Services · Retrenchment

How do I retrench without a claim on my hands?

Retrenchment has its own rules under the LRA. Get the consultation and selection process right, and a necessary business decision does not turn into a dispute.

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The legal position

What a fair retrenchment requires

Operational requirements are a fair reason for dismissal, but only if the employer consults properly before the decision is final. The process is where most retrenchment disputes are decided.

Consultation before the decision

When you contemplate retrenchment, you must consult, in a meaningful joint consensus-seeking process, on ways to avoid or reduce dismissals, change their timing and soften their effect, the selection criteria, and severance pay. Consulting after the decision has already been taken is not consultation.

LRA s189(1) and (2)

Disclosure in writing

The consultation starts with a written notice disclosing the reasons, the alternatives considered, the number and categories of employees likely to be affected, the proposed selection method, timing, severance and any assistance or re-employment proposed.

LRA s189(3)

Fair, objective selection and severance

Employees must be selected on criteria that are agreed, or that are fair and objective. Each retrenched employee is entitled to at least one week's remuneration for every completed year of continuous service, unless they unreasonably refuse an offer of alternative employment.

LRA s189(7); BCEA s41

The 2025 Code and large-scale retrenchments

The 2025 Code of Good Practice: Dismissal now covers operational requirements and replaces the 1999 Code on retrenchment. Larger employers who retrench above the thresholds in section 189A face additional rules, including facilitation and longer minimum periods.

Code of Good Practice: Dismissal (2025); LRA s189A

Common mistakes

Where retrenchments go wrong

Almost all of these come down to a decision made without checking first. That is the part we fix.

What you get with ClearLine

The tools and the people behind them

Everything below sits in your member portal, against your own company and employee records, so the history is there when you need it.

A guided retrenchment process

The portal walks you through the business rationale, alternatives considered, the section 189 consultation notice, consultation on selection criteria and severance, and the outcome, recording each step as you go.

In the member portal

Retrenchment documentation

The consultation notice, minutes, proposed selection criteria, severance calculation and outcome letters a fair process needs, drawn from what you record in the workflow.

From Professional

Procedure planning with a consultant

Plan the timeline and consultation with a labour consultant before the first notice goes out, so the process is right from the start rather than repaired afterwards.

From Business

Naledi, any time

Ask Naledi, our online legal advisor, a routine question in plain language and get a straight answer immediately, with no waiting for a callback.

Every package, and free to try on this site

A legal advisor when it matters

When a question is outside Naledi's scope, or you want a person to look at your specific facts, escalate it to a labour consultant through the portal and get a considered answer, not a guess.

From Professional, with more escalations per month on each higher package

How it works

Three layers of support, in order

1

Naledi answers first

Routine, settled questions get an immediate answer from Naledi, our online legal advisor.

2

A legal advisor steps in

Anything outside Naledi's scope goes to a senior legal advisor, who responds personally.

3

The attorney panel, if needed

Matters that need an attorney go to our panel, under a separate mandate you enter directly with that firm.

FAQ

Questions employers ask us

Does section 189 apply if I only retrench one employee?

Yes. Section 189 applies whenever an employer contemplates dismissing one or more employees for operational reasons. Section 189A adds further rules only for larger employers retrenching above its thresholds.

How is severance pay calculated?

The BCEA minimum is one week's remuneration for each completed year of continuous service. Your contract, a collective agreement or a sectoral determination may provide for more, and notice pay and accrued leave are paid in addition.

Can I choose who to retrench?

Only on selection criteria that have been agreed with the consulting parties or, if none are agreed, that are fair and objective. Criteria used to target particular individuals are a common reason retrenchments are found to be unfair.

Ask about your specific situation

Get a straight answer from Naledi, free, or join and have a legal advisor and the attorney panel behind every decision.

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