Page 34 - DRG HR HANDBOOK- Nikita Pillay

RETRENCHMENT

IN TERMS OF SECTION 189A OF THE LABOUR RELATIONS ACT 66 OF 1995

ismissal of employees that is based on the CONSULTATION
operational requirements of the employer
An employer is obliged to consult with its employees
D is regulated by Sections 189 and 189A of
when it contemplates dismissing one or more of the
the Labour Relations Act 66 of 1995 (LRA). A Code
of Good Practice has also been issued in terms of employees for operational reasons. An employer may
the LRA to govern the retrenchment process to be not assume that an employee will accept redeployment
followed by an employer. or transfer within the company unless the employee is
contractually obliged to do so.
Dismissals based on the employer’s operational require-
ments are more commonly known as retrenchments. Two An employer is required to provide its employees with
types of retrenchment processes are distinguishable; a statutory notice in terms of section 189 (3) of the LRA
small scale retrenchments and large scale retrenchments. which discloses in writing all relevant information relating
Small scale retrenchments are regulated by section 189 to the proposed retrenchment prior to commencing
of the LRA, while large scale retrenchments are regulated the consultation process. An employer must consult
by section 189A of the LRA. not only on the consequences of the proposed
When a company considers retrenchment, procedure retrenchment but in respect of the business needs and
must be followed in order to comply with the Labour to be able to show that all reasonable alternatives have
Relations Act in respect of the retrenchment of any been considered prior to contemplating the need for
member of staff. retrenchment.

The retrenchment process normally consists of two An employer must thereafter engage in meaningful
important stages: consultation with its employees or their representatives
to achieve consensus. Meaningful consultation
1. The decision by the employer that costs need
requires the employer to allow the employee or its
to be reduced by means of retrenchment of staff
(the economic rationale) representatives an opportunity during consultation
to make representations about any matter connected
2. Deciding on the best way to effect retrenchments
with the proposed retrenchment and for the employer
to ensure that the process is fair.
to respond.
It is important that both employers and employees
understand the requirements of the Labour Relations Act THE NOTICE WHICH IS GIVEN IN TERMS OF
and how employees’ rights are protected. All employees SECTION 189(3)
(and their employers) involved in a retrenchment should
The employer must give notice to the affected employees
at least be aware of the following:
of the need for the proposed retrenchment. This notice
When management decides to reduce costs by
must be in writing and contain the necessary information
retrenching staff, the employer must firstly seek
for the consulting employees to make representations at
avenues to minimise retrenchment. This could include
the consultation.
for example requesting employees to work short time,
The necessary information includes, but is not limited to:
eliminate overtime, or impose a timeous moratorium
on appointing new staff, transfers, etc. An employer ƒ reasons for the proposed retrenchment
cannot simply make a unilateral decision and announce
ƒ options considered by the employer to avoid the
that short time is going to be worked with immediate
proposed retrenchment and the reasons for rejecting
effect to avoid retrenchment. Such a decision must be
these options
as a result of a process of consultation with the
34 effected employees in order to comply with the ƒ number of employees likely to be affected and their
fairness requirement. positions