Retrenchment

• Published date: 04 September 2020
• Subject Matter: Employment and HR, Retirement, Superannuation & Pensions, Employee Benefits & Compensation, Employee Rights/ Labour Relations
• Law Firm: ChimwaMurombe Legal Practice
• Author: Ms Oripah Sharukayi

Retrenchment is a form of dismissal due to no fault of the employee, it is usually due to unavoidable economic considerations Retrenchment as a dismissal does not essentially relate to the conduct or capability of the work. Retrenchment is also known as downsizing, because an employer often resorts to retrenchment to reduce costs and spending to ensure economic survival. One of the requirements of retrenchment are that the employer must give fair reasons for making the decision to retrench and follow a fair procedure when making such a decision or the retrenchment may be considered unfair. The Labour Relations Act 1, permits employers to dismiss employees for operational requirements. These are defined as requirements based on economic, technological, structural or similar needs of the Employer. Another commonly used alternative to employer petitioning for volunteers who desire to take early retirement to do so. This has some advantages as it provides opportunities for younger workers to advance into new roles However, in contrast it means that the organization loses substantial skills and experience. An additional disadvantage is that it would be expensive since company will lose a lot of money in retirement packages vs cost of retrenchment.

One size fits all minimum retrenchment package

This minimum retrenchment package is in full and final settlement of such retrenchment. It is worth pointing out that, in terms of section 12C (3) of the Labour Act, should an employer allege financial incapacity and consequent inability to pay the minimum retrenchment package timeously or at all, the employer has the right to apply in writing to be exempted from paying then full minimum retrenchment package or any part of it either to an employment council or, if there is no employment council, the retrenchment board. If the employment council or retrenchment board fails to respond to the request for exemption within fourteen days of receiving the notice, the application is deemed granted. If the employer succeeds in an application to be exempted from paying the full minimum retrenchment package, the employer can retrench the concerned employees and such employees can leave empty handed There is no longer a need for employers to seek any approval of...