Retrenchment

Nobody did anything wrong. That is what makes it hard.

An operational-requirements dismissal is the only kind where fault plays no part, which means the whole of the fairness enquiry is about the process. Employers lose these on procedure almost exclusively, and employees who understand that are in a much stronger position.

021 000 0000 The other three grounds

A plain workplace canteen mid-morning: seven people at two long formica tables with mugs and lunchboxes, in ordinary clothes of no single uniform, some talking and one looking out of the window. — This is where a section 189 notice lands, weeks before anybody sees a hearing room. Everything on this page is about what has to happen between that moment and the last day.

Five steps

What section 189 actually requires.

Identical for both sides, so it is set out once. What differs is what each of you should do at each step.

A written notice inviting consultation

It must set out the reasons contemplated, the alternatives considered and why they were rejected, the number of employees likely to be affected, the proposed selection method, the timing, severance proposed, and assistance offered. A notice missing half of that starts the process badly and it is the first document the CCMA will read.

Consultation, which means a joint problem-solving exercise

Not an announcement with a comment period. The employer must allow the other party to make representations and must respond to them — in writing, if the representations were in writing — and must consider them properly before deciding.

Selection on agreed or fair and objective criteria

If the parties agree criteria, those apply. If not, the criteria must be fair and objective, and LIFO is the usual default. "Attitude" and "not a team player" are neither fair nor objective and they do not survive scrutiny.

Severance pay

At least one week’s remuneration per completed year of continuous service, unless a bargaining council agreement or contract says more. An employee who unreasonably refuses a reasonable offer of alternative employment loses the entitlement.

Notice, and then the dispute

A retrenchment dispute about procedure or substance goes to the Labour Court, or to the CCMA where a single employee is affected or the employee elects arbitration in certain cases. Which route applies is a live question and getting it wrong costs months.

Four things, twice each

Where retrenchments actually fail.

Section 189A changes almost everything, and it is easy to miss.

If you are the employer

If you employ more than fifty people and the numbers cross the statutory thresholds, you are in 189A. That means a sixty-day consultation period before notice may be given, the right of either party to ask for a CCMA facilitator, and a right to strike over the retrenchment. Proceeding as though it is an ordinary 189 is the single most expensive error in this area.

If you are the employee

Check the headcount and the numbers being retrenched. If it is a 189A and the employer has run it as a 189, the process is defective before anything else is argued, and you may be entitled to an order stopping it rather than compensation afterwards.

Disclosure is not optional.

If you are the employer

The consulting party is entitled to all relevant information in writing. Refusing to hand over the financials that are the stated reason for the retrenchment, and then relying on those financials, is a position that does not hold. If it is genuinely confidential, say so and deal with it properly.

If you are the employee

Ask for the information in writing and keep the request. If the employer says the business cannot afford the headcount, you are entitled to see the basis of that. A refusal is itself a dispute that can be referred, and it is often the strongest part of a retrenchment case.

Alternatives have to be genuinely considered.

If you are the employer

Short time, reduced hours, a freeze on overtime, voluntary severance, redeployment. You are not obliged to adopt them, but you are obliged to consider them and to say why they were rejected. A one-line dismissal of every alternative reads as a decision already taken.

If you are the employee

Propose alternatives in writing, even ones you expect to be refused. It shifts the burden onto the employer to explain the refusal, and an employer who cannot explain it has a procedural problem rather than you having an unreasonable expectation.

A retrenchment used to remove one person is not a retrenchment.

If you are the employer

If the real reason is performance or conduct, deal with it as performance or conduct. Dressing it as operational requirements to avoid a hearing is transparent, and it converts a defensible dismissal into an indefensible one.

If you are the employee

If the position is advertised again two months later, or somebody junior is doing your job, say so. A sham retrenchment is an automatically unfair dismissal in some circumstances, and the compensation cap is twice as high.

The same advice to both of you

Put it in writing, and answer in writing.

A retrenchment is judged almost entirely on the paper trail. An employer who responds to written representations in writing has built the defence as it goes; an employee who makes them in writing has built the case. Meetings with no minutes help whichever of you is willing to remember them differently, and neither of you should want to be that party.

Send us the section 189 notice.

It is one document and it tells us most of what either side needs to know about how this is going to go.

021 000 0000 Where the dispute goes