Employers must be very careful with retrenchments - otherwise you could end up in the Labour Court, with a judgement stating that you must reinstate the retrenched employees, or pay them hefty compensation, and in addition pay all their legal costs.

The most common element that lands employers in the Labour Court seems to be the reason for retrenchments. Procedurally, retrenchments are not a problem - the procedure is clearly laid down step-by-step in "The Act".

Provided that the employer follows that procedure - even if it may seem a bit onerous or time consuming to do so - the employer would not be found lacking on procedural fairness.

Employers who face the Labour Court are those who did not have a proper or justifiable reason for retrenching. Employers must give very careful thought on consideration to the reasons for the retrenchments/s.

Employers must be able to show that the need to retrench is justified by a sound and objective business rationale.

If an employer is retrenching for financial reasons - and this is usually the case - the employer must be able to actually prove that there is a connection between his financial constraints and the need to retrench.

Employers must also be prepared to show the basis on which certain employees were selected for retrenchment and others not.

In other words, employers must be able to show what savings would be achieved by retrenching the selected employees and so on.

When it comes to retrenchment, employers are strongly advised to seek professional assistance.

Damage control never works - do it to correctly from the beginning - and you will not have a need to introduce damage control. In order to win a retrenchment case at the CCMA or Labour Court, the employer must fulfill its onus of providing that the retrenchment was fair in all respects.

It is the employer who has the duty of providing that there was a genuine and valid reason for retrenching staff in the first place.

Furthermore, they must prove that the decision as to which employees will be retrenched and which will keep their jobs was arrived at fairly.

The employer must also prove that he/she has shared with the targeted employees (or their representatives) all documentary and other information pertinent to the retrenchment.

There are a number of possible reasons for the fact that employers are still not complying with dismissal law, including;

  • Employers know the law well enough but do not believe it will be applied to them;
  • They hear about the law but do not believe it;
  • The operational circumstances of the employer are so dire that the pressure distracts the employer from the legal aspects of the retrenchment;
  • There is also a mistaken belief that, if there is a good reason for retrenchment, the court will be lenient on the procedural side of the case;
  • Employers misuse so-called retrenchments to get rid of undesirable employees. As their priority is getting rid of such employees, the legal requirements are given little consideration;
  • Employers are given poor legal advice regarding retrenchment law and implementation strategy.
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