, the employer is obliged to include Solidarity in the consultation process where we can represent you (unless there is a collective agreement which excludes Solidarity). Therefore, if your employer starts with such a process, please contact us as soon as possible so that we can have inputs in the process.