Why be informed before embarking on retrenchments

A tough economic climate continues to see numerous organisations restructuring and implementing retrenchments in an attempt to streamline operations and increase profitability. Retrenchments are often unexpected, and employers should take time to review the retrenchment process, ensuring the correct procedures have been followed.

Organisations that do not comply with the Labour Relations Act could find themselves guilty of unlawful retrenchment should an employee seek legal counsel from the Commission for Conciliation Mediation and Arbitration (CCMA).

Organisations that follow retrenchment procedures are obliged to issue a written notice to all affected employees and following that, a reasonable period of time must be granted to allow the employee to review the notice and provide input and feedback. A consultation process must afford employees the opportunity to apply for alternative roles within the company.

Making employees sign documentation without allowing them to review it is illegal.

Whilst large organisations are likely to have the means to consult a department of HR specialists or a labour attorney, it is often smaller organisations that are ill informed when it comes to lawful procedure surrounding retrenchments, and as a result end up in lengthy and costly legal battles with ex-employees.

In addition to the required retrenchment notice and consultation process, the Labour Relations Act clearly stipulates what information needs to be included in the in the retrenchment notice.

Here employers need to ensure they clearly outline 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.
• Any possibility of re-employment?

When it comes to a settlement package, by law employees are entitled to a minimum of one week’s severance pay for every completed year of service as a minimum requirement.

It is important that during the consultation process that both parties agree on a fair and final settlement. The Labour Relations Act governs how organisations need to manage retrenchments and it would be advisable for all organisations to be fully informed before initiating retrenchment proceedings.

Kay Vittee is the CEO of Kelly.

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