According to The Labour Law for Managers Loose Leaf Service, a retrenchment is just like any other dismissal. You must have a fair and valid reason to retrench and you must follow a fair procedure. If you get both right, your retrenchment will be substantively and procedurally fair.
But, if you get either one or both wrong, you'll be at risk. The retrenched employees can take you to the CCMA or Labour Court.
As an employer, you're well within your rights to start a retrenchment process. And you can retrench employees to cut costs if the company isn't doing well and if you can't afford to keep on so many employees.
But, according to the Labour Guide.co.za, employers continue to get it wrong when it comes to retrenchments and, as a result 'land up paying a very heavy price'.
Here are five factors you need to consider before you retrench employees.
Consider these five factors before you start retrenching
1. What do you want to achieve by retrenching? For instance, is it because you want to cut costs? Is it because of the global economic crisis?
2. What is the best plan to get there? You need to ascertain if your plan is in line with what you want to achieve.
3. How do you propose selecting employees for retrenchment? You must ensure that the retrenchment process is in line with your strategy.
4. When do you want to implement retrenchments? Determine if the timing of the retrenchments makes business sense. Ensuring that you're giving yourself enough time to consult properly will help you do this.
5. What do you propose paying as a retrenchment package? You must ensure you've worked out how much this will cost you.
Considering these five factors before you start a retrenchment process will ensure you avoid being taken to the CCMA by retrenched employees.