The reasons for retrenchment have to be genuine in a fair procedure suitable for both parties.
Below are steps to follow
An employer needs to issue a written notice inviting all employees who will likely be affected by the retrenchment to consult. The should have relevant information regarding the process
The consultation between the employer and the employee needs to take place with the aim of reaching consensus regarding matters set out in the notice. Employees should be allowed to make representation regarding matters set out in the notice and the employer needs to respond if he disagrees with them he should give reasons.
At the end of the consultation, should retrenchment be found unavoidable, staff to be retrenched needs to be selected based on criteria agreed to in the consultation or on a criteria that is fair and objective.
After the process of consultation has been done, employees to be retrenched are entitled to a severance package, including
- One week salary for every year of service completed.
- Notice pay which is calculated based on how long the employee has been employed for.
- Six months or less, notice pay will be equivalent to one week salary.
- More than six months but less than a year will be equivalent to two weeks for salary.
- Leave pay for the annual leave days that were due to the employee at the time of retrenchment.
- Any pro-rata bonus that may be due to the employee
But it should be noted that if an employer as part of the consultation process offered some of the affected employees alternative employment and the employee refused this offer then the employee won’t be entitled to a severance package.
Where the retrenchment is not done according to the above procedure, affected employees can refer the matter to the CCMA within 30 days of retrenchment.
