4 situations in which you may want to retrench
Your company has come to a point where you're considering to terminate many of your employees' contracts. You've taken a look at things from an 'operational' point of view and you strongly feel that your company simply can't continue the way it is.
If this is you, then you may be looking at retrenching your employees.
But before you go ahead and retrench employees, you've got to make sure that what you're doing is legally allowed! In other words, you've got to make sure that the reasons for your retrenchments are fair and valid.
Because getting just one little thing wrong when retrenching employees can lead to costly cases of unfair dismissal, in which you'll be required to pay your retrenched employees compensation or reinstate them with back pay!
So to help you understand what a 'fair and valid' reason is for retrenchments, take a look at the following 4 situations in which you can definitely consider retrenching employees...
Your company is not doing very well and so you just can't afford to keep so many employees.
It could also be the case that one or some of the departments in your business are not doing very well. And so you might have to shut them down in order to cut your losses. This will result in no work for those who worked in those departments.
Your shareholders want you to cut costs and show a better profit so as to get a better return on their investment.
With technological advances, you may not require as many staff and you can increase production, which can lead to more money in the long run.
You have lost a big customer/client and so you can't afford to keep so many employees.
*Those were the 4 situations in which you'd consider retrenchments.
But don't forget that should you wish to retrench because of any of the above-mentioned situations, there's an entire process you need to follow!
To learn what that process is, as well as how to carry it out, page over to Chapter R 03
in your Labour Law for Managers
handbook, or click here
to get your copy today.