Retrenchment is dismissal for the business's operational requirements rather than anything the employee did. It is lawful, it is sometimes necessary, and it has a process that must be followed before the decision is final.
The most common failure is deciding first and consulting afterwards. That sequence is what makes an otherwise justified retrenchment unfair.
Consultation has to be genuine
The obligation is to consult when retrenchment is contemplated — not to announce a completed decision. The consultation must give the other side a real opportunity to influence the outcome, including whether retrenchment happens at all.
That means going in with a proposal rather than a conclusion, and being genuinely open to alternatives.
Who you consult
Whoever the law or an agreement requires — a union where one is recognised, a workplace forum where one exists, otherwise the affected employees themselves. Where nothing else applies, you consult the people affected directly.
What must be discussed
- Ways to avoid the retrenchments altogether.
- Ways to reduce the number.
- Ways to change the timing to lessen the effect.
- Ways to mitigate the consequences.
- The method of selecting who goes.
- Severance pay.
Give written notice with the information the other side needs to engage properly: why, how many, which roles, the proposed selection method, and the timing.
Selection must be objective
Agreed criteria if there are any; otherwise fair and objective ones. Last in, first out is the common default, and skills, qualifications and operational needs are also legitimate.
What is not acceptable is selection that is actually about something else — the person who complained, the one on maternity leave, the one who is older. Retrenchment used to remove an individual is unfair dismissal wearing a different name, and it is usually obvious.
Severance and final payments
Severance pay is due at a statutory minimum, calculated on service, and more may be payable under a contract or agreement. Notice pay, outstanding wages and accrued leave are due in addition.
Provide a certificate of service, and the documents the employee needs to claim UIF. That last one matters more to them in the following weeks than almost anything else you can do.
Do it decently
Beyond the legal process: tell people directly rather than by letter, tell the rest of the team promptly and honestly, and help where you can — a reference, an introduction, notice of who is hiring.
The people who remain are watching how the people who leave are treated, and it determines whether they stay.
General guidance, not legal advice. Retrenchment procedure and severance entitlements are governed by legislation; take proper advice before starting a process.