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Read this before you jump on the retrenchment bandwagon...

by , 12 March 2013
Big companies are making big staff movements at the moment. Telkom is about to launch large-scale retrenchments, and SAA has suspended its acting CEO, Vuyisile Kona, based on allegations that he contravened provisions of the Public Finance Management Act. This move is drawing lots of media attention, especially as SAA's famous for its 'golden handshake'. If your business is in financial trouble and you're considering retrenching employees, here's how to do it with the least fuss...

Vuyisile Kona, the suspended South African Airways (SAA) board member and acting CEO, was removed from the board of the airline by Public Enterprises Minister Malusi Gigaba yesterday.
 
The airline has a history of paying departing CEOs handsomely, the most infamous being the R232 million Coleman Andrews received in 2001.
 
But taxpayers needn't worry as he won't be receiving a 'golden handshake' for this, says the BusinessDay's BDLive website.
 
Telkom's also in the media spotlight for offering voluntary severance and early retirement packages to thousands of its employees to cut costs and keep the company profitable, says FSP Business.
 
Chances are, these retrenchment packages will be attractive.
 
With tough economic times, there's a chance that your business will need to retrench employees at some point too. 
 
But don't jump straight into offering retrenchment packages – consider other cost-saving options first!
 
Be careful: Retrenchment differs from other types of employee dismissal…
 
Because retrenchment is a 'no fault' dismissal and because of its human cost, you have quite a few obligations as an employer, says Ideate.
 
Remember to consult with your employees right at the beginning of the retrenchment process, from the moment it becomes a reality that the business might need to retrench. 
 
You must do this as one of the most common reasons employees take their former employers to the CCMA is for 'suddenly springing retrenchment on them', says FSP Business.
 
Mention that you're doing all you can to prevent retrenchment, and ask employees for alternatives to save costs so that you don't have to retrench them. 
 
Here's how to structure retrenchment packages in your own company
 
If there are no other alternatives and retrenchment is the only way to save your business, remember that the minimum retrenchment package is one week's remuneration for each completed year of continuous service with the employer. 
 
You can pay more than this though – the average is two to three months' salary, says Ideate.
 
Just remember to follow the correct process to ensure your retrenchment is seen as fair and you don't end up at the CCMA with disgruntled employees!
 


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