Retrenchment: A Basic Guide for Employers

What should employers know about retrenchment? Once a possibility at the beginning of lockdown, retrenchment has now become the new reality for many businesses. Retrenchment should always be a last resort, however, businesses on the cusp of folding have little option but to resort to this complicated process. Businesses must prepare themselves for the worst-case scenario and it is crucial that they comply with the law throughout the retrenchment process. Employers cannot afford the costly consequences of unfair dismissal claims.

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Retrenchment is a type of dismissal that is through no fault of the employee. Retrenchment occurs where businesses experiencing economic pressure may need to let some of their employees go in order to increase profits or reduce losses.

Steps in the Retrenchment Process

1. Operational Requirements of the Employee

Employees may be retrenched for operational requirements, which are requirements based on the economic, technological, structural, or similar needs of an employer.