COVID-19 Retrenchments and what to expect in simple terms

COVID-19 Retrenchments and what to expect in simple terms

At the end of March 2020, the President of South Africa announced the nationwide lockdown, due to the outbreak of the COVID-19 pandemic. This announcement had a severe negative impact on South Africa’s economy and accordingly also on all businesses and employers in South Africa.

Due to the financial strain, a lot of employers resorted to dismissals (“retrenchments”) in order to keep the doors open, which they are entitled to do in terms of the Labour Relations Act No. 66 of 1995 (“LRA”). However, a fair procedure as set out in section 189 of the LRA should at all times be followed and even though fair reasons for retrenchments exist, an employer cannot stray away from this crucial requirement.

In short, the employer should consult with the employees and participate in a consensus seeking process as set out in section 189 of the LRA. The purpose of the process is to attempt to retain jobs as far as possible and only as a last resort to retrench the employees. In the event that the employer doesn’t follow a fair procedure, the dismissal will be procedurally unfair and accordingly the employee will have the opportunity to refer the dispute to the CCMA or Labour Court and claim compensation.

The question that arises is what should the employee do when being retrenched?

From the inception of the retrenchment, the employee should endeavour to take part in the consensus seeking process. This will entail that the employee asks questions, request information and provide alternatives to retrenchments, with the sole purpose to retain his/her job. Remember that an employer may only as a last resort retrench an employee, meaning that no viable alternatives to retrenchment exist.

In the event that the employee is then retrenched and the procedure was not in accordance to section 189 of the LRA, then the employee can, within 30 days from date of retrenchment, refer the dispute to the CCMA or bargaining council for conciliation. Conciliation is a procedure laid down, in order to set the employer and employee around the same table, with the sole purpose to attempt to settle the dispute. If the parties are able to settle the dispute then no further proceedings are necessary and the matter will be deemed resolved. If the parties are unable to settle the dispute, then the matter will be referred to arbitration in CCMA or bargaining council or to the Labour Court for adjudication.

Due to the employee being retrenched and accordingly in difficult financial circumstances, it will be more time and cost effective in the event that the dispute is referred to arbitration in the CCMA or bargaining council.
However, Section 191(12) of the LRA reads as follows:
“(12) An employee who is dismissed by reason of employer’s operational requirements may elect to refer the dispute either to arbitration (CCMA or bargaining council) or to the Labour Court if –
(a) the employer followed a consultation procedure that applied to that employee only, irrespective of whether that procedure complied with section 189;
(b) the employer’s operational requirements lead to the dismissal of that employee only; or
(c) the employer employs less than ten employees, irrespective of the number employees who are dismissed.”

In simple terms the CCMA and bargaining councils can only adjudicate upon a retrenchment matter, if the employee was the only employee who was retrenched or if the employer employs less than 10 employees, otherwise the employee will have to approach the Labour Court.

We at Hartzenberg Incorporated can assist the employee or employer with any labour related matters. For any further advice and assistance please feel free to contact LG du Plooy at

Article written by LG du Plooy B Comm LLB (EUP Programme in Advanced Labour Law)