If you're still unsure how a retrenchment differs from a dismissal, the Labour Law for Managers Loose Leaf Service has got you covered.
Revealed: the real way retrenchment differs from a dismissal
At a basic level, a retrenchment is just like any other dismissal.
Just like in a dismissal, you've got to have a fair and valid (good) reason to retrench and you've got to follow a fair procedure. If you get both right, your retrenchment will be substantively and procedurally fair.
But if you get either one or both wrong, then you'll be at risk. Your retrenched employees can take you to the CCMA or the Labour Court. You could be ordered to take them back (reinstate them) with or without back pay, or to pay them compensation.
Here are five fair and valid examples of when you may need to retrench your employees:
You'd consider retrenching staff in the following circumstances:
Where retrenchments are quite different from other types of dismissal is in the procedure that you must follow before you can retrench.
With retrenchments, you don't hold a disciplinary hearing or a counselling session. You follow a process of consultation.
What is consultation?
Consultation is the discussion with the potential retrenches (employees that you'll be retrenching) or their representatives on the proposed retrenchments.
The Labour Relations Act (LRA) says consultation must be meaningful.
'The parties must work together to attempt to reach consensus. The courts have regularly said that sham consultations aren't good enough, you can't simply go through the motions,' warns the Labour Law for Managers Loose Leaf Service.
When must you start consulting?
Consultations must start as soon as you think about retrenching. The Labour Court has said this means when retrenchments are reasonably foreseeable
Remember though, following a proper consultation process won't help you if you don't have a good reason to retrench.