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.