The law allows you to retrench when you have a good commercial reason for reducing staff complement. It may be because of bad economic circumstances, technological advancements, a restructuring exercise to streamline the way the business operates, or merely because you wish to stop trading. In the Labour Relations Act it is referred to as "dismissal based on operational requirements", but we can simply refer to it as retrenchment.

Good reason
Before you retrench, there are some important steps you need to take. Firstly, consider whether it is really necessary to retrench. In other words, is there a good reason to do so? Are there not alternatives that you can think of? For example, you may suggest that people work short time or there may be alternative work available, even if it is at a lower level of pay.
If you cannot think of any alternatives, don't simply make a decision and tell certain employees that their services will be terminated. The law requires you to consult with those who may be affected before making a final decision. If there is a union whose members may be affected, you must involve the union.

Written notice
From a practical perspective, you must invite the other consulting parties in writing to a meeting to consult regarding the following: The reasons for the proposed dismissals; the alternatives that you considered before proposing the dismissals; the reasons for rejecting each of those alternatives; the number of employees employed; the number of those likely to be affected and the job categories in which they are employed; the proposed method for selecting which employees to dismiss (for example "last-in, first-out" or retention of skills); the time when, or the period during which, the dismissals are likely to take effect; the severance pay proposed (i.e. at least one week's wages per completed year of service); any assistance that you propose to offer (letter of reference, obtaining a tax directive, etc.); the possibility of future re-employment should a suitable vacancy become available. The number of employees that had been retrenched in the past 12 months must also be mentioned, if any.

Meetings
As mentioned before, a meeting must be scheduled where the employees or their union are invited to consult on all of the issues mentioned. Depending on what happens during the meeting, it may be necessary to have follow-up meetings. To "consult" means you must consider and respond to the representations made and, if you do not agree, you must state the reasons for disagreeing. The law requires you to engage in a "joint consensus-seeking approach".

Final decision
Although an attempt must be made to reach agreement on these issues, it is not absolutely necessary to conclude an agreement. Ultimately, you as employer may have to make a decision. It would be wise to record the entire process, as well as the ultimate decision and reasons therefore, in writing.
If you have more than 50 employees, there are several additional obligations pertaining to retrenchments that will be introduced in the near future. Keep your eyes on the media.

Jan Truter, www.labourwise.co.za

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