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Retrenching employees? Don't, unless you've considered these five factors

by , 19 June 2013
Up to 145 500 jobs and 60% of South Africa's platinum output could be at risk in coming years amid unrest and upheavals in the sector. That's a warning sounded by economists at the Japanese bank, Nomura. They believe rising mining costs as a result of wage increases, regulation, increased electricity prices and a need to drill deeper, as well as political risks, will force SA mines to cut their losses, iAfrica.com reports. If this forecast becomes a reality, mines will face disputes from disgruntled employees who feel they haven't been retrenched legally. Don't let this happen to you! Here are five factors you need to consider before you retrench employees.

According to iAfrica.com, economists at the bank believe 'there are around 24 000 [mining] jobs at risk next year [and] the number rises to 121 500 in 2015'.

This threat on jobs could add tensions to the already volatile platinum sector, which has been plagued by violent strikes since last year.

As an employer that's the last thing you want when restructuring your company through retrenchments.

That's why it's important that you consider certain factors before you start a retrenchment process.

Consider these five factors before you start retrenching

While you're well within your rights to start a retrenchment process and can retrench employees to cut costs if your company isn't doing well and if you can't afford to keep on so many employees.

According to the Labour Guide.co.za, employers continue to get it wrong when it comes to retrenchments and, as a result 'land up paying a very heavy price'.

Here's what The Labour Law for Managers Loose Leaf Service says you need to consider before you retrench employees.

  1. What do you want to achieve by retrenching? For instance, is it because you want to cut costs? Is it because of the global economic crisis?
  2. What is the best plan to get there? You need to ascertain if your plan is in line with what you want to achieve.
  3. How do you propose selecting employees for retrenchment? You must ensure that the retrenchment process is in line with your strategy.
  4. When do you want to implement retrenchments? Determine if the timing of the retrenchments makes business sense. Ensuring that you're giving yourself enough time to consult properly will help you do this.
  5. What do you propose paying as a retrenchment package? You must ensure you've worked out how much this will cost you.

Remember, 'a retrenchment is just like any other dismissal. You must have a fair and valid reason to retrench and you must follow a fair procedure. If you get both right, your retrenchment will be substantively and procedurally fair,' says the Loose Leaf.

But, if you get either one or both wrong, you'll be at risk of being taken to the CCMA or Labour Court.

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