Financial Data
Updated 29 Feb 2020

Jennifer Da Mata gives top advice on retrenchments

Q&A Retrenching staff is one of the hardest professional things a business owner will probably ever have to do. Labour specialist Jennifer Da Mata explains why companies decide to retrench, and how the process can be completed in a fair and professional manner.

GG Van Rooyen, Entrepreneur, 05 September 2017  Share  0 comments  Print

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  • Player: Jennifer Da Mata (CEO)
  • Company: Strata-g Labour Solutions
  • Established: 2008
  • Background: Strata-g provides solutions to employers of all sizes and in all industries. These solutions include retrenchments, as well as consultation in all areas of labour legislation, Human Resources, Industrial Relations, BBBEE, Skills Development, Employment Equity, Recruitment services and Payroll Outsourced Solutions.
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What is the business’s responsibility towards its employees?

Retrenchments do not always occur as a result of financial issues, but no matter what the reason is for the possible retrenchments, businesses have a duty to be open and honest with their employees regarding the reasons for the possible retrenchments.

Employers need to engage with employees in a meaningful and joint consensus-seeking process and should provide employees with sufficient information regarding the business’s rationale for going through the retrenchment process in order for the employees to constructively engage in the process.

The process needs to be fair and transparent and ultimately no final decision should be made without affording employees an opportunity to provide their input.

Related: 5 Things I wish I’d known sooner as a female entrepreneur

How does the owner know that retrenchments have become viable?

Retrenchments will only become a viable option once all other alternatives have been explored and none of these alternatives are considered to be viable in order to secure the operational and/or financial sustainability of the business.

Alternatives that could possibly be considered include, transferring employees to other departments or branches, salary reductions, the implementation of short time, reduction of overtime, termination of the services of temporary or contract workers, placing suitable employees on retirement and so on.

Only once the alternatives have been considered and there are valid reasons as to why the alternatives are not viable, will an owner know that the possibility of retrenchments has become unavoidable.

So the CCMA is not involved in retrenchments? Does it not play any role?

The CCMA does not ordinarily become involved in so-called small-scale retrenchments but in circumstances where an employer employs more than 50 people and contemplates dismissing a specific number of employees due to operational requirements, the CCMA must appoint a facilitator to assist the parties engaged in consultations if the employer requested facilitation, or the consulting parties representing the majority of employees have requested facilitation.

The CCMA can play a very important and useful role during the facilitation process and the services are offered free of charge.

Do companies need facilitators?

All companies do not need facilitators to be appointed and the process can be handled internally. However, given the legalities and complexities often surrounding the process and the fact that many employees may become apprehensive about the process, it may be beneficial for companies to enlist the services of experts to ensure that they receive adequate guidance and assistance during the process of consultation and/or facilitation.

The process can potentially affect the job security and livelihood of many employees and a facilitator could assist the parties through this difficult time by ensuring the process is conducted fairly.

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What are the requirements of the process?

As the employer you are required to consult with your employees regarding the reasons for the possible retrenchments and various other aspects as per section 189 of the LRA.

In order to engage in a meaningful joint consensus seeking process, you are required to provide all consulting parties with sufficient information in writing, including but not limited to: The number of employees likely to be affected, the timing of the possible retrenchments, detailed reasons why the company is contemplating the retrenchments, the assistance the employer is proposing for potentially affected employees, alternatives the employer has considered to retrenching, proposed severance pay, how the employer has gone about selecting potentially affected employees, the possibility of future employment, the number of employees the employer has in its employ at the time that retrenchments become contemplated, as well as the number of employees retrenched in the preceding 12 month period.

You need to consider the submissions made by the consulting parties and upon this consideration, an attempt must be made to reach consensus on the different aspects.

There are various things that should be considered from a procedural point of view and therefore it’s important to obtain proper legal advice before simply embarking on the process.

It’s a joint-consensus seeking process, so what happens if consensus isn’t reached?

As the employer, you have the right to terminate, even if consensus isn’t reached. However, it’s important to think about the cost, not only in terms of retrenchment packages and potential court cases, but also morale.

Retrenchments are traumatic, and they can have a profound impact on a company. Many companies even offer counselling to employees. Retrenchments are never easy, regardless of the reason behind them.

Take note

Retrenchments are not an easy way to get rid of unwanted employees. The costs are high and the duties on the employer executing the process are onerous and risky, which is why retrenchments should only be considered once all other options have been exhausted. 


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About the author

GG Van Rooyen, Entrepreneur

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