#1: Make sure you follow the retrenchment process to the letter according to Sections 189 and 189A of the Labour Relations Act 66 of 1995.
#2: Know the requirements of a retrenchment process. Some of the requirements include:
Exploring all alternatives to retrenchment before starting the process;
Consulting from the start with representative unions and employees who the retrenchment will affect; and
Disclosing, in writing, all information relevant to the consultations.
#3: Have valid reasons for retrenching. You must also explain these reasons to the employees.
Remember, you can't retrench employees on a whim or to avoid dealing with performance or behaviour issues, you must explain reasons to your employees.
#4: Pay a basic, minimum retrenchment package.
The Practical Guide to Human Resources Management says you must calculate the package according to one week's pay for every completed year of service and take into account the value of any outstanding leave. In addition, you must give all employees you're retrenching a formal, paid notice of termination of service.
#5: Pay out pension and provident funds according to the scheme rules where applicable.
The bottom line: Retrenchment can result in labour disputes if you fail to implement them in a legal manner. Reduce potential problems by doing these five things.