Retrenchment processes are unfortunately common practice in our contracting economy.

If it is something your organisation is contemplating, there must be a reason to implement a retrenchment process and it must be related to operational requirements. Poor performance is NEVER a reason to retrench an employee.

In terms of the Labour Relations Act (LRA), severance pay is based on one week for every completed year of service.

Letters should be issued to ALL employees in the company or business unit informing them of a possible retrenchment. Include the following in the letters:

The reason for the proposed retrenchment.
Considerations by the employer to find alternatives and that all options have been explored and retrenchment is the “last resort”.
How many employees at each skill level will be affected.
What selection method will be used (for example, LIFO (last in first out))?
When the retrenchments will happen.
What severance pay will be offered (some company policies are more generous than the prescribed legislation).
Any assistance that the employer may offer the affected employees (for example, financial workshops).
If there is a possibility of re-employment.

Retrenchment is an unpleasant and life-changing process for employees and employers (even employees who are not retrenched are impacted negatively with “survivor guilt” and feelings of uncertainty). Most companies follow the process in terms of the LRA and consult with labour specialists but do not always follow or offer an outplacement service. Outplacement programmes should be practical and professional and offer entrepreneurial and financial advice. Programmes offering support for HR staff and managers conducting the consultations and discussions are important.