Checklist: What Your Retrenchment Letter Must Include

Planning a retrenchment?

Whether you are retrenching one employee or many, you must have a good reason to retrench and do it properly. Otherwise you will end up defending yourself in court, which will cost you time and money. You could end up even worse-off than you were before you retrenched!

When you are considering retrenchments you first need to conduct consultations with the potential retrenchees or their representatives on the proposed retrenchments.
To begin consulting, the LRA says that you need to issue a written notice to all relevant parties. This notice is known as the Section 189(3) notice because that is the section that describes what should go into the notice. The LRA says that your Section 189(3) notice must at least cover the following things:

Checklist: What your Section 189(3) notice must contain

❑The reasons for the proposed retrenchments.
❑The alternatives you considered before proposing retrenchment and the reasons for rejecting each of those alternatives.
❑The number of employees likely to be affected and the job categories in which they are employed.
❑The selection criteria you propose using to select which employees to retrench.
❑When retrenchments are likely to take effect (a specific date or a period of time).
❑The severance pay you propose for retrenched employees.
❑Any assistance that you can offer to employees likely to be retrenched.
❑The possibility of future re-employment of retrenched employees.
❑The number of employees you employ.
❑The number of employees you have retrenched in the last 12 months.

Warning! Don’t take a rigid checklist approach, but think carefully about all the information you could give that would assist the other consulting party to engage with you meaningfully. Anything relevant to the proposals you are making should be included. The checklist should be your guide as to the minimum required. Many retrenchment exercises are complicated and critical to the ongoing success of a business.

Checklist: Include these 11 items in your Section 189(3) notice

  • The reasons for the proposed retrenchments
  • The alternatives you considered before proposing retrenchment and the reasons for rejecting each alternative.
  • The number of employees likely to be affected and job categories in which they’re employed.
  • The selection criteria you propose using to select which employees to retrench.
  • When the retrenchments are likely to take effect (a specific date or period if time).

Severance pay – what are your obligations?
You have to pay at least one week’s remuneration for every completed year of continuous service.
Warning!You must calculate it on remuneration and not basic salary.