Retrenchment and your rights explained

In financial downswings, or when a company is trying to manage their company more effectively, they are often forced to retrench some of their workers, to save money. No matter who one is, or what type of career one has, this is one of the worst things that can happen to a person. It affects a person’s whole life and if a large number of people in a certain area are retrenched at the same time, it can also have an effect on the local economy. For example the people, do not have income any more, they cannot spend so much money as they used to in the area and this then affects the income of other people too.

An employer should therefore be sure that there is no other option but retrenchment. According to the Labour Relations Act, 1995, an employer should decide on retrenchment through a process of consultation.

What is meant by consultation?

An employer cannot just by himself decide to retrench workers. As soon as retrenchment is considered, an employer must start a consultation process with worker representatives. This means that the employer and worker representatives must discuss the various options together. They must strive to find agreed ways to avoid job loss altogether, or if that is not possible, to reduce job losses to the minimum. They must also strive to agree on the severance pay and on how to select workers to be retrenched. It is recommended that you discuss the conditions agreed on in respect of your retrenchment with your worker representative. You are entitled to know what conditions have been agreed on and also how the decisions were taken.

What is meant by severance pay?

On retrenchment, an employer must pay the retrenched worker certain benefits. An employer must pay a minimum severance pay of one week’s wages for each completed year of service to all retrenched workers, no matter what other benefits might be due to them. Ensure that you get all the financial benefits, that are due to you. In most cases, in addition to severance pay you should receive your pension money, money for leave you have not taken and part of your bonus. Discuss the financial benefits you will receive, with your worker representative and the Personnel Division of the company you worked for.

What if an agreement cannot be reached?

If you feel that you have not been treated fairly when you are retrenched, you may refer a dispute over retrenchment to the CCMA (Commission for Conciliation, Mediation and Arbitration), or a bargaining council for conciliation. If it still cannot be settled, it can be referred to the Labour Court.


If you have any further enquiry with regard to retrenchments, or the Labour Relations Act, 1995, you may contact the nearest Provincial Office of the Department of Labour. The locations and telephone numbers of the above-mentioned offices are indicated on the website The telephone numbers for the CCMA in each Province, are also indicated there.