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Retrenchments Part 2

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Retrenchments Part 2

In part 1 of retrenchments I dealt with the basic principle of retrenchments and I touched on the process of consultation.

In this section, we get an in dept look at what consultation means, taking into account the LRA as well as the common law. Dismissals based on operational requirements are quite complicated and it is advisable that you get assistance from a professional person when you go through this process.

The consultation process must start as soon as the employer contemplates retrenching staff and it must be done in good faith. The Labour Court stated that the consultation process must start the moment when retrenchments are reasonably foreseeable. If the employer has already made up his mind about retrenching staff, then there is really nothing to consult about.

In the case of Numsa and others v Dorbyl Ltd and another, striking workers were retrenched after an executive meeting held by the employer prior to consultations with the employees. This rendered the consultations meaningless, as the employer had already made up its mind about the retrenchments. This rendered the retrenchments to be procedurally unfair.

Employers are often not sure how to start consulting and the LRA, Section 189(3), states that the employer must start the consultation process by issuing a written notice wherein the employees or their representatives are invited to consult. The employer must then disclose all relevant information see part 1 on retrenchments – to the other consulting party, so that meaningful consultation can take place.

The employees are allowed to ask for more information, but they are only allowed to ask for relevant information that is not confidential. Employers definitely do not want to supply confidential information on an unrestricted basis to the employees or their representatives.

In terms of Section 16(4) of the LRA, an employer is not required to disclose information

That is legally privileged information;

That the employer cannot disclose without contravening a prohibition imposed on the employer by any law or order of any Court;

That is confidential and, if disclosed, may cause substantial harm to the employee or employer;

That is private personal information relating to an employee, unless that employee consents to the disclosure of that information.

Any disputes about the disclosure of information that cannot be resolved between the parties can be referred to the CCMA, who will try and resolve the dispute through conciliation. If conciliation fails, then it will be referred to arbitration.

Companies must not take a rigid checklist process, because the retrenchment process must be done in good faith. If the Court gets the impression that the employer did not act in good faith, but merely used a checklist to make the consultation process look like a legitimate process, then the Court will in all likelihood find that the retrenchment is procedurally unfair.

Consultation must be done properly and all issues must be canvassed!

Example of a letter to start retrenchment consultations, in terms of Section 189(3)


Due to the need for us to improve our competitiveness and the financial position of the company, we may have to retrench employees. If this happens, your position in the company may be effected.

We would like to first consult with employees who may possibly be affected in order for us to try to:

avoid the dismissals;

minimise the number of dismissals;

change the timing of the dismissals;

mitigate the adverse effects of the dismissals.

In order for proper consultation to take place, we make the following information available for your consideration:


. The reason why the employer proposed the dismissals or restructuring and alternatives that the employer considered before proposing the dismissals and the reasons why the employer rejected each of those alternatives.

Complete the information.

1. The number of employees likely to be effected and the categories in which they are employed.

Complete the information.

2. The proposed method for selecting which employees to dismiss.

Complete the information.

3. The time when, or the period during which, the dismissals are likely to take effect. Complete the information.

4. The severance pay proposed.

Complete the information.

5. Any assistance that the employer proposes to offer to the employees likely to be dismissed. Complete the information.

6. The possibility of future re-employment of the employees who are dismissed. Complete the information.

7. Number of employees employed by Company.

Complete the information.

8. Number of staff retrenched during the past 12 months.

Complete the information.

We propose meeting with you on date, time and venue to consult with you. Consider the information supplied by us, and come to us with your proposals.

Should you require any further relevant information in order for us to have meaningful consultations, please submit your request to us before the scheduled meeting, if possible. We reserve the right not to disclose confidential or irrelevant information. We look forward to a productive consultation process.

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