The Basics of Retrenchments

by Lungelo Luthuli

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Recently STATS SA announced that the number of unemployed people in South Africa in this quarter is sitting at around 2.2. million. This is equivalent to the population of Botswana, startling stuff! We have basically shed the entire country of Botswana. Unemployment rates, the world over, has spiralled since the advent of the novel coronavirus known as COVID-19. I don’t think the world has seen such a large rate of unemployment since the great depression.

For many people, COVID-19 and the National Lockdown was a time to reflect. A time to do things that they had always wanted to do but did not have time to engage in due to corporate demands such as to bake, try new recipes, write those books they have been putting off all their lives, take up new hobbies, inter alia. For many, however, it’s been a time of anguish. A time of uncertainty. A time where job security was threatened. A time where joblessness becomes a reality. Retrenchments during this time have increased drastically and they are not showing any signs of decreasing. More and more, office parks are becoming ghost towns.

While many of us are celebrating the country going to alert level one, many are lamenting job losses. With the economy also declining and unemployment rates on an all-time high, these job losses often carry with them an element of mental illness which, as a country, we haven’t even begun to delve into.

In recent times we have seen an upward spike in retrenchments or dismissals for operational requirements. The 2018/2019 report of the Commission for Conciliation, Mediation and Arbitration indicate that although 15 787 job losses have been mitigated, 21 391 retrenchments were recorded. The Construction sector saw 3584 job losses, the mining sector saw 3260 job losses and the mental industry saw 1741 job losses, inter alia. This spike in retrenchments is just in reference to the 2018/2019 period. If these are the numbers we witnessed in 2018/2019, one shudders at the thought of the numbers that the 2019/2020 report will present.

Many of the retrenchments we have seen during this COVID-19 period have been mainly as a result of economic and technological reasons due to the workplace being located remotely and those without tools and wherewithal to navigate the new normal which comes in the form of virtual meetings have become redundant. Section 213 of the Labour Relations Act defines Operational requirements as “requirements based on the economic, technological, structural or similar needs of an employer.”

In as much as companies or employers can have valid reasons which necessitate letting go of some employees, our law does not allow employees to be dismissed without the fair procedure being followed. Section 189 and 189A of the Labour Relations Act are the main sections governing dismissals for operational requirements. Section 189 applies to normal scale retrenchments whereas Section 189A applies to mass retrenchments.

In terms of the retrenchment process as set out in Section 189, an employer contemplating dismissing one or more employees for operational requirements must consult with the employees likely to be affected by the proposed dismissals. If the workplace is unionized, the employer must consult with the registered trade union whose members are likely to be affected by the proposed dismissals. This consultation process is meant to be a meaningful joint consensus-seeking process which means parties come to the table with an open mind.

An important component in this process is found in Section 189(3) where the employer is required to notify, in writing, the consulting parties and to disclose all relevant information including but not limited to:

• Reasons for the proposed dismissals
• Alternatives considered by the employer and reasons for rejecting them.
• The number of employees likely to be affected
• Selection criteria to be used
• Timing of the retrenchments
• Severance payment
• Assistance the employer proposes to offer to affected employees
• Possibility of future re-employment
• The number of employees the employer employs
• The number of employees retrenched in the preceding 12 months.

It bears to mention that although Section 189 lays out the procedure that must be followed where retrenchments are concerned, it does not prescribe how this procedure is to be followed. The most important thing is ensuring that said procedure is followed, however, that may be.

Section 189A(13) goes so far as affording the courts judicial supervisory role in intervening in a retrenchment that is procedurally unfair with powers to make compensation orders.

Having gone through a retrenchment myself and also have facilitated a number of retrenchment consultations I can honestly say that the process is not easy. There are companies which offer psychological assistance to employees who are affected by retrenchments and these companies should be lorded because, from my personal experience, retrenchments are not easy and not many of us are equipped mentally and otherwise to deal with them. Although it may not lessen the pain of the possibility of losing one’s job, it does help when one understands the process so that one is able to identify any unfairness, be it substantive or procedural.

It worth noting that those being retrenched must be paid severance which is calculated at one week for every completed year of service. If employees are not paid these monies or any other statutory payments due at the time if termination of employment, employees who earn less than the threshold can now approach the CCMA in terms of Section 73A of the Basic Conditions of Employment Act.

About the Author

is the founder of a platform called Labour Collective Advisory whose aim is to empower both employers and employees with the knowledge to help them navigate the treacherous field of Labour Relations.

She has extensive experience spanning over (5) five years in Industrial/ Labour Relations, having added value to clients from different industries varying from large conglomerates to small to medium enterprises.