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Not sure when to retrench? These four scenarios will make things clear

by , 15 August 2014
There's a lot of talk around retrenchment at the moment.

For example, Telkom is implementing retrenchments following consultation with unions. And there rumors that retrenchments are looming in the mining sector.

These companies aren't the only ones retrenching.

Our experts have been getting a lot of retrenchment questions from business owners. Most of them aren't sure when to retrench or consider retrenchments.

As a result, our labour experts have put together four scenarios that make it clear when you may need to retrench employees. Take a look at them so you can ensure you have a good reason to retrench.


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Four scenarios that show you when you may need to retrench employees
 

Experts behind the Labour Law for Managers Loose Leaf Service say you could consider retrenching staff in the following circumstances:

#1: Your business is doing badly and you can't afford to keep on so many employees.

#2: Your shareholders insist that you must cut costs and show better profit so they can get a better return on their investment.

#3: You can, with a reasonable investment in new technology or by getting a new machine, operate with fewer staff and make more money.

#4: You've lost a major customer and, with the reduced business, you can't afford to keep your full workforce.

The golden rule when it comes to retrenchments is: You must have a good reason to retrench and your reason must be fair and valid.

If your business is going through some of the challenges above, you're well within your right to consider retrenchments. We hope these scenarios have made it clear when it's appropriate to retrench.

For more information on retrenchments, check out the Labour Law for Managers Loose Leaf Service.
 

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