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Follow this important tip when considering who to retrench

by , 23 November 2015
Your business is under a lot of pressure, and in order to survive you strongly believe that the best decision will be to retrench employees.

When looking into retrenchments, there are some questions you'll need to ask yourself beforehand. And 1 of those questions has to do with the selection process you'll use in determining which employees to retrench.

You would more than likely opt for an objective criteria for selection, and a very common method for doing so is known as the 'Last in first out' (LIFO) selection criteria.

It means that you'll first retrench employees with the shortest service.

Now, this may seem fair, but in a South African context, it's not as easy as that.

So follow this great tip before deciding on selection criteria for retrenchments.


Warning! Your company could be next! Don't make this retrenchment mistake. It could cost you over R1 million in compensation...

Discover how to avoid making the same horrific mistake Telkom, Sibanye Gold and Amplats made when retrenching their employees.
In South Africa, we have Employment Equity, and if you're a 'designated employer', then you must comply with its requirements in creating a business makeup reflective of the country's demographics.

Now, if you were to opt for the LIFO option, you run the risk of not being fair because members from designated groups could be greatly affected.

The Courts have realised this issue, and so they'll allow you, as an employer, to choose another selection criteria apart from LIFO. But you must still ensure  your selection criteria are fair and reasonably objective.
Important Note: Include a provision in your Employment Equity and Affirmative Action policies that set out to retain employees from designated groups in the wake of a possible retrenchment.

Do you want to learn more great advice on retrenchments? Then subscribe to Labour Law for Managers today.

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