Retrenchment Policy
Retrenchment Policy- For a dismissal ( be it for misconduct, incapacity or operational reasons ) to be fair, it has to be substantively as well as procedurally fair. In other words, there has to be a fair reason for the dismissal (substantive fairness) and how the dismissal takes place needs to be fair as well (in other words, it needs to be procedurally fair).
Large-scale vs Small-scale Retrenchments
Labour law for retrenchments states that there is a distinction drawn between large-scale and small-scale retrenchments. However, before the distinction between these two is drawn one needs to look at what a small employer is versus a big employer:
- A small employer employers 50 or less employees.
- A big employer employs more than 50 employees.
A big employer can undergo a large-scale or a small-scale retrenchment. A large-scale retrenchment at a big employer is a dismissal of a specified minimum number of employees in relation to the size of the employer. If the employer retrenches:
- 10 employees, and they employ between 50 and 200, this is a large-scale retrenchment
- 20 employees, and they employ between 200 and 300, this is a large-scale retrenchment
- 30 employees, and they employ between 300 and 400, this is a large-scale retrenchment
- 40 employees, and they employ between 400 and 500, this is a large-scale retrenchment
- 50 employees, and they employ over 500, this is a large-scale retrenchment
If a big employer retrenches fewer employees than the numbers listed above, this may still be considered as a large-scale retrenchment. This is if the number of employees to be retrenched – together with the number of employees who have been tretrenched in the last 12 months before the proposed retrenchment – is equal to the numbers listed above.
The heart of procedural fairness in retrenchment: the consultation procedure
At the heart of procedural fairness in retrenchments is the consultation procedure. The first step in any retrenchment procedure is for an employer to consult with:
- Any party that they are required to consult with owing to a collective agreement
- A workplace forum or registered trade union if there is no collective agreement
- The employees themselves, who may possibly be affected by the retrenchment
Employers need to make sure retrenchment proceedings in their company are both procedurally and substantively fair as – if not – they risk a negative outcome at the CCMA. You can download our free Dismissal Policy here.