When an employer considers retrenchment, he or she must consult:

• Whoever a collective agreement says must be consulted, or if none exists:
• The workplace forum, or if none exists:
• The union, or if none exists:
• The employees themselves

The employer must issue a written notice inviting the other party to consult with it and make all the relevant information available in writing at the consultations, including:

• Reasons for retrenchment
• Alternatives considered including redeployment
• Number of employees to be retrenched
• How it will be decided which employees to retrench
• When the dismissals will take place
• Severance pay
• What other help the employer will give to the employees who will be retrenched
• Possibilities of future re-employment for these employees
• Number of employees employed by the employer
• Number of employees the employer has retrenched during the past 12 months

The employees the employer is consulting with must be allowed to have their say and make suggestions on any of these issues. If the employer rejects what they say, he or she must give reasons in writing if the employees have submitted their representations in writing.

The consultation process is a ‘joint consensus seeking’ process. In other words the parties try and reach an agreement on the different issues, such as:

• Whether retrenchment is justified and ways to avoid retrenchments
• Ways to reduce the number of people retrenched
• Ways to limit the harsh effects of retrenchment
• The method and criteria for selecting employees to be retrenched; if there is no agreement, the employer must use fair and objective criteria
• Severance pay: employees can negotiate for higher severance pay than the LRA prescribes (which is 1 week’s pay for every year of service)

If employees and the employer cannot agree, disputes over the procedures for retrenchment can be referred to the CCMA for conciliation and thereafter the Labour Court. If the retrenchment involves a single employee, the employee can challenge the fairness of the dismissal at the CCMA rather than the Labour Court,

if he or she wishes. A dispute about the amount of severance pay, is finalised at the CCMA by arbitration. Section 189A of the Labour Relations Act, has special provisions for retrenchments in companies that employ more than fifty employees.

The provisions can be used by parties, if both agree to this, to help them reach an agreement. The provisions allow for an outside facilitator to help facilitate the process and the right to strike over retrenchments as a final resort.

(See: Problem 5: Retrenchment)