Retrenchment is one of the easiest ways for a business to lose at the CCMA or Labour Court — not because the cuts weren’t needed, but because the process wasn’t followed. We guide you through Section 189 so the decision is fair, consulted and defensible.
Dismissal for operational requirements — economic, technological or structural needs of the business — is lawful, but only if you follow Section 189 of the Labour Relations Act. The single most common mistake is treating consultation as an announcement: telling staff they are retrenched, rather than genuinely consulting before the decision is final. That turns a justified retrenchment into an unfair dismissal.
You must issue a written notice inviting the affected employees (or their union or representatives) to consult, setting out the reasons, the numbers and categories affected, the proposed selection method, severance, and the timing.
You must consult on ways to avoid the retrenchments, minimise the number, change the timing, and mitigate the effects — and be able to show you considered alternatives (short time, reskilling, natural attrition) with an open mind.
Who goes must be decided on fair, objective criteria — last-in-first-out, skills and retention needs, or criteria agreed in consultation. Selecting on a whim, or to target individuals, is where employers lose.
Retrenched employees are entitled to a minimum of one week’s remuneration for every completed year of continuous service, plus notice pay, accrued leave and a certificate of service — more where a contract or bargaining council agreement provides for it.
If you employ more than 50 people and are retrenching above the set threshold, Section 189A applies: a minimum 60-day consultation period, the option of a CCMA facilitator, and different dispute routes. These matters need careful handling and firm timelines.
For the background, see our guide on how to retrench fairly under Section 189.
The relevant letters and consultation records are in our Retrenchment (S189) Pack, or we can run the whole process with you.
A dismissal for the operational requirements of the business, which requires genuine consultation before the decision is finalised.
At least one week’s pay per completed year of continuous service, plus notice, leave and a certificate of service.
Avoiding and minimising the retrenchments, timing, mitigation, selection criteria and severance.
The large-scale process for employers with more than 50 staff retrenching above a threshold — 60-day consultation, CCMA facilitation, and separate dispute routes.
The cheapest time to involve us is before you issue a single notice. Talk to us first — the initial conversation is free.
This page is general information about South African labour law and is not legal advice for your specific matter.