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Retrenchment: Employer Solely Responsible For Showing That Retrenchment Is For Fair Reasons


In a season when most businesses are struggling to make ends meet, retrenchment has become a popular subject matter. Although it is known that fair procedure has to be followed in retrenching employees and that the reasons for the retrenchment have to be fair, companies still struggle with the process.

On the 6th November 2018 in a matter where the popular retail store Woolworths was found to have failed to show that the retrenchment of more than 90 employees was operationally justifiable on rational grounds, the Court made a landmark ruling that it is the responsibility of the employer to show that the retrenchment is for fair reasons. The employee need only allege that the retrenchment is unfair - South African Commercial, Catering and Allied Workers Union and Others v Woolworths (Pty) Limited.

The following are important factors to check in order to show that retrenchment is for fair reasons:

  1. Purpose of dismissal: This is of paramount importance when proving that the reasons for the dismissal are fair. An employer must show that the dismissal seeks to give effect to a requirement based on the employer’s economic, technological, structural or similar needs. Further to this the dismissal must be operationally justifiable and on the justifiable grounds. The grounds must be presented to the employees prior to the retrenchment and cannot be brought after.

  2. Proper Consideration of alternatives: An employer must show that alternatives were properly explored. In doing this the employer should show that suggestions made by the employees were not only considered but also attempted. If an employer did not consider alternatives then tenable reasons must be given to explain the failure.

  3. Selective Criteria: This needs to be fair and objective. The employer is wholly responsible to show that the criteria for the selection of employees to be retrenched was objective and that no other reasons influenced the employees selected.

It is not sufficient for an employer to prove that the reasons followed for the retrenchment were fair. A further requirement is that the employer must follow a joint consensus-seeking process and attempt to reach consensus on appropriate measures to avoid dismissal, to change the timing of the dismissal and to mitigate the adverse effects of such dismissal.

The whole crux is that Management must be genuinely open to meaningful consensus-seeking and must not follow the prescribed procedure for the sake of ticking boxes.

The primary remedy available to employees in cases of unfair reinstatement is reinstatement. It is for the employer to prove that reinstatement is not reasonably practical.

For any advice and assistance with labour law issues please contact Myers Attorneys on 011 346 2422 or reception@myersattorneys.co.za

#retrenchment #labourlaw #SouthAfricanlabourlaw

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