Home Page ->
Legal Articles -> 5 must-know retrenchment facts
Welcome to Scorpion’s Legal Tips! Every week we’ll share stories of injustice and show you how you can strike back legally.
With retrenchments in the news yet again, it’s time to brush up on your rights. Scorpion Legal Protection gives you 5 must-know retrenchment facts to keep in mind.
Retrenchment must be the last resort taken by employers. Retrenchment has nothing to do with an employee’s conduct or health, it can only be done for “operational requirements”, which means it is strictly related to the employer’s business situation. The employer must give fair reasons for the retrenchment. You cannot be retrenched because of your health, performance in the workplace, or because your employer does not like you. This would be a substantially unfair retrenchment.
Even if the employer is having financial problems and all the employees know about it, if the employer wants to start retrenchments, this must be done in writing. Retrenchment is a formal process by law, the employer may not just tell you about it verbally. You must receive a written notice of retrenchment and this notice must include things like the reason for the retrenchment, what options were considered other than retrenchment, how they are choosing those for retrenchment, when it will take place, how many people are likely to be retrenched and severance pay, among other things, to ensure that your rights are not infringed upon.
Employers may not skip the consultation process. This is where the affected employees, who have received the written retrenchment notice, have a chance to discuss the retrenchment with their employer. The point of consultations is to try and find ways to avoid or at least reduce the size of the retrenchment. The employer must give the employees enough information to allow them to negotiate meaningfully with the employer.
A commonly used way to determine who gets retrenched is the LIFO principle (“last in – first out”). This means the employees who were hired most recently (last in) are the first ones to be chosen for retrenchment. However, this is not a law, and employers may use other criteria to determine who stays and who must go, for example, particular skills or qualifications that are needed in the company regardless of who has worked there the longest.
If your employer offers you a different position in the company instead of retrenching you, and you unreasonably refuse to take this alternate position at the company, then the employer could retrench you without severance pay. This could be seen as one of the ways the employer is trying to avoid retrenchments so that you can still earn an income. However, employers may not use this as a chance to just demote employees they do not like.
You may also be interested in:
Can you be fired for being drunk at work?
Can employers demote you to save money?
Step-by-step guide on going to the CCMA
Got a legal question for us? Ask it at the next Scorpion Live Q&A (every first Thursday of the month from 11:30-13:30) on the Scorpion Legal Protection Facebook page where you can get free legal advice – you don’t have to be a member.
* This is only basic legal advice and cannot be relied on solely. The information is correct at the time of being sent to publishing.
Date added: 04 April 2022
If you prefer to leave us an online query, please complete the form below and we will call you back.
Please select an enquiry type
Membership card / policy update query
Income Tax query
Last will & testament
Please select a complaint type
Poor service/Rude staff